Q4 2023 ATN International Inc Earnings Call
Participants
Justin Benincasa; CFO; ATN International, Inc.
Brad Martin; President & CEO; ATN International, Inc.
Michael Prior; Executive Chairman; ATN International, Inc.
Carlos Doglioli
Rick Prentiss; Analyst; Raymond James & Associates, Inc.
Greg Burns; Analyst; Sidoti & Company, LLC
Hamed Khorsand; Analyst; BWS Financial Inc.
Presentation
Operator
Thank you for standing by, and welcome to ATN International's Fourth Quarter and Full Year 2023 earnings conference call. (Operator Instructions) I would now like to hand the call over toJustin Benincasa, Chief Financial Officer. Please go ahead.
Justin Benincasa
Thank you, operator. And good morning, everyone. This morning, we'll be reviewing our fourth quarter and full year 2023 results and providing additional insights on 2024. I'm joined today by Brad Martin, ATN's Chief Executive Officer; and Carlos Doglioli, ATN's Incoming Chief Financial Officer, and Michael Prior, ATN's Executive Chairman, who will be available for the Q&A portion of the call.
As a reminder, we announced our 2023 fourth quarter and full year results yesterday afternoon. After the market close, investors can find the earnings release and conference call slide presentation on our Investor Relations web. Our earnings release and the presentation contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described.
Also in an effort to provide useful information for our investors.
Our comments today include non-GAAP financial measures for details on these measures and reconciliations to comparable GAAP measures and further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atn.com for the 8-K filing provided to the SEC. And now I'll turn the call over to Brad.
Brad Martin
Thank you, Justin, and good morning, everyone. And thank you for joining us. It's a pleasure to be here for my first earnings call as ATN's CEO. I'll begin covering highlights from our Q4 and fiscal year 2023 performance and progress executing our strategy. Following that, Justin will review our financials in more detail and provide an update on our 2024 guidance. This is a significant time in ATN journey.
We've ended the third and final year of our strategic investment plan to expand the reach capability of our high-speed networks and to bring more high-speed data services to remote and underserved consumers and businesses. The investments we are making position A10 to continue delivering high-quality, reliable services to our customers while providing a solid foundation for growing high-speed data subscribers and recurring revenues, expanding free cash flows and delivering sustainable value creation for our stakeholders in the years ahead.
As a result, APN today is a stronger more resilient company. We concluded a solid 2023 with a strong fourth quarter, executing on our first to fiber and glass and steel investment strategy. Our continued conversion of customers to our high-speed networks and focus on margin improvements contributed to subscriber growth, higher revenue and margin expansion. In fact, both the quarter and the year, we achieved single digit revenue growth in double digit expansion of adjusted EBITDA. Justin will expand more on our financial results shortly. But first, I'd like to start with four key points that frame our 2023 performance and the opportunities ahead for ATN.
First, in 2023, we executed several important strategic milestones that are key to our success going forward. We advanced our first fiber and glass and steel investment strategy by adding fiber rich digital infrastructure in the markets we serve.
In May, we announced our long-term agreement with Verizon. We have made strong progress towards our multiyear effort to transition our large carrier customers from legacy wholesale roaming services to carrier managed services that provide ATN with greater revenue stability. We completed the integration and second wins of core addition to our operations and expanding our business in retail broadband operations domestically in 2023, we also completed initiatives to rightsize operations to better support the business into the future these actions are now complete in the U.S. and essentially completed internationally. All in all, we have enhanced our capabilities to better serve our customers and provide high-quality, reliable products and services for the coming years. As a result of these combined efforts, ATN is operating from a strong and scalable foundation as we enter 2024.
Second, our first fiber and glass and steel infrastructure investments are yielding results across key operational metrics. Expanding high-speed network reach and capabilities provides a solid foundation for delivering strong recurring revenues, durable free cash flow and shareholder value over the long term.
Since launching our strategy at the start of 2022, we've increased high-speed broadband subscribers by 39%, nearly doubled broadband homes passed by high-speed data services and expanded our fiber network reach by nearly 50%.
Third, our performance validates ATN's strong market position. As we have said before, we play directly into what is unquestionably one of the world's most durable secular growth drivers need to be connected anytime and everywhere our network's reliability, consistency and efficiency as improved customer satisfaction as exemplified by strong subscriber growth and low churn.
Our deeply embedded relationships with local communities, customers, enterprises, governments and carriers continue to position ATN with an essential competitive advantage. And fourth, as we look to 2024 and beyond. We're committed to managing our balance sheet to maximize cash flow expansion and to realize the full benefits of our investments in the years ahead. While we plan to continue to invest in our network expansion.
This year, we will move down the other side of our three-year investment bell curve as we dial back internally funded capital spending. We continue to leverage our upgraded network footprint and available grant funding to augment network expansions and continue to grow our subscriber base and recurring revenue. Additionally, we will continue to advance margin improvement initiatives to manage run rate operating costs.
All in all, these actions position AT&T to reap the full benefits of our network investment in the years ahead, including accelerated cash flow generation and subscriber revenue growth, it higher incremental margin.
Let's turn to operational wins, providing high-speed connectivity to more customers in as many were both in underserved regions as possible is core to our mission and strategy in Q4, we continued to make great progress on this front in both the US and international markets.
We exited 2023 with 20% more high-speed broadband subscribers and 33% more broadband home passed high-speed data services compared to the prior year. We also have had great success scaling our fiber footprint. Fiber has many advantages is more energy efficient, requires less maintenance and provide superior customer experience as we replace and decommission legacy copper networks with fiber networks, we are positioning ATN to deliver higher margin revenue over time.
We exited 2023 with 11,650 fiber route miles, 11% year over year increase and increased our fiber homes passed footprint by 32%. Now taking a closer look at operational highlights by segment, starting with our international segment, which represents about half of eighteen's revenue and includes operations in Bermuda and the Caribbean where we operate in fast-growing markets like Cayman Islands and Guyana.
Across this segment, we continue to see rapid uptake of high-speed broadband and high-speed data subscriber growth of 20% year over year. Additionally, we have seen strong mobile subscriber growth, which grew 8% in 2023 behind investments in network core upgrade densification and 5G rollout.
We remain optimistic about the growth and free cash flow expansion opportunities across our international markets as we continue to benefit on networking and operating investments, traffic, market tailwinds and our unique value proposition. Our US segment, which serves rural communities in the West and Southwest, as well as urban and rural areas of Alaska accounts for the other half of eighteen's revenue.
In Q4, we achieved several key operational milestones in the US as we advanced our domestic strategy to increase broadband homes passed by high-speed data and pivot away from our legacy wireless wholesale roaming business by meeting our carrier customers' evolving business needs. We expanded our middle and last mile fiber networks, advanced the capacity and reach of our next-generation fixed wireless network, enabling 7% year-over-year growth on recurring business data revenue in the US, we continue to pursue grant funding to augment our fiber and fixed wireless high-speed network expansion in rural areas, including parts of Alaska, Arizona, Nevada and New Mexico.
In Q4, we were recipients of nearly $4 million in federal grants, bringing total awarded grants to us and our partners to $91.2 million in 2023. Also in Q4, we renewed our agreement with the Alternative Connect America model program or ATM, locking in the continuation of the subsidy funding to serve locations into Mexico and the amount of $118 million over the next 15 years.
As it relates to grants and external funding, I want to clarify a few key points first one of our core competencies at ATN is our deep understanding of the mechanics of grants and third party funding. We have a long track record of using discretion to ensure the grants we participated are economically viable. Second network builds funded by these future grants are expected to extend over the next several years. As a result, these funds will support our continued network expansion and customer revenue growth, even as the pace of our self-funded capital decreases as planned.
And third, ATN is well positioned to compete for the $4.2 billion of being telecom infrastructure funding allocated to six states that we operate in. We're actively working in jurisdictions on opportunities that align with our business strategy.
In conclusion, our strategy to expand high-speed network reach capabilities while managing cost through margin improvement initiatives positions APN to reap the benefits of our investment for years to come.
Looking ahead to 2024, it's all about continued execution of our plan. Our priorities remain to continue growing high-speed data network subscriber base and expanding our fiber footprint through targeted internal funded investments, albeit at a slower pace as we come down the backside of our three-year investment bell curve to pursue economically viable grants to augment these internal investments to advance margin improvement initiatives and to manage our balance sheet to maximize cash flow and increase shareholder value.
And with that, I'll hand the call back to you, Justin.
Justin Benincasa
Great. Thank you, Brad and strong fourth quarter and full year performance reflects our team's hard work executing against our three year strategic investment plan. In 2023, we achieved consistent top line growth and even stronger adjusted EBITDA growth well in line with our guidance for the year.
Turning to the P&L highlights from in Q4, total company revenue of $199 million grew 4% before construction revenue compared to the same period in 2022. Higher fixed revenue was driven by growth in rural broadband revenue and high-speed data subscribers.
The quarter also benefited from $3.1 million of nonrecurring revenue associated with engineering services we provided on a fiber deployment. For the full year, revenue totaled $762.2 million. This represents a 6% increase over the prior year, excluding construction revenue from both periods, reflecting the momentum of our strategic network investments.
Operating income in the fourth quarter was $3.3 million versus $4.7 million in Q4 of 2022. Year over year decrease was due to a $6.6 million restructuring charge related to our ongoing efforts to better align our cost structure to the future needs of the business and a $1.3 million net loss on the disposition of assets and changes in contingent consideration.
Full year operating income for 2023 increased to $13.2 million, which was negatively impacted by restructuring charges of $11.2 million. This compares to operating income of $7.9 million in the prior year. Adjusted EBITDA growth was exceptionally strong for both the fourth quarter and the full year increasing 13% to $51 million for the quarter and 10% to $189.5 million for the full year.
This performance was fueled by strength across both segments as we benefited from higher revenue and our ongoing margin expansion initiatives.
Net loss in Q4 was $5.8 million or a loss of $0.46 per share compared with prior year's net loss of $1.4 million or a loss of $0.18 per share for the quarter was affected by the restructuring charge and a year-over-year increase in interest and of $4.7 million. For the full year, the net loss was $14.5 million or $1.25 per share, which included the restructuring charge of $11.2 million in higher interest expense year over year. This compares to a full year 2022 net loss of $5.6 million or $0.67 per share.
Looking now at the segment performance, the international segment delivered revenue growth of 5% in the quarter and 4% for the full year. As Brad mentioned, we saw strong high-speed data subscriber growth that drove increased fixed broadband revenues. Mobile revenues in the segment were flat in the quarter as strong subscriber growth for the segment was offset by a lower RPU than some of our bigger prepaid market.
Adjusted EBITDA for the international segment increased 6% for the quarter and 4% for the full year. In our Domestic segment, total Q4 revenue grew 3%, driven by the growth in fixed revenue and engineering services. As I previously noted, on a full year basis, domestic revenue increased by 6% as we benefited from strong fixed revenue growth related to greater enterprise and emergency connectivity fund revenue in Alaska as well as the Sincor Wind acquisition.
Carrier revenues were flat both for the quarter and the year. As Brad mentioned, moving into 2024, we will have transitioned the bulk of the carrier service revenue from the legacy wholesale roaming revenue, so offering a suite of infrastructure and network services to our large carrier customers in the EU.
Adjusted EBITDA for the domestic segment was very strong, up 20% for the quarter, well outpacing our revenue growth and up 17% for the year as we benefited from margin expansion efforts that we've been a bit of focus throughout the year.
Moving on to the balance sheet and cash flow highlights. We exited the year with a net debt to adjusted EBITDA ratio of 2.4 times and total debt outstanding of $517 million. Net cash provided by operating activities was $113 million for the year, up from [$103 million] in the prior year period as the funding of working capital improved in 2023. Maintaining the strength of our balance sheet remains a top priority for ATN, and we expect to continue expanding cash flow as we leverage the benefit of our investments made earn on our networks over the past few years.
Turning now to capital expenditures, in line with our three-year strategic investment plan. For the full year 2023, we invested nearly $200 million, expanding both the reach and quality of our networks in all our markets of the nearly $200 million invested CapEx funded through operations was $163.3 million and $32.9 million was funded through reimbursable government programs.
These investments have upgraded the capabilities of our networks and enabled our teams to greatly expand the reach of our fiber facilities that ATM can leverage for years to come. As provided in our guidance, our CapEx spending through operations is expected to decrease substantially in 2024 and continue you move lower into 2025.
\We expect to augment this more normalized CapEx spending levels with government subsidy grant programs and funding returning capital to shareholders remains a capital allocation priority. In 2023, ATN returned $15 million to shareholders through our share repurchase program, and we paid out an additional $13.2 million in debt. In December, we announced the Board of Directors' decision to increase the quarterly dividend 14% year over year to $0.24 per share and the expansion of our share repurchase program, allowing the Company to repurchase up to an additional $25 million of common shares.
Turning now to our full year 2024 outlook for the full year, we expect total Company revenues in the range of $750 million to $770 million, excluding construction revenue. As a reminder, a $27 million annual COVID related government contract is scheduled to expire at the end of the first quarter in our US segment, which will affect year-over-year revenue growth comparisons beginning in Q2.
We expect other revenue growth to offset that reduction as we move through the year. We continue to expect adjusted EBITDA for the full year within our previously provided preliminary guidance ranges $200 million to $208 million as we move through 2024 and begin to expand cash flow, we expect to exit the year with a net debt to ratio of between 2.25 times and 2.4 times, as I mentioned previously, maintaining healthy debt levels as a top priority for eight 10, and our goal remains to continue to bring leverage closer to two times over the medium term.
Turning now to our capital expenditure guidance. After reviewing our 2024 projects and the status of grant funding, we are eligible for, we have lowered our capital expenditure outlook by $10 million to a new range of $110 million to $120 million as a result of the investments. We've made ATMs in an excellent position. We'll expand cash flow and fuel profitable growth in the years to come.
Finally, as announced at the end of last year and this will be my last earnings call as CFO before I retire, reflecting on my past 18 years with ATN, I'm proud of the organization that we've built and the incredible progress this entire company has made together over the year. I truly valued my partnership with Michael over the past 18 years and the great team of financial executives and our system. Kathy, who supported us both for much of that time.
I'd also like to express my gratitude for the opportunity to connect as many of you, our shareholders and analysts that cover, etc. And I truly appreciate the support you've provided me over the years having worked closely with Brad for several years. I have the utmost confidence that he is the right leader for ATN at this stage in our transformation.
Additionally, in my time with Carlos, I can assure you he is a seasoned leader with strong industry knowledge, financial and operational operational experience and a collaborative approach to business as the full confidence, Brad and Carlos will seamless and lead agents through the completion of a three year strategy and a set of compelling vision for AT&T next phase of growth.
Before opening up in questions, I'd like to just turn the call over to Carlos, who has a few words to say.
Carlos Doglioli
Thanks, Justin, and hello, everyone. It is an honor to be here today. ATN is a solid company that has been definitely a foundation for the continued creation of shareholder value. Since joining ATN in January, I've been impressed with the thoroughness of ATN's finance team, the strength and experience of the leadership team and the clarity of the organization's mission and strategy. I am grateful for the holiday time that I have spent with Justin and I look forward to building on the disciplined financial foundation. He has established to continue to generate value for our investors and stakeholders for years to come. I look forward to meeting with many of you in the months ahead. And with that, I turn the call back over to Brad.
Brad Martin
Thanks, Justin and Carlos. And we are very excited for AT and future to our first fiber and glass and steel investment strategies and ongoing focus on margin improvement. We are laying the foundation for durable long-term growth in the years ahead.
The ATN value proposition continues to resonate with customers around the globe. Our teams remain energized, execute on our promise to help low and underbuilt communities advance their quality of life reliable, high-quality digital connectivity.
With that, operator, we'd like to open up for questions.
Question and Answer Session
Operator
(Operator Instructions) Rick Prentiss, Raymond James.
Rick Prentiss
Yes, thanks. Good morning, Justin, and wish you well in retirement We enjoyed working with you and Dr. Carlos look forward to giving you guys better.
Brad Martin
Thanks, Ray.
Carlos Doglioli
Thanks.
Rick Prentiss
Right at their first question, Justin, you called out that you've got this COVID program that's expiring in 1Q 24. Can you remind us what line item is that revenue in domestic? How much was that in 23? And how much will it be in 1Q 24 because obviously it's affecting the revenue growth rate of 24 versus 23?
Justin Benincasa
Yes, it's a fixed revenue. So it's reported in Texas. They're pretty consistent number to that. But again, it's a $27 million program. It is kind of pro rata over the quarter. So it will have a pro rata program on Q1, then it will drop off.
So it's roughly a $21 million impact next year.
Rick Prentiss
to $21 million for three quarters worth of 24 is what we know direct,
Justin Benincasa
right?
So we'll have some we'll have it in Q1. But then it drops.
Rick Prentiss
Right, right.
Okay. And is that a super high margin business in terms of how would that affect was into EBITDA?
Justin Benincasa
Yes, we definitely are accounted for in our guidance.
It did have a significant cost that came what has caused that came with it, but it did it did it did MRs because.
Rick Prentiss
When we think about we didn't normalize for that now, obviously, so it will be split $21 million in there. The revenue growth rate from 23 to 24 seems somewhat muted. Can you help us understand you've spent all this CapEx. You've got these exciting adds high-speed broadband in both of your regions.
How should we think about kind of where you want to head with revenue growth on a more normalized basis absent this COVID program
Justin Benincasa
I still think that you know that we can be in that range that we guided to a while back right in the 4% to 6% range of view of revenue growth this year. The drop of any program definitely muted at the obviously fit.
Rick Prentiss
Okay. And then, margin, you touched on margin improvements a couple of times in your comments, what should we think of this? What's the target you want to get to? And is it varied between domestic and international where where should we think you're trying to drive this this both to as far as up margin improvement?
Brad Martin
Is that correct so to your question, yes, it's obviously a key area of focus for the business. The current guidance on that we provided for 2024 includes a lot of these initiatives. And look, we always are measuring ourselves against benchmarks to the industry but we are we are guiding beyond that. I think we are what we guide to 24 is a reflection on a continued focus that started through my course of my tenure here, my operational and will continue to be a key focus of the business as we move forward.
Rick Prentiss
It's a guidance 24. So it kind of assumes maybe a 27% margin?
Justin Benincasa
Yes, that yes, you use the midpoint, I think on that one.
Yes, I would just say it's in both segments, Stuart we're working on.
Rick Prentiss
Okay. The last question for me then on the CapEx, obviously getting back to more normal growth levels in 25, somewhere between 10% and 15% of total revenues, ex construction on what would cause it to go to the low end of that range. What would cause it to go to the high end of the range. And obviously, I think that assumes that any government funding is separate and that gets netted out?
Brad Martin
Yeah so it's a great question, Rick.
And that you specified the range, the major dynamics that move CapEx timing are really around success in the year. We do have markets where the markets we serve can be very complex to plan. Some of the timing because of complexity due to weather, for example, but a big mover is the timing on that grants already awarded grant programs that come in similar to the business.
So those can move specifically by state by by program it does vary significantly so that potentially could drive it to a lower low. So overall, more level, but it would be really specific to each individual market such as pressure management.
Operator
(Operator Instructions) Greg Burns, Sidoti.
Greg Burns
Morning when you look at the broad broadband penetration rates, home per homes passed versus subscriber growth. Still the subscriber growth is lagging the homes passed growth by a little bit.
Can you just talk about maybe your plans for some marketing promotion or any activities or programs you might have in place to to continue to increase that broadband penetration?
Brad Martin
Yes, great question. So certainly penetration as quickly as possible. Always the core focus on any infrastructure build generally, we have we look at every single situation competitively the different types of products, different types of competitive solutions across the portfolio. So we are everywhere looking at how do we move the needle more quickly had we tried to presell.
I mean, we certainly tried to leverages may techniques as possible to shorten that, that timing, but it does vary significantly market by market based on those competitive dynamics and the technology funding that we are coming off a year of significant investment phase in growing that growing that base of homes passed provides us great opportunity to continue to expand.
Greg Burns
Okay. then in Guyana, there's some Rivers saber rattling going on down there. What is your exposure there to maybe the disputed regions and maybe field, I guess what the risk is to you that maybe something escalates in that region?
Brad Martin
Yes, I will not. I will start on that answer.
And Michael, who's been closer to can chime in. But generally, this is something we obviously watch very closely. It's something that we stay very close to the other major U.S. investors in that market. And the Exxon CEO spoke to this in your earnings calls?
Well, I spoke to the fact that they think it's a general low risk, but it's something that we watch very closely and we make sure that the teams are aligned. The general disputed general disputed area is an area where very little of our infrastructure resides. It's a very unpopular portion of Guyana, but something we're watching closely as things develop. And we are we're certainly making sure we have we have our teams aligned around what we effectively. I'm wiring with our governments and our business partners.
Michael, I think I think you.
Michael Prior
Yes, this is Michael. I don't I don't think there's much to add. I would just emphasize that it's really around around interruption for Guyana, which we certainly don't hope. And we don't hope we hope that there's nothing like in any kind of even minor military action.
We don't we don't get the sense that that's likely from everyone we talk to, but who knows. But but the point is that from a pure economic and business standpoint, as Brad said, review all of our operations very, very little in that region that Venezuela is claiming.
Greg Burns
Okay. Thank you.
Operator
(Operator Instructions) Hamed Khorsand, BWS.
Hamed Khorsand
Good morning. So first off, just wanted to ask you are there was a sequential bump in U.S. related revenue have by about $7 million or so. How much of that is you're able to retain and going forward, I understand that the grant money is coming off in Q2.
But outside of that, how much of that is realistically, I mean,
Justin Benincasa
they knew that there was a there was an engineering service revenue, right that I spoke about in my part of the opening of about $3 million or so. But I think they generally I think a lot of that's sustainable, but for the fact of the the ECS drop-off that I noted as well.
Hamed Khorsand
Okay and then could you provide a little bit more details about the restructuring that you took the and why you decided you had to take it down?
Justin Benincasa
Yes, what month the recession was really and your kind of cost reduction initiatives, right in terms of workforce and leases and things like that we took off. So they're out there. They're predominantly is all onetime charges associated with exiting those those costs that answers your question.
Michael Prior
But I guess I was asking why now what was the impediment?
Justin Benincasa
It's really it's really part of the initiative to just kind of more efficiently run the business and improve margin.
Hamed Khorsand
Got it and my last question was last earnings call you were talking about the churn going up in mobile that came down. What was the net result of that as far as the improvement you've seen, is that because better marketing the consumer, there's happy with the mobile service they have the mobile phones they have I know in the past you've talked about they have two phones and now they're back on.
Michael Prior
Yes, I know I don't think that generally there was a dynamic this year in one of our significant prepaid market towards was the competitor that came in with a free offering with new network much, much smaller competitor that did have an impact did effectively have some some positive impact for subscribers on data consumption. So that was one of the dynamics that was effectively a six month free promotion period. So that's something that that promotional period has ended.
Hamed Khorsand
Okay, great. Congrats just on the retirement.
Michael Prior
Thank you.
Operator
(Operator Instructions) Rick Prentiss, Raymond James.
Rick Prentiss
Ray, it's just we can't let you go that easily. We'll get a few more questions here. On your last call. I did you have any exposure to the ACP program? Is that what you're referring to in the COVID world? Or what was your exposure to ACP.
Brad Martin
Eric, I guess that that was novel referring to as the COVID, that was a different program called emergency connectivity ton ACP. We are watching this closely.
We do have some exposure to ACP.
It's not huge overall to ATN. We are still working to quantify quantify the overall impact in options help mitigate.
Rick Prentiss
We got them. Do you know how many subs you have to really to kind of show us what that ballpark numbers?
Justin Benincasa
Yeah, we haven't given that breakout yet. So I think we're right with this more time for us to quantify the
Rick Prentiss
anticipated at Microsoft April, right?
Brad Martin
Yes, I think that yes.
Rick Prentiss
The other question for me is on free cash flow. Looks like they're on the cusp of turning the corner to be positive free cash flow on you talked a little bit about maybe cash taxes and interest, which would be the other items compared to see EBITDA and CapEx, but are you feeling pretty good that maybe even early this year, you get to that free cash flow positive dynamic? And then what kind of progress from there?
Justin Benincasa
Yes, I mean, we're definitely striving to increase free cash flow, right? We're repeating that message over over. And I think in terms of interest into So with that kind of our priority items to keep driving down leverage. I'm going to help on the interest cost. I think in terms of interest expense, you kind of seen that in the core.
That's yes, that's kind of a deal to work right now where we are cash taxes for better for worse these days are pretty limited, but our goal is to keep keep expanding that free cash flow bring down leverage return to shareholders.
Rick Prentiss
And we don't usually include in our valuation free cash flow.
But are there any unusual working capital items coming up?
Justin Benincasa
Is there nothing out of the ordinary that we are watching like with the with the government reimbursement programs. So we've got some working capital already tied up in those programs, right? As we go through the arc that the replacement removed. And but we're watching that and we're trying to manage that closely. But that could be a little bit of a there's some work for us does not not to grow that part of the working capital too much put it out there because there we have to we kind of have to spend it before we get reimbursed.
Rick Prentiss
What's the lag as far as from spending to reimbursing?
Is that six, nine months?
Justin Benincasa
Is it I know it's probably in a shorter period than Navidea is order.
Brad Martin
Yes, it does vary by program briefly. We have seen much better than that. But some of these programs, certainly the more sizable ones require a lot of details for those reimbursement. So so but it has been it has been measured in weeks, which is good for them. And there have been some program that allowed for prepositioning getting effectively a six month pre-positioning of invoicing.
Michael Prior
And the trick for us is how to manage how fast we're constructing and seeking reimbursement to, right. So there's a lot of management involved in that. Obviously, it's worth adding that it's worth adding to that, just that we've also entered into agreements on some of the big vendor contracts that you get paid when we get paid kind of thing that would require a bank account.
Rick Prentiss
And the higher reimbursements are probably coming from states instead of the U.S. had it is mostly US federal government, but there are some statements about the ones we're working on now, right?
Because if our government can get something done in weeks, that's I suppose.
Brad Martin
Yes, it's hard.
Rick Prentiss
And last one for me was just on the leverage guidance changed a little bit previously was get to approximately two by end of 24. And now it's kind of in the two, two five to two, four out. We were at two to anyone in our model. Was that just kind of a fine tuning of of kind of the OEM when you get to that closer to two range or is there anything specific different from prior guidance?
Justin Benincasa
And now finally, I think it's a little bit of fine-tuning how much working capital we might have tied up in some of the reimbursement programs. So but that's that's where the fine tuning was.
Rick Prentiss
Great. Thanks.
And Justin and again, best wishes.
Justin Benincasa
Thank you, Rick. Appreciate it. Thanks for all the support over the years.
Operator
Thank you.
As there are no further questions in queue, I would now like to turn the call over to Brad Martin, ATN's Chief Executive Officer, for closing remarks.
Brad Martin
Thank you operator, and thank you all for joining us today, and we will be participating in Sidoti small-cap Virtual Investor Conference on March 14th and look forward to meeting with many of you there. I would like to take a moment to thank Justin for his leadership, his commitment, long term tenure to ATN. Wish you all the best in your retirement and congrats and I thank you again for your time for that. Operator, I'll turn it back to you.
Operator
So this concludes today's conference call. Thank you for participating. You may now disconnect.
