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Liberty Global PLC (LBTYA) Down 3.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Liberty Global PLC (LBTYA). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Liberty Global PLC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Liberty Global Q3 Earnings Rise Y/Y, Revenues Fall

Liberty Global's third-quarter 2021 earnings from continuing operations were $315.6 million, up 132% year over year.

Revenues decreased 33.2% year over year to $1.90 billion. On a rebased basis, revenues increased 0.7% year over year.

Liberty Global lost 5,400 customer relationships in the reported quarter compared with 27,300 additions in the year-ago quarter.

Top-Line Details

Average revenue per unit (“ARPU”) per cable customer relationship increased 1.4% to $68.89.

Mobile ARPU (including interconnect revenues), on a reported basis, increased 60% to $29.19. On a rebased basis, the figure decreased 0.9%.

Further, mobile ARPU (excluding interconnect revenues), on a reported basis, surged 72.5% to $26.01. On a rebased basis, the figure was down 1.9%.

In Belgium, Liberty Global lost 2,300 customer relationships compared with the loss of 3,100 in the year-ago quarter.

Belgium revenues, on a reported basis, increased 1.2% year over year to $755.4 million. On a rebased basis, revenues increased 0.4%.

In Switzerland, Liberty Global lost 1,600 customer relationships compared with the loss of 6,300 in the year-ago quarter.

Switzerland revenues, on a reported basis, surged 163.6% year over year to $830.2 million.

The company, in Ireland, lost 1,100 customer relationships compared with 300 in the year-ago quarter.

Ireland revenues, on a reported basis, increased 7.6% to $136 million. On a rebased basis, the top line increased 6.9%.

In Slovakia, Liberty Global lost 400 customer relationships compared with 600 in the year-ago quarter.

Central and other revenues, on a reported basis, increased 52.6% to $181.4 million. On a rebased basis, the top line increased 1.7%.

Liberty Global’s non-consolidated joint venture —Virgin Media O2 — reported revenues of $3.61 billion, up 0.8% year over year, primarily driven by an increase in handset revenues, fueled by increased upgrade activity following new hardware launches by Samsung and Apple.

Virgin Media O2’s first converged product, VOLT, went live in the market during the reported quarter. Contract mobile net additions were 108,000 while broadband net additions were 42,000, reflecting the continued demand for faster broadband speeds.

Vodafone Ziggo revenues grew 3.4% on a reported basis and 1.8% on a rebased basis, year over year, to $1.21 billion, driven by an increase in mobile customers, roaming and visitor recovery, and fixed ARPU growth. The joint venture added 67,000 mobile postpaid subscribers.

Joint Venture Details

Liberty Global’s venture portfolio is currently valued at $3.1 billion. During the quarter, the company formed a joint venture with DigitalBridge called AtlasEdge to serve the growing European demand for scalable data center capacity that brings applications and contentcloser to the edge.

Operating Details

Adjusted EBITDA decreased 34.8% year over year to $758.5 billion in the third quarter. On a rebased basis, EBITDA increased 1%.

Switzerland EBITDA, on a rebased basis, was up 3.3% from the year-ago quarter.

Belgium EBITDA, on a rebased basis, decreased 0.4% year over year.

Moreover, Ireland EBITDA, on a rebased basis, increased 17.6% year over year.

Operating income was $101 million in the reported quarter compared with $643.8 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2021, Liberty Global had $5.3 billion of cash, investments under SMAs and unused borrowing capacity.

Total principal amount of debt and finance leases were $15.2 billion for continuing operations. Moreover, the average debt tenor is seven years, with approximately 93% not due until 2027 or thereafter.

Cash provided by operating activities was $563.2 million, down 47.3% year over year.

Moreover, adjusted free cash flow was $304.3 million in the third quarter compared with free cash flow of $403 million in the year-ago quarter.

Divestiture Details

Liberty Global reached a definitive agreement to sell UPC Poland for a total enterprise value of PLN 7 billion ($1.8 billion). Net cash proceeds to Liberty Global are expected to be roughly $600 million while the transaction is expected to close in first half of 2022.

Guidance

For 2021, Liberty Global expects adjusted free cash flow of $1.45 billion, indicating 36% growth year over year.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Liberty Global PLC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Liberty Global PLC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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