Liberty(FWONK) - 2022 Q3 - Quarterly Report

Part I – Financial Information This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis Financial Statements This section presents Liberty Media Corporation's unaudited condensed consolidated financial statements and related notes for Q3 and YTD 2022 Condensed Consolidated Balance Sheets Liberty Media's balance sheet as of September 30, 2022, shows total assets of $43.2 billion and total equity of $18.5 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $43,235 | $44,351 | | Total Current Assets | $3,970 | $4,812 | | Goodwill | $19,341 | $19,248 | | Total Liabilities | $24,191 | $25,514 | | Total Current Liabilities | $4,164 | $6,610 | | Long-term Debt | $17,066 | $15,699 | | Total Equity | $18,466 | $18,262 | Condensed Consolidated Statements of Operations Total revenue for Q3 2022 reached $3.25 billion, with nine-month revenue at $9.07 billion and net earnings of $1.25 billion Key Operating Results (in millions, except per share data) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $3,247 | $3,100 | $9,074 | $8,230 | | Sirius XM Holdings Revenue | $2,280 | $2,198 | $6,720 | $6,415 | | Formula 1 Revenue | $715 | $668 | $1,819 | $1,349 | | Operating Income | $506 | $702 | $1,525 | $1,466 | | Net Earnings Attributable to Liberty Stockholders | $391 | $328 | $1,253 | $629 | | Diluted EPS (Liberty SiriusXM) | $0.82 | $1.02 | $2.89 | $1.98 | Condensed Consolidated Statements of Comprehensive Earnings (Loss) Comprehensive earnings for Q3 2022 were $318 million, increasing to $1.22 billion for the nine-month period Comprehensive Earnings (Loss) Attributable to Liberty Stockholders (in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three months ended Sep 30 | $318 | $277 | | Net earnings (loss) | $434 | $400 | | Other comprehensive earnings (loss), net of taxes | $(77) | $(53) | | Nine months ended Sep 30 | $1,216 | $537 | | Net earnings (loss) | $1,404 | $914 | | Other comprehensive earnings (loss), net of taxes | $(37) | $(90) | Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $1.74 billion for the nine months ended September 30, 2022, with increased cash used in financing Net Cash Flow Summary (Nine months ended Sep 30, in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,740 | $1,673 | | Net Cash from Investing Activities | ($506) | ($615) | | Net Cash from Financing Activities | ($1,580) | ($981) | | Net (decrease) in cash | ($359) | $72 | | Cash at beginning of period | $2,924 | $2,877 | | Cash at end of period | $2,565 | $2,949 | Condensed Consolidated Statements of Equity Total equity increased to $18.47 billion by Q3 2022, driven by net earnings despite significant share repurchases - Total equity rose to $18.47 billion at the end of Q3 2022, up from $18.26 billion at the start of the year[33] - Key drivers for the change in equity during the first nine months of 2022 include net earnings of $1.25 billion (attributable to stockholders), Liberty stock repurchases of $395 million, and subsidiary share repurchases of $594 million[33] Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, tracking stock structure, fair value measurements, debt, and segment performance - The company is primarily engaged in the media and entertainment industries through its significant subsidiaries: Sirius XM Holdings Inc., Delta Topco Limited (Formula 1), and Braves Holdings, LLC[43] - The company's most significant equity method investment is in Live Nation Entertainment, Inc[43] - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and should be read with the 2021 Annual Report on Form 10-K[44] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, consolidated results, segment performance, liquidity, and cash flows for the nine months ended September 30, 2022 Overview The company operates via three tracking stock groups, with key assets including Sirius XM and Formula 1, showing strong post-COVID recovery - The Liberty SiriusXM Group is primarily comprised of interests in Sirius XM Holdings and Live Nation[218] - The Braves Group is primarily comprised of Braves Holdings, which owns the Atlanta Braves MLB team and associated real estate development[220] - The Formula One Group is primarily comprised of the global motorsports business Formula 1 and an interest in Liberty Media Acquisition Corporation (LMAC)[222] - The impact of COVID-19 has diminished, with the Atlanta Braves playing a full 162-game schedule in 2022 and Formula 1 expecting to hold 22 events with record attendance[223] Results of Operations—Consolidated Consolidated revenue grew to $9.07 billion and operating income to $1.53 billion for the nine months ended September 30, 2022, driven by segment growth Consolidated Revenue by Segment (Nine months ended Sep 30, in millions) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Sirius XM Holdings | $6,720 | $6,415 | | Braves Group | $535 | $466 | | Formula One Group | $1,819 | $1,349 | | Total | $9,074 | $8,230 | Consolidated Adjusted OIBDA by Segment (Nine months ended Sep 30, in millions) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Liberty SiriusXM Group | $2,073 | $2,089 | | Braves Group | $74 | $86 | | Formula One Group | $416 | $298 | | Total | $2,563 | $2,473 | Other Income and Expense Total other income was $293 million for the nine months ended September 30, 2022, primarily due to gains on financial instruments and affiliate earnings Components of Other Income (Expense) (Nine months ended Sep 30, in millions) | Component | 2022 | 2021 | | :--- | :--- | :--- | | Interest expense | ($497) | ($484) | | Share of earnings (losses) of affiliates, net | $158 | ($134) | | Realized and unrealized gains (losses) on financial instruments, net | $545 | $66 | | Gains (losses) on dilution of investment in affiliate | $9 | $152 | | Other, net | $78 | ($54) | | Total Other Income (Expense) | $293 | ($454) | - The significant swing in 'Share of earnings (losses) of affiliates' was mainly due to improved performance from Live Nation, which contributed a $140 million gain in YTD 2022 compared to a $169 million loss in YTD 2021[236] Material Changes in Financial Condition Liberty held $2.54 billion in cash as of September 30, 2022, with significant cash uses including debt repayments and a Las Vegas land purchase Cash and Cash Equivalents by Group (as of Sep 30, 2022, in millions) | Group | Cash & Cash Equivalents | | :--- | :--- | | Liberty SiriusXM Group | $264 | | Braves Group | $159 | | Formula One Group | $2,119 | - Liberty's primary uses of cash in the first nine months of 2022 were $2.0 billion for debt repayments, $241 million for a land purchase in Las Vegas for the Grand Prix, and over $395 million in stock repurchases[253] - Sirius XM Holdings paid $1.245 billion in dividends during the first nine months of 2022, of which Liberty received $1.012 billion[254] Results of Operations—Businesses Detailed review of business segments, including Sirius XM, Formula 1, and Braves Holdings, all showing revenue growth - Sirius XM Holdings operates two main businesses: the Sirius XM satellite and streaming service, and the Pandora streaming platform[263] - Formula 1's business is centered on the commercial exploitation of the annual Formula 1 World Championship[294] - Braves Holdings operates the Atlanta Braves MLB team and a mixed-use real estate development project[308] Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from stock price and interest rate fluctuations, with $17.5 billion in debt and exposure to equity investments Debt Composition by Interest Rate Type (as of Sep 30, 2022, in millions) | Group | Variable Rate Debt | Fixed Rate Debt | | :--- | :--- | :--- | | Liberty SiriusXM Group | $1,796 | $11,626 | | Braves Group | $169 | $432 | | Formula One Group | $832 | $2,637 | - The company is actively managing the transition from LIBOR to alternative benchmark rates like SOFR for its variable-rate debt, which could impact future borrowing costs[318][320] - The company holds $108 million in marketable equity securities A 10% decline in their market price would result in an $11 million loss in value The investment in Live Nation, not carried at fair value, would have been $530 million lower with a 10% price drop[322] Controls and Procedures Management confirmed effective disclosure controls and no material changes to internal controls over financial reporting as of September 30, 2022 - The company's executives concluded that disclosure controls and procedures were effective as of September 30, 2022[323] - No material changes occurred in the company's internal control over financial reporting during the quarter ended September 30, 2022[324] Part II — Other Information This section provides additional information including legal proceedings, equity security sales, and a list of exhibits Legal Proceedings This section refers to Note 10 of the financial statements for details on ongoing legal proceedings - For details on legal proceedings, the report directs readers to Note 10 in the financial statements[326] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1.02 million Liberty SiriusXM shares for $39 million in Q3 2022, with $1.1 billion remaining in the repurchase program Share Repurchase Activity (Q3 2022) | Stock Series | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Series A Liberty SiriusXM | 229,700 | $36.52 | | Series C Liberty SiriusXM | 794,500 | ~$38.50 (calculated) | - As of September 30, 2022, approximately $1.1 billion remained available for future repurchases under the company's authorized program[328] Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and unaudited tracking stock financial information - Key exhibits filed include CEO/CFO certifications and unaudited financial information for the tracking stock groups[332]