A month has gone by since the last earnings report for Liberty Global (LBTYA - Free Report) . Shares have lost about 1.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Liberty Global due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Liberty Q1 Results Hurt By Subscriber Loss
Liberty Global reported first-quarter 2019 net income of $7 million, against the year-ago quarter’s loss of $1.19 billion.
Revenues on a reported basis declined 6.4% year over year to $2.87 billion. On a rebased basis, revenues decreased 0.6% from the year-ago quarter.
Liberty Global gained 24,700 subscribers (revenue generating units or RGUs) during the quarter, against subscriber loss of 10,300 in the year-ago quarter.
The company completed the sale of its DTH business for €180 million ($202 million) in early May.
Residential cable revenues decreased 1.1% year over year to $1.9 billion. Residential mobile revenues declined 2.4% to $0.4 billion. Moreover, B2B revenues increased 3.2% from the year-ago quarter to $0.5 billion.
The company lost 60,500 video RGUs compared with loss of 45,200 RGUs in the year-ago quarter. Liberty Global added 42,400 data RGUs, significantly up from 30,500 RGUs added in the year-ago quarter. Voice RGU addition was 42,800, against gain of 4,400 RGU in the year-ago quarter.
Average revenue per unit (ARPU) per cable customer relationships decreased 5.9% to $60.20. On a rebased basis, growth was 0.9%.
U.K./Ireland RGU additions were 59,200, up from 44,900 in the year-ago quarter, driven by expanding Project Lightning footprint.
U.K./Ireland revenues on a reported basis decreased 6.6% year over year to $1.66 billion. On a rebased basis, U.K./Ireland revenues climbed 0.1%, driven by an increase in residential cable revenues due to higher subscription revenues based on increased subscriber growth and higher B2B revenue due to an increase in internet SOHO subscribers.
RGU attrition in Belgium was 35,700 compared with 25,200 in the year-ago quarter, reflecting negative impacts of stiff competition.
Belgium revenues on a reported basis decreased 6.3% year over year to $711.9 million. On a rebased basis, revenues decreased 0.6% due to lower residential cable and mobile revenues.
Switzerland RGU attrition was 42,900 compared with subscriber loss of 43,700 in the year-ago quarter, primarily due to intensifying competition. Revenues on a reported basis decreased 8.4% year over year to $316 million. On a rebased basis, revenues decreased 3.7%, primarily due to lower residential cable subscription revenues.
Continuing CEE (Poland, Slovakia and DTH) gained 44,100 RGUs compared with 13,700 in the year-ago quarter. Growth was primarily driven by stronger video, broadband and voice additions in Poland.
Continuing CEE revenues on a reported basis decreased 8% year over year to $119.1 million. On a rebased basis, revenues increased 2.2% due to higher residential cable revenues and growth in B2B business.
Liberty Global also built 131,000 new premises in the reported quarter. Moreover, Virgin Media delivered 102,000 new premises in the U.K. & Ireland.
In mobile, Liberty Global added 26,800 subscribers compared with net additions of 63,700 subscribers in the year-ago quarter.
Belgium added 20,900 mobile subscribers, while U.K./Ireland lost 6,700 mobile subscribers.
Mobile ARPU (including interconnect revenues) on a reported basis increased 4.9% to $16.27. On a rebased basis, the figure declined 1.2%.
Further, mobile ARPU (excluding interconnect revenues) on a reported basis increased 8.9% to $13.97. On a rebased basis, the figure edged down 1.6%.
Operating income declined 10.3% from the year-ago quarter to $105.5 million.
Segment operating cash flow (operating income after adjusted for non-cash items) decreased 0.5% year over year to $1.18 billion on a rebased basis.
U.K./Ireland operating cash flow (OCF) on a rebased basis decreased 0.7% due to lower revenues, increased programming costs and higher network taxes.
Belgium OCF on a rebased basis increased 2.2% due to lower direct costs as a result of the migration of subscribers to its own mobile network.
Switzerland OCF on a rebased basis decreased 7.4% due to decline in residential cable subscription revenues.
Finally, Continuing CEE OCF on a rebased basis increased 2% due to higher revenues.
Balance Sheet & Cash Flow
As of Mar 31, 2019, Liberty had $0.9 billion of cash and unused borrowing capacity of $2.5 billion under its credit facilities.
Total principal amount of debt and capital leases were $30.2 billion for continuing operations. Moreover, average debt tenor is almost seven years, with approximately 71% not due until 2025 or thereafter for continuing operations.
As of Mar 31, 2019, Liberty’s adjusted gross and net leverage ratios for the full company were 5.4x and 5.3x, respectively.
Cash provided by operating activities was $306.3 billion, while free cash outflow from continuing operations was $622.1 million in the reported quarter.
Liberty Global bought stock worth $200 million in first-quarter 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.