Liberty Broadband Corp (LBRDA)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024: GCI revenue rose 5% to $263M; operating income increased to $35M (13.3% margin) while Adjusted OIBDA declined 4% to $86M (32.7% margin) on higher SG&A, capping FY24 at $1.016B revenue and $362M Adjusted OIBDA .
• Strategic: LBRDA shareholders approved the all-stock combination with Charter (0.236 CHTR shares per LBRDA share); close targeted for June 30, 2027 (unless mutually accelerated); GCI to be spun to LBRDA holders in summer 2025 .
• Balance sheet/liquidity: Charter to repurchase ~$100M/month of its Class A from LBRDA (and more or provide loans if needed) to service LBRDA debt; proceeds used tax-free for debt service; $205M proceeds received Nov–Jan; total principal debt $3.7B; consolidated cash and restricted cash $229M at year-end .
• 2025 outlook (GCI): Net capex expected ~ $250M (up from ~$200M FY24), focused on middle/last-mile and rural Alaska builds (Bethel, AU-Aleutians) and Alaska Plan requirements; 2024 net capex finished at $193M (below prior ~$200M outlook due to rural fiber delays) .
• Consensus estimates: S&P Global consensus for Q4 2024 EPS and revenue was unavailable at time of retrieval; cannot assess beat/miss versus Street. We will update when available (S&P Global).

What Went Well and What Went Wrong

• What Went Well

  • Business segment strength: GCI Business revenue grew 10% YoY in Q4 (data +15%), driving consolidated revenue up despite flat Consumer revenue .
  • Operating leverage in FY24: Operating income rose to $144M for the year, aided by lower D&A as assets became fully depreciated in 2023 .
  • Strategic clarity/catalyst: Shareholders approved the Charter deal; management reiterated expected spin-off of GCI in summer 2025 and deal close by June 30, 2027, enhancing long-term visibility .

• What Went Wrong

  • Margin compression: Q4 Adjusted OIBDA fell 4% and margin contracted 330 bps YoY to 32.7% on higher labor-related SG&A despite mix shift to higher-margin business data .
  • Consumer softness: Consumer revenue was flat; Consumer wireless subs and cable modem subscribers declined YoY (cable modems -3% YoY to 155.7K), with ACP expiration contributing to losses .
  • Competitive/rural disruption: Rural Starlink share gains tied to outages on third-party backbone fiber (Quintillion) pressured rural wireline; management expects redundancy to mitigate going forward .

Financial Results

Segment revenue (GCI):

Selected mix details:

KPIs:

Additional corporate metrics and balance sheet highlights:

• Consolidated cash and restricted cash: $229M at 12/31/24; total principal debt: $3.742B; GCI leverage 3.1x; undrawn GCI revolver capacity $342M (net LCs) .
• Fair value of Charter investment: $15.5B at 12/31/24 .
• Charter repurchases from LBRDA Nov–Jan: 541K shares, $205M proceeds to LBRDA for debt service .

Guidance Changes

No formal revenue, margin, OpEx, OI&E, or tax-rate guidance was issued for GCI or consolidated Liberty Broadband beyond the items above .

Earnings Call Themes & Trends

Management Commentary

• “Our merger with Charter is progressing well… and we are actively working towards spinning off GCI this year… This transaction generates significant value for shareholders…” — John Malone, Chairman & CEO .
• “The distribution of GCI will provide incremental value to shareholders… Ron will be the new CEO of… GCI Liberty… We expect to complete the spin-off in late Q2 or early Q3 of this year.” — Brian Wendling, PFO .
• “At quarter end, Liberty Broadband had consolidated cash and restricted cash of $229 million… GCI leverage was 3.1x… Charter will repurchase $100 million… each month until the transaction closes… or make loans… to satisfy… debt obligations.” — Ben Oren, EVP & Treasurer .
• “We have lost wired subs to Starlink in rural areas, largely due to service disruptions arising from multiple breaks in the backbone fiber… Once the fiber networks are built out and the redundant rings are completed, I don't anticipate more… disruptions…” — Ron Duncan, GCI CEO .
• “The state has… an April date for the submission of BEAD applications… about $1 billion to flow to Alaska… Starlink… will probably be a competitor under the revised BEAD rules… [but] for the enterprise users, it makes more sense to be on a fiber backbone.” — Ron Duncan .

Q&A Highlights

• Competitive backdrop: Management detailed stable Alaska environment; wireless share gains vs AT&T; rural Starlink gains tied to third-party fiber outages; redundancy expected to curb this .
• Subsidies/funding: Expect BEAD submissions (~April) and potentially ~$1B to Alaska; possible shift to satellite-tolerant rules; healthcare bandwidth favors fiber; low probability of material USF structural change despite Supreme Court case .
• Macro/energy linkage: Alaska historically countercyclical; potential upside under administration favoring domestic energy/minerals development .
• Timeline: GCI spin late Q2/early Q3 2025; Charter-LBRDA close June 30, 2027 unless mutually accelerated .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was unavailable at the time of retrieval due to access limits; therefore, we cannot assess beats/misses vs consensus at this time. We will refresh with S&P Global once accessible.
• Given the lack of formal revenue/margin guidance from management, Street models may need to reflect: (a) sustained Business data strength, (b) near-term OIBDA margin pressure from higher labor/SG&A, and (c) a higher 2025 capex run-rate tied to rural builds and Alaska Plan obligations .

Key Takeaways for Investors

• Mix shift intact: Business Data remains the growth engine (+15% YoY in Q4), offsetting flat Consumer; this supports revenue stability but margin pressure persists from SG&A/labor .
• 2025 capex step-up: ~$250M plan (vs ~$193M net in 2024) is a deliberate investment cycle to secure funding and build rural connectivity; expect near-term FCF drag with longer-term moat reinforcement .
• Rural satellite risk manageable: Starlink’s rural share gains were outage-driven; management expects fiber redundancy to stabilize rural churn; enterprise/healthcare bandwidth needs remain a fiber advantage .
• Transaction path reduces overhang: Shareholder approval, clear exchange ratio (0.236 CHTR/LBRDA), and monthly Charter buybacks/loan backstops de-risk LBRDA’s liability management into 2027 close .
• Spin-off catalyst: GCI spin in summer 2025 should surface asset value and allow purer exposure; Charter will bear >$420M corporate-level tax tied to the spin, removing a key uncertainty .
• Watch list for next quarter: ACP program dynamics; rural fiber redundancy progress; BEAD awards in Alaska (~$1B potential flow); SG&A trajectory; confirmation of capex phasing .
• Trading setup: Near-term narrative hinges on execution of rural builds, Business data momentum, and transaction milestones; absence of formal top-line/EBITDA guidance shifts focus to quarterly print quality and deal progress .

Appendix: Additional Data Points

• FY2024 consolidated results: Revenue $1.016B; Operating income $92M; Adjusted OIBDA $327M; Diluted EPS $6.08 .
• Fair value of Charter investment at 12/31/24: $15.5B .
• Liquidity: Charter margin loan available capacity $1.15B; restricted cash includes Charter proceeds dedicated to debt service .
• Quarterly consumer metrics context: Cable modem subs -3% YoY at 12/31/24; Consumer lines +1% YoY after reclassifications .