Q2 2023 Liberty TripAdvisor Holdings Inc Earnings Call and Q&A

Welcome to the Liberty broadband 2023 Q2 earnings call.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session.

At that time, if you have a question. Please press star one on your telephone.

As a reminder, this conference will be recorded August 4th.

I would now like to turn the call over to Shane clients Dean Vice President Investor Relations. Please go ahead.

Thank you and good morning, 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 1995 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 by 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 and Liberty 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 its expectations with regard thereto or any change in events conditions or circuit.

Stances on which any such statement is based on.

On today's call, we will discuss certain non-GAAP financial measures to the Liberty broadband, including adjusted OIBDA information regarding the comparable GAAP metrics, along with required definitions and reconciliations including preliminary note scheduled one and two can be found in the earnings press release issued today as well as earnings releases for prior periods, which are available on Liberty broadband website now.

Like to introduce Greg Maffei, Liberty's, President and CEO . Thank.

Thank you Shane and good morning today speaking on the call. We will have Liberty broadband Chief Accounting Officer, and principal financial Officer, Brian Wendling.

Ron Duncan CEO of GCI, and Pete pounds, CFO GCI will also be available to answer questions.

Also during the Q&A, we will be available to answer questions related to Liberty Tripadvisor.

Starting with Liberty broadband.

We remain under the 26% fully diluted ownership cap due to lighter buybacks and their annual issuance of equity awards at charter.

We have not sold into the buyback since January .

We do plan to resume L. B R D. A N K buybacks using substantially all of our after tax proceeds from charter sales.

Once they resume their buyback.

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Charter is looking at it strong operating results.

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Broadband net adds in 648000 wireless net adds benefiting from the convergent strategy of spectrum one chip.

<unk> is now about 30% of all the postpaid industry wireless net adds in cable in total is about 47%.

The rural expansion is going well with charter pacing with 26000 subsidized world subscribers added that was one third of our total broadband net adds coming from these subsidized world bills.

We do expect progress on the investments we've made at ease and cost pressures in the back half of 2023 to really Reaccelerate growth 2023 is an investment year and we did see modest financial growth in the quarter as expected due to that there remains a pressure in the video ecosystem, which is impacting our top line, but not impacting.

Give it as much.

Charter management is executing well on all pillars of our strategy and we are pleased with their progress the employee retention initiatives, Dave undertaken have proved successful with better sales yields retention and customer service.

We're on track for 300000 World passing is constructed in 2023.

And the network evolution and physical upgrade class plans are on track as well, 45% of our customers are now receiving our advanced Wi Fi product.

Turning to Tripadvisor.

We believe the long term trends in travel experiences will benefit the business and will continue.

Recent growth has continued to be led by strength of experiences vital revenue was up 59% year over year.

We are focused on growing the brand awareness or buyer tour in building a cost efficient customer acquisition channel, which we believe is entirely doable and will contribute to increased profitability over time.

And we continue to evaluate ways to better highlight the value of buyer tour.

There are we are working through the challenges in meta search while carefully managing cost trip.

Tripadvisor announced cost reductions recently, most recently targeted to the Tripadvisor core and corporate functions.

We are investing in strategic initiatives to build deeper engagement with travelers and diversify our monetization schemes, we are leveraging AI.

We have upgraded our trip planning tools built on trips proprietary data using AI and we are augmenting our content offering both with both user generated plus editorial content leveraging that AI as well.

And we have other initiatives underway to drive increased engagement and membership sign it.

And with that I'll turn it over to Brian for the details.

Thank you Greg, let's take a quick look at broadband as balance sheet at quarter end Liberty broadband had consolidated cash and cash equivalents of $81 million, which includes $60 million of cash at GCI.

As of the end of the day yesterday the value of our charter investment was $19 9 billion.

And at quarter end Liberty broadband had total principal amount of debt of $3 8 billion note that this excludes the preferred stock and remaining indemnification obligation to cure it.

As Greg mentioned, we have not sold into charters buybacks since January and we do expect to resume share sales to charter.

Some point this year to maintain our fully diluted ownership of 26% for our stockholders agreement. However, due to less buyback activity. We are we would expect lower tax leakage on our future charter sales this year compared to the previously estimated range of 7% to 9%.

Taking a quick look at GCI GCI had a solid second quarter.

Revenue and adjusted OIBDA were up 7% and $2 million respectively.

Revenue growth was driven by continued strength in data sales, particularly to our HC and school customers.

This was partially offset by continued declines in our video business, which impacts revenue, but it does not have a meaningful impact on margin or free cash flow.

Adjusted OIBDA grew less than revenue due to inflationary pressures, primarily in labor and personnel related expenses.

Over the last year GCI has added 5700 revenue generating wireless subscribers and 4000 revenue generating cable modem customers.

Solid performance is a lot of GCI to continue making distributions up to liberty broadband subsequent to quarter end Juicy I paid $25 million dividend Liberty broadband using cash on hand, and we anticipate additional dividends will be paid this year our year to date broadband has received 65 million in dividends for GCI.

<unk> Leverages defined in its credit agreement was 295 times as of quarter end and GCI has $397 million of Undrawn capacity under our revolver.

And then just a quick update on two litigation settlement matters during the second quarter GCI pave the previously accrued $41 million settlement to the FCC and Doj resolving that long standing inquiry regarding the RSV program and Additionally, during the second quarter Liberty broadband paid the previously accrued $38 million.

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More information on both of these matters is available in our 10-Q, which will be filed shortly.

And with that I'll turn the call back over to Greg. Thank you Brian .

And to our listening audience. We appreciate your continued interest in Liberty broadband and Liberty Tripadvisor, Our annual Investor Day will be Thursday November 19 in New York City. Please save the date and additional details will be provided soon we hope to see many of you there and with that operator, we'd like to open the line for questions.

Thank you.

At this time well conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate that your line is in the question queue.

You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question comes from Michael Rollins with Citi. Please state your question.

Thanks, and good morning, I'm, just curious on the Liberty broadband side any new perspectives on the opportunity for Liberty broadband to close.

Some of the <unk> discount.

Relative to the value of the charter stake and G. I.

The other assets GCI any other assets that you're wrong.

Yeah. Thank you for the question look I.

Our always interested in trying to maintain that.

The smallest discount possible, but when presented with the discount we're going to try and take advantage of it and we believe with the cash flows that we're gonna be generated from charter to us we will be able to repurchase shares at an attractive rate.

Over the long term.

We'll see how that narrows and when it becomes most logical is it probably will at some point to combine liberty broadband charter, but we have no current plan or intent.

Thanks.

Operator, I believe we have no more questions. So with that again, thanks to our listening audience. Appreciate your interest in Liberty broadband and Liberty Tripadvisor, We hope to see you next quarter, if not sooner. Thank you.

Thank you all parties may disconnect.