Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq:
LBRDA, LBRDK, LBRDP) today reported second quarter 2024
results.
Headlines include(1):
- Fair value of Charter investment was $13.7 billion as of June
30th
- Issued $860 million aggregate principal amount of 3.125%
exchangeable senior debentures due 2054 on July 2nd
- Used net proceeds to repay $540 million under Charter margin
loan and repurchase $300 million principal amount of 3.125%
exchangeable senior debentures due 2053
- From May 1, 2024 through July 31, 2024, Liberty Broadband
received $74 million of proceeds from sale of 270 thousand Charter
shares to Charter
- Maintained fully diluted equity interest in Charter of
26%(2)
- In the second quarter, GCI(3) revenue was flat at $246 million,
generated $30 million in operating income and Adjusted OIBDA(4)
decreased 7% to $86 million
Share Repurchases
There were no repurchases of Liberty Broadband’s common stock
(Nasdaq: LBRDA, LBRDK) from May 1, 2024 through July 31, 2024. The
total remaining repurchase authorization for Liberty Broadband as
of August 1, 2024 is approximately $1.7 billion.
Charter Ownership
Under the terms of Liberty Broadband and Charter’s stockholder
agreement, Liberty Broadband has sold and will continue to sell to
Charter a number of shares of Charter Class A common stock as is
necessary to maintain Liberty Broadband’s percentage equity
interest at 26%(2) on a fully diluted basis. Such sales are
executed by Liberty Broadband monthly based on Charter’s repurchase
activity in the month prior.
From May 1, 2024 through July 31, 2024, Liberty Broadband sold
270 thousand shares of Charter Class A common stock to Charter for
total proceeds of $74 million.
Balance Sheet
The following presentation is provided to separately identify
cash and liquid investments, debt and public holdings of Liberty
Broadband as of March 31, 2024 and June 30, 2024.
(amounts in millions)
3/31/2024
6/30/2024
Cash and Cash Equivalents:
GCI Holdings
$
70
$
47
Corporate and Other
38
26
Total Liberty Broadband Consolidated
Cash
$
108
$
73
Fair Value of Public Holdings in
Charter(a)
$
13,385
$
13,730
Debt:
Senior Notes(b)
$
600
$
600
Senior Credit Facility
334
443
Tower Obligations and Other(c)
90
88
Total GCI Holdings Debt
$
1,024
$
1,131
GCI Leverage(d)
2.8x
3.2x
Charter Margin Loan
$
1,480
$
1,330
3.125% Exchangeable Senior Debentures due
2053(e)
1,265
1,265
Total Corporate Level Debt
$
2,745
$
2,595
Total Liberty Broadband Debt
$
3,769
$
3,726
Fair market value adjustment and deferred
loan costs
(45
)
(33
)
Tower obligations and finance leases
(excluded from GAAP Debt)
(85
)
(84
)
Total Liberty Broadband Debt
(GAAP)
$
3,639
$
3,609
Other Financial Obligations:
Preferred Stock(f)
180
180
____________________
a)
Represents fair value of the investment in
Charter as of March 31, 2024 and June 30, 2024.
b)
Principal amount of Senior Notes.
c)
Includes the Wells Fargo Note Payable and
current and long-term obligations under tower obligations and
finance leases.
d)
As defined in GCI's credit agreement.
e)
Principal amount of Exchangeable Senior
Debentures exclusive of fair market value adjustments.
f)
Liquidation value of preferred stock.
Preferred stock has a 7% coupon, $25 per share liquidation
preference plus accrued and unpaid dividends and 1/3 vote per
share. The redemption date is the first business day following
March 8, 2039. The preferred stock is considered a liability for
GAAP purposes.
Liberty Broadband cash decreased $35 million in the second
quarter as net debt repayment at Liberty Broadband more than offset
proceeds from Charter share sales. GCI cash decreased $23 million
in the second quarter as cash from operations and net debt
borrowings were more than offset by capital expenditures (net of
grant proceeds) and a $150 million dividend to Liberty Broadband
during the period. These proceeds were used to pay down the Charter
margin loan and were therefore net debt neutral to Liberty
Broadband.
Liberty Broadband debt decreased $43 million in the second
quarter as Liberty Broadband repaid $150 million of borrowings
under the Charter margin loan, partially offset by additional
borrowing under GCI’s senior credit facility. As of June 30, 2024,
GCI’s credit facility has undrawn capacity of $347 million (net of
letters of credit), and GCI’s leverage as defined in its credit
agreement is 3.2x. On June 26, 2024, the Charter margin loan was
amended to extend the maturity to June 30, 2027, among other
modifications.
On July 2, 2024, Liberty Broadband closed a private offering of
$860 million aggregate principal amount of 3.125% exchangeable
senior debentures due 2054 and used net proceeds to repay $540
million of borrowings under the Charter margin loan, leaving $1.15
billion of available capacity under the Charter margin loan, and
also repurchased $300 million in aggregate principal amount of
3.125% exchangeable senior debentures due 2053.
GCI Operating and Financial
Results
2Q23
2Q24
% Change
(amounts in millions, except operating
metrics)
GCI Consolidated Financial
Metrics
Revenue
Consumer
$
117
$
117
—
%
Business
128
129
1
%
Total revenue
$
245
$
246
—
%
Operating income
$
32
$
30
(6
)%
Operating income margin (%)
13.1
%
12.2
%
(90)bps
Adjusted OIBDA(a)
$
92
$
86
(7
)%
Adjusted OIBDA margin(a) (%)
37.6
%
35.0
%
(260)bps
GCI Consumer
Financial Metrics
Revenue
Data
$
59
$
60
2
%
Wireless
48
47
(2
)%
Other
10
10
—
%
Total revenue
$
117
$
117
—
%
Operating Metrics
Data:
Cable modem subscribers(b)
159,600
158,000
(1
)%
Wireless:
Lines in service(c)
201,100
201,900
—
%
GCI Business
Financial Metrics
Revenue
Data
$
106
$
109
3
%
Wireless
13
12
(8
)%
Other
9
8
(11
)%
Total revenue
$
128
$
129
1
%
____________________
a)
See reconciling schedule 1.
b)
A cable modem subscriber is defined by the
purchase of cable modem service regardless of the level of service
purchased. If one entity purchases multiple cable modem service
access points, each access point is counted as a subscriber. Data
cable modem subscribers as of June 30, 2024 include 900 subscribers
that were reclassified from GCI Business to GCI Consumer
subscribers in the first quarter of 2024 and are not new
additions.
c)
A wireless line in service is defined as a
wireless device with a monthly fee for services. Wireless lines in
service as of June 30, 2024 include 1,800 lines that were
reclassified from GCI Business to GCI Consumer lines in the first
quarter of 2024 and are not new additions.
Unless otherwise noted, the following discussion compares
financial information for the three months ended June 30, 2024 to
the same period in 2023.
GCI revenue was flat in the second quarter. Consumer revenue was
flat as growth in data was offset by declines in wireless revenue.
Business revenue increased 1% driven by growth in data, partially
offset by declines in wireless and other revenue.
Operating income and Adjusted OIBDA decreased $2 million and $6
million, respectively, in the second quarter due to higher
operating costs primarily driven by increased distribution costs to
healthcare customers as well as increased selling, general and
administrative expense due to increases in labor-related costs and
professional service fees. These were partially offset by lower
depreciation expense as certain assets became fully depreciated
during 2023.
In the second quarter, GCI spent $58 million, net, on capital
expenditures. Capital expenditure spending was related primarily to
improvements to the wireless and data networks in rural Alaska.
GCI's net capital expenditures for the full year 2024 are expected
to be approximately $200 million related to additional
high-returning investments in middle and last mile connectivity,
with continued network expansion in GCI’s most important markets in
rural Alaska including the Bethel and AU-Aleutians fiber
projects.
FOOTNOTES
1)
Liberty Broadband will discuss these
highlights and other matters on Liberty Broadband's earnings
conference call that will begin at 11:15 a.m. (E.T.) on August 8,
2024. For information regarding how to access the call, please see
“Important Notice” later in this document.
2)
Calculated pursuant to the stockholder
agreement between Liberty Broadband and Charter Communications,
Inc. ("Charter").
3)
Liberty Broadband’s principal operating
asset is GCI Holdings, LLC (“GCI” or “GCI Holdings”), Alaska's
largest communications provider. Liberty Broadband also holds an
interest in Charter.
4)
For a definition of Adjusted OIBDA and
Adjusted OIBDA margin and applicable reconciliations, see the
accompanying schedules.
NOTES
LIBERTY BROADBAND FINANCIAL
METRICS
(amounts in millions)
2Q23
2Q24
Revenue
GCI Holdings
$
245
$
246
Corporate and other
—
—
Total Liberty Broadband Revenue
$
245
$
246
Operating Income
GCI Holdings
$
32
$
30
Corporate and other
(9
)
(9
)
Total Liberty Broadband Operating
Income
$
23
$
21
Adjusted OIBDA
GCI Holdings
$
92
$
86
Corporate and other
(5
)
(6
)
Total Liberty Broadband Adjusted
OIBDA
$
87
$
80
Important Notice: Liberty Broadband (Nasdaq: LBRDA,
LBRDK, LBRDP) will discuss Liberty Broadband’s earnings release on
a conference call which will begin at 11:15 a.m. (E.T.) on August
8, 2024. The call can be accessed by dialing (877) 407-3944 or
(412) 902-0038, passcode 13742821, at least 10 minutes prior to the
start time. The call will also be broadcast live across the
Internet and archived on our website. To access the webcast go to
https://www.libertybroadband.com/investors/news-events/ir-calendar.
Links to this press release and replays of the call will also be
available on Liberty Broadband’s website.
This press release includes certain forward-looking statements
under the Private Securities Litigation Reform Act of 1995,
including statements about business strategies, market potential,
future financial prospects, capital expenditures, matters relating
to Liberty Broadband’s equity interest in Charter and Charter’s
buyback of common stock, Liberty Broadband’s participation in
Charter’s buyback of common stock, the continuation of our stock
repurchase program and other matters that are not historical facts.
These forward-looking statements involve many risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements, including,
without limitation, possible changes in market acceptance of new
products or services, competitive issues, regulatory matters
affecting our businesses, continued access to capital on terms
acceptable to Liberty Broadband, changes in law and government
regulations, the availability of investment opportunities, general
market conditions (including as a result of inflationary pressures)
and market conditions conducive to stock repurchases. These
forward-looking statements speak only as of the date of this press
release, and Liberty Broadband expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Liberty Broadband's expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement
is based. Please refer to the publicly filed documents of Liberty
Broadband, including the most recent Forms 10-K and 10-Q, for
additional information about Liberty Broadband and about the risks
and uncertainties related to Liberty Broadband which may affect the
statements made in this press release.
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our
financial results, this press release includes a presentation of
Adjusted OIBDA, which is a non-GAAP financial measure, for Liberty
Broadband (and certain of its subsidiaries) and GCI Holdings
together with a reconciliation to that entity or such businesses’
operating income, as determined under GAAP. Liberty Broadband
defines Adjusted OIBDA as operating income (loss) plus depreciation
and amortization, stock-based compensation, transaction costs,
separately reported litigation settlements, restructuring and
impairment charges. Further, this press release includes Adjusted
OIBDA margin which is also a non-GAAP financial measure. Liberty
Broadband defines Adjusted OIBDA margin as Adjusted OIBDA divided
by revenue.
Liberty Broadband believes Adjusted OIBDA is an important
indicator of the operational strength and performance of its
businesses by identifying those items that are not directly a
reflection of each business' performance or indicative of ongoing
business trends. In addition, this measure allows management to
view operating results and perform analytical comparisons and
benchmarking between businesses and identify strategies to improve
performance. Because Adjusted OIBDA is used as a measure of
operating performance, Liberty Broadband views operating income as
the most directly comparable GAAP measure. Adjusted OIBDA is not
meant to replace or supersede operating income or any other GAAP
measure, but rather to supplement such GAAP measures in order to
present investors with the same information that Liberty
Broadband’s management considers in assessing the results of
operations and performance of its assets. Please see the tables
below for applicable reconciliations.
SCHEDULE 1
The following table provides a reconciliation of GCI’s operating
income to its Adjusted OIBDA for the three months ended June 30,
2023 and June 30, 2024.
GCI HOLDINGS ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
2Q23
2Q24
GCI Holdings Operating Income
$
32
$
30
Depreciation and amortization
56
52
Stock-based compensation
4
4
GCI Holdings Adjusted OIBDA
$
92
$
86
SCHEDULE 2
The following table provides a reconciliation of operating
income (loss) calculated in accordance with GAAP to Adjusted OIBDA
for Liberty Broadband for the three months ended June 30, 2023 and
June 30, 2024.
LIBERTY BROADBAND ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
2Q23
2Q24
Liberty Broadband Operating
Income
$
23
$
21
Depreciation and amortization
56
52
Stock-based compensation
8
7
Liberty Broadband Adjusted
OIBDA
$
87
$
80
GCI Holdings
$
92
$
86
Corporate and other
(5
)
(6
)
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET INFORMATION
(unaudited)
June 30,
December 31,
2024
2023
amounts in millions,
except share amounts
Assets
Current assets:
Cash and cash equivalents
$
73
158
Trade and other receivables, net of
allowance for credit losses of $5 and $5, respectively
176
178
Prepaid and other current assets
60
94
Total current assets
309
430
Investment in Charter, accounted for using
the equity method
12,535
12,116
Property and equipment, net
1,109
1,053
Intangible assets not subject to
amortization
Goodwill
755
755
Cable certificates
550
550
Other
41
40
Intangible assets subject to amortization,
net
436
461
Other assets, net
224
236
Total assets
$
15,959
15,641
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
101
86
Deferred revenue
30
30
Current portion of debt
3
3
Other current liabilities
50
59
Total current liabilities
184
178
Long-term debt, net, including $1,211 and
$1,255 measured at fair value, respectively
3,606
3,733
Obligations under tower obligations and
finance leases, excluding current portion
81
83
Long-term deferred revenue
76
65
Deferred income tax liabilities
2,311
2,216
Preferred stock
201
202
Other liabilities
139
141
Total liabilities
6,598
6,618
Equity
Series A common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 18,236,186
and 18,233,573 at June 30, 2024 and December 31, 2023,
respectively
—
—
Series B common stock, $.01 par value.
Authorized 18,750,000 shares; issued and outstanding 2,022,532 and
2,025,232 at June 30, 2024 and December 31, 2023, respectively
—
—
Series C common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 122,589,251
and 123,704,814 at June 30, 2024 and December 31, 2023,
respectively
1
1
Additional paid-in capital
3,023
3,107
Accumulated other comprehensive earnings
(loss), net of taxes
40
52
Retained earnings
6,279
5,843
Total stockholders' equity
9,343
9,003
Non-controlling interests
18
20
Total equity
9,361
9,023
Commitments and contingencies
Total liabilities and equity
$
15,959
15,641
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS INFORMATION
(unaudited)
Three months ended
June 30,
2024
2023
amounts in millions,
except per share
amounts
Revenue
$
246
245
Operating costs and expenses:
Operating expense (exclusive of
depreciation and amortization shown separately below)
62
59
Selling, general and administrative,
including stock-based compensation
111
107
Depreciation and amortization
52
56
225
222
Operating income (loss)
21
23
Other income (expense):
Interest expense (including amortization
of deferred loan fees)
(52
)
(52
)
Share of earnings (losses) of
affiliate
297
318
Gain (loss) on dilution of investment in
affiliate
(4
)
(5
)
Realized and unrealized gains (losses) on
financial instruments, net
(17
)
40
Other, net
8
2
Earnings (loss) before income taxes
253
326
Income tax benefit (expense)
(58
)
(74
)
Net earnings (loss)
195
252
Less net earnings (loss) attributable to
the non-controlling interests
—
—
Net earnings (loss) attributable to
Liberty Broadband shareholders
$
195
252
Basic net earnings (loss) attributable to
Series A, Series B and Series C Liberty Broadband shareholders per
common share
$
1.36
1.73
Diluted net earnings (loss) attributable
to Series A, Series B and Series C Liberty Broadband shareholders
per common share
$
1.36
1.71
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS INFORMATION
(unaudited)
Six months ended
June 30,
2024
2023
amounts in millions
Cash flows from operating activities:
Net earnings (loss)
$
436
321
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation and amortization
102
114
Stock-based compensation
14
16
Share of (earnings) losses of affiliate,
net
(577
)
(566
)
(Gain) loss on dilution of investment in
affiliate
32
32
Realized and unrealized (gains) losses on
financial instruments, net
(59
)
74
Deferred income tax expense (benefit)
101
95
Other, net
(2
)
(2
)
Change in operating assets and
liabilities:
Current and other assets
57
(40
)
Payables and other liabilities
(25
)
(99
)
Net cash provided by (used in) operating
activities
79
(55
)
Cash flows from investing activities:
Capital expenditures
(123
)
(97
)
Grant proceeds received for capital
expenditures
19
2
Cash received for Charter shares
repurchased by Charter
116
42
Cash released from escrow related to
dispositions
—
23
Purchases of investments
—
(53
)
Other investing activities, net
(16
)
2
Net cash provided by (used in) investing
activities
(4
)
(81
)
Cash flows from financing activities:
Borrowings of debt
266
1,451
Repayments of debt, tower obligations and
finance leases
(348
)
(1,545
)
Repurchases of Liberty Broadband common
stock
(89
)
(40
)
Indemnification payment to Qurate
Retail
—
(25
)
Other financing activities, net
(1
)
(2
)
Net cash provided by (used in) financing
activities
(172
)
(161
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(97
)
(297
)
Cash, cash equivalents and restricted
cash, beginning of period
176
400
Cash, cash equivalents and restricted
cash, end of period
$
79
103
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version on businesswire.com: https://www.businesswire.com/news/home/20240807993177/en/
Shane Kleinstein (720) 875-5432
Liberty Broadband (NASDAQ:LBRDK)
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