Author Topic: LILA - Liberty Global Latin America tracker  (Read 98866 times)

muscleman

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Re: LILA - Liberty Global Latin America tracker
« Reply #30 on: August 07, 2015, 09:07:39 AM »
Does anyone understand the differences between "Net cash provided by operating activities of our continuing operations" and their own definition of OCF?

Operating Cash Flow Definition and Reconciliation

As used herein, OCF has the same meaning as the term "Adjusted OIBDA" that is referenced in our 10-Q. OCF is the primary measure used by our chief operating decision maker to evaluate segment operating performance. OCF is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, OCF is defined as operating income before depreciation and amortization, share-based compensation, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items. Other operating items include (a) gains and losses on the disposition of long-lived assets, (b) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (c) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe OCF is a meaningful measure and is superior to available GAAP measures because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between segments and (3) identify strategies to improve operating performance in the different countries in which we operate. We believe our OCF measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. OCF should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings or loss, cash flow from operating activities and other GAAP measures of income or cash flows. A reconciliation of total segment operating cash flow to our operating income is presented below.


In this SEC filing, their OCF is 128 million per quarter for LILA, but much smaller in GAAP's "Net cash provided by operating activities of our continuing operations".

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10841724-5297-133087&type=sect&TabIndex=2&companyid=901298&ppu=%252fdefault.aspx%253fsym%253dLBTYA


ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #31 on: August 07, 2015, 09:57:08 AM »
The tax question is really quite theoretical here. Take a look at how much tax LBTYA has paid for the last 5 years (cash or GAAP) compared to their operating earnings. Tax paid by VTR in the past doesn't matter either, because this is hugely dependent on how a company is managed and if they really optimize for it.

It boggles my mind that Malone's management teams belong to the very view that realize how much money is being wasted by running your company too profitable. Of course, you need to have the choice to optimize this by having high ROI investment opportunities to pour your cash flows into. Not every company can do that. But Malone tries to structure his companies in a way that they get this choice.

There is a huge economic difference between cash tax paid and GAAP tax because cash tax paid is money that went out the door and, therefore, can't compound for you. Tax deferral is an interest free loan this is money that can work for you while you don't pay it. So, this is not a zero sum game. If managed the right way the two should never converge as long as your company keeps on living.
« Last Edit: August 07, 2015, 09:59:51 AM by ni-co »

Fat Pitch

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Re: LILA - Liberty Global Latin America tracker
« Reply #32 on: August 07, 2015, 10:15:10 AM »
I'm at roughly $1.40 of FCF / share. Chile EBITDA: $330, 60% of Puerto Rico EBITDA: $120, Chile + 60% of Puerto Rico Capex: $200, Interest Expense: $150, Corporate Expense: $8.5mm, Share Based Comp: $5, Cash Taxes: $40mm. Gets you to roughly $55mm or $1.40 in FCF / share.

I'm looking at their cash flow statement and I'm getting different numbers than you are. Take their net earnings + D&A. Annualize the amount and subtract out ~85mm for maintenance capex. This is backwards looking as every new customer they add to their current system will expand their margins going forward. What makes this model powerful is their ability to acquire new cable systems with just incremental debt since they will be deleveraging each quarter from organic growth.
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folivera13

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Re: LILA - Liberty Global Latin America tracker
« Reply #33 on: August 07, 2015, 10:24:04 AM »
I'm at roughly $1.40 of FCF / share. Chile EBITDA: $330, 60% of Puerto Rico EBITDA: $120, Chile + 60% of Puerto Rico Capex: $200, Interest Expense: $150, Corporate Expense: $8.5mm, Share Based Comp: $5, Cash Taxes: $40mm. Gets you to roughly $55mm or $1.40 in FCF / share.

I'm looking at their cash flow statement and I'm getting different numbers than you are. Take their net earnings + D&A. Annualize the amount and subtract out ~85mm for maintenance capex. This is backwards looking as every new customer they add to their current system will expand their margins going forward. What makes this model powerful is their ability to acquire new cable systems with just incremental debt since they will be deleveraging each quarter from organic growth.

Your PR EBITDA seems really low to me. Run-rate EBITDA excluding Choice is close to $150mm and Choice EBITDA with Synergies is around $45mm. How did you get the $200mm for capex? Does it exclude minority interest? Why did you assume $8.5mm in corp expense?

no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #34 on: August 07, 2015, 10:53:31 AM »
Capex for lila was $110m in the last 6 months.  How do you get from there to $85m per year?

Fat Pitch

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Re: LILA - Liberty Global Latin America tracker
« Reply #35 on: August 07, 2015, 11:04:53 AM »
Capex for lila was $110m in the last 6 months.  How do you get from there to $85m per year?

There's a difference between maintenance capex and growth capex. Net PP&E is 894mm. Do you really think they are turning over 20% of their base each year from total wear and tear??
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no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #36 on: August 07, 2015, 11:47:37 AM »
I get that the $110m includes growth but they are only growing 7%.   IDK, I don't really have enough info to gauge how much of that is maintenance vs growth so I prefer to err on caution.   To say 60% of the total capex is so that the company can grow 7% well  .. that's possible but seems aggressive.

no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #37 on: August 16, 2015, 07:25:16 AM »
I cannot figure out how to post a link directly to it, but if you go to underwater capital's twiter feed https://twitter.com/chalkbaggery there is a great little table on LILA.  It includes historical and forecast numbers from 2014 through to 2018.   It includes FCF & EBITDA plus numerous other metrics.

In particular they have FCF yield for 2015 coming in around 5.5% or 19x, and EV/EBITDA at 7.9x.   Based on these calculations he is coming up with a $71 price target in 2018 based on modest organic growth (looks like 5%-ish per year), no acquisitions, margins gradually improving from 40% to 42%, and a terminating EV/EBITDA around 9x.   I think it is a great summary for those trying to decide whether to do the analysis but obviously you will want to check the numbers.
« Last Edit: August 16, 2015, 07:28:10 AM by no_free_lunch »

ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #38 on: August 17, 2015, 04:27:19 AM »
I cannot figure out how to post a link directly to it, but if you go to underwater capital's twiter feed https://twitter.com/chalkbaggery there is a great little table on LILA.  It includes historical and forecast numbers from 2014 through to 2018.   It includes FCF & EBITDA plus numerous other metrics.

In particular they have FCF yield for 2015 coming in around 5.5% or 19x, and EV/EBITDA at 7.9x.   Based on these calculations he is coming up with a $71 price target in 2018 based on modest organic growth (looks like 5%-ish per year), no acquisitions, margins gradually improving from 40% to 42%, and a terminating EV/EBITDA around 9x.   I think it is a great summary for those trying to decide whether to do the analysis but obviously you will want to check the numbers.

The direct link to this tweet: https://twitter.com/chalkbaggery/status/632196385996177408

no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #39 on: August 17, 2015, 11:24:57 AM »
It looks like lilak is now trading cheaper than lila.   About 1% at this point.  However looking at LBTYA vs LBTYK it looks like the K series (c class?) is about 7 or 8% cheaper.   Does anyone have any thoughts on which is the safer class to hold?   I would prefer not to buy lilak now only to have it permanently adjust down to a 7% spread.