Liberty Broadband(LBRDA) - 2024 Q4 - Annual Results

Executive Summary & Corporate Updates Liberty Broadband reported Q4 and full-year 2024 results, detailing the ongoing merger with Charter, the planned GCI spin-off, and share repurchase activities Corporate Headlines Liberty Broadband reported its Q4 and full-year 2024 results, highlighting the ongoing merger with Charter and the planned spin-off of GCI, with the Charter transaction receiving shareholder approval and expected to generate significant value - The merger with Charter is progressing well, with requisite shareholder approval obtained. The company is actively working towards spinning off GCI in 2025[2] - The transaction is expected to generate significant value for shareholders, with strong support for Charter and its management team[2] Merger and Spin-off Updates Liberty Broadband entered a definitive agreement to be acquired by Charter on November 12, 2024, with shareholder approval on February 26, 2025, and the transaction is anticipated to close by June 30, 2027, following the expected spin-off of the GCI business in summer 2025, while Charter will repurchase $100 million of its Class A common stock monthly from Liberty Broadband until the merger completion - Liberty Broadband entered a definitive agreement to be acquired by Charter on November 12, 2024. Shareholders approved the transaction on February 26, 2025[3][4] - The transaction is expected to close on June 30, 2027, contingent on the GCI spin-off and other conditions[4][6] - Liberty Broadband expects to spin off its GCI business in the summer of 2025[4] - Charter will repurchase $100 million of its Class A common stock from Liberty Broadband monthly until the proposed combination is complete, subject to certain adjustments[4] Charter Investment and Share Sales | Metric | Value | | :-------------------------------- | :------------------- | | Fair value of Charter investment (Dec 31, 2024) | $15.5 billion | | Proceeds from Charter share sales (Nov 1, 2024 - Jan 31, 2025) | $205 million | | Number of Charter shares sold | 541 thousand | Share Repurchases Liberty Broadband did not repurchase its common stock between November 1, 2024, and January 31, 2025, with the remaining repurchase authorization at approximately $1.7 billion, but repurchases are currently restricted by the merger agreement with Charter - No repurchases of Liberty Broadband's common stock occurred from November 1, 2024, through January 31, 2025[7] - Remaining repurchase authorization as of January 31, 2025, is approximately $1.7 billion[7] - Repurchases of Liberty Broadband's common stock are restricted by the merger agreement with Charter[7] Balance Sheet Overview Liberty Broadband's balance sheet shows increased cash and public holdings, alongside a slight rise in total debt, maintaining stable leverage Cash and Public Holdings Liberty Broadband's consolidated cash, cash equivalents, restricted cash, and restricted cash equivalents increased to $229 million as of December 31, 2024, primarily due to proceeds from Charter share sales, while the fair value of public holdings in Charter also increased to $15.524 billion Cash and Public Holdings (Amounts in millions) | Metric | 9/30/2024 | 12/31/2024 | | :----------------------------------------------------------------- | :-------- | :--------- | | Total Liberty Broadband Consolidated Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $174 | $229 | | Fair Value of Public Holdings in Charter | $14,769 | $15,524 | - Liberty Broadband's cash and restricted cash increased by $55 million in Q4, primarily from Charter share sales. GCI's cash and restricted cash increased by $22 million due to net debt borrowing and cash from operations, partially offset by capital expenditures[10] Debt Structure Total Liberty Broadband debt increased slightly to $3,742 million as of December 31, 2024, mainly due to additional borrowing under the GCI senior credit facility, with GCI's leverage remaining stable at 3.1x and significant undrawn capacity available under both the Charter margin loan and GCI's credit facility Debt Structure (Amounts in millions) | Debt Category | 9/30/2024 | 12/31/2024 | | :------------------------------------------ | :-------- | :--------- | | Total GCI Holdings Debt | $1,110 | $1,127 | | Total Corporate Level Debt | $2,615 | $2,615 | | Total Liberty Broadband Debt | $3,725 | $3,742 | | Total Liberty Broadband Debt (GAAP) | $3,712 | $3,756 | - Liberty Broadband debt increased by $17 million in the fourth quarter, primarily due to additional borrowing under the GCI senior credit facility[11] - GCI's leverage, as defined in its credit agreement, remained at 3.1x[9][11] - Available capacity under the Charter margin loan is $1,150 million, and GCI's credit facility has $342 million of undrawn capacity (net of letters of credit)[11] GCI Operating and Financial Performance GCI reported revenue growth driven by its Business segment, with increased operating income but flat Adjusted OIBDA for the full year GCI Consolidated Financial Metrics GCI's total revenue grew 5% in Q4 2024 and 4% for the full year 2024, reaching $1,016 million, while operating income saw significant increases, up 35% in Q4 and 23% for the full year, and Adjusted OIBDA decreased 4% in Q4 but remained flat for the full year GCI Consolidated Financial Metrics (Amounts in millions) | Metric | 4Q23 | 4Q24 | % Change (4Q) | 2023 | 2024 | % Change (FY) | | :------------------------ | :--- | :--- | :------------ | :--- | :--- | :------------ | | Revenue | $250 | $263 | 5 % | $981 | $1,016 | 4 % | | Operating income | $26 | $35 | 35 % | $117 | $144 | 23 % | | Operating income margin (%) | 10.4% | 13.3% | 290 bps | 11.9% | 14.2% | 230 bps | | Adjusted OIBDA | $90 | $86 | (4)% | $361 | $362 | - % | | Adjusted OIBDA margin (%) | 36.0% | 32.7% | (330)bps | 36.8% | 35.6% | (120)bps | GCI Consumer Segment Performance GCI Consumer revenue remained flat in both Q4 and full-year 2024, with data revenue seeing slight growth while wireless revenue experienced minor declines, and cable modem subscribers decreased by 3% year-over-year, while wireless lines in service increased by 1% GCI Consumer Financial Metrics (Amounts in millions) | Metric | 4Q23 | 4Q24 | % Change (4Q) | 2023 | 2024 | % Change (FY) | | :---------------- | :--- | :--- | :------------ | :--- | :--- | :------------ | | Total revenue | $119 | $119 | - % | $468 | $469 | - % | | Data revenue | $58 | $59 | 2 % | $233 | $238 | 2 % | | Wireless revenue | $51 | $50 | (2)% | $193 | $191 | (1)% | GCI Consumer Operating Metrics | Metric | 2023 | 2024 | % Change (FY) | | :-------------------- | :----- | :----- | :------------ | | Cable modem subscribers | 159,700 | 155,700 | (3)% | | Wireless lines in service | 197,300 | 198,800 | 1 % | GCI Business Segment Performance GCI Business revenue increased significantly, up 10% in Q4 and 7% for the full year 2024, primarily driven by strong data revenue growth, while wireless and other revenue streams in this segment experienced declines GCI Business Financial Metrics (Amounts in millions) | Metric | 4Q23 | 4Q24 | % Change (4Q) | 2023 | 2024 | % Change (FY) | | :---------------- | :--- | :--- | :------------ | :--- | :--- | :------------ | | Total revenue | $131 | $144 | 10 % | $513 | $547 | 7 % | | Data revenue | $110 | $127 | 15 % | $427 | $469 | 10 % | | Wireless revenue | $12 | $11 | (8)% | $50 | $47 | (6)% | GCI Operational Discussion & Capital Expenditures GCI's revenue growth was driven by the Business segment, particularly from upgrades in schools and healthcare in remote Alaska, with operating income increasing due to lower depreciation, while Adjusted OIBDA was flat for the full year, impacted by increased SG&A expenses, and capital expenditures in 2024 focused on network improvements in rural Alaska, with a significant increase projected for 2025 to fulfill Alaska Plan build-out requirements - GCI's full-year revenue grew 4% to $1.0 billion, driven by a 7% increase in Business revenue, particularly from a strong upgrade cycle in schools and healthcare corporations in remote Alaska[4][16] - Operating income increased in Q4 and full year, primarily due to lower depreciation expense as certain assets became fully depreciated in 2023[17] - Adjusted OIBDA decreased 4% in Q4 and was flat for the full year, as the shift to higher-margin business data revenue was offset by increased selling, general and administrative expense due to increased salaries and headcount[17] GCI Capital Expenditures | Metric | 2024 | 2025 (Expected) | | :-------------------------------- | :--- | :-------------- | | Net Capital Expenditures | $193 million | ~$250 million | - Increased capital expenditures in 2025 are primarily related to additional investments in middle and last mile connectivity and network expansion in rural Alaska, including the Bethel and AU-Aleutians fiber projects, to fulfill Alaska Plan build-out requirements[18] Liberty Broadband Consolidated Financial Metrics Liberty Broadband's total revenue for 2024 was $1,016 million, up from $981 million in 2023, with operating income increasing to $92 million in 2024 from $73 million in 2023, while Adjusted OIBDA slightly decreased to $327 million from $337 million Liberty Broadband Consolidated Financial Metrics (Amounts in millions) | Metric | 4Q23 | 4Q24 | 2023 | 2024 | | :------------------------------------ | :--- | :--- | :--- | :--- | | Total Liberty Broadband Revenue | $250 | $263 | $981 | $1,016 | | Total Liberty Broadband Operating Income (Loss) | $13 | $13 | $73 | $92 | | Total Liberty Broadband Adjusted OIBDA | $83 | $69 | $337 | $327 | GAAP Financial Statements Liberty Broadband's GAAP financial statements show increased assets, equity, and net earnings, with improved cash flow from operations in 2024 Balance Sheet Information (Detailed) As of December 31, 2024, Liberty Broadband's total assets increased to $16,687 million from $15,641 million in 2023, primarily driven by an increase in the investment in Charter, while total liabilities also increased to $6,879 million, and total equity grew to $9,808 million Liberty Broadband Balance Sheet Highlights (Amounts in millions) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------------------- | :----------- | :----------- | | Total assets | $16,687 | $15,641 | | Investment in Charter, accounted for using the equity method | $13,057 | $12,116 | | Total current assets | $423 | $430 | | Total liabilities | $6,879 | $6,618 | | Long-term debt, net | $3,753 | $3,733 | | Total equity | $9,808 | $9,023 | Statement of Operations Information For the year ended December 31, 2024, Liberty Broadband reported net earnings attributable to shareholders of $869 million, an increase from $688 million in 2023, with this improvement largely driven by a higher share of earnings from affiliates, despite increased interest expense and realized/unrealized losses on financial instruments Liberty Broadband Statement of Operations Highlights (Amounts in millions, except per share) | Metric | 2024 | 2023 | | :----------------------------------------------------------------- | :--- | :--- | | Revenue | $1,016 | $981 | | Operating income (loss) | $92 | $73 | | Share of earnings (losses) of affiliate | $1,323 | $1,155 | | Interest expense | $(194) | $(206) | | Net earnings (loss) attributable to Liberty Broadband shareholders | $869 | $688 | | Basic net earnings (loss) per common share | $6.08 | $4.71 | | Diluted net earnings (loss) per common share | $6.08 | $4.68 | Statement of Cash Flows Information Liberty Broadband generated $104 million in net cash from operating activities in 2024, a significant increase from $16 million in 2023, with net cash provided by investing activities at $130 million, while net cash used in financing activities decreased to $181 million, and the company ended 2024 with $229 million in cash and equivalents Liberty Broadband Statement of Cash Flows Highlights (Amounts in millions) | Metric | 2024 | 2023 | | :------------------------------------------ | :--- | :--- | | Net cash provided by (used in) operating activities | $104 | $16 | | Net cash provided by (used in) investing activities | $130 | $150 | | Net cash provided by (used in) financing activities | $(181) | $(390) | | Cash received for Charter shares repurchased by Charter | $335 | $394 | | Capital expenditures | $(247) | $(222) | | Repurchases of Liberty Broadband common stock | $(89) | $(227) | | Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $229 | $176 | Non-GAAP Financial Measures This section defines Adjusted OIBDA as a key non-GAAP metric and provides its reconciliation for both GCI Holdings and Liberty Broadband Adjusted OIBDA Definition and Rationale Liberty Broadband uses Adjusted OIBDA, a non-GAAP financial measure, to provide additional insight into its financial results, defined as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, and impairment charges, and is considered an important indicator of operational strength and performance, allowing management to assess business performance and identify improvement strategies - Adjusted OIBDA is a non-GAAP financial measure defined as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, and impairment charges[24] - Adjusted OIBDA is used to identify items not directly reflective of business performance or ongoing trends, enabling management to view operating results, perform analytical comparisons, and identify strategies to improve performance[25] GCI Holdings Adjusted OIBDA Reconciliation GCI Holdings' Adjusted OIBDA for 2024 was $362 million, remaining flat compared to 2023, reconciled from an operating income of $144 million by adding back depreciation and amortization of $207 million and stock-based compensation of $11 million GCI Holdings Adjusted OIBDA Reconciliation (Amounts in millions) | Metric | 4Q23 | 4Q24 | 2023 | 2024 | | :-------------------------- | :--- | :--- | :--- | :--- | | GCI Holdings Operating Income | $26 | $35 | $117 | $144 | | Depreciation and amortization | $61 | $50 | $230 | $207 | | Stock-based compensation | $3 | $1 | $14 | $11 | | GCI Holdings Adjusted OIBDA | $90 | $86 | $361 | $362 | Liberty Broadband Adjusted OIBDA Reconciliation Liberty Broadband's consolidated Adjusted OIBDA for 2024 was $327 million, a slight decrease from $337 million in 2023, derived from an operating income of $92 million, adjusted for depreciation and amortization of $207 million and stock-based compensation of $28 million Liberty Broadband Adjusted OIBDA Reconciliation (Amounts in millions) | Metric | 4Q23 | 4Q24 | 2023 | 2024 | | :-------------------------------- | :--- | :--- | :--- | :--- | | Liberty Broadband Operating Income (Loss) | $13 | $13 | $73 | $92 | | Depreciation and amortization | $61 | $50 | $230 | $207 | | Stock-based compensation | $9 | $6 | $34 | $28 | | Liberty Broadband Adjusted OIBDA (Loss) | $83 | $69 | $337 | $327 | Important Notices and Disclosures This section provides conference call details and important disclosures regarding forward-looking statements and associated risks and uncertainties Conference Call Details Liberty Broadband's earnings conference call was scheduled for 11:15 a.m. (E.T.) on February 27, 2025, with access details, including dial-in numbers and webcast information, provided for investors - Liberty Broadband's earnings conference call was scheduled for 11:15 a.m. (E.T.) on February 27, 2025[21] - The call could be accessed by dialing (877) 407-3944 or (412) 902-0038, passcode 13749591, or via webcast at **https://www.libertybroadband.com/investors/news-events/ir-calendar**[21](index=21&type=chunk) Forward-Looking Statements and Risks The press release contains forward-looking statements regarding business strategies, financial prospects, capital expenditures, the Charter combination, GCI divestiture, and stock repurchases, which are subject to various risks and uncertainties, including market acceptance, competition, regulatory matters, access to capital, and general market conditions, that could cause actual results to differ materially - The press release includes forward-looking statements concerning business strategies, market potential, future financial prospects, capital expenditures, matters related to Liberty Broadband's equity interest in Charter, Charter's stock buyback, Liberty Broadband's participation in the buyback, the continuation of the stock repurchase program, and expectations regarding the combination with Charter and divestiture of GCI[22] - These statements involve risks and uncertainties that could cause actual results to differ materially, including changes in market acceptance, competitive issues, regulatory matters, access to capital, changes in law, investment opportunities, general market conditions, and the satisfaction of conditions for the Charter combination[22] - Liberty Broadband disclaims any obligation to update or revise any forward-looking statement and advises readers to refer to publicly filed documents, including the most recent Form 10-K, for additional information on risks and uncertainties[22][23]