Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq:
LBRDA, LBRDK, LBRDP) today reported fourth quarter and year end
2023 results.
Headlines include (1):
- Fair value of Charter investment was $18.0 billion as of
December 31, 2023
- From November 1, 2023 through January 31, 2024, Liberty
Broadband received $385 million of proceeds from sale of 933
thousand Charter shares to Charter
- Maintained fully diluted equity interest in Charter of
26%(2)
- From November 1, 2023 through January 31, 2024, Liberty
Broadband repurchased 3.2 million LBRDK shares at an average price
per share of $79.69 for total cash consideration of $255
million
- For the full year, GCI(3) grew revenue 1% to $981 million,
generated operating income of $117 million and grew Adjusted
OIBDA(4) 1% to a record $361 million
“Despite a challenging environment, Charter deployed significant
capital and made progress on its attractive mobile and rural
expansion initiatives in 2023. Mobile is growing quickly, with
promising post-promotional Spectrum One results. Rural footprint
expansion is surpassing penetration and return targets. We are
delivering value to customers leveraging the power of Charter’s
assets and we are confident these investments will strengthen
Charter’s competitive positioning, enhance future growth and
increase shareholder value,” said Greg Maffei, Liberty Broadband
President & CEO. “GCI produced another year of solid financial
results and continues to expand and upgrade its fiber network
across Alaska.”
Share Repurchases
From November 1, 2023 through January 31, 2024, Liberty
Broadband repurchased 3.2 million shares of Series C Liberty
Broadband common stock (Nasdaq: LBRDK) at an average cost per share
of $79.69 for total cash consideration of $255 million. The total
remaining repurchase authorization for Liberty Broadband as of
February 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 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 November 1, 2023 through January 31, 2024, Liberty
Broadband sold 933 thousand shares of Charter Class A common stock
to Charter for total proceeds of $385 million.
Balance Sheet
The following presentation is provided to separately identify
cash and liquid investments, debt and public holdings of Liberty
Broadband as of September 30, 2023 and December 31, 2023.
(amounts in millions)
9/30/2023
12/31/2023
Cash and Cash Equivalents:
GCI Holdings
$
38
$
79
Corporate and Other
50
79
Total Liberty Broadband Consolidated
Cash
$
88
$
158
Fair Value of Public Holdings in
Charter(a)
$
20,715
$
17,984
Debt:
Senior Notes(b)
$
600
$
600
Senior Credit Facility
395
394
Tower Obligations and Other(c)
92
91
Total GCI Holdings Debt
$
1,087
$
1,085
GCI Leverage(d)
3.0x
2.9x
Charter Margin Loan
$
1,525
$
1,460
3.125% Exchangeable Senior Debentures due
2053(e)
1,265
1,265
1.25% Exchangeable Senior Debentures due
2050(e)
2
—
Total Corporate Level Debt
$
2,792
$
2,725
Total Liberty Broadband Debt
$
3,879
$
3,810
Fair market value adjustment and deferred
loan costs
73
12
Tower obligations and finance leases
(excluded from GAAP Debt)
(87
)
(86
)
Total Liberty Broadband Debt
(GAAP)
$
3,865
$
3,736
Other Financial Obligations:
Indemnification Obligation(f)
$
21
$
—
Preferred Stock(g)
180
180
_______________
a)
Represents fair value of the
investment in Charter as of September 30, 2023 and December 31,
2023.
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
Debentures exclusive of fair market value adjustments.
f)
Indemnity to Qurate Retail, Inc.
(“Qurate Retail”), pursuant to Liberty Broadband’s indemnification
agreement with Qurate Retail with respect to the Liberty
Interactive LLC ("LI LLC") 1.75% exchangeable debentures due 2046
(the "LI LLC Charter exchangeable debentures"). Liberty Broadband
was required to indemnify LI LLC for any payments made to a holder
of such debentures that exercised its exchange right on or before
the put/call date of October 5, 2023 in excess of the sum of the
adjusted principal amount of such debentures plus certain estimated
tax benefits to Qurate Retail, if any, resulting from the exchange.
All remaining LI LLC Charter exchangeable debentures were retired
or exchanged in the fourth quarter of 2023.
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 increased $70 million in the fourth
quarter as proceeds from Charter share sales more than offset share
repurchases in the period and debt reduction. GCI cash increased
$41 million in the fourth quarter as cash from operations more than
offset capital expenditures.
Liberty Broadband debt decreased by $69 million in the fourth
quarter primarily due to repayment under the Charter margin loan.
There is $840 million of 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 2.9x.
GCI Operating and Financial
Results
4Q22
4Q23
% Change
2022
2023
% Change
(amounts in millions, except operating
metrics)
GCI Consolidated Financial
Metrics
Revenue
Consumer
$
123
$
119
(3
)
%
$
479
$
468
(2
)
%
Business
127
131
3
%
490
513
5
%
Total revenue
$
250
$
250
-
%
$
969
$
981
1
%
Operating income(a)
$
22
$
26
18
%
$
54
$
117
117
%
Operating income margin (%)
8.8
%
10.4
%
160
bps
5.6
%
11.9
%
630
bps
Adjusted OIBDA(b)
$
91
$
90
(1
)
%
$
358
$
361
1
%
Adjusted OIBDA margin(b) (%)
36.4
%
36.0
%
(40
)
bps
36.9
%
36.8
%
(10
)
bps
GCI Consumer
Financial Metrics
Revenue
Data
$
59
$
58
(2
)
%
$
231
$
233
1
%
Wireless
51
51
-
%
193
193
-
%
Other
13
10
(23
)
%
55
42
(24
)
%
Total revenue
$
123
$
119
(3
)
%
$
479
$
468
(2
)
%
Operating Metrics
Data:
Cable modem subscribers(c)
157,200
159,700
2
%
Wireless:
Lines in service(d)
191,100
197,300
3
%
GCI Business
Financial Metrics
Revenue
Data
$
104
$
110
6
%
$
395
$
427
8
%
Wireless
12
12
-
%
53
50
(6
)
%
Other
11
9
(18
)
%
42
36
(14
)
%
Total revenue
$
127
$
131
3
%
$
490
$
513
5
%
_______________
a)
Operating income for the year
ended December 31, 2022 includes a $29 million legal settlement
accrual related to discussions and settlement offers that GCI made
to the DOJ and Enforcement Bureau of the FCC. The legal proceedings
were finalized and settlement payments were made in the second
quarter of 2023.
b)
See reconciling schedule 1.
c)
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 December 31, 2023
include 1,100 subscribers that were reclassified from GCI Business
to GCI Consumer subscribers in the first quarter of 2023 and are
not new additions.
d)
A wireless line in service is
defined as a wireless device with a monthly fee for services.
Wireless lines in service as of December 31, 2023 include 1,400
lines that were reclassified from GCI Business to GCI Consumer
lines in the first quarter of 2023 and are not new additions.
Unless otherwise noted, the following discussion compares
financial information for the three and twelve months ended
December 31, 2022 and December 31, 2023.
GCI revenue was flat in the fourth quarter, with growth in
business data offset by declines in other revenue in both business
and consumer. GCI revenue increased 1% for the full year driven by
robust demand for data in business customers throughout the year,
partially offset by a decline in video and voice revenue.
Operating income increased in the fourth quarter and full year
due to lower depreciation expense as certain assets became fully
depreciated in 2022. The full year also benefited from lapping a
legal settlement accrual recognized in 2022. Adjusted OIBDA
decreased 1% in the fourth quarter and increased 1% for the full
year in line with revenue growth. Business data growth was strong
throughout 2023 highlighting the shift to higher margin revenue,
offset primarily by higher selling, general and administrative
expense due to increases in labor related costs, software
contracts, bad debt and property taxes.
In 2023, GCI spent $216 million, net, on capital expenditures,
which is elevated compared to prior expectations largely due to the
timing of receiving certain grant proceeds. Capital expenditure
spending was primarily related to improvements to the wireless and
data networks, particularly in rural Alaska. GCI’s net capital
expenditures for 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 11:00 a.m. (E.T.) on February
16, 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, and it 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)
4Q22
4Q23
2022
2023
Revenue
GCI Holdings
$
250
$
250
$
969
$
981
Corporate and other(a)
-
-
6
-
Total Liberty Broadband Revenue
$
250
$
250
$
975
$
981
Operating Income (Loss)
GCI Holdings(b)
$
22
$
26
$
54
$
117
Corporate and other(a)(c)
(55
)
(13
)
(93
)
(44
)
Total Liberty Broadband Operating
Income (Loss)
$
(33
)
$
13
$
(39
)
$
73
Adjusted OIBDA
GCI Holdings
$
91
$
90
$
358
$
361
Corporate and other
(10
)
(7
)
(31
)
(24
)
Total Liberty Broadband Adjusted
OIBDA
$
81
$
83
$
327
$
337
_______________
a)
Corporate and other included
Skyhook Holdings, Inc. until its sale on May 2, 2022.
b)
GCI’s operating income for the
year ended December 31, 2022 includes a $29 million legal
settlement accrual related to discussions and settlement offers
that GCI made to the DOJ and Enforcement Bureau of the FCC. The
legal proceedings were finalized and settlement payments were made
in the second quarter of 2023.
c)
During the fourth quarter of
2022, Liberty Broadband accrued $38 million for a litigation
settlement relating to a tentative settlement of the Charter and
Liberty Broadband Delaware litigation. The legal proceeding was
finalized and a settlement payment was made in the second quarter
of 2023.
Important Notice: Liberty Broadband (Nasdaq: LBRDA,
LBRDK, LBRDP) will discuss Liberty Broadband’s earnings release on
a conference call which will begin at 11:00 a.m. (E.T.) on February
16, 2024. The call can be accessed by dialing (877) 407-3944 or
(412) 902-0038, passcode 13742819, 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, the expansion and upgrade of GCI’s fiber
network, expectations regarding Charter’s mobile growth and
Spectrum One results 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 Form 10-K, 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, 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 and twelve months ended
December 31, 2022 and December 31, 2023.
GCI HOLDINGS ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
4Q22
4Q23
2022
2023
GCI Holdings Operating Income
$
22
$
26
$
54
$
117
Depreciation and amortization
67
61
262
230
Stock-based compensation
2
3
13
14
Litigation settlement(a)
—
—
29
—
GCI Holdings Adjusted OIBDA
$
91
$
90
$
358
$
361
_______________
a)
GCI’s operating income for the
year ended December 31, 2022 includes a $29 million legal
settlement accrual related to discussions and settlement offers
that GCI made to the DOJ and Enforcement Bureau of the FCC. The
legal proceedings were finalized and settlement payments were made
in the second quarter of 2023.
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 and twelve months ended
December 31, 2022 and December 31, 2023.
LIBERTY BROADBAND ADJUSTED OIBDA
RECONCILIATION
(amounts in millions)
4Q22
4Q23
2022
2023
Liberty Broadband Operating Income
(Loss)
$
(33
)
$
13
$
(39
)
$
73
Depreciation and amortization
67
61
262
230
Stock-based compensation
9
9
37
34
Litigation settlement(a)
38
—
67
—
Liberty Broadband Adjusted OIBDA
(Loss)
$
81
$
83
$
327
$
337
GCI Holdings
$
91
90
$
358
361
Corporate and other
(10
)
(7
)
(31
)
(24
)
_______________ a)
GCI’s operating income for the
year ended December 31, 2022 includes a $29 million legal
settlement accrual related to discussions and settlement offers
that GCI made to the DOJ and Enforcement Bureau of the FCC. The
legal proceedings were finalized and settlement payments were made
in the second quarter of 2023. Additionally, during the fourth
quarter of 2022, Liberty Broadband accrued $38 million for a
litigation settlement relating to a tentative settlement of the
Charter and Liberty Broadband Delaware litigation. The legal
proceeding was finalized and a settlement payment was made in the
second quarter of 2023.
LIBERTY BROADBAND
CORPORATION
BALANCE SHEET
INFORMATION
(unaudited)
December 31,
December 31,
2023
2022
amounts in millions,
except share amounts
Assets
Current assets:
Cash and cash equivalents
$
158
375
Trade and other receivables, net
178
201
Prepaid and other current assets
94
84
Total current assets
430
660
Investment in Charter, accounted for using
the equity method
12,116
11,433
Property and equipment, net
1,053
1,011
Intangible assets not subject to
amortization
Goodwill
755
755
Cable certificates
550
550
Other
40
37
Intangible assets subject to amortization,
net
461
516
Other assets, net
236
180
Total assets
$
15,641
15,142
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
86
92
Deferred revenue
30
20
Current portion of debt, including zero
and $1,373 measured at fair value, respectively
3
1,376
Indemnification obligation
—
50
Other current liabilities
59
137
Total current liabilities
178
1,675
Long-term debt, net, including $1,255 and
zero measured at fair value, respectively
3,733
2,425
Obligations under tower obligations and
finance leases, excluding current portion
83
86
Long-term deferred revenue
65
63
Deferred income tax liabilities
2,216
2,040
Preferred stock
202
202
Other liabilities
141
150
Total liabilities
6,618
6,641
Equity
Series A common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 18,233,573
and 18,528,468 at December 31, 2023 and 2022 respectively
—
—
Series B common stock, $.01 par value.
Authorized 18,750,000 shares; issued and outstanding 2,025,232 and
2,106,636 at December 31, 2023 and 2022, respectively
—
—
Series C common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 123,704,814
and 125,962,296 at December 31, 2023 and 2022, respectively
1
1
Additional paid-in capital
3,107
3,318
Accumulated other comprehensive earnings
(loss), net of taxes
52
9
Retained earnings
5,843
5,155
Total stockholders' equity
9,003
8,483
Non-controlling interests
20
18
Total equity
9,023
8,501
Commitments and contingencies
Total liabilities and equity
$
15,641
15,142
LIBERTY BROADBAND
CORPORATION
STATEMENT OF OPERATIONS
INFORMATION
(unaudited)
Years ended
December 31,
2023
2022
amounts in millions,
except per share
amounts
Revenue
$
981
975
Operating costs and expenses:
Operating expense (exclusive of
depreciation and amortization shown separately below)
245
253
Selling, general and administrative,
including stock-based compensation
433
432
Depreciation and amortization
230
262
Litigation settlement
—
67
908
1,014
Operating income (loss)
73
(39
)
Other income (expense):
Interest expense (including amortization
of deferred loan fees)
(206
)
(133
)
Share of earnings (losses) of
affiliate
1,155
1,326
Gain (loss) on dilution of investment in
affiliate
(60
)
(63
)
Realized and unrealized gains (losses) on
financial instruments, net
(101
)
334
Gain (loss) on dispositions, net
—
179
Other, net
27
(70
)
Earnings (loss) before income taxes
888
1,534
Income tax benefit (expense)
(200
)
(277
)
Net earnings (loss)
688
1,257
Less net earnings (loss) attributable to
the non-controlling interests
—
—
Net earnings (loss) attributable to
Liberty Broadband shareholders
$
688
1,257
Basic net earnings (loss) attributable to
Series A, Series B and Series C Liberty Broadband shareholders per
common share
$
4.71
8.01
Diluted net earnings (loss) attributable
to Series A, Series B and Series C Liberty Broadband shareholders
per common share
$
4.68
7.96
LIBERTY BROADBAND
CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
(unaudited)
Years ended
December 31,
2023
2022
amounts in millions
Cash flows from operating activities:
Net earnings (loss)
$
688
1,257
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation and amortization
230
262
Stock-based compensation
34
37
Litigation settlement
—
67
Share of (earnings) losses of affiliate,
net
(1,155
)
(1,326
)
(Gain) loss on dilution of investment in
affiliate
60
63
Realized and unrealized (gains) losses on
financial instruments, net
101
(334
)
Deferred income tax expense (benefit)
168
54
(Gain) loss on dispositions, net
—
(179
)
Other, net
(4
)
(4
)
Change in operating assets and
liabilities:
Current and other assets
20
140
Payables and other liabilities
(126
)
(93
)
Net cash provided by (used in) operating
activities
16
(56
)
Cash flows from investing activities:
Capital expenditures
(222
)
(181
)
Grant proceeds received for capital
expenditures
6
25
Cash received for Charter shares
repurchased by Charter
394
3,034
Cash proceeds from dispositions, net
—
163
Cash released from escrow related to
dispositions
23
—
Purchase of investments
(53
)
—
Other investing activities, net
2
6
Net cash provided by (used in) investing
activities
150
3,047
Cash flows from financing activities:
Borrowings of debt
1,501
325
Repayments of debt, tower obligations and
finance leases
(1,616
)
(231
)
Repurchases of Liberty Broadband common
stock
(227
)
(2,882
)
Indemnification payment to Qurate
Retail
(45
)
—
Other financing activities, net
(3
)
(9
)
Net cash provided by (used in) financing
activities
(390
)
(2,797
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(224
)
194
Cash, cash equivalents and restricted
cash, beginning of period
400
206
Cash, cash equivalents and restricted
cash, end of period
$
176
400
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version on businesswire.com: https://www.businesswire.com/news/home/20240215212362/en/
Liberty Broadband Corporation Shane Kleinstein,
720-875-5432
Liberty Broadband (NASDAQ:LBRDK)
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