LiLAC Group (NASDAQ:LILAK) reported its third-quarter results after the market closed on Wednesday and is seeing slow and steady growth in the business. But this may be the last positive quarter before the impact of Puerto Rico's Hurricane Maria devastation starts to hit the income statement.

Here's a look at the financial results and highlights, including what it will take to get Puerto Rico's infrastructure up and running again.

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Image source: Getty Images.

LiLAC Group: The raw numbers

Metric Q3 2017 Q3 2016 Year-Over-Year Change
Sales $908.1 million $894.1 million  1.6% 
Operating cash flow $359.4 million  $354.6 million  1.4% 
Free cash flow ($109.5 million)  ($39.3 million)  N/A 

Data Source: Liberty Global and LiLAC Group's Q3 2017 earnings release. 

What happened with LiLAC Group this quarter? 

This was the first quarter LiLAC Group's year over year comparison fully includes the Cable & Wireless Communications acquisition completed in May 2016. So, investors are starting to see what organic growth really looks like.

  • Overall, 39,500 revenue generating units (RGUs) were added, dominated by 34,700 data additions and 8,700 voice customers. But the video business lost 3,900 RGUs as people cut the cord.
  • C&W saw additions of 20,200 RGUs as upgrades and new product offerings helped results in Panama and Jamaica.
  • Chile's RGUs were up 19,000 on strong mobile growth of 13,000 subscribers. 
  • Puerto Rico's subscribers were flat through Aug. 31, but that will change in the future, as I'll cover below.
  • Liquidity at the end of the quarter was $1.5 billion and net leverage was 4.1x times.
  • LiLAC's split from Liberty Global is expected to be completed around the end of the year.

LiLAC Group estimates it'll take $100 million in investment to restore the territory's services. In the fourth quarter alone there's an anticipated $80 million to $100 million of lost revenue and $60 million to $80 million of lost operating cash flow. Management thinks this will result in negative overall operating cash flow for the quarter.

What management had to say

Management is happy with the steady growth in Latin America, but there's a big headwind with the Puerto Rico disaster. Liberty Global CEO Mike Fries said:

We've begun the work of restoring our fixed and mobile networks in the affected markets, primarily Puerto Rico, as we make good operational strides elsewhere in the region with 40,000 organic RGU additions in Q3.

In coming quarters, we'll hear from new CEO Balan Nair, who will take control of the company as it becomes independent from Liberty Global.

Looking forward

Investors shouldn't have very high expectations for the next few quarters because Puerto Rico's recovery will be a drag on results. But for now, other Latin American markets are performing fairly well and improving technology being provided to those markets should increase adoption of LiLAC Group's products long term.

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Liberty LiLAC Group. The Motley Fool has a disclosure policy.