Liberty Broadband Corporation (“Liberty Broadband”) (Nasdaq:
LBRDA, LBRDK, LBRDP) today reported fourth quarter and year end
2021 results.
Highlights include (1):
- Fair value of Charter investment was $35 billion as of December
31st
- From November 1st through January 31st, Liberty Broadband
received $1.3 billion of proceeds from sale of 1.9 million Charter
shares to Charter
- Maintained fully diluted equity interest in Charter of
26%(2)
- From November 1st through January 31st, Liberty Broadband
repurchased 8.8 million LBRDA/K shares at an average price per
share of $157.95 and total cash consideration of $1.4 billion
- Liberty Broadband’s Board of Directors increased remaining
repurchase authorization to approximately $2.5 billion on January
26th
- For the full year, GCI(3) grew revenue 2% to $970 million,
generated operating income of $72 million and grew adjusted
OIBDA(4) 3% to a record $354 million
“Both Charter and GCI produced strong operating and financial
performance in 2021,” said Greg Maffei, Liberty Broadband President
and CEO. “Best-in-class products and service offerings at
attractive prices give us confidence in our ongoing competitive
positioning. The cable industry has proven its ability to manage
competition in the past, and we remain bullish on the long-term
trajectory of our companies.”
Share Repurchases
From November 1, 2021 through January 31, 2022, Liberty
Broadband repurchased approximately 6.7 million shares of Series C
Liberty Broadband common stock (Nasdaq: LBRDK) at an average cost
per share of $157.84 for total cash consideration of $1.1 billion
and repurchased approximately 2.1 million shares of Series A
Liberty Broadband common stock (Nasdaq: LBRDA) at an average cost
per share of $158.32 for total cash consideration of $335 million.
On January 26, 2022, Liberty Broadband’s Board of Directors
increased the repurchase authorization to approximately $2.5
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, 2021 through January 31, 2022, Liberty
Broadband sold 1.9 million shares of Charter Class A common stock
to Charter for total proceeds of approximately $1.3 billion.
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, 2021.
(amounts in millions)
9/30/2021
12/31/2021
Cash and Cash Equivalents:
GCI Holdings
$
37
$
34
Corporate and Other
282
157
Total Liberty Broadband Consolidated
Cash
$
319
$
191
Fair Value of Public Holdings in
Charter(a)
$
40,382
$
34,807
Debt:
Senior Notes(b)
$
600
$
600
Senior Credit Facility
426
399
Tower Obligations and Other(c)
98
98
Total GCI Holdings Debt
$
1,124
$
1,097
GCI Leverage(d)
3.0x
3.0x
Charter Margin Loan
$
1,500
$
1,300
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
$
2,915
$
2,715
Total Liberty Broadband Debt
$
4,039
$
3,812
Fair market value adjustment and deferred
loan costs
95
41
Tower obligations and finance leases
(excluded from GAAP Debt)
(92
)
(92
)
Total Liberty Broadband Debt
(GAAP)
$
4,042
$
3,761
Other Financial Obligations:
Indemnification Obligation(f)
$
394
$
324
Preferred Stock(g)
178
179
____________________
a)
Represents fair value of the
investment in Charter as of December 31, 2021. 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 $128 million in the fourth
quarter as share repurchases and net debt repayment more than
offset proceeds from Charter share sales in the period. GCI cash
was flat in the fourth quarter as cash from operations were offset
by debt repayment and capital expenditures.
Liberty Broadband debt decreased $227 million in the fourth
quarter primarily due to repaying $200 million on the Charter
margin loan and additional debt repayment at GCI. There is $1
billion of available capacity under the Charter margin loan. Total
capacity under GCI’s revolving credit facility is $550 million, of
which undrawn capacity is $397 million (net of letters of credit),
and GCI’s leverage as defined in its credit agreement is 3.0x.
On October 15, 2021, GCI amended its credit facility to, among
other things, extend the revolving credit facility maturity date to
October 15, 2026. Simultaneously, GCI entered into a $250 million
Term Loan A with a maturity date of October 15, 2027. The Term Loan
B was repaid in full using the proceeds from the new Term Loan A
together with $150 million in borrowings under the revolving credit
facility.
Liberty Broadband has an indemnification agreement with Qurate
Retail with respect to Qurate Retail’s Charter exchangeable
debentures. Details of the indemnification agreement can be found
in our Form 10-K. 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
December 31, 2021, a holder of the LI LLC Charter exchangeable
debentures has the ability to exchange, and accordingly, the
indemnification obligation is classified as a current
liability.
GCI Results
Unless otherwise noted, the following discussion compares
financial information for the three and twelve months ended
December 31, 2020 and December 31, 2021.
GCI revenue decreased 3% in the fourth quarter. Continued
strength in demand for data in both business and consumer was more
than offset by the impact of extending a roaming contract with a
large partner in the fourth quarter, the prior year benefit of
increased political advertising revenue and declines in consumer
video revenue. In the fourth quarter, GCI amended a roaming
contract which resulted in lower annual revenue in 2021 and will
result in lower annual revenue in 2022, but GCI will benefit from
the extension of the agreement for several years as well as
continued backhaul services for GCI’s network post expiration. The
previous agreement was expected to be terminated in 2022.
GCI revenue grew 2% for the full year due to robust demand for
data in both business and consumer customers throughout the year,
partially offset by the decline in video and voice subscriber
counts, the loss of revenue from its broadcast television business
sold in the third quarter of 2020, the loss of revenue from its
de-emphasized time and materials business, the absence of political
advertising revenue that was earned in 2020 and the impact of the
modification of the roaming contract discussed above.
Operating income declined in the fourth quarter and the full
year. Adjusted OIBDA declined in the fourth quarter and grew
modestly for the full year, corresponding to the slight revenue
decline in the fourth quarter and strong revenue growth throughout
the rest of 2021, offset by elevated expenses primarily in
healthcare and software related costs.
In 2021, GCI spent $131 million on capital expenditures,
excluding capitalized interest. Capital expenditure spending was
related primarily to improvements to the wireless and hybrid fiber
coax networks. GCI's net capital expenditures for 2022 are expected
to be approximately $150 million.
Rural Healthcare Update
There were no material RHC updates in the fourth quarter. Please
reference our latest Form 10-K for a summary of RHC matters.
FOOTNOTES
1)
Liberty Broadband’s President and
CEO, Greg Maffei, will discuss these highlights and other matters
on Liberty Broadband's earnings conference call that will begin at
11:15 a.m. (E.S.T.) on February 25, 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. Other assets include its
interests in Charter Communications, Inc. ("Charter").
4)
For a definition of adjusted
OIBDA and adjusted OIBDA margin and applicable reconciliations, see
the accompanying schedules.
NOTES
Except as otherwise noted, the financial information presented
in this earnings release represents the historical consolidated
financial information of Liberty Broadband’s interest in Charter
Communications, Inc. (“Charter”), Skyhook Holding, Inc. (“Skyhook”)
and, as of December 18, 2020, GCI Holdings, as well as certain
other assets and liabilities.
LIBERTY BROADBAND FINANCIAL
METRICS
(amounts in millions)
4Q20
4Q21
2020
2021
Revenue
GCI Holdings(a)
$
34
$
244
$
34
$
970
Corporate and other
5
5
17
18
Total Liberty Broadband Revenue
$
39
$
249
$
51
$
988
Operating Income (Loss)
GCI Holdings(a)
$
(5
)
$
9
$
(5
)
$
72
Corporate and other(b)
(22
)
(29
)
(55
)
(170
)
Total Liberty Broadband Operating
Income (Loss)
$
(27
)
$
(20
)
$
(60
)
$
(98
)
Adjusted OIBDA
GCI Holdings(a)
$
10
$
80
$
10
$
354
Corporate and other
(9
)
(13
)
(24
)
(49
)
Total Liberty Broadband Adjusted
OIBDA
$
1
$
67
$
(14
)
$
305
____________________
a)
GCI’s results are only included
in Liberty Broadband’s results following the merger of Liberty
Broadband and GCI Liberty on December 18, 2020.
b)
Operating Loss for the year ended
December 31, 2021 includes $95 million net litigation
settlement.
HISTORICAL GCI OPERATING METRICS AND
FINANCIAL RESULTS
GCI’s results are only included in Liberty Broadband’s results
following the merger of Liberty Broadband and GCI Liberty on
December 18, 2020. However, we believe a discussion of GCI’s
results for a comparative two-year period promotes a better
understanding of GCI’s operations. For comparison and discussion
purposes, the following information presents actual historical
results of GCI for the quarter and year ended December 31, 2020,
exclusive of the effects of acquisition accounting, and the actual
historical results of GCI as included in Liberty Broadband’s
results for the quarter and year ended December 31, 2021. The most
significant effect of acquisition accounting is an increase to
depreciation and amortization as compared to prior periods as a
result of an increase in fair values of depreciable or amortizable
assets. This historical financial information of GCI can be found
in historical filings of GCI Liberty, Inc. The financial
information below is presented voluntarily and does not purport to
represent what the results of operations of GCI would have been if
it were a wholly owned subsidiary of Liberty Broadband for the
periods presented or to project the results of operations of GCI
for any future periods.
HISTORICAL GCI OPERATING METRICS AND
FINANCIAL RESULTS
4Q20
4Q21
% Change
2020
2021
% Change
(amounts in millions, except operating
metrics)
GCI Consolidated Financial
Metrics
Revenue
Consumer
$
124
$
123
(1
)%
$
465
$
484
4
%
Business
127
121
(5
)%
484
486
-
%
Total revenue
$
251
$
244
(3
)%
$
949
$
970
2
%
Operating income (loss)
$
21
$
9
(57
)%
$
87
$
72
(17
)%
Operating income margin (%)
8.2
%
3.7
%
(450
)bps
9.2
%
7.4
%
(180
)bps
Adjusted OIBDA(a)
$
89
$
80
(10
)%
$
345
$
354
3
%
Adjusted OIBDA margin(a) (%)
35.6
%
32.8
%
(280
)bps
36.4
%
36.5
%
10
bps
GCI Consumer
Financial Metrics
Revenue
Wireless
$
44
$
49
11
%
$
171
$
184
8
%
Data
51
55
8
%
188
214
14
%
Video
26
15
(42
)%
91
71
(22
)%
Voice
3
4
33
%
15
15
-
%
Total revenue
$
124
$
123
(1
)%
$
465
$
484
4
%
Operating Metrics
Wireless:
Revenue generating lines in service(b)
176,900
185,200
5
%
Non-revenue generating lines in
service(c)
2,200
1,000
(55
)%
Wireless lines in service
179,100
186,200
4
%
Data:
Revenue generating cable modem
subscribers(d)
140,600
151,900
8
%
Video - Basic subscribers
74,300
54,300
(27
)%
Voice - Total access lines in
service(e)
36,600
33,000
(10
)%
GCI Business
Financial Metrics
Revenue
Wireless
$
24
$
14
(42
)%
$
89
$
74
(17
)%
Data
91
98
8
%
339
368
9
%
Video
1
-
(100
)%
12
3
(75
)%
Voice
11
9
(18
)%
44
41
(7
)%
Total revenue
$
127
$
121
(5
)%
$
484
$
486
-
%
____________________
a)
See reconciling schedule 1.
b)
A revenue generating wireless
line in service is defined as a wireless device with a monthly fee
for services.
c)
A non-revenue generating wireless
line in service is defined as a data-only line with no monthly fee
for services.
d)
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.
e)
A local access line in service is
defined as a revenue generating circuit or channel connecting a
customer to the public switched telephone network.
Important Notice: Liberty Broadband (Nasdaq: LBRDA,
LBRDK, LBRDP) President and CEO, Greg Maffei, will discuss Liberty
Broadband’s earnings release on a conference call which will begin
at 11:15 a.m. (E.S.T.) on February 25, 2022. The call can be
accessed by dialing (800) 458-4121 or (323) 794-2093, passcode
2637968, 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, indemnification by Liberty Broadband, the
continuation of our stock repurchase program, benefits from
extending a roaming contract, 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 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, 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 and twelve months ended
December 31, 2020 and December 31, 2021.
GCI HOLDINGS
ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
4Q20
4Q21
2020
2021
GCI Holdings
Operating Income
$
21
$
9
$
87
$
72
Depreciation and amortization
65
67
248
266
Stock-based compensation
3
4
10
16
Adjusted OIBDA
$
89
$
80
$
345
$
354
SCHEDULE 2
The following table provides a reconciliation of operating loss
calculated in accordance with GAAP to Adjusted OIBDA for Liberty
Broadband for the three and twelve months ended December 31, 2020
and December 31, 2021, respectively.
LIBERTY BROADBAND
ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
4Q20
4Q21
2020
2021
Liberty
Broadband
Liberty Broadband Operating Income
(Loss)
$
(27
)
$
(20
)
$
(60
)
$
(98
)
Depreciation and amortization
14
68
15
267
Stock-based compensation
3
10
9
41
Litigation settlement, net of
recoveries(a)
—
9
—
95
Transaction costs
11
—
22
—
Consolidated Liberty Broadband Adjusted
OIBDA
$
1
$
67
$
(14
)
$
305
GCI Holdings
$
10
80
$
10
354
Corporate and other
(9
)
(13
)
(24
)
(49
)
____________________
a)
During the third quarter 2021,
Liberty Broadband agreed to final settlement amounts with its
insurance carriers for insurance recoveries relating to the
Hollywood Firefighters’ Pension Fund litigation. Additional
litigation-related fees were settled and paid in the fourth quarter
of 2021.
LIBERTY BROADBAND
CORPORATION
BALANCE SHEET
INFORMATION
(unaudited)
December 31,
December 31,
2021
2020
amounts in millions,
except share amounts
Assets
Current assets:
Cash and cash equivalents
$
191
1,418
Trade and other receivables, net
206
349
Prepaid and other current assets
62
79
Total current assets
459
1,846
Investment in Charter, accounted for using
the equity method
13,260
16,179
Property and equipment, net
1,031
1,099
Intangible assets not subject to
amortization
Goodwill
762
746
Cable certificates
550
560
Other
37
22
Intangible assets subject to amortization,
net
573
675
Tax sharing receivable
86
95
Other assets, net
210
151
Total assets
$
16,968
21,373
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
99
98
Deferred revenue
25
25
Current portion of debt, including $25 and
$26 measured at fair value, respectively
28
31
Indemnification obligation
324
345
Other current liabilities
106
113
Total current liabilities
582
612
Long-term debt, net, including $1,403 and
$1,446 measured at fair value, respectively
3,733
4,785
Obligations under finance leases and tower
obligations, excluding current portion
89
93
Long-term deferred revenue
35
40
Deferred income tax liabilities
1,998
1,978
Preferred stock
203
203
Other liabilities
189
147
Total liabilities
6,829
7,858
Equity
Stockholders’ equity:
Series A common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 23,232,342
and 26,495,249 at December 31, 2021 and 2020 respectively
—
—
Series B common stock, $.01 par value.
Authorized 18,750,000 shares; issued and outstanding 2,544,548 and
2,549,470 at December 31, 2021 and 2020, respectively
—
—
Series C common stock, $.01 par value.
Authorized 500,000,000 shares; issued and outstanding 144,854,780
and 167,480,926 at December 31, 2021 and 2020, respectively
1
2
Additional paid-in capital
6,214
10,320
Accumulated other comprehensive earnings
(loss), net of taxes
14
15
Retained earnings
3,898
3,166
Total stockholders' equity
10,127
13,503
Non-controlling interests
12
12
Total equity
10,139
13,515
Commitments and contingencies
Total liabilities and equity
$
16,968
21,373
LIBERTY BROADBAND
CORPORATION
STATEMENT OF OPERATIONS
INFORMATION
(unaudited)
Year ended
December 31,
2021
2020
amounts in millions, except
per share amounts
Revenue
$
988
51
Operating costs and expenses:
Operating expense (exclusive of
depreciation and amortization shown separately below)
282
20
Selling, general and administrative,
including stock-based compensation and transaction costs
442
76
Depreciation and amortization
267
15
Litigation settlement, net of
recoveries
95
—
1,086
111
Operating income (loss)
(98
)
(60
)
Other income (expense):
Interest expense (including amortization
of deferred loan fees)
(117
)
(28
)
Share of earnings (losses) of
affiliate
1,194
713
Gain (loss) on dilution of investment in
affiliate
(102
)
(184
)
Realized and unrealized gains (losses) on
financial instruments, net
67
(83
)
Other, net
6
3
Earnings (loss) before income taxes
950
361
Income tax benefit (expense)
(218
)
37
Net earnings (loss)
732
398
Less net earnings (loss) attributable to
the non-controlling interests
—
—
Net earnings (loss) attributable to
Liberty Broadband shareholders
$
732
398
Basic net earnings (loss) attributable to
Series A, Series B and Series C Liberty Broadband shareholders per
common share
$
3.97
2.18
Diluted net earnings (loss) attributable
to Series A, Series B and Series C Liberty Broadband shareholders
per common share
$
3.93
2.17
LIBERTY BROADBAND
CORPORATION
STATEMENT OF CASH FLOWS
INFORMATION
(unaudited)
Year ended
December 31,
2021
2020
amounts in millions
Cash flows from operating activities:
Net earnings (loss)
$
732
398
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation and amortization
267
15
Stock-based compensation
41
9
Share of (earnings) losses of affiliates,
net
(1,194
)
(713
)
(Gain) loss on dilution of investment in
affiliate
102
184
Realized and unrealized (gains) losses on
financial instruments, net
(67
)
83
Deferred income tax expense (benefit)
(15
)
(37
)
Other, net
(15
)
1
Change in operating assets and
liabilities:
Current and other assets
214
(14
)
Payables and other liabilities
(62
)
(22
)
Net cash provided by (used in) operating
activities
3
(96
)
Cash flows from investing activities:
GCI Liberty, Inc. cash acquired in
merger
—
592
Capital expenditures
(134
)
(2
)
Exercise of preemptive right to purchase
Charter shares
—
(15
)
Cash received for Charter shares
repurchased by Charter
4,179
—
Other investing activities, net
17
—
Net cash provided by (used in) by
investing activities
4,062
575
Cash flows from financing activities:
Borrowings of debt
1,467
2,825
Repayment of debt, finance leases and
tower obligations
(2,476
)
(1,301
)
Repurchases of Liberty Broadband common
stock
(4,272
)
(597
)
Other financing activities, net
(11
)
(23
)
Net cash provided by (used in) financing
activities
(5,292
)
904
Net increase (decrease) in cash, cash
equivalents and restricted cash
(1,227
)
1,383
Cash, cash equivalents and restricted cash
at beginning of period
1,433
50
Cash, cash equivalents and restricted cash
at end of period
$
206
1,433
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220224006133/en/
Liberty Broadband Corporation Courtnee Chun,
720-875-5420
Liberty Broadband (NASDAQ:LBRDA)
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