Liberty Global Ltd. · NASDAQ:LBTYA
Liberty Global — Q3 2020 Earnings Presentation
39 slides from Liberty Global's earnings presentation, Nov 5, 2020
Slide 1: Liberty Global plc Investor Call Q3 2020
LIBERTY GLOBAL PLC INVESTOR CALL | Q3 2020 November 5, 2020
Slide 2: Safe Harbor: Forward-Looking Statements + Disclaimer
“SAFE HARBOR” performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange Forward-Looking Statements + Disclaimer and interest rates; the ability of suppliers, vendors and contractors to timely deliver quality products, equipme
Slide 3: Executive Summary
Slide 4: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS Q3 RESULTS (1) OPERATIONS ACTUAL YOY 1 SOLID EXECUTION 2 SUNRISE 3 VIRGIN / O2 JV IN THE AMIDST COVID-19 ACQUISITION TO UK ON TRACK CUSTOMER NET ADDS 37k +55k PANDEMIC CLOSE THIS MONTH • Pre-merger integration • Best customer & • 96.6% of shares tendered planning well underway FIX
Slide 5: Pandemic Underscores Strength of Business
PANDEMIC UNDERSCORES STRENGTH OF BUSINESS Building stronger customer relationships while navigating low-margin revenue headwinds SERVING OUR CUSTOMERS NAVIGATING HEADWINDS RESILIENT NETWORKS BUILDING ON POSITIVE LOW OPERATIONAL IMPACT HANDLE DEMAND SHIFT CUSTOMER RELATIONSHIPS FROM COVID SO FAR AVER
Slide 6: Connectivity Driving Commercial Momentum
CONNECTIVITY DRIVING COMMERCIAL MOMENTUM 71 STRONG BROADBAND FMC DELIVERING COMPELLING PRODUCT & TECH NET ADDS (000’S) ROADMAPS 48 46% 42% 23% 23% 22 16 11 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Sales steady; churn better VodafoneZiggo CASE STUDY Networks • BE: Best quarterly broadband performance • Lightnin
Slide 7: Creating a Swiss National Champion
CREATING A SWISS NATIONAL CHAMPION SIGNIFICANT OPERATING LEVERAGE STRONG Q3 PERFORMANCE UPC: MOBILE & FIXED RGU SUNRISE: POSTPAID MOBILE Clear #2 to Swisscom ADDS (k) NET ADDS(5) (k) • ~30% B2C market share(1) 3.8 0.1 0.8 46 • ~7% B2B share(1); offering competitive (3.6) (3.8) 41 38 (5.0) (5.9) (6.1
Slide 8: Value Creation Strategy
VALUE CREATION STRATEGY LIBERTY GLOBAL: PF GROUP STRUCTURE FMC CHAMPIONS OTHER ASSETS 50% 60% 50% 100% 100% VENTURES EUROPEAN FMC SCALE • Building National FMC Champions in attractive markets • Operating and financial stability • 84mm fixed and mobile subscribers (RGUs) combined(1) • Levered FCF gro
Slide 9: Financial Results
WEISUMMARY 4% “ iF eSULIS fA ; : m @ a SS
Slide 10: Underlying Revenue Stable
UNDERLYING REVENUE STABLE U.K. & Ireland Belgium Switzerland REVENUE GROWTH (1) ESTIMATED COVID REVENUE IMPACTS TOTAL PREMIUM B2B FIXED & MOBILE SPORTS IMPACTS ~$110m (0.6%) (0.5%) (0.3%) ~$34m (1.3%) (1.4%) ~$19m (4.3%) (4.0%) ~$13m ~$41m ~$13m Q3'19 Q4'19 Q1'20 Q2'20 Q2 Q3'20 Q3 COVID COVID IMPACT
Slide 11: Adj EBITDA in Line with Expectations
ADJ EBITDA IN LINE WITH EXPECTATIONS Confirming FY 2020 mid-single-digit Adj EBITDA decline (1) ADJUSTED EBITDA ($m) Below incremental headwinds(2) hold 1,274 Q4 EBITDA broadly flat, sequentially from Q3 1,212 1,209 1,189 1,150 U.K. & IRELAND (5) • Estimated deferred price rise impact ~$26m Q3'19 Q4
Slide 12: Capital Intensity Continues to Decline
CAPITAL INTENSITY CONTINUES TO DECLINE (1) Q3 2020 ~20% ex-Lightning ; elevated Q4’19 Capex not expected to repeat in Q4’20 Q3 SPEND DECLINE CHANGE VS SPEND BY CATEGORY PRIOR YEAR ($m) TOTAL NEW BUILD Lightning spend lower as CPP CAPITAL INTENSITY 23.2% 28.2% 22.8% 21.6% 22.3% continues to trend dow
Slide 13: Generating Significant OFCF
(1) GENERATING SIGNIFICANT OFCF BE ($m) (2) LG OFCF ($m) UKIE ($m) (2) Pre-Lightning Pre-Lightning construction capex construction capex (as a % of revenue) (as a % of revenue) (as a % of revenue) 23% 18% 21% 25% 21% 22% 22% 23% 25% 20% 678 384 649 623 373 377 595 601 353 342 240 241 241 553 544 552
Slide 14: Confirming $1bn FCF Guidance
CONFIRMING $1BN FCF GUIDANCE(1) 9M phasing remains broadly consistent with prior years $m YTD 2020 Comments OFCF pre-Lightning P&E $1,895 NET INTEREST (1,078) • No material payments in Q4 CASH TAX (197) • No material payments in Q4 • 50% of VZ distribution; guiding to upper end of VODAFONE ZIGGO JV
Slide 15: Capital Allocation
CAPITAL ALLOCATION Q3 FULL COMPANY LIQUIDITY (1,2) Key Highlights: $2.5bn Revolving • Repurchased $1 billion of stock through the end of Credit October; purchased 29% of our market cap since Q3 Facilities $9.3BN 2019(3) TOTAL LIQUIDITY $6.8bn • Announced new $1 billion buyback authorization Cash/SMA
Slide 16: Conclusions
CONCLUSIONS Strong customer and broadband performance; NPS remains high Phase 1 approval granted in Switzerland, closing mid-November Transformational FMC remains on track in the U.K. Capital intensity continues to decline; now ~20% pre Lightning Reconfirming all 2020 guidance metrics Announced new
Slide 17: Appendix
EXECUTIVE SUMMARY @ FINANCIAL RESULTS@ APPENDIX |
Slide 18: Virgin Media
VIRGIN MEDIA Demand for quality connectivity and FMC momentum drove robust Q3 Customer and Postpaid adds KEY DRIVERS OF PERFORMANCE Q3 2020 KEY RESULTS (1) 1 BALANCING VALUE AND VOLUME • 2nd consecutive quarter of customer gains in BAU and Lightning +37k CUSTOMER • ARPU impacted by price rise postpo
Slide 19: Virgin Media: Project Lightning Update
VIRGIN MEDIA: PROJECT LIGHTNING UPDATE Lightning build returned to normalized levels following lockdown restrictions in H1 HIGHLIGHTS CONSTRUCTION ACTIVITY KPIs • Modest ongoing impact on ARPU PREMISES CONSTRUCTED (000s) ARPU £ from COVID-19; Q3 ARPU in line w/ BAU post-discounts Lightning to date:
Slide 20: Telenet
TELENET Strong performance in broadband and mobile postpaid net adds driven by FMC growth KEY DRIVERS OF PERFORMANCE Q3 2020 KEY RESULTS (1) 1 POSITIVE COMMERCIAL MOMENTUM AND FMC GROWTH • Robust growth of FMC subscriber base to 621K (3k) CUSTOMER • FMC penetration increased to 46% powered by WIGO o
Slide 21: UPC Switzerland
UPC SWITZERLAND Improved commercial momentum; competitive environment still heightened KEY DRIVERS OF PERFORMANCE Q3 2020 KEY RESULTS (1) 1 SALES MOMENTUM CONTINUING (6k) • Improved broadband trends supported by successful CUSTOMER NET ADDS summer campaign; September BB adds turned positive • Streng
Slide 22: VodafoneZiggo JV
(1) VODAFONEZIGGO JV Robust Q3 results; 2020 financial guidance raised KEY DRIVERS OF SUCCESS Q3 2020 KEY RESULTS (1) 1 MAINTAINING NETWORK SUPERIORITY • Offering 1Gbps speeds to more than 2 million homes and on track to (18k) reach 3 million homes by year end CUSTOMER NET ADDS • First to offer nati
Slide 23: 9M Adjusted Attributed FCF
9M ADJUSTED ATTRIBUTED FCF All OpCos remain substantially FCF positive despite COVID-19 U.K. & Poland / Liberty 50-50 $m Belgium Switzerland Central (2) Ireland Slovakia Global Dutch JV (3,4) ADJUSTED EBITDA (1) $1,975 $1,053 $439 $161 ($80) $3,548 $1,593 P&E pre-lightning P&E (5) (884) (385) (216)
Slide 24: Central Update
CENTRAL UPDATE Cost base managed in line with service agreements $m 2019 9M’20 Total Operating Costs(1) • Includes both T&I (core & partner markets) and Corporate spend ($601) ($438) Central Revenue(2,3) $405 $297 • TSA revenue from partner markets offset 100% of related costs • Structures in place
Slide 25: Rebase Information
REBASE INFORMATION Rebase growth percentages, which are non-GAAP measures, are presented as a basis for assessing growth rates on a comparable basis. For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2020, we have adjusted our historical r
Slide 26: Glossary
GLOSSARY 10-Q or 10-K: As used herein, the terms 10-Q and 10-K refer to our most recent quarterly or annual report as filed with the Securities and Exchange Commission on Form 10-Q or Form 10-K, as applicable. Adjusted EBITDA: Adjusted EBITDA is the primary measure used by our chief operating decisi
Slide 27: Glossary
GLOSSARY B2B: Business-to-Business. Customer Churn: The rate at which customers relinquish their subscriptions. The annual rolling average basis is calculated by dividing the number of disconnects during the preceding 12 months by the average number of customer relationships. For the purpose of comp
Slide 28: Glossary
GLOSSARY MVNO: Mobile Virtual Network Operator. NPS: Net Promoter Score. OFCF: As used herein, Operating Free Cash Flow or "OFCF", which is a non-GAAP measure, represents Adjusted EBITDA less property and equipment additions. OFCF is an additional metric that we use to measure the performance of our
Slide 29: Reconciliations: Rebase Adjustments
RECONCILIATIONS REBASE ADJUSTMENTS Rebase growth percentages, which are non-GAAP measures, are presented as a basis for assessing growth rates on a comparable basis. For further details on adjustments made to arrive at our rebase growth rates for the periods below, refer to our previously issued ear
Slide 30: Reconciliations: Adjusted EBITDA
RECONCILIATIONS ADJUSTED EBITDA The following tables provide a reconciliation of our earnings (loss) from continuing operations to Adjusted EBITDA for the indicated periods: 30
Slide 31: Reconciliations: Adjusted FCF
RECONCILIATIONS ADJUSTED FCF The following table provides a reconciliation of our net cash provided by operating activities to Adjusted Free Cash Flow for the indicated periods: 31
Slide 32: Reconciliations: OFCF
RECONCILIATIONS OFCF A reconciliation of our Adjusted EBITDA to (i) OFCF and (ii) OFCF pre-Lightning P&E additions for our continuing operations is presented in the following table: 32
Slide 33: Reconciliations: Centrally-Held Operating Cost Allocations
RECONCILIATIONS CENTRALLY-HELD OPERATING COST ALLOCATIONS During the fourth quarter of 2019, we changed the presentation of certain operating costs related to our centrally-managed technology and innovation function. These costs, which were previously included in Central and Corporate, are now alloc
Slide 34: Reconciliations: Centrally-Held P&E Attributions / Attributed OFCF
RECONCILIATIONS CENTRALLY-HELD P&E ATTRIBUTIONS / ATTRIBUTED OFCF Property and equipment additions presented for Central and Corporate include certain capital costs incurred for the benefit of our operating segments. Generally, for purposes of the consolidated financial statements of our borrowing g
Slide 35: Reconciliations: Centrally-Held P&E Attributions (Cont.)
RECONCILIATIONS CENTRALLY-HELD P&E ATTRIBUTIONS / ATTRIBUTED OFCF (CONT.) 35
Slide 36: Reconciliations: Supplemental Adjusted Attributed Free Cash Flow
RECONCILIATIONS SUPPLEMENTAL ADJUSTED ATTRIBUTED FREE CASH FLOW We define adjusted free cash flow as net cash provided by our operating activities, plus (i) cash payments for third-party costs directly associated with successful and unsuccessful acquisitions and dispositions and (ii) expenses financ
Slide 37: Reconciliations: Supplemental Adjusted Attributed FCF (Cont.)
RECONCILIATIONS SUPPLEMENTAL ADJUSTED ATTRIBUTED FREE CASH FLOW (CONT.) a. Includes intersegment eliminations. b. Represents interest on an intercompany loan that we eliminate for purposes of this presentation as intercompany interest income/expense does not impact our leverage calculations in our c
Slide 38: Reconciliations: VodafoneZiggo JV Adjusted Free Cash Flow
RECONCILIATIONS VODAFONEZIGGO JV ADJUSTED FREE CASH FLOW (JV FCF) JV Adjusted FCF is defined as net cash provided by operating activities, plus (i) expenses financed by an intermediary and (ii) interest payments on certain Shareholder loans, less (a) capital expenditures, (b) principal payments on a
Slide 39: Reconciliations: Debt & Net Debt Leverage Ratios
RECONCILIATIONS DEBT & NET DEBT LEVERAGE RATIOS Our debt and net debt ratios, which are non-GAAP metrics, are defined as total debt and net debt, respectively, divided by Adjusted EBITDA for the last twelve months (LTM Adjusted EBITDA). Net debt is defined as total debt less cash and cash equivalent