Liberty Latin America(LILA) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides comprehensive financial data, including statements, notes, and management's discussion of performance and condition Item 1. FINANCIAL STATEMENTS This section presents unaudited condensed consolidated financial statements, with notes on accounting policies and a significant impairment charge Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total Assets | $11,952.9 | $12,800.0 | | Goodwill | $2,983.5 | $2,981.0 | | Intangible assets not subject to amortization | $1,319.1 | $1,813.3 | | Total Liabilities | $10,830.9 | $11,174.0 | | Total Equity | $1,122.0 | $1,626.0 | - Intangible assets not subject to amortization decreased significantly, primarily due to a $494 million impairment loss on spectrum license intangible assets at Liberty Puerto Rico during Q2 2025[21][58] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss, reflecting operational performance Consolidated Statements of Operations Highlights (in millions, except per share amounts) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $1,086.7 | $1,118.0 | $2,170.2 | $2,217.4 | | Operating income (loss) | $(333.0) | $110.8 | $(204.9) | $203.6 | | Net loss attributable to Liberty Latin America shareholders | $(423.3) | $(42.7) | $(559.7) | $(43.2) | | Basic and diluted net loss per share | $(2.12) | $(0.22) | $(2.82) | $(0.22) | - Impairment, restructuring and other operating items, net, increased significantly from $25.6 million in Q2 2024 to $517.2 million in Q2 2025, primarily due to a $494 million impairment loss on spectrum license intangible assets at Liberty Puerto Rico[26][58][257] Condensed Consolidated Statements of Comprehensive Loss This section presents the total comprehensive loss, including net loss and other comprehensive income or loss Consolidated Statements of Comprehensive Loss Highlights (in millions) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(415.1) | $(36.9) | $(541.8) | $(37.4) | | Other comprehensive earnings (loss) | $4.3 | $(11.5) | $19.1 | $(1.6) | | Comprehensive loss | $(410.8) | $(48.4) | $(522.7) | $(39.0) | - Other comprehensive earnings (loss) improved from a loss of $(11.5) million in Q2 2024 to earnings of $4.3 million in Q2 2025, and from a loss of $(1.6) million in H1 2024 to earnings of $19.1 million in H1 2025, primarily due to foreign currency translation adjustments[29] Condensed Consolidated Statements of Equity This section outlines changes in shareholders' equity, including net income, share repurchases, and other comprehensive income Liberty Latin America Shareholders' Equity Highlights (in millions) | Metric | June 30, 2025 | January 1, 2025 | | :-------------------------------- | :------------ | :-------------- | | Total Liberty Latin America shareholders | $608.4 | $1,121.0 | | Accumulated deficit | $(4,158.4) | $(3,598.7) | | Additional paid-in capital | $5,345.6 | $5,315.6 | | Noncontrolling interests | $513.6 | $505.0 | - Total Liberty Latin America shareholders' equity decreased by $512.6 million from January 1, 2025, to June 30, 2025, primarily driven by the net loss of $(559.7) million during the period[35] Condensed Consolidated Statements of Cash Flows This section details cash flows from operating, investing, and financing activities, indicating liquidity and solvency Consolidated Statements of Cash Flows Highlights (Six months ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $165.8 | $180.2 | | Net cash used by investing activities | $(246.9) | $(282.4) | | Net cash used by financing activities | $(32.2) | $(280.5) | | Net decrease in cash, cash equivalents and restricted cash | $(139.5) | $(385.3) | | Cash, cash equivalents and restricted cash at end of period | $530.8 | $614.5 | - Net cash used by financing activities decreased significantly by $248.3 million, from $(280.5) million in H1 2024 to $(32.2) million in H1 2025, primarily due to higher debt borrowings and lower share repurchases[41][294] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies, significant transactions, and other disclosures - Liberty Latin America is an international provider of fixed, mobile, and subsea telecommunications services across over 20 countries in Latin America and the Caribbean, Puerto Rico, USVI, and Costa Rica[45][46][49] - A $494 million impairment loss was recorded on spectrum license intangible assets at Liberty Puerto Rico during the second quarter of 2025, driven by challenges related to customer migration and network operationalization[57][58] - The company entered into an agreement with Millicom to combine Costa Rica operations, expected to be completed during Q1 2026, and also agreed to acquire an additional 8.5% equity in Liberty Costa Rica for approximately $83 million[60][61] Total Debt Before Premiums, Discounts and Deferred Financing Costs (in millions) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $8,228.4 | | December 31, 2024 | $8,138.8 | - Income tax benefit increased significantly to $155.7 million (Q2 2025) and $146.6 million (H1 2025) from $35.9 million (Q2 2024) and $30.8 million (H1 2024), primarily due to beneficial effects of permanent differences and jurisdictional rate differences, partially offset by increased valuation allowances and global minimum tax effects[115][116][118][119] Revenue by Reportable Segment (Six months ended June 30, in millions) | Segment | 2025 | 2024 | | :------------------ | :----- | :----- | | Liberty Caribbean | $730.2 | $732.5 | | C&W Panama | $354.3 | $366.4 | | Liberty Networks | $225.0 | $227.6 | | Liberty Puerto Rico | $599.7 | $635.8 | | Liberty Costa Rica | $309.5 | $299.5 | | Consolidated Revenue | $2,170.2 | $2,217.4 | Adjusted OIBDA by Reportable Segment (Six months ended June 30, in millions) | Segment | 2025 | 2024 | | :------------------ | :----- | :----- | | Liberty Caribbean | $347.1 | $307.6 | | C&W Panama | $133.2 | $121.6 | | Liberty Networks | $118.7 | $122.3 | | Liberty Puerto Rico | $168.5 | $140.2 | | Liberty Costa Rica | $112.9 | $111.7 | | Total Reportable Segment Adjusted OIBDA | $880.4 | $803.4 | Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes financial condition and operating results, highlighting impacts from acquisitions, currency, and impairment Overview This section provides a high-level summary of the company's operational footprint, subscriber base, and strategic initiatives - As of June 30, 2025, the company served 3,979,400 RGUs (1,807,300 broadband internet, 1,253,900 fixed-line telephony, 918,200 video) and 6,643,600 mobile subscribers across its fixed networks passing 4,795,900 homes[183] - The company is combining its Costa Rica operations with Millicom, with Liberty Latin America and its minority partner holding approximately 86% interest, expected to close in Q1 2026. Additionally, an agreement was made to acquire an additional 8.5% equity in Liberty Costa Rica for $83 million by January 30, 2026[185][186] - New and increased U.S. government tariffs on imported goods may impact the price of mobile handsets in Liberty Puerto Rico, contributing to global economic uncertainty[184] Material Changes in Results of Operations This section analyzes significant changes in revenue, operating expenses, and profitability, including impairment impacts Operating Income (Loss) Changes (Six months ended June 30, in millions) | Metric | 2025 | 2024 | Increase (decrease) | Organic Change | | :------------------------------------ | :----- | :----- | :------------------ | :------------- | | Revenue | $2,170.2 | $2,217.4 | $(47.2) | $(64.8) | | Operating costs and expenses (excl. D&A) | $1,395.9 | $1,497.1 | $(101.2) | $(120.8) | | Depreciation and amortization | $446.3 | $484.5 | $(38.2) | $(38.1) | | Impairment, restructuring, other operating items | $532.9 | $32.2 | $500.7 | $500.7 | | Operating Income (Loss) | $(204.9) | $203.6 | $(408.5) | $(408.6) | Consolidated Adjusted OIBDA (in millions) | Period | 2025 | 2024 | | :------------------- | :----- | :----- | | Three months ended June 30 | $415.0 | $389.1 | | Six months ended June 30 | $821.6 | $763.3 | Adjusted OIBDA Margin by Segment (Six months ended June 30, in %) | Segment | 2025 | 2024 | | :------------------ | :--- | :--- | | Liberty Caribbean | 47.5 | 42.0 | | C&W Panama | 37.6 | 33.2 | | Liberty Networks | 52.8 | 53.7 | | Liberty Puerto Rico | 28.1 | 22.1 | | Liberty Costa Rica | 36.5 | 37.3 | - Depreciation and amortization expense decreased by $38 million (8%) for the six months ended June 30, 2025, primarily due to customer relationship assets becoming fully amortized and certain assets becoming fully depreciated in C&W Panama and Liberty Caribbean[256] - Interest expense increased by $12 million for the six months ended June 30, 2025, primarily due to increases in average debt balances, weighted-average interest rates, and the accretion of the net present value discount associated with the LPR Acquisition deferred payment obligation[260] Realized and Unrealized Gains (Losses) on Derivative Instruments, Net (in millions) | Period | 2025 | 2024 | | :------------------- | :----- | :----- | | Three months ended June 30 | $(24.7) | $23.9 | | Six months ended June 30 | $(87.6) | $70.3 | - Net loss increased significantly to $(541.8) million for the six months ended June 30, 2025, from $(37.4) million in the prior year, largely due to the impairment charge and derivative losses[274] Material Changes in Financial Condition This section discusses significant changes in the company's assets, liabilities, and equity, including liquidity and debt management Cash and Cash Equivalents (in millions) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $514.4 | | December 31, 2024 | $654.3 | - The company's liquidity is primarily held by its three borrowing groups (C&W, Liberty Puerto Rico, and Liberty Costa Rica), with access potentially limited by tax, legal, noncontrolling interests, and foreign currency restrictions[275][277] - Outstanding principal amount of debt and finance lease obligations aggregated $8,233 million at June 30, 2025, with $557 million classified as current and $7,666 million due in 2027 or thereafter[286] - The weighted average interest rate on indebtedness was 6.5% at June 30, 2025, including the effects of derivative instruments, original issue premiums or discounts, and commitment fees[287] Cash Flow Summary (Six months ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | Change | | :------------------------------------------ | :----- | :----- | :------- | | Net cash provided by operating activities | $165.8 | $180.2 | $(14.4) | | Net cash used by investing activities | $(246.9) | $(282.4) | $35.5 | | Net cash used by financing activities | $(32.2) | $(280.5) | $248.3 | | Net decrease in cash | $(139.5) | $(385.3) | $245.8 | Capital Expenditures, Net (Six months ended June 30, in millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Property and equipment additions | $270.5 | $314.5 | | Assets acquired under capital-related vendor financing arrangements | $(55.4) | $(72.1) | | Changes in current liabilities related to capital expenditures and other | $20.9 | $7.8 | | Capital expenditures, net | $236.0 | $250.2 | Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details market risk exposure, including foreign currency and interest rates, and risk management strategies Foreign Currency Rates This section outlines the company's exposure to foreign currency fluctuations and its approach to managing associated risks Foreign Currency Exchange Rates (per one U.S. dollar) | Currency | June 30, 2025 (Spot) | December 31, 2024 (Spot) | H1 2025 (Average) | H1 2024 (Average) | | :------- | :------------------- | :----------------------- | :---------------- | :---------------- | | CRC | 505.48 | 510.49 | 505.75 | 514.00 | | JMD | 160.17 | 155.33 | 157.35 | 154.88 | - The company manages exchange rate risk by actively managing the denominations of its cash balances in consideration of forecasted liquidity requirements[299] Interest Rate Risks This section describes the company's exposure to interest rate fluctuations and its use of derivative instruments for hedging - The company uses interest rate derivative contracts (swaps, caps, floors) to protect against increases in the interest rates on its variable-rate debt[301] - At June 30, 2025, 95% of the company's total debt had a fixed or capped interest rate, including the impact of interest rate derivative contracts[301] Sensitivity Information This section provides quantitative analysis of the potential impact of market rate changes on derivative instrument fair values - An instantaneous 100 basis point increase (decrease) in the relevant base rate would change the aggregate fair value of C&W interest rate derivative contracts by approximately $111 million[303] - An instantaneous 100 basis point increase (decrease) in the relevant base rate would change the aggregate fair value of Liberty Puerto Rico interest rate derivative contracts by approximately $14 million[304] - An instantaneous 10% increase (decrease) in the value of the Costa Rica Colon relative to the U.S. dollar would change the aggregate fair value of Liberty Costa Rica foreign currency forward contracts by approximately $16 million[305] Projected Cash Flows Associated with Derivative Instruments This section presents anticipated net cash payments or receipts related to the company's derivative instruments Projected Derivative Cash Payments (Receipts), Net (in millions, as of June 30, 2025) | Category | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | | :-------------------------- | :---------------- | :--- | :--- | :--- | :--- | :--- | :--------- | :------ | | Interest-related | $(19.8) | $(36.6) | $(57.2) | $(43.3) | $(1.7) | $(1.7) | $(2.2) | $(162.5) | | Other (foreign currency) | — | $7.6 | $2.4 | — | — | — | — | $10.0 | | Total | $(19.8) | $(29.0) | $(54.8) | $(43.3) | $(1.7) | $(1.7) | $(2.2) | $(152.5) | Item 4. CONTROLS AND PROCEDURES This section addresses disclosure controls and internal control over financial reporting, noting un-remediated material weaknesses Evaluation of Disclosure Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures as of the reporting date - The company's disclosure controls and procedures were concluded to be ineffective as of June 30, 2025, due to un-remediated material weaknesses in internal control over financial reporting[311] Management's Remediation Plans This section outlines management's ongoing efforts to strengthen internal control over financial reporting and address identified weaknesses - Management, with oversight from the Audit Committee, is continuing to implement remediation plans to strengthen internal control over financial reporting and address identified material weaknesses[312] Changes in Internal Control over Financial Reporting This section describes specific actions taken to improve internal control over financial reporting during the reporting period - Designed and implemented additional manual procedures and controls - Hired a new Vice President of Controls and Compliance - Held workshops and trainings to reinforce control concepts and responsibilities[314] PART II - OTHER INFORMATION This section provides disclosures on legal proceedings, equity security sales, other information, and a list of filed exhibits Item 1. LEGAL PROCEEDINGS This section notes the company's involvement in ordinary course litigation and refers to financial statement notes for contingent liabilities - The company has contingent liabilities related to matters arising in the ordinary course of business, including legal proceedings, tax issues, and disputes over interconnection, programming, and copyright fees[124][316] - A claim was received in Q1 2025 regarding possible overpayments under a transitional services agreement, for which a possible loss or range of loss cannot yet be estimated[124] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the company's Share Repurchase Programs, noting no repurchases in Q2 2025 and $242 million remaining authorized - The company's Directors approve Share Repurchase Programs authorizing repurchases of Class A and/or Class C common shares through various means[111][317] - No repurchases of Class A or C common shares occurred during the three months ended June 30, 2025[318] - As of June 30, 2025, $242 million remained authorized for share repurchases under the Share Repurchase Programs[318] Item 5. OTHER INFORMATION This section confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - None of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[319] Item 6. EXHIBITS This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL taxonomy documents - Certification of President and Chief Executive Officer (Exhibit 31.1) - Certification of Senior Vice President and Chief Financial Officer (Principal Financial Officer) (Exhibit 31.2) - Section 1350 Certifications (Exhibit 32) - XBRL Inline Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents (Exhibits 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) - Cover Page Interactive Data File (Exhibit 104)[320]