Liberty Latin America(LILA) - 2024 Q2 - Quarterly Results

Executive Summary & Outlook Liberty Latin America reported sequential Q2 2024 financial growth, with strong Adjusted OIBDA in C&W Panama and Caribbean, while Puerto Rico's post-migration challenges are expected to improve in H2 Q2 & H1 2024 Performance Overview The company achieved sequential Q2 2024 revenue growth and strong Adjusted OIBDA in C&W Panama and Caribbean, with Puerto Rico's performance expected to improve in H2 after migration impacts - Q2 2024 reported revenue increased by 2% sequentially[2] - C&W Panama and C&W Caribbean demonstrated continued strong Adjusted OIBDA growth[2] - Puerto Rico experienced post-migration impacts, with performance expected to improve in H2 2024[2] Strategic Initiatives & H2 Outlook The company agreed to combine Costa Rica operations with Tigo, deployed over $300 million in capital allocation, and anticipates significant H2 financial improvement, especially in Puerto Rico - Agreement reached to combine operations with Tigo in Costa Rica[2] - Over $300 million has been deployed in share repurchases and convertible redemption to date in 2024[2] - Anticipate significant inflection in financial performance in H2, with Puerto Rico's Adjusted OIBDA expected to exceed $45 million per month towards year-end due to synergies and growth plans[2] Q2 Business Highlights by Segment This section details Q2 2024 performance across C&W Caribbean, C&W Panama, Liberty Networks, Liberty Puerto Rico, and Liberty Costa Rica, including Hurricane Beryl's impact C&W Caribbean C&W Caribbean maintained strong financial momentum in Q2 2024, with 3% YoY reported revenue growth and 7% YoY reported Adjusted OIBDA growth - YoY reported revenue growth: 3%[3] - YoY rebased revenue growth: 4%[3] - YoY reported Adjusted OIBDA growth: 7%[3] - YoY rebased Adjusted OIBDA growth: 8%[3] C&W Panama C&W Panama achieved strong Q2 2024 subscriber and financial growth, adding 51,000 postpaid mobile subscribers and seeing 9% YoY revenue growth - 51,000 postpaid mobile subscriber additions due to competitor exit[3] - YoY revenue growth: 9%[3] - YoY Adjusted OIBDA growth: 10%[3] Liberty Networks Liberty Networks showed strong Q2 2024 enterprise growth, with resilient wholesale MRR and a 17% YoY increase in reported enterprise revenue - Resilient MRR performance in wholesale business with steady growth[3] - YoY reported enterprise revenue up 17%[3] Liberty Puerto Rico Liberty Puerto Rico faced Q2 2024 post-migration impacts, but operational challenges are stabilizing, with significant performance improvement expected in H2 2024 - Post-migration operational challenges are stabilizing[3] - Operating and financial performance is expected to significantly improve in H2 2024[3] Liberty Costa Rica Liberty Costa Rica demonstrated strong Q2 2024 mobile momentum, with postpaid net additions 65% higher YoY and 9% reported revenue growth - Postpaid net adds were 65% higher YoY[3] - YoY reported revenue growth: 9%[3] - YoY rebased revenue growth: 4%[3] Hurricane Beryl Impact Hurricane Beryl impacted C&W Caribbean operations in July 2024, with an estimated $10-20 million negative impact on revenue and Adjusted OIBDA, largely offset by $44 million in weather derivative proceeds - Expected negative impact on Revenue and Adjusted OIBDA: $10 million to $20 million for the remainder of 2024, primarily during Q3[3] - Expected property and equipment additions: Approximately $10 million to $20 million for infrastructure replacement and network resiliency[4] - Expected net third-party proceeds from weather derivatives: Approximately $44 million[4] Capital Allocation & Strategic Transactions This section outlines the company's capital allocation strategies, including stock repurchases and convertible bond redemption, and details the strategic agreement to combine Costa Rica operations with Millicom Stock Repurchase & Convertible Bond Redemption Liberty Latin America repurchased $22 million in stock in Q2 2024, totaling $83 million YTD, and subsequently cancelled the remaining $140 million Convertible Notes upon maturity - Q2 2024 stock repurchases: $22 million[5] - YTD 2024 stock repurchases: $83 million, representing 12 million shares[5] - Remaining $140 million of Convertible Notes repurchased and cancelled subsequent to June 30, 2024[5] Costa Rica Operations Combination with Millicom Liberty Latin America and Millicom agreed to combine Costa Rica operations, with Liberty holding approximately 86% interest, aiming to expand fiber networks and enhance services, with completion expected in H2 2025 - Agreement to combine Costa Rica operations with Millicom (Tigo) announced August 1, 2024[6] - Liberty Latin America and its minority partner will hold approximately 86% interest in the combined operations[6] - The transaction aims to create a scaled platform, accelerate fiber network expansion, deliver exceptional high-speed services, and enhance customer experiences[6] - Expected completion during the second half of 2025, subject to customary closing conditions including regulatory authorizations[7] Consolidated Financial & Operating Highlights Liberty Latin America's Q2 and H1 2024 consolidated financials showed flat revenue, declining operating income and Adjusted OIBDA, and decreased property additions, while operating metrics indicated slight customer and mobile subscriber growth Consolidated Financial Highlights (Q2 2024 vs Q2 2023) | Metric (USD in millions) | Q2 2024 | Q2 2023 | YoY Decline | YoY Rebased Decline | | :----------------------- | :------ | :------ | :---------- | :------------------ | | Revenue | 1,118 | 1,120 | — % | (1 %) | | Operating income | 111 | 135 | (18 %) | | | Adjusted OIBDA | 389 | 441 | (12 %) | (12 %) | | Property & equipment additions | 180 | 192 | (7 %) | | | Adjusted FCF | (18) | 31 | | | | Cash provided by operating activities | 157 | 226 | | | | Cash used by investing activities | (166) | (159) | | | | Cash used by financing activities | (55) | (97) | | | Consolidated Financial Highlights (H1 2024 vs H1 2023) | Metric (USD in millions) | H1 2024 | H1 2023 | YoY Decline | YoY Rebased Decline | | :----------------------- | :------ | :------ | :---------- | :------------------ | | Revenue | 2,217 | 2,222 | — % | (1 %) | | Operating income | 204 | 242 | (16 %) | | | Adjusted OIBDA | 763 | 841 | (9 %) | (10 %) | | Property & equipment additions | 315 | 337 | (7 %) | | | Adjusted FCF | (168) | (19) | | | | Cash provided by operating activities | 180 | 288 | | | | Cash used by investing activities | (282) | (291) | | | | Cash used by financing activities | (281) | (133) | | | Consolidated Operating Highlights (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :---------------------- | :-------- | :-------- | | Total customers | 1,966,300 | 1,965,400 | | Organic customer additions | 900 | 14,500 | | Fixed RGUs | 3,997,400 | 3,978,100 | | Organic RGU additions | 19,300 | 44,700 | | Organic internet additions | 8,900 | 21,800 | | Mobile subscribers | 7,912,300 | 7,907,400 | | Organic mobile gains / (losses) | 20,800 | (57,000) | | Organic postpaid additions | 8,100 | 23,200 | Revenue Performance by Segment Consolidated Q2 and H1 2024 revenue remained flat, with strong growth in C&W Caribbean, C&W Panama, and Liberty Costa Rica, offset by significant declines in Liberty Puerto Rico and flat performance in Liberty Networks Q2 2024 Revenue by Segment (Reported YoY Growth) | Segment | Q2 2024 Revenue (USD millions) | YoY Reported % Change | YoY Rebased % Change | | :------------------ | :----------------------------- | :-------------------- | :------------------- | | C&W Caribbean | 368.3 | 3% | 4% | | C&W Panama | 197.2 | 9% | 9% | | Liberty Networks | 119.1 | —% | (1%) | | Liberty Puerto Rico | 308.6 | (12%) | (12%) | | Liberty Costa Rica | 147.2 | 9% | 4% | | Total | 1,118.0 | —% | (1%) | H1 2024 Revenue by Segment (Reported YoY Growth) | Segment | H1 2024 Revenue (USD millions) | YoY Reported % Change | YoY Rebased % Change | | :------------------ | :----------------------------- | :-------------------- | :------------------- | | C&W Caribbean | 732.5 | 3% | 4% | | C&W Panama | 366.4 | 6% | 6% | | Liberty Networks | 227.6 | —% | (2%) | | Liberty Puerto Rico | 635.8 | (11%) | (11%) | | Liberty Costa Rica | 299.5 | 13% | 6% | | Total | 2,217.4 | —% | (1%) | - C&W Caribbean revenue growth was driven by ARPU growth, broadband subscriber growth, postpaid mobile subscriber increases, and higher project-related B2B revenue[15] - Liberty Puerto Rico's residential mobile revenue declined 21% due to mobile subscriber reduction post-migration and lower roaming revenue; B2B revenue declined 6% due to the cancellation of the FCC's Emergency Connectivity Fund, leading to a reduction of 74,000 mobile postpaid subscribers[18] Operating Income & Adjusted OIBDA Performance Operating income decreased by 18% in Q2 and 16% in H1 2024, driven by consolidated Adjusted OIBDA declines of 12% in Q2 and 9% in H1, primarily due to Liberty Puerto Rico and Liberty Networks - Operating income for Q2 2024 was $111 million (down 18% YoY) and for H1 2024 was $204 million (down 16% YoY), primarily due to declines in Adjusted OIBDA[19] Consolidated Adjusted OIBDA (Q2 2024 vs Q2 2023) | Metric (USD in millions) | Q2 2024 | Q2 2023 | Reported % Change | Rebased % Change | | :----------------------- | :------ | :------ | :---------------- | :--------------- | | C&W Caribbean | 157.0 | 146.3 | 7% | 8% | | C&W Panama | 64.8 | 59.0 | 10% | 10% | | Liberty Networks | 63.1 | 72.2 | (13%) | (13%) | | Liberty Puerto Rico | 71.1 | 137.2 | (48%) | (48%) | | Liberty Costa Rica | 53.4 | 50.1 | 7% | 1% | | Corporate | (20.3) | (23.6) | 14% | 14% | | Total | 389.1 | 441.2 | (12%) | (12%) | | Adjusted OIBDA margin | 34.8% | 39.4% | | | - Liberty Puerto Rico's Adjusted OIBDA declined by 48% due to revenue decline, a $12 million increase in bad debt expense related to billing and collection issues, higher IT service and license expenses for mobile migration, and $16 million in TSA, integration, and inventory costs[21][24] Net Earnings & Capital Expenditures Net earnings attributable to shareholders resulted in a $43 million loss for both Q2 and H1 2024, while property and equipment additions decreased by 7% in both periods, totaling $179.6 million and $314.5 million respectively - Net earnings (loss) attributable to shareholders was ($43 million) for both the three and six months ended June 30, 2024[25] Property & Equipment Additions (Q2 2024 vs Q2 2023) | Category (USD in millions) | 2024 | 2023 | | :------------------------- | :---- | :---- | | Customer Premises Equipment | 46.0 | 44.6 | | New Build & Upgrade | 43.7 | 34.6 | | Capacity | 26.1 | 26.2 | | Baseline | 52.1 | 69.3 | | Product & Enablers | 11.7 | 17.7 | | Total P&E Additions | 179.6 | 192.4 | | Capital expenditures, net | 140.5 | 159.0 | | P&E Additions as % of revenue | 16.1% | 17.2% | New Build and Homes Upgraded by Reportable Segment (Q2 2024 vs Q2 2023) | Segment | 2024 | 2023 | | :------------------ | :----- | :----- | | C&W Caribbean | 41,400 | 39,200 | | C&W Panama | 13,100 | 25,600 | | Liberty Puerto Rico | 15,600 | 15,600 | | Liberty Costa Rica | 23,800 | 13,400 | | Total | 93,900 | 93,800 | Consolidated Debt, Leverage & Liquidity As of June 30, 2024, total debt and finance lease obligations were $8,136.3 million, with a consolidated gross leverage ratio of 5.3x and net leverage ratio of 4.9x, and $843.3 million in unused borrowing capacity Summary of Debt, Finance Lease Obligations and Cash & Cash Equivalents (June 30, 2024) | Segment | Debt (USD millions) | Finance Lease Obligations (USD millions) | Total (USD millions) | Cash & Cash Equivalents (USD millions) | | :---------------------- | :------------------ | :--------------------------------------- | :------------------- | :------------------------------------- | | Liberty Latin America | 139.6 | — | 139.6 | 104.2 | | C&W | 4,833.9 | — | 4,833.9 | 465.7 | | Liberty Puerto Rico | 2,707.6 | 5.2 | 2,712.8 | 31.8 | | Liberty Costa Rica | 450.0 | — | 450.0 | 9.9 | | Total | 8,131.1 | 5.2 | 8,136.3 | 611.6 | Consolidated Leverage and Liquidity Information (June 30, 2024 vs March 31, 2024) | Metric | June 30, 2024 | March 31, 2024 | | :------------------------------------------------------------ | :------------ | :------------- | | Consolidated debt and finance lease obligations to operating income ratio | 20.0x | 19.7x | | Consolidated net debt and finance lease obligations to operating income ratio | 18.5x | 18.1x | | Consolidated gross leverage ratio | 5.3x | 5.0x | | Consolidated net leverage ratio | 4.9x | 4.6x | | Weighted average debt tenor | 3.9 years | 4.1 years | | Fully-swapped borrowing costs | 6.0% | 6.0% | | Unused borrowing capacity (in millions) | $843.3 | $870.5 | Subscriber & ARPU Trends This section analyzes Q2 2024 subscriber variances, including net additions for fixed-line and mobile, and details ARPU trends across various segments for both customer relationships and mobile services Quarterly Subscriber Variance In Q2 2024, Liberty Latin America reported organic net additions of 900 customers and 19,300 RGUs, primarily in internet and telephony, with total mobile subscribers increasing by 4,900 Net Additions (Losses) by Subscriber Type (Q2 2024) | Metric | Net additions (losses) | | :---------------------- | :--------------------- | | Homes Passed | 31,800 | | Fixed-line Customer Relationships | 900 | | Video RGUs | 100 | | Internet RGUs | 8,900 | | Telephony RGUs | 10,300 | | Total RGUs | 19,300 | | Prepaid Mobile | (3,200) | | Postpaid Mobile | 8,100 | | Total Mobile Subscribers | 4,900 | ARPU per Customer Relationship Q2 2024 ARPU per customer relationship saw slight increases in C&W Caribbean and the Cable & Wireless Borrowing Group, while C&W Panama and Liberty Costa Rica experienced minor declines ARPU per Customer Relationship (Q2 2024 vs Q1 2024) | Reportable Segment | Q2 2024 ARPU | Q1 2024 ARPU | % Change | FX-Neutral % Change | | :------------------------- | :----------- | :----------- | :------- | :------------------ | | C&W Caribbean | $49.38 | $48.69 | 1% | 2% | | C&W Panama | $37.79 | $38.44 | (2%) | (2%) | | Liberty Puerto Rico | $73.05 | $72.82 | —% | —% | | Liberty Costa Rica | $43.33 | $44.64 | (3%) | (3%) | | Cable & Wireless Borrowing Group | $46.58 | $46.24 | 1% | 1% | Mobile ARPU Mobile ARPU in Q2 2024 increased by 8% in C&W Panama, with minor changes in C&W Caribbean and Liberty Costa Rica, and a slight decline in Liberty Puerto Rico Mobile ARPU (Q2 2024 vs Q1 2024) | Reportable Segment | Q2 2024 ARPU | Q1 2024 ARPU | % Change | FX-Neutral % Change | | :------------------------- | :----------- | :----------- | :------- | :------------------ | | C&W Caribbean | $14.68 | $14.61 | —% | 1% | | C&W Panama | $12.19 | $11.28 | 8% | 8% | | Liberty Puerto Rico | $39.75 | $40.48 | (2%) | (2%) | | Liberty Costa Rica | $7.11 | $7.07 | 1% | —% | | Cable & Wireless Borrowing Group | $13.47 | $13.00 | 4% | 4% | Forward-Looking Statements & Company Overview This section includes a disclaimer for forward-looking statements, outlining various risks and uncertainties, and provides an overview of Liberty Latin America's operations and services Forward-Looking Statements and Disclaimer This disclaimer highlights various risks and uncertainties, including external events like natural disasters and internal factors such as competition and regulatory changes, that could impact actual results - The press release contains forward-looking statements regarding strategies, performance, guidance, subscriber growth, integration plans, transaction impacts, balance sheet strength, and capital allocation[36] - Risks and uncertainties include natural disasters, political/social events, pandemics, competition, rapid technological change, regulatory changes, general economic factors, and the ability to successfully integrate new businesses[36] About Liberty Latin America Liberty Latin America is a leading communications company operating in over 20 countries across Latin America and the Caribbean, offering diverse services and operating an extensive fiber optic network - Liberty Latin America is a leading communications company operating in over 20 countries across Latin America and the Caribbean[38] - Services include digital video, broadband internet, telephony, and mobile services for residential and business customers, as well as enterprise-grade connectivity, data center, hosting, and managed IT solutions[38] - The company operates a subsea and terrestrial fiber optic cable network connecting approximately 40 markets in the region[38] Detailed Segment Financials & Debt This section provides detailed financial results and debt information for the C&W, Liberty Puerto Rico, and Liberty Costa Rica borrowing groups, including revenue, operating income, Adjusted OIBDA, and leverage ratios Cable & Wireless (C&W) Borrowing Group The C&W Borrowing Group reported 4% revenue growth in Q2 2024 and 3% in H1, with operating income increasing by 81% in Q2 and total third-party debt at $4,833.9 million as of June 30, 2024 C&W Borrowing Group Financial Results (Q2 2024 vs Q2 2023) | Metric (USD in millions) | Q2 2024 | Q2 2023 | Change % | Rebased Change % | | :----------------------- | :------ | :------ | :------- | :--------------- | | Revenue | 662.3 | 634.5 | 4% | 4% | | Operating income | 98.0 | 54.2 | 81% | | | Adjusted OIBDA | 284.4 | 277.7 | 2% | 3% | | Property & equipment additions | 101.1 | 111.1 | (9%) | | | Operating income as % of revenue | 14.8% | 8.5% | | | | Adjusted OIBDA as % of revenue | 42.9% | 43.8% | | | | Proportionate Adjusted OIBDA | 236.1 | 234.8 | | | C&W Borrowing Group Financial Results (H1 2024 vs H1 2023) | Metric (USD in millions) | H1 2024 | H1 2023 | Change % | Rebased Change % | | :----------------------- | :------ | :------ | :------- | :--------------- | | Revenue | 1,282.6 | 1,241.7 | 3% | 3% | | Operating income | 178.4 | 114.8 | 55% | | | Adjusted OIBDA | 551.1 | 524.7 | 5% | 5% | | Property & equipment additions | 173.8 | 187.6 | (7%) | | | Operating income as % of revenue | 13.9% | 9.2% | | | | Adjusted OIBDA as % of revenue | 43.0% | 42.3% | | | | Proportionate Adjusted OIBDA | 459.3 | 446.8 | | | - At June 30, 2024, total third-party debt was $4,833.9 million, with a Fully-swapped Borrowing Cost of 5.4% and an average debt tenor of approximately 3.6 years[44][45] - The Covenant Proportionate Net Leverage Ratio was 4.0x, and maximum undrawn commitments were $636 million[44][45] Liberty Puerto Rico (LPR) Borrowing Group The Liberty Puerto Rico Borrowing Group experienced significant Q2 and H1 2024 financial declines, with revenue decreasing by 12% and 11% respectively, and total debt at $2,712.8 million as of June 30, 2024 LPR Borrowing Group Financial Results (Q2 2024 vs Q2 2023) | Metric (USD in millions) | Q2 2024 | Q2 2023 | Change % | | :----------------------- | :------ | :------ | :------- | | Revenue | 308.6 | 349.5 | (12%) | | Operating income | (19.1) | 61.9 | (131%) | | Adjusted OIBDA | 71.1 | 137.2 | (48%) | | Property & equipment additions | 48.9 | 54.0 | (9%) | | Operating income as % of revenue | (6.2%) | 17.7% | | | Adjusted OIBDA as % of revenue | 23.0% | 39.3% | | LPR Borrowing Group Financial Results (H1 2024 vs H1 2023) | Metric (USD in millions) | H1 2024 | H1 2023 | Change % | | :----------------------- | :------ | :------ | :------- | | Revenue | 635.8 | 713.0 | (11%) | | Operating income (loss) | (28.5) | 117.1 | (124%) | | Adjusted OIBDA | 140.2 | 265.2 | (47%) | | Property & equipment additions | 89.9 | 101.7 | (12%) | | Operating income (loss) as % of revenue | (4.5%) | 16.4% | | | Adjusted OIBDA as % of revenue | 22.1% | 37.2% | | - At June 30, 2024, total debt and finance lease obligations were $2,712.8 million, with a Fully-swapped Borrowing Cost of 6.2% and an average debt tenor of approximately 4.0 years[49][50] - The Covenant Consolidated Net Leverage Ratio was 7.6x, and maximum undrawn commitments were $148 million[49][50] Liberty Costa Rica Borrowing Group The Liberty Costa Rica Borrowing Group reported 4% revenue growth in Q2 2024 and 6% in H1, with operating income increasing by 9% in Q2 and 48% in H1, and total debt at CRC 236.9 billion as of June 30, 2024 LCR Borrowing Group Financial Results (Q2 2024 vs Q2 2023 - CRC in billions) | Metric | Q2 2024 | Q2 2023 | Change % | | :----------------------- | :------ | :------ | :------- | | Revenue | 75.6 | 73.0 | 4% | | Operating income | 14.2 | 13.0 | 9% | | Adjusted OIBDA | 27.4 | 27.1 | 1% | | Property & equipment additions | 10.7 | 9.5 | 13% | | Operating income as % of revenue | 18.8% | 17.8% | | | Adjusted OIBDA as % of revenue | 36.2% | 37.1% | | LCR Borrowing Group Financial Results (H1 2024 vs H1 2023 - CRC in billions) | Metric | H1 2024 | H1 2023 | Change % | | :----------------------- | :------ | :------ | :------- | | Revenue | 153.9 | 145.7 | 6% | | Operating income | 31.6 | 21.4 | 48% | | Adjusted OIBDA | 57.4 | 52.5 | 10% | | Property & equipment additions | 16.4 | 16.6 | (1%) | | Operating income as % of revenue | 20.5% | 14.7% | | | Adjusted OIBDA as % of revenue | 37.3% | 36.0% | | - At June 30, 2024, total debt was CRC 236.9 billion (USD 450.0 million), with a Fully-swapped Borrowing Cost of 10.9% and an average debt tenor of approximately 6.5 years[52][53] - The Covenant Consolidated Net Leverage Ratio was 2.0x, and maximum undrawn commitments were $60 million[52][53] Consolidated Operating Data Table As of June 30, 2024, Liberty Latin America reported 1,966,300 fixed-line customer relationships and 7,912,300 mobile subscribers, with total homes passed at 4,678,900 and 3,997,400 total RGUs Consolidated Operating Data (June 30, 2024) | Metric | Total | | :------------------------ | :----------- | | Homes Passed | 4,678,900 | | Fixed-line Customer Relationships | 1,966,300 | | Video RGUs | 935,800 | | Internet RGUs | 1,832,100 | | Telephony RGUs | 1,229,500 | | Total RGUs | 3,997,400 | | Prepaid Mobile Subscribers | 5,460,100 | | Postpaid Mobile Subscribers | 2,452,200 | | Total Mobile Subscribers | 7,912,300 | Glossary of Terms This section defines key financial and operational terms, including non-GAAP measures like Adjusted OIBDA Margin and Adjusted Free Cash Flow, along with operational metrics and leverage ratios - Definitions are provided for non-GAAP measures including Adjusted OIBDA Margin, Adjusted Free Cash Flow, and various leverage ratios (Consolidated Debt and Finance Lease Obligations to Operating Income Ratio, Consolidated Net Debt and Finance Lease Obligations to Operating Income Ratio, Leverage, Proportionate Net Leverage Ratio)[57][58][61] - Key operational metrics defined include ARPU (Average Revenue Per Unit), Customer Relationships, CRU (Corporate Responsible User), Homes Passed, Internet (Broadband) RGU, Mobile Subscribers, Revenue Generating Unit (RGU), SOHO (Small Office/Home Office), Telephony RGU, and Video RGU[57][58][59][62][63] - Categories for Property and Equipment Additions are defined: Customer Premises Equipment, New Build & Upgrade, Capacity, Baseline, and Product & Enablers[60] Non-GAAP Reconciliations This section provides reconciliations for various non-GAAP financial measures, including Adjusted OIBDA, Adjusted Free Cash Flow, rebased growth rates, and consolidated leverage ratios, offering detailed insights into underlying performance Adjusted OIBDA Reconciliation This section reconciles operating income to Adjusted OIBDA, a non-GAAP measure used by management to evaluate segment performance and allocate resources, by excluding specific non-operating and non-cash items - Adjusted OIBDA is defined as operating income or loss before share-based compensation, depreciation and amortization, provisions related to significant litigation, impairment, restructuring, and other operating items[69] - Management uses Adjusted OIBDA as the primary measure to evaluate segment operating performance and allocate resources, believing it provides a transparent view of recurring operating performance[69] Reconciliation of Operating Income to Adjusted OIBDA (Q2 & H1 2024) | Metric (USD in millions) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :----------------------- | :------ | :------ | :------ | :------ | | Operating income | 110.8 | 135.4 | 203.6 | 242.0 | | Share-based compensation and other Employee Incentive Plan-related expense | 16.0 | 24.5 | 43.0 | 53.7 | | Depreciation and amortization | 236.7 | 240.5 | 484.5 | 475.1 | | Impairment, restructuring and other operating items, net | 25.6 | 40.8 | 32.2 | 70.5 | | Adjusted OIBDA | 389.1 | 441.2 | 763.3 | 841.3 | | Operating income margin | 9.9% | 12.1% | 9.2% | 10.9% | | Adjusted OIBDA margin | 34.8% | 39.4% | 34.4% | 37.9% | Adjusted Free Cash Flow Reconciliation This section defines and reconciles Adjusted Free Cash Flow (Adjusted FCF), a non-GAAP measure derived from net cash provided by operating activities, used to assess debt servicing and investment funding capabilities - Adjusted FCF is defined as net cash provided by operating activities, plus certain cash payments/proceeds, less capital expenditures, principal payments on vendor financing/finance leases, and distributions to noncontrolling interest owners[71] - Adjusted FCF provides useful information to investors by gauging the ability to service debt and fund new investment opportunities, but it does not represent the ability to fund discretionary amounts[71] Reconciliation of Net Cash Provided by Operating Activities to Adjusted FCF (Q2 & H1 2024) | Metric (USD in millions) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :----------------------- | :------ | :------ | :------ | :------ | | Net cash provided by operating activities | 156.9 | 225.6 | 180.2 | 288.0 | | Cash payments for direct acquisition and disposition costs | 2.5 | 2.1 | 3.3 | 3.5 | | Expenses financed by an intermediary | 48.6 | 52.6 | 80.8 | 93.9 | | Capital expenditures, net | (140.5) | (159.0) | (250.2) | (273.1) | | Principal payments on amounts financed by vendors and intermediaries | (74.3) | (49.2) | (152.0) | (89.4) | | Principal payments on finance leases | (0.3) | (0.3) | (0.5) | (0.5) | | Repayments of handset receivables securitization | — | — | (18.4) | — | | Adjusted FCF before distributions to noncontrolling interest owners | (7.1) | 71.8 | (156.8) | 22.4 | | Distributions to noncontrolling interest owners | (10.7) | (40.8) | (10.7) | (41.2) | | Adjusted FCF | (17.8)| 31.0 | (167.5)| (18.8)| Rebase Information This section explains rebased growth rates, a non-GAAP measure that translates prior-year results at current-year exchange rates to provide a comparable view of operational performance unaffected by currency fluctuations - Rebased growth rates are a non-GAAP measure that reflects the translation of prior-year results at the applicable average foreign currency exchange rates used for the corresponding current-year period[74] - This method is used to assess growth rates on a comparable basis, providing a supplementary view of operating performance unaffected by foreign exchange impacts[74] Reconciliation from Reported Revenue to Rebased Revenue (Q2 2023) | Segment | Revenue – Reported (USD millions) | Rebase adjustment: Foreign currency (USD millions) | Revenue – Rebased (USD millions) | Reported percentage change | Rebased percentage change | | :------------------ | :-------------------------------- | :------------------------------------------------- | :------------------------------- | :------------------------- | :------------------------ | | C&W Caribbean | 356.3 | (1.5) | 354.8 | 3% | 4% | | C&W Panama | 180.8 | — | 180.8 | 9% | 9% | | Liberty Networks | 118.6 | 2.2 | 120.8 | —% | (1)% | | Liberty Puerto Rico | 349.5 | — | 349.5 | (12)% | (12)% | | Liberty Costa Rica | 135.2 | 6.9 | 142.1 | 9% | 4% | | Corporate | 5.6 | — | 5.6 | 5% | 5% | | Intersegment eliminations | (25.8) | — | (25.8) | N.M. | N.M. | | Total | 1,120.2 | 7.6 | 1,127.8 | —% | (1)% | Consolidated Leverage Ratios Reconciliation This section reconciles consolidated leverage and net leverage ratios, non-GAAP measures calculated as total debt (net of cash) divided by annualized Adjusted OIBDA, providing insight into aggregate business leverage - Consolidated leverage and net leverage ratios are non-GAAP measures defined as the principal amount of debt and finance lease obligations (less cash and restricted cash) divided by annualized Adjusted OIBDA of the last two quarters[81] - These ratios are useful for investors to consider the aggregate leverage on the business, including leverage at the Liberty Latin America level[81] Consolidated Leverage Ratios Reconciliation (June 30, 2024 vs March 31, 2024) | Metric | June 30, 2024 (in millions, except leverage ratios) | March 31, 2024 (in millions, except leverage ratios) | | :------------------------------------------------------------ | :-------------------------------------------------- | :--------------------------------------------------- | | Total debt and finance lease obligations | 8,080.7 | 8,056.0 | | Discounts, premiums and deferred financing costs, net | 55.6 | 60.4 | | Adjusted total debt and finance lease obligations | 8,136.3 | 8,116.4 | | Less: Cash and cash equivalents | 598.6 | 668.5 | | Less: Restricted cash related to debt | 13.0 | 8.0 | | Net debt and finance lease obligations | $7,524.7 | $7,439.9 | | Operating income – last two quarters | $203.6 | $205.8 | | Annualized operating income – last two quarters annualized | $407.2 | $411.6 | | Adjusted OIBDA – last two quarters | $763.3 | $806.1 | | Annualized Adjusted OIBDA – last two quarters annualized | $1,526.6 | $1,612.2 | | Consolidated debt and finance lease obligations to operating income ratio | 20.0 x | 19.7 x | | Consolidated net debt and finance lease obligations to operating income ratio | 18.5 x | 18.1 x | | Consolidated leverage ratio | 5.3 x | 5.0 x | | Consolidated net leverage ratio | 4.9 x | 4.6 x | Borrowing Group Non-GAAP Reconciliations This section provides specific non-GAAP reconciliations for the C&W, Liberty Puerto Rico, and Liberty Costa Rica borrowing groups, including Adjusted OIBDA and Proportionate Adjusted OIBDA, for detailed performance insights - Adjusted OIBDA for borrowing groups is defined as operating income or loss before share-based compensation, depreciation and amortization, related-party fees, litigation provisions, impairment, restructuring, and other operating items[86] - Proportionate Adjusted OIBDA is Adjusted OIBDA less the noncontrolling interests' share of Adjusted OIBDA[86] Reconciliation of C&W's Operating Income to Adjusted OIBDA and Proportionate Adjusted OIBDA (Q2 & H1 2024) | Metric (USD in millions) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :----------------------- | :------ | :------ | :------ | :------ | | Operating income | 98.0 | 54.2 | 178.4 | 114.8 | | Share-based compensation and other Employee Incentive Plan-related expense | 6.5 | 7.7 | 14.4 | 13.9 | | Depreciation and amortization | 143.0 | 150.6 | 296.5 | 298.2 | | Related-party fees and allocations | 26.8 | 28.2 | 48.0 | 43.6 | | Impairment, restructuring and other operating items, net | 10.1 | 37.0 | 13.8 | 54.2 | | Adjusted OIBDA | 284.4 | 277.7 | 551.1 | 524.7 | | Noncontrolling interests' share of Adjusted OIBDA | 48.3 | 42.9 | 91.8 | 77.9 | | Proportionate Adjusted OIBDA | 236.1 | 234.8 | 459.3 | 446.8 |