Q2 2021 Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
[music].
Good day, ladies and gentlemen, thank you for standing by.
Welcome to the Liberty broadband 2021 quarter, 2 adding cool joined the presentation book.
Participants will be in listen only mode. Afterwards, we'll conduct the question and answer session. At this time. If you have a question. Please press star 1 on your type of thing.
Reminder of this conference is being recorded August the 10th I would now like to turn the conference over to Courtney Chun Chief portfolio Officer. Please go ahead.
Thank you before we begin we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent form 10-K, and 10-Q filed for in Liberty broadband and Liberty Tripadvisor with the SEC.
These forward looking statements speak only as of the date of this call and Liberty broadband and Liberty trip of Tripadvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in liberty broadband or liberty tripadvisor expectations with regard there to or any change in events conditions or circumstances on.
Which any such statement is based on today's call, we will discuss certain non-GAAP financial measures for Liberty broadband, including adjusted OIBDA of information regarding the comparable GAAP metrics, along with the required definitions and reconciliations, including preliminary note and schedules 1 and 2 can be found in the earnings press release issued today, which is available on Liberty broadband.
Now I'd like to turn the call over to Liberty, President and CEO, Greg for pain.
Thank you Courtney and good morning for listeners today speaking on the call. We will also have Liberty broadband Chief Accounting Officer, and principal financial Officer, Brian weapon.
Also during Q&A, we will answer questions related to Liberty Tripadvisor, who hosted their earnings call earlier. This morning, Ron Duncan the CEO of Gci's Pete pounds. The CFO of GCI will also be available to answer questions.
So let me start.
For the numbers of Liberty broadband itself, we continue to participate in charters buyback holding our fully diluted ownership at 26%.
From May 1 through July 31, we received $1.1 billion of proceeds we use these proceeds plus additional cash held at that'll be our D to repurchased 7.5 million LDR D. K shares for $1.3 billion over the same period at an average price per share.
Of a $167.17.
This is a very attractive look through price for charter compared to the approximately of approximately $5.60 per share versus yesterday's close of $7.70 per share as.
As we said before Liberty broadband is a very attractive levered play on charter and you can see debt and our results year to date, our LDR the repurchases plus strong performance from charter have accretive to our NAV per share almost 17% compared to the charters growth of 15% over the same period.
As we mentioned last quarter, we expect LDR the purchases.
Purchases on an annual basis to match or exceed the after tax proceeds from our charter share sales.
Notably the board also increased the buyback authorization at Liberty broadband to $2.5 billion.
So turning to charter itself, which had another.
A great results residential revenue was up 6.9%.
And still over 6% adjusting for last year's of Covid impacts.
Adjusted EBITDA was up 11, 8% for the fourth consecutive quarter of double digit EBITDA growth at charter.
We had another strong broadband quarter.
With net adds of 400000 up meaningfully compared to the second quarter of 2019 pre COVID-19.
Mobile charter added 265000, new lines and is approaching a $3 million totaled $3 million total lines. After only 3 years of offering the service.
We are seeing a nice rebounds in the segments that have been that were most affected by the pandemic, notably charters participating in a recovery of the advertising market and advertising revenue was up 65% over 2012% and 4% over 2019.
We also see of continued recovery in commercial revenue was strong growth of 5.6%.
So with that let me turn it over to Liberty Tripadvisor and of Tripadvisor Liberty Leisure travel is back.
The U S continues to lead with our hotel auction revenue nearly reaching 2019 levels in the second quarter and trending positively throughout the quarter.
Europe has picked up recently with the hotel shoppers, reaching approximately 75% of 2019 comparable levels up from 45% from the first quarter.
Consolidated monthly revenue as a percent of.
Revenue of 2000, 1911, excuse me consolidated monthly revenues as a percent of 2019 revenues continued to trend up growing from 46% in April for 66% in June.
EBITDA turned positive to 25 million in the second quarter up from $51 million from from our first quarter results.
This was driven by the revenue recovery as well as cost discipline the relative to this during the pandemic.
The majority of our 2020 fixed cost savings are expected to remain in place in 2021.
Trip during the pandemic is building the been building the tools to be even more relevant the travel resumes we are differentiating our offerings and experiences in dining we've rolled out of redesigned trip App and we continue to invest in Tripadvisor plus subscription service, we expanded the tripadvisor plus to all customers use.
Customers in June and we've entered into new partnerships to enhance the value proposition, including partnering with the first major otas for Dot Com group, adding car rental benefits through Hertz and slight discounts through dollar of flight club.
You should expect we will continue to enhance the supply offering of Tripadvisor plus 2 further okay and direct hotel partnerships and with that I'll turn it over to Brian to discuss the financials. Thank.
Thank you Greg at quarter end Liberty broadband had consolidated cash and cash equivalents of $219 million, which includes $41 million of cash of GCI.
The value of our charter investment based on the share that we held on August 1st the charters closing price as of yesterday was <unk> $43 billion.
At quarter end Liberty broadband had a total principal amount of debt of $3.8 billion, which includes $1.2 billion of debt at GCI during.
During the quarter, we amended our charter margin loan, reducing pricing 35 basis points and extending the maturity of 2 years to May 2024 in connection with the amendment, we repaid $850 million under the margin loan, leaving $1.5 billion of Undrawn margin loan capacity.
GTI continue to de lever driven by strong results. In addition, and an additional $30 million pay down on the revolver leverage as defined in its credit agreement was 3.3 times as of quarter end.
GCI has $452 million undrawn capacity on its line of credit.
Both of the above the amounts exclude the indemnification obligation and preferred stock.
Looking at GCI of GC GCI had a great second quarter revenue grew 7% and adjusted OIBDA grew 14% for $89 million driven by driven by continued strong demand for consumer wireless and data as well as business data.
Operationally GCI added over 10000 consumer revenue generating the cable modem subscribers and nearly 10000 consumer revenue generating wireless subscribers over the past year.
With that I'll turn it back over to Greg.
Thanks, Brian.
And exciting news, our Investor meeting will be held on Thursday November 18th the flow.
The experience will be offered in person at the New York Times Center and virtually.
Please save the date of additional details will be provided soon and please note that all enforcement attendees must be fully vaccinated against COVID-19.
We appreciate your continued interest in Liberty broadband and Liberty Tripadvisor and with that I'd.
Like to open the line for questions operator.
Thank you if you'd like to ask a question. Please signal by pressing star 1 on your telephone keypad.
You're going to speak of Brian. Please make sure youll be exemption is todd of to allow the signatory chocolate ma'am.
Again, Crestar 1 to ask a question for Jeff.
Just for a moment to a lot of from Nick Joseph of signal for a question.
We will now take the last question from James Ratcliffe Evercore ISI. Please go ahead.
Thanks.
1 question for 2 people if I could.
Greg regarding charter and Ron regarding GCI can you talk about the what looks like to be the infrastructure Bill and both what opportunities and what risks that.
Of that comes out of that comes with it for the 2 businesses. Thanks.
Brian I'll, let you go first.
Okay.
Thanks, Greg I appreciate that.
I think of what is up from the air right now on the <unk>.
For structure Bill in terms of exactly how it will impact the market up here, obviously, we have a substantial number of.
Locations that would fit in the Unserved category. So they would be eligible for a funding.
Under the under the proposal.
There are some upside opportunities for GCI theres, some facilities, where we could expand our coverage of building fiber up the Bethel area is something we've been trying to figure out how to put together for a long time.
And we're working with 1 group, though under the treble broadband program to see if that could come together.
There is also some risks because they are likely to be some startup operators coming in I think it's hard for people to compete with just sections of our network but.
Clearly some risk for us not necessarily of overbuilding book of market disruption when you put that much money that fast into the marketplace. It does create disruptions also I think some real challenges in terms of the anticipated time frame I think the.
What the anticipated in terms of the requirements for build are not particularly realistic in terms of available workforce available equipment available technology book.
What more of that would be determined what's the does the final version of the Bill.
Yeah, and I agree with the with Ron's comments I think for charter.
The potential in certain markets you have.
The.
Increased competition doing Monday of money being funded.
There's going to be a rush of air.
Entities, whether it's.
States or municipalities thinking counties that you're thinking that they can any of the broadband business, whether they actually can.
We will see but there will be some probably.
The impact on talent as Ron pointed out of pouring all of that money and I expect in the Timeframes that things are going to get done means and a lot of cases, you'll be seeing people trying to hire.
The installers or whatever you want.
That is going to have an impact of secondary impact on us in some of our markets.
The book the Bill could have been and there are still details to be worked out as Ron rightly points out of the bill could have been far worse in terms of potential for encouraging either fiber only 101 hundreds of metric.
The.
Many of Muni Overbills all of those things are fairly muted it appears.
In terms of what what the most of <unk>.
Radical elements would have liked.
So all in all I would say, it's it's a TBD on a lot of things, but probably not as bad as it could have been.
Thank you.
Okay.
We'll now take the next question from Matthew Harrigan Benchmark. Please go ahead.
Thank you Greg given your very broad prism on TMT.
Your former EBITDA Board member ex box of Formula 1.
What's your perspective on really creating the apps to justify the demand for.
For your broadband not just the gaming sliver, but just overall I mean, it's a nice marketing proposition.
But as the ways to go in terms of realizing the.
Potential thanks.
Yeah.
I'm, making sure I understand Matthew do I think there is going to be further opportunities around real time gaming as networks get faster than demand gets higher is that yes, that's too low latency gaming, but I mean, just everything comes over your transfer of in terms of deals and startups inventors and all of that.
The starting off with gaming as a subset.
Or what do you think really adjusted caused consumers paying of opening up for the full gig or even faster broadband, which is kind of becoming the zurich where for a lot of cash.
Interest from the market right now.
Well, you're right that there are certainly.
The customers, who we very much appreciate who are buying things like of gig, who probably don't need it but can afford it and want to have the best.
There's probably not that much demand for people really need the gig.
I would say the pandemic has pointed out that the demand.
Its certainly very high return path with the treated somewhat cavalierly has become way more important in the world of zoom.
And I expect that the people who have platforms like zone, whether it would be.
Backs or for our blue jeans or micros.
The Microsoft teams will continue to build.
Of those platforms up and they will require and there'll be there'll be more bandwidth consuming as the buildup.
It truly is the case and I think Charlie Oregon has been articulate about this.
That as you build that network Youll see apps developed that are.
Consumed the available items.
You mentioned.
The.
Breadth of experience I, certainly spent a lot of years of Microsoft.
Until we build the new chip with more processing power and we would come up with the others with new software, which utilize that power I do think there is a case of.
The.
The field of dreams build it and they will come but I also think we've seen examples like as I mentioned all of the things around the pandemic from pushing the requirements of the network like things like low latency gaming, which are clearly going to benefit from increased speed, but I certainly wouldn't say I know the mall today.
We can spec them all today.
Thanks Kurt.
Operator, I believe we have no other questions. So if that is the.
The limit.
I think our listening audience I. Appreciate your continued interest in Liberty Tripadvisor in Liberty broadband and look forward to speaking with you again next quarter, if not earlier and seeing you in November.
Thank you operator.
That concludes today's call. Thank you for your participation you may now disconnect.
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Good day, ladies and gentlemen, thank you for standing by.
Welcome to the Liberty broadband 2021 quarter 2 earnings call.
The presentation, all participants will be in listen only mode. Afterwards, we will conduct a question and answer session. At this time. If you have a question. Please press star 1 on your telephone.
The reminder, this conference is being recorded August the tongue I would now like to turn the conference ex Courtney Chun Chief Financial Officer. Please go ahead.
Thank you before we begin we'd like to remind everyone that this call includes certain forward looking statements from the median private Securities Litigation Reform Act of Thank you for 95 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent form 10-K, and 10-Q filed for Liberty broadband and Liberty Tripadvisor with the SEC.
These forward looking statements speak only as of the date of this call and Liberty broadband and Liberty trip of a tripadvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in liberty broadband or liberty tripadvisor as the expectations with regard thereto or any change in events conditions or circumstances.
All of which any such statements.
On today's call, we will discuss certain non-GAAP financial measures for the re broadband, including adjusted OIBDA of information regarding the comparable GAAP metrics, along with required definitions and reconciliations.
For the preliminary note and schedules 1 and 2 can be found in the earnings press release issued today, which is available on Liberty broadband website now I'd like to turn the call over to Liberty, President and CEO Greg Okay.
Thank you Courtney and good morning to all our listeners today speaking on the call. We will also have Liberty broadband Chief Accounting Officer, and principal financial Officer, Brian Wendling.
Also during Q&A, we will answer questions related to Liberty Tripadvisor, who hosted their earnings call earlier. This morning, Ron Duncan the CEO of GCI and Pete pounds. The CFO of GCI will also be available to answer questions. So let me start.
The number of that Liberty broadband itself, we continue to participate in charters buyback holding our fully diluted ownership at 26% for.
From May 1 through July 31, we received $1.1 billion of proceeds we use these proceeds plus additional cash held at the LD R&D to repurchase 7.5 million LDR Dk shares for $1.3 billion over the same period at an average price per share of it.
Of $167.17.
This is a very attractive look through price for charter compared to the approximately of approximately $5.60 per share versus yesterday's close of $7.70 per share.
As we've said before Liberty broadband is a very attractive levered play on charter and you can see debt and our results year to date, our LDR the repurchases plus strong performance from charter have accretive to our NAV per share almost 17% compared to charters growth of 15% over the same period.
As we mentioned last quarter, we expect LDR the purchases.
Repurchases on an annual basis to match or exceed the after tax proceeds from our charter share sales.
Notably the board also increased the buyback authorization at Liberty broadband to $2.5 billion.
So turning to charter itself, which had another.
Quarter of Great results residential revenue was up 6.9% and still over 6% adjusting for last year's Covid impacts.
Adjusted EBITDA was up 11, 8% for the fourth consecutive quarter of double digit EBITDA growth at charter.
We had another strong broadband quarter.
We had net adds of 400000.
Up meaningfully compared to the second quarter of 2019 pre COVID-19.
In mobile charter added 265000, new lines.
And is approaching a $3 million totaled $3 million total lines. After only 3 years of offering the service.
We are seeing a nice rebounds in the segments that had been that were most affected by the pandemic, notably charters participating in a recovery of the advertising market and advertising revenue was up 65% over 2020 and 4% over 2019.
We also see of continued recovery in commercial revenue was strong growth of 5.6%.
So with that let me turn it over to Liberty Tripadvisor and of Tripadvisor Liberty Leisure travel is back.
U S continued to lead with our hotel auction revenue nearly reaching 2019 levels in the second quarter and trending positively throughout the quarter.
Europe has picked up recently with hotel shoppers, reaching approximately 75% of 2019 comparable levels up 45% from the first quarter.
Consolidated monthly revenue as a percentage of revenue for 2000.1911, excuse me consolidated monthly revenues as a percent of 2019 revenues continued to trend up going from 46% in April for 66% in June.
EBITDA turned positive 25 million in the second quarter up from $51 million from our first.
Quarter results. This.
This was driven by the revenue recovery as well as cost discipline of that went into the during the pandemic.
Majority of our 2020 fixed cost savings are expected to remain in place in 2021.
Trip during the pandemic is building the turbine building the tools to be even more relevant as travel resumes. We are differentiating our offerings of experiences and guidance. We've rolled out of redesign trip App and we continue to invest in Tripadvisor plus subscription service, we expanded the tripadvisor plus to all customers use.
Customers in June and we've entered into new partnerships to enhance the value proposition, including partnering with the first major otas trip Dot Com group, adding car rental benefits the hearts and slight discounts through dollar flight club.
You would expect we will continue to enhance the supply offering of Tripadvisor plus 2 further otas and direct hotel partnerships and with that I'll turn it over to Brian to discuss the financials.
Thank you Greg at quarter end Liberty broadband had consolidated cash and cash equivalents of $219 million, which includes $41 million of cash at GCI.
The value of our charter investment based on the share that we held on August 1st the charters closing price as of yesterday was <unk> $43 billion.
At quarter end Liberty broadband had a total principal amount of debt of $3.8 billion, which includes $1.2 billion of debt at GCI.
During the quarter, we amended our charter margin loan, reducing pricing 35 basis points and extending the maturity by 2 years to May 2024 in connection with the amendment, we repaid $850 million under the margin loan, leaving $1.5 billion of Undrawn margin loan capacity.
GCI continue to de lever driven by strong results. In addition, and an additional $30 million pay down on the revolver.
Average as defined in its credit agreement was 3.3 times as of quarter end of <unk>.
CCI has $452 million undrawn capacity on its line of credit.
Note that the above amounts exclude the indemnification obligation and preferred stock.
Looking at GCI GC GCI had a great second quarter revenue grew 7% and adjusted OIBDA grew 14% for $89 million driven by driven by continued strong demand for consumer wireless and data as well as business data.
Operationally GCI added over 10000 consumer revenue generating cable modem subscribers and nearly 10000 consumer revenue generating wireless subscribers over the past year.
With that I'll turn it back over to Greg.
Thanks, Brian.
And exciting news, our Investor meeting will be held on Thursday November 18th.
<unk> experience will be offered in person at the New York Times Center and virtually.
Please save the date additional details will be provided soon.
And please note that all interest attendees must be fully vaccinated against COVID-19.
We appreciate your continued interest in Liberty broadband and Liberty Tripadvisor and with that I'd like to open the line for questions operator.
Thank you if you'd like to ask a question. Please signal by pressing star 1 on your telephone keypad, if youre using the speaker phone. Please make sure. Your mute function is turned off to allow the signal to reach our equipment.
Again, Crestar 1 to ask a question.
Just from mainland China and from the.
Guaranteed signal for a question.
Hey.
We will now take the first question from James Ratcliffe Evercore ISI. Please go ahead.
Thanks.
1 question for 2 people if I could.
Greg regarding charter and Ron regarding GCI can you talk about the what looks like to be the infrastructure Bill and both what the opportunities and what risks that.
That comes out of that comes with it for the 2 businesses. Thanks.
Brian I'll, let you go first.
Okay.
Thanks, Greg appreciate that.
I think of what is up from the air right now on the infrastructure Bill in terms of exactly how it will impact the market up here, obviously, we have a substantial number of.
Locations that would fit in the Unserved category. So they would be eligible for a funding.
For the under the proposed.
Kozel <unk>.
There are some upside opportunities for GCI theres, some facilities, where we could expand our coverage of building fiber out of the vessel area is something I've been trying to figure out how to put together for a long time.
And we're working with 1 group, though under the treble broadband program to see if that could come together.
Also some risks because they are likely to be some start up of operators coming in I think it's hard for people to compete with just sections of our network but.
Clearly some risk for us not necessarily of overbuilding book of market disruption when you put that much money that fast into the marketplace. It does create disruptions also I think some real challenges in terms of the anticipated timeframe I think the.
What they anticipate in terms of the requirements for build are not particularly realistic in terms of available workforce available equipment available technology book.
Lot more to be determined once the Theres a final version of the Bill.
Yes, I'd agree with Ron's comments I think for charter.
In certain markets you have.
The.
Increased competition doing Monday money being funded I think theres going to be a rush of.
Entities, whether it's.
The states or municipalities thinking counties of thinking that they can end of the broadband business, whether they actually Ken.
We'll see but there will be some probably.
The impact on talent as Ron pointed out pouring all of that money and I expect in the Timeframes that things are going to get done means that a lot of cases, you'll be seeing people trying to hire.
The installers or whatever you want.
That is going to have an impact secondary impact on us in some of our markets.
The book the Bill could have been and there are still details to be worked out as rod rightly points out of the bill could have been far worse in terms of potential for encouraging either fiber only.
1 hundreds of metric.
Bob.
And the Muni overbuilt all of those things are fairly muted it appears.
In terms of what what the most.
Radical elements would have liked.
So all in all I would say, it's it's a TBD on a lot of things, but probably not as bad as it could have been.
Thank you.
We will now take the next question from Matthew Harrigan Benchmark. Please go ahead.
Thank you Greg given your very broad cruise demand on TMT.
The former board member ex box of Formula 1.
What's your perspective on really creating the apps to justify the demand for <unk>.
I'll kick your broadband not just the gaming sliver, but just the overall I mean, it's a nice marketing proposition, but it feels like this the ways to go in terms of realizing the potential.
Potential thanks.
I'm, making sure I understand Matthew do I think there is going to be further opportunities around real time gaming as networks get faster than demand gets higher.
Yes, that's the low latency gaming by the airlines.
Just everything comes over your transfer of in terms of deals and startups inventors and all of that.
Just starting off with gaming as a subset.
Or where do you think really adjusted caused consumers paying of putting up for the full gig or even faster broadband, which is kind of becoming the zurich.
Derek where for a lot of the.
Interest from the market right now.
Well, you're right that there are certainly.
The customers, who we very much appreciate who are buying things like of gay, who probably don't need it but can afford it and want to have the best.
There's probably not that much demand for the people really need of gig.
But I would say the pandemic has pointed out debt the demand.
Its certainly very high return path for treated somewhat cavalierly has become way more important in the world of zoom and <unk>.
I suspect that the people who have platforms like zone, whether it be buybacks or for our blue jeans or the.
Microsoft teams will continue to build.
Of those platforms up and they will require and there'll be there'll be more bandwidth consuming as they build them.
It's really is the case and I think Charlie Oregon has been articulate about this.
Debt as you build that network youll see apps develop that are consumed the available items.
You mentioned.
The.
The breadth of experience I, certainly spent a lot of years at Microsoft.
Intel would build of new chip with more processing power and we would come up with the others with new software, which utilize that power and I do think there is a case of.
The field of dreams build it and they will come but I also think we've seen examples like as I mentioned all of the things around the pandemic from pushing the requirements of the network like things like low latency gaming, which are clearly going to benefit from increased speed, but I certainly wouldn't say I know the mall today.
We can spec them all today.
Thanks Kurt.
Operator, I believe we have no other questions so of that is the.
The limit will think our listening audience I. Appreciate your continued interest in Liberty Tripadvisor in Liberty broadband and look forward to speaking with you again next quarter, if not earlier and seeing you in November.
Thank you operator.
That concludes today's call. Thank you for your participation you may now disconnect.