I was curious what people thought about the leverage metrics? The absolute amount of debt the company runs with is very high $5.7 bill (in terms of debt to ebitda). They have cash of $475mm. The interest coverage ratios are good and tend to fall in around 3x (EBITDA to interest expense). I am just curious, because on one hand I have no concern (EBITDA could take a good hit and we would be fine) and on another I am concerned (total debt is very high, years to pay off debt is high).
Also, wondering if we have been in a long bull cycle for the biz
Like a Malone business, you have to be confortable with the leverage, and trust that management is an expert at creating a capital structure that is optimized, but not
too optimized.
The current leverage is pretty high because they just levered up and paid big special dividends, but if you look at it historically, they delever pretty fast after these recaps, and a lof of their debt isn't due for a while.
As with Malone, the question is: Are their cash flows durable enough to support that leverage. Each investor has to answer that question for himself...
I kind of doubt they've just been riding one cycle. They went through all kinds of stuff just in the past 15 years and navigated all those situations admirably.