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

Speaker 1: Welcome to the Liberty Broadband 2023 Q2 earnings.

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.

Speaker 1: during the presentation all participants will be in a listen only mode. Afterwards, we will conduct the question and answer.

Speaker 1: At that time, if you have a question, please press star one on your tele...

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

Speaker 1: As a reminder, this conference will be recorded August 4th.

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

Speaker 1: I would now like to turn the call over to Shane Kleinstein, Vice President, Investor Relations. Please go ahead.

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.

Speaker 2: 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 Security's 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 forms 10K and 10Q filed by Liberty Broadband and Liberty Trip Advisor 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 there to or any change in events conditions or circuit.

Speaker 2: These four-looking statements speak only as of the date of this call, and Liberty Broadband and Liberty TripAdvisor expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any four-looking statement contained herein to reflect any change in Liberty Broadband or Liberty TripAdvisor's expectations with regard to or any change in events, conditions, or circumstances on which any such statement is based.

Stances on which any such statement is based on.

Speaker 2: On today's call, we will discuss certain non-GAAP financial measures for Liberty Broadband, including adjusted OIBDA. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary notes scheduled 1 and 2, can be found in the earnings press release issued today, as well as earnings releases for prior periods, which are available on Liberty Broadband's website. Now, I'd like to introduce Greg Maffei, Liberty's President and CEO . Thank you, Shane.

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 and 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 I'd.

Like to introduce Greg Maffei, Liberty's, President and CEO . Thank you Shane and good morning.

Speaker 3: Today speaking in the call, we will have Larry Broadbanz, Chief Accounting Officer and Principal Financial Officer, Brian Wendling.

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.

Speaker 3: Ron Duncan, CEO of GCI, and Pete Pound, CFO of GCI, will also be available to answer questions.

Speaker 3: Also during the Q&A, we will be available to answer questions related to Liberty Trip Advisor. 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 box.

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

Speaker 3: We do plan to resume LBRDA and KBibax using substantially all of our aftertacks proceeds from charter sales once they were Zoomed their Bibax.

We do plan to resume lb RDA NK buybacks using substantially all of our after tax proceeds from charter sales.

Once they resume thereby back.

Uh huh.

Speaker 3: charter looking at it, strong operating results, 77,000 broadband net ads and 648,000 wireless net ads benefiting from the conversion strategy of spectrum 1.

Charter looking at it strong operating results.

77%.

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

Speaker 3: Charter is now about 30% of all the post-paint industry wireless net ads and cable in total is about 47%.

It 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 at charter pacing with 26000 subsidized world subscribers added that was one third of our total broadband net adds coming from the subsidized rural builds.

Speaker 3: The rural expansion is going well at charter, pacing with 26,000 subsidized rural subscribers added. That was one third of our total broadband net ads coming from these subsidized rural bills.

Speaker 3: We do expect progress on the investments we've made and easing cost pressures in the back half of 2023 to really accelerate growth. 2023 is an investment year, and we did see modest financial growth in the quarter as expected due to that. There remains pressure in the video income system, which is impacting our top line, but not impacting if it is as much.

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 pressure in the video ecosystem, which is impacting our top line, but not impacting.

Give it as much.

Speaker 3: Charter management is executing well on all pillars of its strategy and we are pleased with their progress. The employee retention initiatives they've undertaken have proved successful with better sales yields, retention and customer service.

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

Speaker 3: We're on track for 300,000 rural passings constructed in 2023.

We are on track for 300000 rural passing constructed in 2023.

Speaker 3: and the network evolution and physical upgrade plans are on track as well. 45% of our customers are now receiving our advanced Wi-Fi product.

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

Turning to Tripadvisor.

Speaker 3: We believe the long term trends and travel experiences will benefit the business and will continue.

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

Speaker 3: Recent growth has continued to be led by strength of experiences. Viator revenue is up 59% year over year. We are focused on growing the brand awareness for Viator and building a cost efficient customer acquisition channel which we believe is entirely doable and will continue to increase profitability over time. Can we continue to evaluate ways to better highlight the value of Viator?

Recent growth has continued to be led by strength of experiences via tool 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.

Speaker 3: There are, we are working through the challenges in meta-serts while carefully managing costs. TripAdvisor announced cost reductions recently, most recently targeted at the TripAdvisor core and corporate function.

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

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

Speaker 3: We are investing in strategic initiatives to build deeper engagement with travelers and diversify our monetization schemes.

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

Speaker 3: We have upgraded our trip planning tools built on trips for proprietary data using AI. And we are augmenting our content offering both with both user generated plus editorial content leveraging that AI as well.

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.

Speaker 3: And we have other initiatives underway to drive increased engagement and membership sign-ins. And with that, I'll turn...

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.

Speaker 4: Thank you, Greg. Let's take a quick look at Broadband's balance sheet. At quarter end, Liberty Broadband had consolidated cash and cash equivalent 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 preferred stock and remaining indemnification obligation to curate.

Thank you Greg let's take a quick look at broadband is balance sheet.

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 obligations to cure it.

Speaker 4: As Greg mentioned, we have not sold into charter buybacks since January . We do expect to resume share sales to charter at some point this year to maintain our fully diluted ownership of 26% for our stockholders agreement. However, due to less buyback activity, we would expect lower tax leakage on our future charter sales this year compared to the previously estimated range of 7-9%.

As Greg mentioned, we have not sold into charters buybacks. Since January 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 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.

Speaker 4: Taking a quick look at GCI, GCI had a solid second quarter. I knew an adjusted wipe at over up seven and two million dollars respectively.

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

Speaker 3: Revenue growth was driven by continued strength and data sales, particularly to RHC and school customers. This was partially offset by continued declines in our video business, which impacts revenue, but does not have a meaningful impact on margin or free cash flow. Adjusted to whether it grew less than revenue due to inflationary pressures primarily in labor and personnel related expense.

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 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.

Speaker 3: Over the last year, GCI is at 5,700 revenue generating wireless subscribers and 4,000 revenue generating cable modems.

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

Speaker 3: Solid performance is allowed GCI to continue making distributions up to Liberty Broadband. Subsequent to quarter end GCI paid $25 million dividend to Liberty Broadband using cash on hand and we anticipate additional dividends will be paid this year. A year-to-date broadband has received 65-9 dividends from GDF.

Solid performance has allowed GCI to continue making distributions up to Liberty broadband subsequent to quarter end GCI paid $25 million dividend of Liberty broadband using cash on hand, and we anticipate additional dividends will be paid this year year to date broadband has received $65 million of dividends from GCI.

Speaker 3: Levered justifying in its credit agreement was 2.95 times as a quarter end and GCI has 397 million of undrawn capacity under its revolver.

Leverage as defined in its credit agreement was 295 times as of quarter end and GCI has $397 million of undrawn capacity under our revolver.

Speaker 3: And then just a quick update on two litigation settlement matters. During the second quarter, GCI paid the previously accrued $41 million settlement to the FCC and DOJ, resolving that longstanding inquiry regarding the RAC program. And additionally, during the second quarter, Liberty Broadband paid the previously accrued $38 million settlement related to a 2015 loss.

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

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Speaker 3: More information about these matters is available in our 10Q, which will be filed shortly.

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

Speaker 3: And with that, I'll turn the call back over to Greg. Thank you, Brian .

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

Speaker 3: And to our listening audience, we appreciate your continued instant liberty broadband and liberty trip advisor. Our annual investor day will be Thursday, November 9th in New York City. Please save the date. 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.

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 additional details will be provided soon we hope to see many of you there and with that operator wed like to open the line for questions.

Thank you.

Speaker 1: At this time, we'll conduct our 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 you're

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.

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 and 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.

Speaker 1: You may press star 2 if you would like to remove your question from the...

Speaker 1: 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.

Thanks, and good morning, just curious on the Liberty broadband side.

Speaker 5: 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 NAV discount relative to the value of the charter stake and the other assets, GCI and the other assets?

Any new perspectives on the opportunity for Liberty broadband to close.

Some of the.

Discount relative to the value of the charter stake and Gi.

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

Yes. Thank you for the question.

Speaker 3: Yeah, thank you for the question. Look, we are always interested in trying to maintain

Look we are.

Always interested in trying to maintain.

Speaker 3: the smallest discount possible. But when presented with the discount, we are gonna try and take advantage of it and we believe with the cash flows that we are gonna be generated from charter to us, we will be able to repurchase shares and then attract a rate. Over the long term, we'll see how that narrows and when becomes most logical, as it probably will at some point to combine Liberty Broadband at charter, but we have no current plan or intent.

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 are going to 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 are intact.

Thanks.

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

Speaker 3: 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.