Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq:
LBRDA, LBRDK, LBRDP) today reported third quarter 2022 results.
Headlines include(1):
- Fair value of Charter investment was $14.7 billion as of
September 30th
- From August 1st through October 31st Liberty Broadband received
$616 million of proceeds from sale of 1.4 million Charter shares to
Charter
- Maintained fully diluted equity interest in Charter of
26%(2)
- From August 1st through October 31st, Liberty Broadband
repurchased 5.5 million LBRDA/K shares at an average price per
share of $99.77 for total cash consideration of $550 million
- In the third quarter, GCI(3) revenue increased 1% to $248
million, generated $1 million in operating income and grew adjusted
OIBDA(4) 1% to $90 million
Share Repurchases
From August 1, 2022 through October 31, 2022, Liberty Broadband
repurchased approximately 4.5 million shares of Series C Liberty
Broadband common stock (Nasdaq: LBRDK) at an average cost per share
of $98.08 for total cash consideration of $445 million and
repurchased approximately 976 thousand shares of Series A Liberty
Broadband common stock (Nasdaq: LBRDA) at an average cost per share
of $107.60 for total cash consideration of $105 million.
On August 17, 2022, the board of directors authorized the
repurchase of an additional $2 billion of Liberty Broadband common
stock. The total remaining repurchase authorization for Liberty
Broadband as of November 1, 2022 is approximately $2.2 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 Class A common stock as is necessary
to maintain Liberty Broadband’s percentage equity interest at 26%
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, 2022 through October 31, 2022, Liberty Broadband
sold approximately 1.4 million shares of Charter Class A common
stock to Charter for total proceeds of approximately $616
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, 2022 and September 30, 2022.
(amounts in millions)
6/30/2022
9/30/2022
Cash and Cash Equivalents:
GCI Holdings
$
80
$
37
Corporate and Other
221
166
Total Liberty Broadband Consolidated
Cash
$
301
$
203
Fair Value of Public Holdings in
Charter(a)
$
23,502
$
14,693
Debt:
Senior Notes(b)
$
600
$
600
Senior Credit Facility
398
398
Tower Obligations and Other(c)
95
95
Total GCI Holdings Debt
$
1,093
$
1,093
GCI Leverage(d)
2.9x
3.1x
Charter Margin Loan
$
1,400
$
1,400
1.25% Exchangeable Senior Debentures due
2050(e)
825
825
1.75% Exchangeable Senior Debentures due
2046(e)
15
15
2.75% Exchangeable Senior Debentures due
2050(e)
575
575
Total Corporate Level Debt
$
2,815
$
2,815
Total Liberty Broadband Debt
$
3,908
$
3,908
Fair market value adjustment and deferred
loan costs
(45
)
(42
)
Tower obligations and finance leases
(excluded from GAAP Debt)
(90
)
(90
)
Total Liberty Broadband Debt
(GAAP)
$
3,773
$
3,776
Other Financial Obligations:
Indemnification Obligation(f)
$
175
$
35
Preferred Stock(g)
180
180
____________________
a)
Represents fair value of the
investment in Charter as of June 30, 2022 and September 30, 2022. A
portion of the Charter equity securities are considered covered
shares and subject to certain contractual restrictions in
accordance with the indemnification obligation, as described
below.
b)
Principal amount of Senior
Notes.
c)
Includes the Wells Fargo Note
Payable and current and long-term obligations under finance leases
and tower obligations.
d)
As defined in GCI's credit
agreement.
e)
Principal amount of Senior
Exchangeable Debentures exclusive of fair market value
adjustments.
f)
Indemnity to Qurate Retail, Inc.
(“Qurate Retail”), pursuant to an indemnification agreement (the
"indemnification agreement"), with respect to the Liberty
Interactive LLC ("LI LLC") 1.75% exchangeable debentures due 2046
(the "Charter exchangeable debentures"), as described below.
g)
Liquidation value of preferred
stock. Preferred stock has a 7% coupon, $25/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 $98 million in the third
quarter as Charter share sales were more than offset by share
repurchases at Liberty Broadband and taxes paid during the period.
GCI cash decreased $43 million in the third quarter as cash from
operations was more than offset by a $40 million dividend paid to
Liberty Broadband and capital expenditures during the quarter.
Liberty Broadband debt was flat in the third quarter. There is
$900 million available capacity under the Charter margin loan.
GCI’s credit facility has undrawn capacity of $397 million (net of
letters of credit), and GCI’s leverage as defined in its credit
agreement is 3.1x. Subsequent to quarter end, on October 3, 2022
Liberty Broadband amended the terms of its Charter margin loan to
provide increased flexibility and better terms with an improved
loan-to-value ratio. Available capacity under the Charter margin
loan was unchanged.
Liberty Broadband has an indemnification agreement with Qurate
Retail with respect to Qurate Retail’s Charter exchangeable
debentures. Pursuant to the indemnification agreement, Liberty
Broadband will compensate Qurate Retail for any payments made in
excess of the adjusted principal amount of the LI LLC Charter
exchangeable debentures to any holder that exercises its exchange
right on or before the put/call date of October 5, 2023. This
indemnity is supported by a negative pledge in favor of Qurate
Retail on the reference shares of Class A common stock of Charter
held at Liberty Broadband that underlie the LI LLC Charter
exchangeable debentures. The indemnification obligation on Liberty
Broadband’s balance sheet is valued based on the estimated exchange
feature in the LI LLC Charter exchangeable debentures. As of
September 30, 2022, a holder of the LI LLC Charter exchangeable
debentures does not have the ability to exchange, and accordingly,
the indemnification obligation is classified as a long-term
liability.
GCI Operating and Financial
Results
3Q21
3Q22
% Change
(amounts in millions, except operating
metrics)
GCI Consolidated Financial
Metrics
Revenue
Consumer
$
122
$
120
(2
)%
Business
124
128
3
%
Total revenue
$
246
$
248
1
%
Operating income(a)
$
16
$
1
(94
)%
Operating income margin (%)
6.7
%
0.4
%
(630
) bps
Adjusted OIBDA(b)
$
89
$
90
1
%
Adjusted OIBDA margin(b) (%)
36.1
%
36.3
%
20
bps
GCI Consumer
Financial Metrics
Revenue
Wireless
$
46
$
49
7
%
Data
54
57
6
%
Other
22
14
(36
)%
Total revenue
$
122
$
120
(2
)%
Operating Metrics
Wireless:
Revenue generating lines in service(c)
188,800
195,100
3
%
Data:
Revenue generating cable modem
subscribers(d)
147,800
156,100
6
%
GCI Business
Financial Metrics
Revenue
Wireless
$
20
$
14
(30
)%
Data
93
104
12
%
Other
11
10
(9
)%
Total revenue
$
124
$
128
3
%
____________________
a)
Includes a $19 million legal
settlement accrual recognized in the three months ended September
30, 2022 to reflect discussions and settlement offers that GCI made
to the DOJ and Enforcement Bureau of the FCC.
b)
See reconciling schedule 1.
c)
A revenue generating wireless
line in service is defined as a wireless device with a monthly fee
for services.
d)
A revenue generating cable modem
subscriber is defined by the purchase of cable modem service
regardless of the level of service purchased.
Unless otherwise noted, the following discussion compares
financial information for the three months ended September 30, 2022
to the same period in 2021.
GCI revenue was up 1% in the third quarter. Consumer revenue was
down 2% driven by significant declines in the lower margin video
and voice products included in Other consumer revenue, partially
offset by 7% and 6% growth in consumer wireless and data revenue,
respectively. Business revenue was up 3% with growth in data
revenue more than offsetting the impact of extending a roaming
wireless contract with a large partner in the fourth quarter of
2021, which results in lower quarterly and annual revenue in 2022,
but will benefit GCI from the extension of the agreement for
several years as well as the continued receipt of backhaul services
for GCI’s network post expiration. The previous agreement was
expected to be terminated in 2022.
Operating income declined in the third quarter due to a $19
million accrual for a potential litigation settlement related to
RHC matters discussed below. Adjusted OIBDA grew 1% primarily due
to mix shift into higher margin revenue.
In the third quarter, GCI spent $56 million, net on capital
expenditures, including accrued capital expenditures. Capital
expenditure spending was related primarily to improvements to the
wireless and hybrid fiber coax networks. GCI's net capital
expenditures for the full year 2022 are expected to be
approximately $150 million.
Rural Healthcare Update
During the course of 2022, GCI continued to work with the
Department of Justice (“DOJ”) and the Enforcement Bureau of the
Federal Communications Commission (“FCC”) with respect to certain
outstanding rural healthcare matters that have been under
investigation. GCI recognized legal settlement expense of $19
million and $29 million for the three and nine months ended
September 30, 2022, respectively, to reflect discussions and
settlement offers that GCI made to the DOJ and the Enforcement
Bureau of the FCC. This expense is included in operating income and
excluded from adjusted OIBDA. For additional discussion, see our
Form 10-Q for September 30, 2022.
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 4,
2022. For information regarding how to access the call, please see
“Important Notice” later in this document.
2)
Calculated pursuant to Liberty
Broadband and Charter’s stockholder agreement.
3)
Liberty Broadband’s principal
operating asset is GCI Holdings, LLC (“GCI” or “GCI Holdings”),
Alaska's largest communications provider, and also holds an
interest in Charter Communications, Inc. ("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)
3Q21
3Q22
Revenue
GCI Holdings
$
246
$
248
Corporate and other
4
—
Total Liberty Broadband Revenue
$
250
$
248
Operating Income (Loss)
GCI Holdings
$
16
$
1
Corporate and other
9
(13
)
Total Liberty Broadband Operating
Income (Loss)
$
25
$
(12
)
Adjusted OIBDA
GCI Holdings
$
89
$
90
Corporate and other
(9
)
(7
)
Total Liberty Broadband Adjusted
OIBDA
$
80
$
83
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
4, 2022. The call can be accessed by dialing (877) 407-3944 or
(412) 902-0038, passcode 13731629, 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 outcome of
the outstanding rural healthcare matters, 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, indemnification by Liberty
Broadband, the continuation of our stock repurchase program,
backhaul services 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 COVID-19) 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,
acquisition and other related costs 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, 2021 and September 30, 2022, respectively.
GCI HOLDINGS
ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
3Q21
3Q22
GCI Holdings Operating Income
$
16
$
1
Depreciation and amortization
68
66
Stock-based compensation
5
4
Litigation settlement(a)
—
19
GCI Holdings Adjusted OIBDA
$
89
$
90
____________________
a)
During the three months ended
September 30, 2022, GCI recorded legal settlement expense of $19
million to reflect discussions and settlement offers that GCI made
to the DOJ and Enforcement Bureau of the FCC.
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, 2021
and September 30, 2022, respectively.
LIBERTY BROADBAND
ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
3Q21
3Q22
Liberty Broadband Operating Income
(Loss)
$
25
$
(12
)
Depreciation and amortization
68
66
Stock-based compensation
11
10
Litigation settlement(a)
(24
)
19
Liberty Broadband Adjusted OIBDA
(Loss)
$
80
$
83
GCI Holdings
$
89
90
Corporate and other
(9
)
(7
)
____________________
a)
During the three months ended
September 30, 2021, Liberty Broadband agreed to final settlement
amounts with its insurance carriers for insurance recoveries
relating to the Hollywood Firefighters’ Pension Fund litigation.
During the three months ended September 30, 2022, GCI recorded
legal settlement expense of $19 million to reflect discussions and
settlement offers that GCI made to the DOJ and Enforcement Bureau
of the FCC.
LIBERTY BROADBAND
CORPORATION
BALANCE SHEET
INFORMATION
(unaudited)
September 30,
December 31,
2022
2021
amounts in millions,
except share amounts
Assets
Current assets:
Cash and cash equivalents
$
203
191
Trade and other receivables, net of
allowance for credit losses of $4 and $4, respectively
210
206
Prepaid and other current assets
79
62
Total current assets
492
459
Investment in Charter, accounted for using
the equity method
11,547
13,260
Property and equipment, net
1,022
1,031
Intangible assets not subject to
amortization
Goodwill
755
762
Cable certificates
550
550
Other
37
37
Intangible assets subject to amortization,
net
532
573
Tax sharing receivable
7
86
Other assets, net
177
210
Total assets
$
15,119
16,968
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
113
99
Deferred revenue
20
25
Current portion of debt, including zero
and $25 measured at fair value, respectively
3
28
Indemnification obligation
—
324
Other current liabilities
108
106
Total current liabilities
244
582
Long-term debt, net, including $1,348 and
$1,403 measured at fair value, respectively
3,773
3,733
Obligations under finance leases and tower
obligations, excluding current portion
87
89
Long-term deferred revenue
38
35
Deferred income tax liabilities
2,007
1,998
Preferred stock
203
203
Indemnification obligation
35
—
Other liabilities
156
189
Total liabilities
6,543
6,829
Equity
Series A common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 18,917,786
and 23,232,342 at September 30, 2022 and December 31, 2021,
respectively
—
—
Series B common stock, $.01 par value.
Authorized 18,750,000 shares; issued and outstanding 2,111,376 and
2,544,548 at September 30, 2022 and December 31, 2021,
respectively
—
—
Series C common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 128,436,416
and 144,854,780 at September 30, 2022 and December 31, 2021,
respectively
1
1
Additional paid-in capital
3,564
6,214
Accumulated other comprehensive earnings,
net of taxes
18
14
Retained earnings
4,977
3,898
Total stockholders' equity
8,560
10,127
Non-controlling interests
16
12
Total equity
8,576
10,139
Commitments and contingencies
Total liabilities and equity
$
15,119
16,968
LIBERTY BROADBAND
CORPORATION
STATEMENT OF OPERATIONS
INFORMATION
(unaudited)
Three months ended
September 30,
2022
2021
amounts in millions, except
per share amounts
Revenue
$
248
250
Operating costs and expenses:
Operating expense (exclusive of
depreciation and amortization shown separately below)
64
71
Selling, general and administrative,
including stock-based compensation
111
110
Depreciation and amortization
66
68
Litigation settlement, net of
recoveries
19
(24
)
260
225
Operating income (loss)
(12
)
25
Other income (expense):
Interest expense (including amortization
of deferred loan fees)
(35
)
(28
)
Share of earnings (losses) of
affiliate
309
314
Gain (loss) on dilution of investment in
affiliate
—
(1
)
Realized and unrealized gains (losses) on
financial instruments, net
148
(27
)
Gain (loss) on dispositions, net
—
12
Other, net
(34
)
3
Earnings (loss) before income taxes
376
298
Income tax benefit (expense)
(61
)
(61
)
Net earnings (loss)
315
237
Less net earnings (loss) attributable to
the non-controlling interests
—
—
Net earnings (loss) attributable to
Liberty Broadband shareholders
$
315
237
Basic net earnings (loss) attributable to
Series A, Series B and Series C Liberty Broadband shareholders per
common share
$
2.07
1.31
Diluted net earnings (loss) attributable
to Series A, Series B and Series C Liberty Broadband shareholders
per common share
$
2.05
1.29
LIBERTY BROADBAND
CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
(unaudited)
Nine months ended
September 30,
2022
2021
amounts in millions
Cash flows from operating activities:
Net earnings (loss)
$
1,079
345
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation and amortization
195
199
Stock-based compensation
28
31
Litigation settlement, net of
recoveries
29
86
Share of (earnings) losses of affiliate,
net
(998
)
(752
)
(Gain) loss on dilution of investment in
affiliate
67
98
Realized and unrealized (gains) losses on
financial instruments, net
(362
)
53
Deferred income tax expense (benefit)
16
(11
)
(Gain) loss on dispositions, net
(179
)
(12
)
Other, net
(3
)
(2
)
Change in operating assets and
liabilities:
Current and other assets
131
158
Payables and other liabilities
(63
)
(57
)
Net cash provided by (used in) operating
activities
(60
)
136
Cash flows from investing activities:
Capital expenditures
(132
)
(91
)
Cash received for Charter shares
repurchased by Charter
2,602
2,643
Cash proceeds from dispositions, net
163
—
Other investing activities, net
4
17
Net cash provided by (used in) investing
activities
2,637
2,569
Cash flows from financing activities:
Borrowings of debt
300
1,067
Repayment of debt, finance leases and
tower obligations
(203
)
(1,848
)
Repurchases of Liberty Broadband common
stock
(2,641
)
(2,911
)
Other financing activities, net
(5
)
(1
)
Net cash provided by (used in) financing
activities
(2,549
)
(3,693
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
28
(988
)
Cash, cash equivalents and restricted
cash, beginning of period
206
1,433
Cash, cash equivalents and restricted
cash, end of period
$
234
445
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103006407/en/
Liberty Broadband Corporation Courtnee Chun,
720-875-5420
Liberty Broadband (NASDAQ:LBRDP)
Gráfica de Acción Histórica
De Ago 2024 a Sep 2024
Liberty Broadband (NASDAQ:LBRDP)
Gráfica de Acción Histórica
De Sep 2023 a Sep 2024