Liberty Broadband Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Liberty Broadband reported first quarter 2024 results with key highlights: Fair value of Charter investment at $13.4 billion, share repurchases, GCI revenue flat at $245 million, operating income at $37 million, and Adjusted OIBDA at $90 million. Liberty Broadband's balance sheet shows cash decreased due to Charter share sales, GCI cash decreased from operations, and debt decreased as GCI repaid $60 million under its senior credit facility. GCI's financial results remained flat with revenue down 1% in Consumer segment, flat in Business segment, and net capital expenditures expected to be around $200 million for the full year 2024.

Positive

• Fair value of Charter investment at $13.4 billion

• Share repurchases of 103 thousand LBRDK shares at an average price of $79.88

• GCI revenue flat at $245 million

• Operating income increased to $37 million

• Adjusted OIBDA remained flat at $90 million

Negative

• Liberty Broadband's cash decreased due to Charter share sales

• GCI's cash decreased from operations

• Debt decreased as GCI repaid $60 million under its senior credit facility

• Consumer revenue down 1%

• Net capital expenditures expected to be approximately $200 million for full year 2024

Insights

Financial Analyst

The financial results for Liberty Broadband reveal several critical data points. The company's cash position has decreased by $50 million in the first quarter, primarily attributed to share repurchases and other investing activities. This cash outflow might raise concerns among investors regarding the company's liquidity and future investments. Notably, GCI's revenue has remained flat at $245 million, which indicates stability in the company's operations but also a lack of growth which could be a potential red flag for long-term prospects. An increase in operating income by 28% due to lower depreciation expense could be seen as a positive sign as it improves profitability in the short term. However, investors should note the Adjusted OIBDA remained flat, suggesting that operational efficiency has not significantly improved. The fair value of the Charter investment has decreased substantially from $17.984 billion to $13.385 billion, which is likely to impact the overall valuation of Liberty Broadband. This drop in investment value could be due to market dynamics affecting Charter's stock price, which Liberty Broadband should monitor closely as a significant stakeholder. The debt profile shows a reduction, which can be viewed favorably as it indicates effective debt management. Nonetheless, the total remaining repurchase authorization of approximately $1.7 billion indicates a substantial cash reserve for future buybacks, which could boost investor confidence by potentially increasing earnings per share.

Telecommunications Market Analyst

Liberty Broadband's operation in Alaska through GCI is a notable aspect of the company's portfolio. GCI's steady revenue amidst the industry's competitive landscape suggests a strong market presence, especially considering the unique challenges of operating in Alaska. The operating income margin increase from 11.8% to 15.1% reflects improved operational efficiency, which is a significant achievement. However, flat consumer revenue and a slight decline in video revenue point towards changing consumer preferences and the potential need for GCI to innovate and diversify revenue streams, especially in consumer data services which saw an increase. The expected capital expenditures of $200 million for the year on high-return investments in connectivity, particularly in rural areas, indicate a strategic focus on infrastructure development to drive future growth. This move could potentially enhance service quality and expand GCI's customer base. The stability in GCI's financial performance, coupled with strategic investments in network infrastructure, could indicate a cautious yet focused approach to growth in a market that is likely to reward long-term infrastructure development and customer service quality.

Investment Strategist

Liberty Broadband's stock repurchase activity, including the recent buyback of 103 thousand shares, is usually seen as a signal of self-confidence from the company's management, implying that they believe the stock is undervalued. The balance sheet strength with a decrease in total debt and the capacity for significant further repurchases suggests the company has considerable leverage to manage its capital allocation effectively. Investors should watch how these repurchases affect the stock's liquidity and earning power. A point of caution might be the significant decrease in the fair value of Liberty Broadband's investment in Charter, reflecting volatility in Charter's performance or market valuation. This volatility directly affects Liberty Broadband's asset value and could influence investor sentiment. While the short-term numbers show prudent financial management, it's important for investors to assess how the company's strategic initiatives, like its investments in rural connectivity, will contribute to long-term shareholder value. Given these factors, the investment strategy should weigh the company's operational stability and capital allocation efficiency against the industry's competitive and technological risks.

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq: LBRDA, LBRDK, LBRDP) today reported first quarter 2024 results.

Headlines include⁽¹⁾:

• Fair value of Charter investment was $13.4 billion as of March 31^st
• Liberty Broadband did not sell Charter shares to Charter from February 1, 2024 through April 30, 2024 as its fully diluted equity interest in Charter remained below 26%⁽²⁾
• From February 1, 2024 through April 30, 2024, Liberty Broadband repurchased 103 thousand LBRDK shares at an average price per share of $79.88 for total cash consideration of $8.2 million
• In the first quarter, GCI⁽³⁾ revenue was flat at $245 million, generated $37 million in operating income and Adjusted OIBDA⁽⁴⁾ was flat at $90 million

Share Repurchases

From February 1, 2024 through April 30, 2024, Liberty Broadband repurchased 103 thousand shares of Series C Liberty Broadband common stock (Nasdaq: LBRDK) at an average cost per share of $79.88 for total cash consideration of $8.2 million. The total remaining repurchase authorization for Liberty Broadband as of April 30, 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 February 1, 2024 through April 30, 2024, Liberty Broadband did not sell Charter shares to Charter as its fully diluted equity interest in Charter remained below 26%⁽²⁾.

Balance Sheet

The following presentation is provided to separately identify cash and liquid investments, debt and public holdings of Liberty Broadband as of December 31, 2023 and March 31, 2024.

(amounts in millions)		12/31/2023				3/31/2024
Cash and Cash Equivalents:
GCI Holdings		$	79			$	70
Corporate and Other			79				38
Total Liberty Broadband Consolidated Cash		$	158			$	108
Fair Value of Public Holdings in Charter(a)		$	17,984			$	13,385
Debt:
Senior Notes(b)		$	600			$	600
Senior Credit Facility			394				334
Tower Obligations and Other(c)			91				90
Total GCI Holdings Debt		$	1,085			$	1,024
GCI Leverage(d)			2.9x				2.8x
Charter Margin Loan		$	1,460			$	1,480
3.125% Exchangeable Senior Debentures due 2053(e)			1,265				1,265
Total Corporate Level Debt		$	2,725			$	2,745
Total Liberty Broadband Debt		$	3,810			$	3,769
Fair market value adjustment and deferred loan costs			12				(45	)
Tower obligations and finance leases (excluded from GAAP Debt)			(86	)			(85	)
Total Liberty Broadband Debt (GAAP)		$	3,736			$	3,639
Other Financial Obligations:
Preferred Stock(f)			180				180

_________________________
a)		Represents fair value of the investment in Charter as of December 31, 2023 and March 31, 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 $50 million in the first quarter primarily due to proceeds from Charter share sales and borrowing under the Charter margin loan being more than offset by share repurchases and other investing activities. GCI cash decreased $9 million in the first quarter as cash from operations was more than offset by debt repayment and capital expenditures (net of grant proceeds) during the period.

Liberty Broadband debt decreased $41 million in the first quarter as GCI repaid $60 million under its senior credit facility, partially offset by additional borrowing under the Charter margin loan. There is $820 million of available capacity under the Charter margin loan. GCI’s credit facility has undrawn capacity of $457 million (net of letters of credit), and GCI’s leverage as defined in its credit agreement is 2.8x.

GCI Operating and Financial Results

			1Q23			1Q24			% Change
(amounts in millions, except operating metrics)
GCI Consolidated Financial Metrics
Revenue
Consumer		$	118		$	117			(1)	%
Business			128			128			—	%
Total revenue		$	246		$	245			—	%
Operating income		$	29		$	37			28	%
Operating income margin (%)			11.8%			15.1%			330	bps
Adjusted OIBDA(a)		$	90		$	90			—	%
Adjusted OIBDA margin(a) (%)			36.6%			36.7%			10	bps
GCI Consumer
Financial Metrics
Revenue
Data		$	59		$	60			2	%
Wireless			47			47			—	%
Other			12			10			(17)	%
Total revenue		$	118		$	117			(1)	%
Operating Metrics
Data:
Cable modem subscribers(b)			159,100			159,800			—	%
Wireless:
Lines in service(c)			193,700			199,000			3	%
GCI Business
Financial Metrics
Revenue
Data		$	106		$	108			2	%
Wireless			13			12			(8)	%
Other			9			8			(11)	%
Total revenue		$	128		$	128			—	%

__________________________
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 March 31, 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 March 31, 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 March 31, 2024 to the same period in 2023.

GCI revenue was flat in the first quarter. Consumer revenue was down 1% driven by declines in video revenue, partially offset by demand for consumer data. Business revenue was flat as growth in data was offset by declines in wireless and other revenues.

Operating income increased by $8 million in the first quarter driven by lower depreciation expense as certain assets became fully depreciated during 2023. Adjusted OIBDA was flat in line with revenue.

In the first quarter, GCI spent $46 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 May 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)		1Q23				1Q24
Revenue
GCI Holdings		$	246			$	245
Corporate and other			—				—
Total Liberty Broadband Revenue		$	246			$	245
Operating Income
GCI Holdings		$	29			$	37
Corporate and other			(13	)			(9	)
Total Liberty Broadband Operating Income		$	16			$	28
Adjusted OIBDA
GCI Holdings		$	90			$	90
Corporate and other			(8	)			(5	)
Total Liberty Broadband Adjusted OIBDA		$	82			$	85

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 May 8, 2024. The call can be accessed by dialing (877) 407-3944 or (412) 902-0038, passcode 13742820, 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 March 31, 2023 and March 31, 2024.

GCI HOLDINGS ADJUSTED OIBDA RECONCILIATION

(amounts in millions)		1Q23			1Q24
GCI Holdings Operating Income		$	29		$	37
Depreciation and amortization			58			50
Stock-based compensation			3			3
GCI Holdings Adjusted OIBDA		$	90		$	90

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 March 31, 2023 and March 31, 2024.

LIBERTY BROADBAND ADJUSTED OIBDA RECONCILIATION

(amounts in millions)		1Q23				1Q24
Liberty Broadband Operating Income		$	16			$	28
Depreciation and amortization			58				50
Stock-based compensation			8				7
Liberty Broadband Adjusted OIBDA		$	82			$	85
GCI Holdings		$	90			$	90
Corporate and other			(8	)			(5	)

LIBERTY BROADBAND CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (unaudited)
		March 31,			December 31,
		2024			2023
		amounts in millions,
		except share amounts
Assets
Current assets:
Cash and cash equivalents		$	108		158
Trade and other receivables, net of allowance for credit losses of $5 and $5, respectively			186		178
Prepaid and other current assets			56		94
Total current assets			350		430
Investment in Charter, accounted for using the equity method			12,281		12,116
Property and equipment, net			1,078		1,053
Intangible assets not subject to amortization
Goodwill			755		755
Cable certificates			550		550
Other			40		40
Intangible assets subject to amortization, net			449		461
Other assets, net			237		236
Total assets		$	15,740		15,641
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities		$	94		86
Deferred revenue			29		30
Current portion of debt			3		3
Other current liabilities			67		59
Total current liabilities			193		178
Long-term debt, net, including $1,200 and $1,255 measured at fair value, respectively			3,636		3,733
Obligations under tower obligations and finance leases, excluding current portion			81		83
Long-term deferred revenue			77		65
Deferred income tax liabilities			2,255		2,216
Preferred stock			201		202
Other liabilities			139		141
Total liabilities			6,582		6,618
Equity
Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 18,235,286 and 18,233,573 at March 31, 2024 and December 31, 2023, respectively			—		—
Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,023,432 and 2,025,232 at March 31, 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 March 31, 2024 and December 31, 2023, respectively			1		1
Additional paid-in capital			3,018		3,107
Accumulated other comprehensive earnings (loss), net of taxes			35		52
Retained earnings			6,084		5,843
Total stockholders' equity			9,138		9,003
Non-controlling interests			20		20
Total equity			9,158		9,023
Commitments and contingencies
Total liabilities and equity		$	15,740		15,641

LIBERTY BROADBAND CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION (unaudited)
		Three months ended
		March 31,
		2024				2023
		amounts in millions,
		except per share amounts
Revenue		$	245			246
Operating costs and expenses:
Operating expense (exclusive of depreciation and amortization shown separately below)			62			62
Selling, general and administrative, including stock-based compensation			105			110
Depreciation and amortization			50			58
			217			230
Operating income (loss)			28			16
Other income (expense):
Interest expense (including amortization of deferred loan fees)			(51	)		(45	)
Share of earnings (losses) of affiliate			280			248
Gain (loss) on dilution of investment in affiliate			(28	)		(27	)
Realized and unrealized gains (losses) on financial instruments, net			76			(114	)
Other, net			4			14
Earnings (loss) before income taxes			309			92
Income tax benefit (expense)			(68	)		(23	)
Net earnings (loss)			241			69
Less net earnings (loss) attributable to the non-controlling interests			—			—
Net earnings (loss) attributable to Liberty Broadband shareholders		$	241			69
Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share		$	1.69			0.47
Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share		$	1.69			0.47

LIBERTY BROADBAND CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS INFORMATION (unaudited)
		Three months ended
		March 31,
		2024				2023
		amounts in millions
Cash flows from operating activities:
Net earnings (loss)		$	241			69
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
Depreciation and amortization			50			58
Stock-based compensation			7			8
Share of (earnings) losses of affiliate, net			(280	)		(248	)
(Gain) loss on dilution of investment in affiliate			28			27
Realized and unrealized (gains) losses on financial instruments, net			(76	)		114
Deferred income tax expense (benefit)			44			22
Other, net			(1	)		(1	)
Change in operating assets and liabilities:
Current and other assets			39			(6	)
Payables and other liabilities			—			(2	)
Net cash provided by (used in) operating activities			52			41
Cash flows from investing activities:
Capital expenditures			(61	)		(54	)
Grant proceeds received for capital expenditures			15			—
Cash received for Charter shares repurchased by Charter			81			42
Other investing activities, net			(17	)		—
Net cash provided by (used in) investing activities			18			(12	)
Cash flows from financing activities:
Borrowings of debt			20			1,248
Repayments of debt, tower obligations and finance leases			(62	)		(1,416	)
Repurchases of Liberty Broadband common stock			(89	)		(40	)
Indemnification payment to Qurate Retail			—			(24	)
Other financing activities, net			(1	)		(3	)
Net cash provided by (used in) financing activities			(132	)		(235	)
Net increase (decrease) in cash, cash equivalents and restricted cash			(62	)		(206	)
Cash, cash equivalents and restricted cash, beginning of period			176			400
Cash, cash equivalents and restricted cash, end of period		$	114			194

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507783975/en/

Liberty Broadband Corporation

Shane Kleinstein, 720-875-5432

Source: Liberty Broadband Corporation

FAQ

What was the fair value of Charter investment as of March 31, 2024?

The fair value of Charter investment was $13.4 billion as of March 31, 2024.

How much did Liberty Broadband repurchase 103 thousand LBRDK shares for?

Liberty Broadband repurchased 103 thousand LBRDK shares at an average price of $79.88.

What was GCI's revenue in the first quarter of 2024?

GCI's revenue was flat at $245 million in the first quarter of 2024.

What was the operating income for the first quarter of 2024?

Operating income was $37 million in the first quarter of 2024.

What was the Adjusted OIBDA for the first quarter of 2024?

Adjusted OIBDA remained flat at $90 million in the first quarter of 2024.