Liberty Broadband Reports Fourth Quarter and Year End 2023 Financial Results
Headlines include (1):
-
Fair value of Charter investment was
$18.0 billion as ofDecember 31, 2023 -
From
November 1, 2023 throughJanuary 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 throughJanuary 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$361 million
“Despite a challenging environment, Charter deployed significant capital and made progress on its attractive mobile and rural expansion initiatives in 2023. Mobile is growing quickly, with promising post-promotional Spectrum One results. Rural footprint expansion is surpassing penetration and return targets. We are delivering value to customers leveraging the power of Charter’s assets and we are confident these investments will strengthen Charter’s competitive positioning, enhance future growth and increase shareholder value,” said
Share Repurchases
From
Charter Ownership
Under the terms of
From
Balance Sheet
The following presentation is provided to separately identify cash and liquid investments, debt and public holdings of
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(amounts in millions) |
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Cash and Cash Equivalents: |
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$ |
38 |
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$ |
79 |
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Corporate and Other |
|
|
50 |
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|
|
79 |
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Total Liberty Broadband Consolidated Cash |
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$ |
88 |
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$ |
158 |
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Fair Value of |
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$ |
20,715 |
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$ |
17,984 |
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Debt: |
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Senior Notes(b) |
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$ |
600 |
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$ |
600 |
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Senior Credit Facility |
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395 |
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|
394 |
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Tower Obligations and Other(c) |
|
|
92 |
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|
91 |
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Total GCI Holdings Debt |
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$ |
1,087 |
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$ |
1,085 |
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GCI Leverage(d) |
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3.0x |
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2.9x |
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$ |
1,525 |
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$ |
1,460 |
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3.125% Exchangeable Senior Debentures due 2053(e) |
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1,265 |
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1,265 |
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1.25% Exchangeable Senior Debentures due 2050(e) |
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2 |
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— |
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Total Corporate Level Debt |
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$ |
2,792 |
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$ |
2,725 |
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Total Liberty Broadband Debt |
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$ |
3,879 |
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$ |
3,810 |
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Fair market value adjustment and deferred loan costs |
|
|
73 |
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|
12 |
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Tower obligations and finance leases (excluded from GAAP Debt) |
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(87 |
) |
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(86 |
) |
Total Liberty Broadband Debt (GAAP) |
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$ |
3,865 |
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$ |
3,736 |
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Other Financial Obligations: |
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Indemnification Obligation(f) |
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$ |
21 |
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$ |
— |
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Preferred Stock(g) |
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180 |
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180 |
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_______________ | ||
a) |
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Represents fair value of the investment in Charter as of |
b) |
Principal amount of Senior Notes. |
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c) |
Includes the Wells Fargo Note Payable and current and long-term obligations under tower obligations and finance leases. |
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d) |
As defined in GCI's credit agreement. |
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e) |
Principal amount of Exchangeable Debentures exclusive of fair market value adjustments. |
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f) |
Indemnity to Qurate Retail, Inc. (“Qurate Retail”), pursuant to Liberty Broadband’s indemnification agreement with Qurate Retail with respect to the |
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g) |
Liquidation value of preferred stock. Preferred stock has a 7% coupon, |
GCI Operating and Financial Results
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4Q22 |
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4Q23 |
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% Change |
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2022 |
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2023 |
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% Change |
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(amounts in millions, except operating metrics) |
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GCI Consolidated Financial Metrics |
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Revenue |
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Consumer |
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$ |
123 |
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$ |
119 |
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(3 |
) |
% |
$ |
479 |
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$ |
468 |
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(2 |
) |
% |
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Business |
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|
127 |
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|
131 |
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3 |
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% |
|
490 |
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|
513 |
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5 |
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% |
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Total revenue |
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$ |
250 |
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$ |
250 |
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- |
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% |
$ |
969 |
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$ |
981 |
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1 |
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% |
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Operating income(a) |
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$ |
22 |
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$ |
26 |
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18 |
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% |
$ |
54 |
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$ |
117 |
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117 |
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% |
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Operating income margin (%) |
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8.8 |
% |
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10.4 |
% |
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160 |
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bps |
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5.6 |
% |
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11.9 |
% |
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630 |
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bps |
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Adjusted OIBDA(b) |
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$ |
91 |
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$ |
90 |
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(1 |
) |
% |
$ |
358 |
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$ |
361 |
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1 |
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% |
|
Adjusted OIBDA margin(b) (%) |
|
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36.4 |
% |
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36.0 |
% |
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(40 |
) |
bps |
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36.9 |
% |
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36.8 |
% |
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(10 |
) |
bps |
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GCI Consumer |
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Financial Metrics |
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Revenue |
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Data |
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$ |
59 |
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$ |
58 |
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(2 |
) |
% |
$ |
231 |
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$ |
233 |
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1 |
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% |
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Wireless |
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51 |
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51 |
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- |
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% |
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193 |
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193 |
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- |
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% |
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Other |
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13 |
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10 |
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(23 |
) |
% |
|
55 |
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|
42 |
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(24 |
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% |
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Total revenue |
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$ |
123 |
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$ |
119 |
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(3 |
) |
% |
$ |
479 |
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$ |
468 |
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(2 |
) |
% |
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Operating Metrics |
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Data: |
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Cable modem subscribers(c) |
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157,200 |
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159,700 |
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2 |
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% |
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Wireless: |
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Lines in service(d) |
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191,100 |
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197,300 |
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3 |
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% |
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GCI Business |
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Financial Metrics |
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Revenue |
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Data |
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$ |
104 |
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$ |
110 |
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6 |
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% |
$ |
395 |
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$ |
427 |
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8 |
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% |
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Wireless |
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|
12 |
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12 |
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- |
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% |
|
53 |
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|
50 |
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(6 |
) |
% |
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Other |
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11 |
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|
9 |
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(18 |
) |
% |
|
42 |
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|
36 |
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(14 |
) |
% |
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Total revenue |
|
$ |
127 |
|
|
$ |
131 |
|
|
3 |
|
% |
$ |
490 |
|
|
$ |
513 |
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|
5 |
|
% |
_______________ | ||
a) |
Operating income for the year ended |
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b) |
See reconciling schedule 1. |
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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 |
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d) |
A wireless line in service is defined as a wireless device with a monthly fee for services. Wireless lines in service as of |
Unless otherwise noted, the following discussion compares financial information for the three and twelve months ended
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
FOOTNOTES |
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1) |
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2) |
Calculated pursuant to the stockholder agreement between |
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3) |
Liberty Broadband’s principal operating asset is |
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4) |
For a definition of Adjusted OIBDA and Adjusted OIBDA margin and applicable reconciliations, see the accompanying schedules. |
NOTES
LIBERTY BROADBAND FINANCIAL METRICS
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(amounts in millions) |
|
4Q22 |
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4Q23 |
|
2022 |
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2023 |
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Revenue |
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||||
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|
$ |
250 |
|
|
$ |
250 |
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$ |
969 |
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$ |
981 |
|
Corporate and other(a) |
|
|
- |
|
|
|
- |
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|
|
6 |
|
|
|
- |
|
Total Liberty Broadband Revenue |
|
$ |
250 |
|
|
$ |
250 |
|
|
$ |
975 |
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$ |
981 |
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Operating Income (Loss) |
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$ |
22 |
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$ |
26 |
|
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$ |
54 |
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$ |
117 |
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Corporate and other(a)(c) |
|
|
(55 |
) |
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|
(13 |
) |
|
|
(93 |
) |
|
|
(44 |
) |
Total Liberty Broadband Operating Income (Loss) |
|
$ |
(33 |
) |
|
$ |
13 |
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$ |
(39 |
) |
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$ |
73 |
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Adjusted OIBDA |
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||||
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$ |
91 |
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|
$ |
90 |
|
|
$ |
358 |
|
|
$ |
361 |
|
Corporate and other |
|
|
(10 |
) |
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|
(7 |
) |
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|
(31 |
) |
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|
(24 |
) |
Total Liberty Broadband Adjusted OIBDA |
|
$ |
81 |
|
|
$ |
83 |
|
|
$ |
327 |
|
|
$ |
337 |
|
_______________ | ||
a) |
Corporate and other included |
|
b) |
GCI’s operating income for the year ended |
|
c) |
During the fourth quarter of 2022, |
Important Notice:
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
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
SCHEDULE 1
The following table provides a reconciliation of GCI’s operating income to its Adjusted OIBDA for the three and twelve months ended
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 |
SCHEDULE 2
The following table provides a reconciliation of operating income (loss) calculated in accordance with GAAP to Adjusted OIBDA for
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 |
|
|
|
$ |
91 |
|
|
|
90 |
|
|
$ |
358 |
|
|
|
361 |
|
Corporate and other |
|
|
(10 |
) |
|
|
(7 |
) |
|
|
(31 |
) |
|
|
(24 |
) |
_______________ | ||
a) |
|
GCI’s operating income for the year ended |
BALANCE SHEET INFORMATION (unaudited) |
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2023 |
|
2022 |
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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 |
|
|
|
|
|
|
|
|
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 |
|
|
3 |
|
1,376 |
Indemnification obligation |
|
|
— |
|
50 |
Other current liabilities |
|
|
59 |
|
137 |
Total current liabilities |
|
|
178 |
|
1,675 |
Long-term debt, net, including |
|
|
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, |
|
|
— |
|
— |
Series B common stock, |
|
|
— |
|
— |
Series C common stock, |
|
|
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 |
STATEMENT OF OPERATIONS INFORMATION (unaudited) |
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|
|
Years ended |
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|
|||||
|
|
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 |
|
$ |
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 |
|
STATEMENT OF CASH FLOWS INFORMATION (unaudited) |
|||||||
|
|
|
|
|
|
||
|
|
Years ended |
|||||
|
|
|
|||||
|
|
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 |
|
|
(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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215212362/en/
Source: