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Liberty Broadband Corp (LBRDA) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribers – Aug 11, 2021 at 2:07PM

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LBRDA earnings call for the period ending June 30, 2021.

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Liberty Broadband Corp (LBRD.A -0.78%)
Q2 2021 Earnings Call
Aug 6, 2021, 11:15 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Liberty Broadband 2021 Quarter Two Earnings Call. [Operator Instructions] I would now like to turn the conference over to Courtnee Chun, Chief Portfolio Officer. Please go ahead.

Courtnee Chun -- Chief Portfolio Officer

Thank you. 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 Forms 10-K and 10-Q filed for Liberty Broadband and Liberty TripAdvisor with the SEC. These forward-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 forward-looking statements contained herein to reflect any change in Liberty Broadband or Liberty TripAdvisor's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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 note and schedules one and two, can be found in the earnings press release issued today, which is available on Liberty Broadband's website.

Now, I'd like to turn the call over to Liberty President and CEO, Greg Maffei.

Gregory B Maffei -- President & Chief Executive Officer

Thank you, Courtnee, and good morning to our listeners. Today, speaking on the call, we will also have Liberty Broadband's Chief Accounting Officer and Principal Financial Officer, Brian Wendling. Also during Q&A, we will answer questions related to Liberty TripAdvisor who hosted their earnings call earlier this morning. Ron Duncan, the CEO of GCI and Pete Pounds, the CFO of GCI will also be available to answer questions.

So, let me start with numbers at Liberty Broadband itself. We continue to participate in Charter's buyback, holding our fully diluted ownership at 26%. From May 1 through July 31, we received $1.1 billion of proceeds. We use these proceeds plus additional cash held at LBRD to repurchase 7.5 million LBRDK shares for $1.3 billion over the same period at an average price per share of $167.17. This is a very attractive look through price for Charter compared to the approximately -- of approximately $5.60 per share versus yesterday's close of $7.70 per share.

As we said before, Liberty Broadband is a very attractive levered play on Charter and you can see that in our results year-to-date our LBRD repurchases plus strong performance in Charter have accrued our NAV per share almost 17% compared to Charter's growth of 15% over the same period. As we mentioned last quarter, we expect LBRD purchases -- repurchases on an annual basis to match or exceed the after-tax proceeds from our Charter share sales. Notably, the Board also increased the buyback authorization at Liberty Broadband $2.5 billion.

So, turning to Charter itself, which had another quarter of great results, residential revenue was up 6.9% and still over 6% adjusting for last year's COVID impacts. Adjusted EBITDA was up 11.8%, the fourth consecutive quarter of double-digit EBITDA growth at Charter. We had another strong broadband quarter. We have net adds of 400,000, up meaningfully compared to the second quarter of 2019 pre-COVID. In mobile Charter added 265,000 new lines and is approaching a 3 million total lines after only three years of offering the service.

We are seeing a nice rebounds in the segments that have been -- were most affected by the pandemic, notably Charter's participating in our recovery of the advertising market and advertising revenue was up 65% over 2020 and 4% over 2019. We also see a continued recovery in commercial revenue with strong growth of 5.6%.

Now, with that let me turn it over to Liberty TripAdvisor. And at TripAdvisor, leisure travel is back. U.S. continues to lead with our hotel auction revenue nearly reaching 2019 levels in the second quarter and trending positively throughout the quarter. Europe has picked up recently with hotel shoppers reaching approximately 75% of 2019 comparable levels, up 45% from the first quarter.

Consolidated monthly revenue as a percent of revenue of 2019, excuse me, consolidated monthly revenues as a percent of 2019 revenues continues to trend up growing from 46% in April to 66% in June. EBITDA turned positive to $25 million in the second quarter, up from -- up $51 million from our first quarter results. This was driven by the revenue recovery as well as cost discipline referring to this during the pandemic. The majority of our 2020 fixed cost savings are expected to remain in place in 2020.

Trip during the pandemic has building -- have been building the tools to be even more relevant as travel resumes. We are differentiating our offerings and experiences in dining, we've rolled out a redesign Trip app and we continue to invest in TripAdvisor Plus subscription service. We expanded the TripAdvisor Plus to all customers, U.S. customers in June and we've entered into new partnerships to enhance the value proposition, including partnering with the first major OTA Trip.com Group adding car rental benefits through Hertz and flight discount through Dollar Flight Club. You should expect we will continue to enhance the supply offering at TripAdvisor Plus to further OTA and direct hotel partnerships.

And with that, I'll turn it over to Brian to discuss the financials.

Brian J. Wendling -- Chief Accounting Officer and Principal Financial Officer

Thank you, Greg. At quarter end, Liberty Broadband had consolidated cash and cash equivalents of $219 million, which includes $41 million of cash at GCI. The value of our Charter investment based on the shares that we held on August 1 to Charter's closing price as of yesterday was $43 billion. At quarter end, Liberty Broadband had a total principal amount of debt of $3.8 billion, which includes $1.2 billion of debt at GCI. During the quarter we amended our Charter margin loan, reducing pricing 35 basis points and extending the maturity by two years to May 2024. In connection with the amendment, we repaid $850 million under the margin loan leaving $1.5 billion of undrawn margin loan capacity.

GCI continue to delever driven by strong results and an additional $30 million pay-down on the revolver. Leverage, as defined in its credit agreement, was 3.3 times as of quarter end. GCI has $452 million undrawn capacity on its line of credit. Note that the above amounts exclude the indemnification obligation and preferred stock. Looking at GCI, GCI had a great second quarter. Revenue grew 7% and adjusted OIBDA grew 14% to $89 million, driven by continued strong demand for consumer wireless and data as well as business data. Operationally, GCI added over 10,000 consumer revenue generating cable modem subscribers and nearly 10,000 consumer revenue generating wireless subscribers over the past year.

With that, I'll turn it back over to Greg.

Gregory B Maffei -- President & Chief Executive Officer

Thanks, Brian. An exciting news our Investor Meeting will be held on Thursday, November 18. The full experience will be offered in-person at the New York Times Center and virtually. Please save the date. Additional details will be provided soon. And please note that all in-person attendees must be fully vaccinated against COVID-19. We appreciate your continued interest in Liberty Broadband and Liberty TripAdvisor.

And with that, I'd like to open the line for questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll now take the first question from James Ratcliffe at Evercore ISI. Please go ahead.

James Ratcliffe -- Evercore-ISI -- Anlayst

Thanks. One question for two people, if I could. Greg regarding Charter and Ron regarding GCI. Can you talk about the -- what looks like to be the infrastructure bill and both what opportunities and what risks that comes with it for the two businesses? Thanks.

Gregory B Maffei -- President & Chief Executive Officer

Ron, I'll let you go first.

Ronald Duncan -- Chief Executive Officer and Co-Founder

Thanks, Greg. I appreciate that. I think a lot is up in the air right now on the infrastructure bill in terms of exactly how it will impact the market up here. Obviously, we have a substantial number of locations that would fit in the unserved categories. So, they would be eligible for a funding under the proposal. There are some upside opportunities for GCI. There's some facilities where we could expand our coverage, building fiber out of the bethel areas is something we've been trying to figure out how to put together for a long time and we're working with one group now under the travel broadband program to see if that could come together. There's also some risks because they likely to be some start-up operators coming in. I think it's hard for people to compete with just sections of our network, but clearly some risk for us, not necessarily of overbuilding, but of market disruption. When you put that much money that fast into the marketplace, it does create disruptions. Also I think some real challenges in terms of the anticipated time frame. I think the -- what they anticipate in terms of the requirements for build not particularly realistic in terms of available workforce, available equipment, available technology. But a lot more to be determined once there is a final version of the bill.

Gregory B Maffei -- President & Chief Executive Officer

Yeah. And I agree with Ron's comments, I think for Charter, potential in certain markets. You have increased competition doing money being funded. I think there's going to be a rush of entities, whether it's states or municipalities, thinking counties thinking that they can out of the broadband business, whether they actually can. We'll see. But there will be some probably impact on talent. As Ron pointed out, pouring all that money and expecting the time frames the things are going to get done, means in a lot of cases, you'll be seeing people trying to hire installers or pick whatever you want that is going to have an impact, secondary impact on us and some of our markets. The bill could have been and there is still details to be worked out is Ron rightly points out. The bill could have been far worse in terms of potential for encouraging either fiber-only, 100 or 100 symmetric, mini overbuild, all of those things are fairly muted it appears in terms of what the most radical elements would have liked. So, all in all, I would say, it's a TBD on a lot of things, but probably not as bad as it could have been.

James Ratcliffe -- Evercore-ISI -- Anlayst

Thank you.

Operator

We'll now take the next question from Matthew Harrigan of Benchmark. Please go ahead.

Matthew Harrigan -- Benchmark -- Analyst

Thank you, Greg, given your very broad prism on TMT, the formerly eight board member, Xbox, Formula 1 AR, what's your perspective on really creating the apps that justify the demand for full gig, broadband, not just the gaming flavor, but just overall. I mean, it's a nice marketing proposition. But it feels like there is always to go in terms of realizing the lane potential. Thanks.

Gregory B Maffei -- President & Chief Executive Officer

I'm making sure I understand, Matthew. Do I think there is going to be further opportunities around real time gaming as networks get faster and demand gets higher, is that...

Matthew Harrigan -- Benchmark -- Analyst

Yeah, not the low latency gaming, but I mean you -- I think just everything comes over, your transfer in terms of deals and start ups and ventures and all that. I mean, just starting off with gaming as a subset in AR, what do you think really justifies consumers paying out or putting up for full gig or even faster broadband, which is kind of becoming data for a lot of entrants in the market right now.

Gregory B Maffei -- President & Chief Executive Officer

Well, you're right that there are certainly customers who we very much appreciate who are buying things like a gig, who probably don't need it, but can afford it and want to have the best. There is probably not that much demand for people really need a gig. But I would say the pandemic has pointed out that the demand is certainly very high. The return path which treated somewhat cavalierly has become way more important in a world of Zoom, and I suspect that the people who have platforms like Zoom whether it be Webex or BlueJeans or Microsoft Teams. We will continue to build those platforms up and they will require -- and there'll be more bandwidth consuming as they build up. It's truly is the case, and I think Charlie Ergen has been articulate about this that as you build that network, you'll see apps develop that are consumed the available. You mentioned breadth of experience. I certainly spent a lot of years of Microsoft, where Intel would build a new chip with more processing power and we would come up with -- as others with new software which utilize that power. I do think there is a case of feel the dreams, build it and they will come, but I've also think we've seen examples, like as I mentioned, all the things around the pandemic, we're pushing the requirements of the network like things like low latency gaming which are clearly going to benefit from increased speed. But I certainly wouldn't say I know them all today, where we could spec them all today.

Matthew Harrigan -- Benchmark -- Analyst

Thanks, Greg.

Gregory B Maffei -- President & Chief Executive Officer

Operator, I believe, we have no other questions. So, if that is the limit, we'll thank our listening audience. I appreciate your continued interest in Liberty TripAdvisor and Liberty Broadband and look forward to speaking with you again next quarter if not earlier and seeing you in November. Thank you, operator.

Operator

[Operator Closing Remarks]

Duration: 16 minutes

Call participants:

Courtnee Chun -- Chief Portfolio Officer

Gregory B Maffei -- President & Chief Executive Officer

Brian J. Wendling -- Chief Accounting Officer and Principal Financial Officer

Ronald Duncan -- Chief Executive Officer and Co-Founder

James Ratcliffe -- Evercore-ISI -- Anlayst

Matthew Harrigan -- Benchmark -- Analyst

All earnings call transcripts

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