Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq:
LBRDA, LBRDK, LBRDP) today reported third quarter 2024 results.
Headlines include(1):
- Fair value of Charter investment was $14.8 billion as of
September 30th
- As described in the Schedule 13D/A filed with the SEC on
September 23rd, Liberty Broadband and the Special Committee of the
Board of Directors of Charter are discussing a proposed all-stock
combination of Liberty Broadband with Charter
- Proposed transaction would rationalize dual corporate structure
and provide enhanced trading liquidity
- Additional updates will be provided only if and when definitive
terms are agreed
- From August 1, 2024 through October 31, 2024, Liberty Broadband
received $74 million of proceeds from sale of 225 thousand Charter
shares to Charter
- Maintained fully diluted equity interest in Charter of
26%(2)
- In the third quarter, GCI(3) increased revenue 9% to $262
million, generated $42 million in operating income and grew
Adjusted OIBDA(4) 12% to $100 million
Share Repurchases
There were no repurchases of Liberty Broadband’s common stock
(Nasdaq: LBRDA, LBRDK) from August 1, 2024 through October 31,
2024. The total remaining repurchase authorization for Liberty
Broadband as of October 31, 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 August 1, 2024 through October 31, 2024, Liberty Broadband
sold 225 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 June 30, 2024 and September 30, 2024.
(amounts in millions)
6/30/2024
9/30/2024
Cash and Cash Equivalents:
GCI Holdings
$
47
$
47
Corporate and Other
26
121
Total Liberty Broadband Consolidated
Cash
$
73
$
168
Fair Value of Public Holdings in
Charter(a)
$
13,730
$
14,769
Debt:
Senior Notes(b)
$
600
$
600
Senior Credit Facility
443
423
Tower Obligations and Other(c)
88
87
Total GCI Holdings Debt
$
1,131
$
1,110
GCI Leverage(d)
3.2x
3.1x
Charter Margin Loan
$
1,330
$
790
3.125% Exchangeable Senior Debentures due
2053(e)
1,265
965
3.125% Exchangeable Senior Debentures due
2054(e)
—
860
Total Corporate Level Debt
$
2,595
$
2,615
Total Liberty Broadband Debt
$
3,726
$
3,725
Fair market value adjustment and deferred
loan costs
(33
)
70
Tower obligations and finance leases
(excluded from GAAP Debt)
(84
)
(83
)
Total Liberty Broadband Debt
(GAAP)
$
3,609
$
3,712
Other Financial Obligations:
Preferred Stock(f)
180
180
_______________________
a)
Represents fair value of the investment in
Charter as of June 30, 2024 and September 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 increased $95 million in the third
quarter primarily due to proceeds from Charter share sales. GCI
cash was flat in the third quarter as cash from operations were
offset by capital expenditures (net of grant proceeds) and net debt
repayment.
Liberty Broadband debt was relatively flat in the third quarter
as net debt issuance at Liberty Broadband offset net debt repayment
at GCI. 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 repaid $20 million under its senior credit facility in the
third quarter. As of September 30, 2024, GCI’s credit facility has
undrawn capacity of $367 million (net of letters of credit), and
GCI’s leverage as defined in its credit agreement is 3.1x.
GCI Operating and Financial
Results
3Q23
3Q24
% Change
(amounts in millions, except operating
metrics)
GCI Consolidated Financial
Metrics
Revenue
Consumer
$
114
$
116
2
%
Business
126
146
16
%
Total revenue
$
240
$
262
9
%
Operating income
$
30
$
42
40
%
Operating income margin (%)
12.5
%
16.0
%
350 bps
Adjusted OIBDA(a)
$
89
$
100
12
%
Adjusted OIBDA margin(a) (%)
37.1
%
38.2
%
110 bps
GCI Consumer
Financial Metrics
Revenue
Data
$
57
$
59
4
%
Wireless
47
47
—
%
Other
10
10
—
%
Total revenue
$
114
$
116
2
%
Operating Metrics
Data:
Cable modem subscribers(b)
159,300
156,400
(2
)%
Wireless:
Lines in service(c)
200,300
200,300
—
%
GCI Business
Financial Metrics
Revenue
Data
$
105
$
125
19
%
Wireless
12
12
—
%
Other
9
9
—
%
Total revenue
$
126
$
146
16
%
________________________
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 September 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 September 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 September 30, 2024
to the same period in 2023.
GCI revenue increased 9% in the third quarter. Consumer revenue
increased 2% driven by growth in data revenue. Business revenue
increased 16% driven by a strong upgrade cycle in schools and
healthcare corporations in remote Alaska.
Operating income and Adjusted OIBDA increased $12 million and
$11 million, respectively, in the third quarter in line with higher
revenue, partially offset by increased operating and selling,
general and administrative expenses. Operating expenses grew driven
by higher distribution costs to healthcare, education and consumer
customers. Selling, general and administrative expenses grew due to
increases in labor-related and software subscription costs,
partially offset by lower lease expense.
In the third quarter, GCI spent $39 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 November 7,
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)
3Q23
3Q24
Revenue
GCI Holdings
$
240
$
262
Corporate and other
—
—
Total Liberty Broadband Revenue
$
240
$
262
Operating Income
GCI Holdings
$
30
$
42
Corporate and other
(9
)
(12
)
Total Liberty Broadband Operating
Income
$
21
$
30
Adjusted OIBDA
GCI Holdings
$
89
$
100
Corporate and other
(4
)
(7
)
Total Liberty Broadband Adjusted
OIBDA
$
85
$
93
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 November
7, 2024. The call can be accessed by dialing (877) 407-3944 or
(412) 902-0038, passcode 13744090, 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, the proposed
transaction with Charter and its expected benefits, 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 September
30, 2023 and September 30, 2024.
GCI HOLDINGS ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
3Q23
3Q24
GCI Holdings Operating Income
$
30
$
42
Depreciation and amortization
55
55
Stock-based compensation
4
3
GCI Holdings Adjusted OIBDA
$
89
$
100
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 September 30, 2023
and September 30, 2024.
LIBERTY BROADBAND ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
3Q23
3Q24
Liberty Broadband Operating
Income
$
21
$
30
Depreciation and amortization
55
55
Stock-based compensation
9
8
Liberty Broadband Adjusted
OIBDA
$
85
$
93
GCI Holdings
$
89
$
100
Corporate and other
(4
)
(7
)
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET INFORMATION
(unaudited)
September 30,
December 31,
2024
2023
amounts in millions,
except share amounts
Assets
Current assets:
Cash and cash equivalents
$
168
158
Trade and other receivables, net of
allowance for credit losses of $4 and $5, respectively
186
178
Prepaid and other current assets
63
94
Total current assets
417
430
Investment in Charter, accounted for using
the equity method
12,760
12,116
Property and equipment, net
1,131
1,053
Intangible assets not subject to
amortization
Goodwill
755
755
Cable certificates
550
550
Other
41
40
Intangible assets subject to amortization,
net
423
461
Other assets, net
226
236
Total assets
$
16,303
15,641
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
112
86
Deferred revenue
30
30
Current portion of debt
3
3
Other current liabilities
56
59
Total current liabilities
201
178
Long-term debt, net, including $1,876 and
$1,255 measured at fair value, respectively
3,709
3,733
Obligations under tower obligations and
finance leases, excluding current portion
79
83
Long-term deferred revenue
93
65
Deferred income tax liabilities
2,342
2,216
Preferred stock
201
202
Other liabilities
140
141
Total liabilities
6,765
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 September 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 September 30, 2024 and December 31, 2023,
respectively
—
—
Series C common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 122,589,320
and 123,704,814 at September 30, 2024 and December 31, 2023,
respectively
1
1
Additional paid-in capital
3,028
3,107
Accumulated other comprehensive earnings
(loss), net of taxes
70
52
Retained earnings
6,421
5,843
Total stockholders' equity
9,520
9,003
Non-controlling interests
18
20
Total equity
9,538
9,023
Commitments and contingencies
Total liabilities and equity
$
16,303
15,641
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS INFORMATION
(unaudited)
Three months ended
September 30,
2024
2023
amounts in millions,
except per share
amounts
Revenue
$
262
240
Operating costs and expenses:
Operating expense (exclusive of
depreciation and amortization shown separately below)
64
59
Selling, general and administrative,
including stock-based compensation
113
105
Depreciation and amortization
55
55
232
219
Operating income (loss)
30
21
Other income (expense):
Interest expense (including amortization
of deferred loan fees)
(46
)
(54
)
Share of earnings (losses) of
affiliate
346
326
Gain (loss) on dilution of investment in
affiliate
(8
)
(10
)
Realized and unrealized gains (losses) on
financial instruments, net
(144
)
(81
)
Other, net
3
6
Earnings (loss) before income taxes
181
208
Income tax benefit (expense)
(39
)
(46
)
Net earnings (loss)
142
162
Less net earnings (loss) attributable to
the non-controlling interests
—
—
Net earnings (loss) attributable to
Liberty Broadband shareholders
$
142
162
Basic net earnings (loss) attributable to
Series A, Series B and Series C Liberty Broadband shareholders per
common share
$
0.99
1.11
Diluted net earnings (loss) attributable
to Series A, Series B and Series C Liberty Broadband shareholders
per common share
$
0.99
1.10
LIBERTY BROADBAND
CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS INFORMATION
(unaudited)
Nine months ended
September 30,
2024
2023
amounts in millions
Cash flows from operating activities:
Net earnings (loss)
$
578
483
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation and amortization
157
169
Stock-based compensation
22
25
Share of (earnings) losses of affiliate,
net
(923
)
(892
)
(Gain) loss on dilution of investment in
affiliate
40
42
Realized and unrealized (gains) losses on
financial instruments, net
85
155
Deferred income tax expense (benefit)
124
137
Other, net
(4
)
(3
)
Change in operating assets and
liabilities:
Current and other assets
44
(60
)
Payables and other liabilities
(20
)
(102
)
Net cash provided by (used in) operating
activities
103
(46
)
Cash flows from investing activities:
Capital expenditures
(183
)
(149
)
Grant proceeds received for capital
expenditures
40
6
Cash received for Charter shares
repurchased by Charter
226
42
Cash released from escrow related to
dispositions
—
23
Purchases of investments
—
(53
)
Other investing activities, net
(14
)
2
Net cash provided by (used in) investing
activities
69
(129
)
Cash flows from financing activities:
Borrowings of debt
1,114
1,501
Repayments of debt, tower obligations and
finance leases
(1,198
)
(1,547
)
Repurchases of Liberty Broadband common
stock
(89
)
(40
)
Indemnification payment to Qurate
Retail
—
(26
)
Other financing activities, net
(1
)
(3
)
Net cash provided by (used in) financing
activities
(174
)
(115
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(2
)
(290
)
Cash, cash equivalents and restricted
cash, beginning of period
176
400
Cash, cash equivalents and restricted
cash, end of period
$
174
110
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Shane Kleinstein (720) 875-5432
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