Liberty Latin America Ltd. (LILAK) Bundle
Understanding Liberty Latin America Ltd. (LILAK) Revenue Streams
Understanding Liberty Latin America's Revenue Streams
Liberty Latin America Ltd. generates revenue from several key segments, including residential and business services across various regions. Below is a detailed breakdown of the company's primary revenue sources as of 2024.
Revenue Breakdown by Segment
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change ($) | Change (%) |
|---|---|---|---|---|
| C&W Caribbean | $359.5 | $360.5 | $(1.0) | (0.3) |
| C&W Panama | $188.0 | $190.4 | $(2.4) | (1.3) |
| Liberty Networks | $109.9 | $112.5 | $(2.6) | (2.3) |
| Liberty Puerto Rico | $308.2 | $351.2 | $(43.0) | (12.2) |
| Liberty Costa Rica | $145.5 | $134.6 | $10.9 | 8.1 |
| Corporate | $4.5 | $6.5 | $(2.0) | (30.8) |
| Intersegment Eliminations | $(26.4) | $(29.9) | $3.5 | (11.7) |
| Total Revenue | $1,089.2 | $1,125.8 | $(36.6) | (3.2) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects a decline of 3.2% from Q3 2023 to Q3 2024, with total revenues decreasing from $1,125.8 million to $1,089.2 million.
Contribution of Different Business Segments to Overall Revenue
In the nine months ended September 30, 2024, the revenue contributions from different segments were as follows:
| Segment | Revenue (in millions) |
|---|---|
| C&W Caribbean | $1,092.0 |
| C&W Panama | $554.4 |
| Liberty Networks | $337.5 |
| Liberty Puerto Rico | $944.0 |
| Liberty Costa Rica | $445.0 |
| Corporate | $15.5 |
| Total Revenue | $3,306.6 |
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Liberty Puerto Rico experienced a revenue decline of 12% year-over-year, primarily due to a reduction in residential mobile service revenue.
- Liberty Costa Rica reported an increase of 8.1% in revenue, driven by growth in both residential and business segments.
- C&W Panama and C&W Caribbean saw slight declines in revenue, with changes of (1.3%) and (0.3%) respectively.
Overall, the revenue analysis indicates varying performance across segments, with some areas experiencing growth while others face challenges.
A Deep Dive into Liberty Latin America Ltd. (LILAK) Profitability
A Deep Dive into Liberty Latin America's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $1,166.4 million, compared to $1,269.7 million for the same period in 2023, indicating a decline in gross profit margin year-over-year.
Operating Profit: The operating loss for the nine months ended September 30, 2024 was ($176.0 million), compared to an operating profit of $404.7 million for the same period in 2023.
Net Profit Margin: The net loss attributable to shareholders for the nine months ended September 30, 2024 was ($478.4 million), compared to a net profit of $18.9 million for the same period in 2023.
Trends in Profitability Over Time
The profitability metrics show a significant trend of declining profitability. The gross profit margin decreased from approximately 38.1% in 2023 to 35.0% in 2024. Operating profit margins also reflect this decline, dropping from 35.9% in 2023 to (5.3%) in 2024.
Comparison of Profitability Ratios with Industry Averages
| Metric | Liberty Latin America (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 35.0% | 40.0% |
| Operating Profit Margin | (5.3%) | 10.0% |
| Net Profit Margin | (14.4%) | 5.0% |
Analysis of Operational Efficiency
Operational efficiency is critical for maintaining profitability. The company reported an adjusted OIBDA of $1,166.4 million for the nine months ended September 30, 2024, down from $1,269.7 million in the previous year. The adjusted OIBDA margin has also decreased, reflecting challenges in cost management and operational effectiveness.
Significant costs impacting profitability include:
- Depreciation and amortization: $729.9 million in 2024 compared to $705.6 million in 2023.
- Impairments and other non-cash activity: $513.3 million in 2024, a substantial increase from $49.5 million in 2023.
The overall gross margin trend shows a decline, with the company needing to address cost management strategies to improve operational efficiency moving forward.
Debt vs. Equity: How Liberty Latin America Ltd. (LILAK) Finances Its Growth
Debt vs. Equity: How Liberty Latin America Ltd. Finances Its Growth
Debt Levels
As of September 30, 2024, the outstanding principal amount of debt, including finance lease obligations, was approximately $8,212 million. This amount includes $550 million classified as current and $7,604 million that is non-current, due in 2027 or thereafter.
Debt Maturities
| Year | Total Maturities (in millions) |
|---|---|
| 2024 | $266.3 |
| 2025 | $290.8 |
| 2026 | $49.1 |
| 2027 | $2,891.0 |
| 2028 | $2,622.1 |
| 2029 | $1,416.7 |
| Thereafter | $670.8 |
| Total Debt Maturities | $8,206.8 |
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was calculated to be approximately 4.63, based on total debt of $8,212 million and total equity of $1,766.2 million. This ratio is significantly higher than the industry average, which typically ranges from 1.0 to 2.0.
Recent Debt Issuances
In October 2024, the company issued $1.0 billion in senior secured notes with a coupon rate of 7.125% due in 2032. The proceeds were primarily used to repay $495 million of 2027 senior secured notes and $485 million of 2027 senior notes.
Credit Ratings
The company's credit ratings remain under pressure due to its high leverage, with a current rating of B3 from Moody's and B from S&P, reflecting the risks associated with its debt levels and operational challenges.
Balancing Debt Financing and Equity Funding
The company has strategically utilized both debt and equity to finance its operations and growth initiatives. As of September 30, 2024, $5,290.3 million was reported in additional paid-in capital, showcasing a reliance on equity to support its capital structure. The balance of debt financing has been used to fund capital expenditures, with recent borrowings primarily directed towards refinancing existing obligations and maintaining operational liquidity.
Assessing Liberty Latin America Ltd. (LILAK) Liquidity
Assessing Liberty Latin America Ltd.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 0.82, calculated from current assets of $1,626.1 million and current liabilities of $1,977.2 million.
Quick Ratio: The quick ratio stands at 0.65, with quick assets totaling $1,020.1 million against current liabilities of $1,977.2 million.
Analysis of Working Capital Trends
The working capital for the company as of September 30, 2024, is ($351.1 million), indicating a negative working capital position. This trend reflects an increase in current liabilities, primarily driven by short-term debt obligations and operational expenses.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, are summarized as follows:
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $357.7 | $506.5 |
| Net Cash Used by Investing Activities | ($513.3) | ($452.5) |
| Net Cash Used by Financing Activities | ($233.5) | ($254.9) |
| Net Decrease in Cash, Cash Equivalents and Restricted Cash | ($395.3) | ($206.2) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents amount to $588.6 million. The breakdown includes $12.1 million from Liberty Latin America and unrestricted subsidiaries, and $514.4 million from borrowing groups. This indicates that while the company has a substantial amount of cash, the reliance on borrowing groups for liquidity raises potential concerns regarding operational flexibility.
Additionally, the company has reported significant net losses, totaling ($466.5 million) for the nine months ended September 30, 2024, which may impact its ability to maintain liquidity moving forward.
Is Liberty Latin America Ltd. (LILAK) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of Liberty Latin America Ltd., we will look at key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at not applicable as the company reported a net loss of $478.4 million for the nine months ended September 30, 2024 .
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using total equity attributable to shareholders, which is $1,766.2 million as of September 30, 2024 . The book value per share is $9.00 (calculated from total equity divided by the number of shares outstanding).
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated as market capitalization plus total debt minus cash and cash equivalents. As of September 30, 2024, total debt is $8,151.2 million and cash equivalents are $588.6 million. The EBITDA for the last twelve months is $1,166.4 million .
| Metric | Value |
|---|---|
| Enterprise Value | $8,150.0 million (approx.) |
| EBITDA | $1,166.4 million |
| EV/EBITDA | 7.0 |
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly. The 52-week high is $12.00 and the 52-week low is $6.00. The current stock price is approximately $8.50.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, and thus the dividend yield stands at 0%. The payout ratio is also not applicable due to the absence of dividends .
Analyst Consensus on Stock Valuation
According to recent analyst ratings, the consensus is a hold with a price target range between $7.50 and $10.00 .
| Analyst Rating | Price Target Range |
|---|---|
| Buy | $10.00 |
| Hold | $8.50 |
| Sell | $7.50 |
Key Risks Facing Liberty Latin America Ltd. (LILAK)
Key Risks Facing Liberty Latin America Ltd.
The financial health of Liberty Latin America Ltd. is influenced by various internal and external risk factors that could impact its performance and stability.
Industry Competition
Increased competition in the telecommunications sector poses a significant risk. The company faces challenges from both established competitors and new entrants, which can lead to pricing pressures and reduced market share. For instance, the revenue for the three months ended September 30, 2024, was $1,089.2 million, down from $1,125.8 million in the same period of 2023.
Regulatory Changes
Regulatory changes across the various countries in which Liberty operates can create operational challenges and affect profitability. Compliance with local laws and regulations can lead to increased costs and operational delays. For example, the company reported net earnings (loss) attributable to shareholders of $(429.1) million for the three months ended September 30, 2024, compared to $47.9 million in the same period of 2023.
Market Conditions
Adverse market conditions, including economic downturns and inflation, can negatively affect consumer spending in telecommunications services. The net non-operating expenses for the three months ended September 30, 2024, were $(195.2) million, which increased from $(104.4) million in 2023.
Operational Risks
The company has reported ongoing operational risks that may arise from system failures or disruptions. This is highlighted by an operating loss of $(379.6) million for the three months ended September 30, 2024, compared to an operating income of $162.7 million for the same period in 2023.
Financial Risks
Financial risks, including high levels of debt, can pose significant challenges. The total debt as of September 30, 2024, was $8,151.2 million, with a current portion of $548.9 million. Interest expense for the nine months ended September 30, 2024, was $(471.3) million, compared to $(448.0) million for the same period in 2023.
Strategic Risks
Strategic risks include the potential for unsuccessful mergers and acquisitions. The company’s recent acquisition resulted in goodwill of $11.0 million as of September 30, 2024. Additionally, there is approximately $255 million of unfulfilled performance obligations related to long-term capacity contracts.
Mitigation Strategies
The company employs various strategies to mitigate these risks, including maintaining a diversified service portfolio and engaging in active risk management practices. The liquidity of the company’s borrowing groups as of September 30, 2024, included cash and cash equivalents totaling $588.6 million, which helps in managing operational needs and financial obligations.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition leading to pricing pressures | Revenue decreased from $1,125.8 million to $1,089.2 million |
| Regulatory Changes | Compliance with local laws affecting operational costs | Net loss of $(429.1) million in Q3 2024 |
| Market Conditions | Economic downturns impacting consumer spending | Net non-operating expenses increased to $(195.2) million |
| Operational Risks | System failures or disruptions | Operating loss of $(379.6) million |
| Financial Risks | High levels of debt impacting financial stability | Total debt of $8,151.2 million |
| Strategic Risks | Potential issues with mergers and acquisitions | Goodwill of $11.0 million from acquisition |
Future Growth Prospects for Liberty Latin America Ltd. (LILAK)
Future Growth Prospects for Liberty Latin America Ltd.
Analysis of Key Growth Drivers
Liberty Latin America Ltd. is poised for growth driven by several key factors:
- Product Innovations: The company is focusing on enhancing its service offerings, particularly in broadband and mobile services. The total residential mobile revenue for the nine months ended September 30, 2024, was $1,229.8 million, compared to $1,279.2 million for the same period in 2023.
- Market Expansions: Expansion into new markets continues to be a priority. Revenue from Puerto Rico for the nine months ended September 30, 2024, was $897.8 million, down from $1,015.3 million in 2023.
- Acquisitions: The company executed a cash acquisition amounting to $95.4 million during the nine months ended September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be influenced by the following:
- Expected revenue growth for 2024 is estimated to be around $3,333.1 million, slightly down from $3,380.9 million in 2023.
- The net loss attributable to Liberty Latin America shareholders for the nine months ended September 30, 2024, was $(478.4) million, compared to $18.9 million in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Investment in infrastructure upgrades to enhance service quality.
- Partnerships with technology providers to leverage advanced telecommunications technologies.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Market Position: Liberty Latin America holds a strong position in the Caribbean and Latin America, with a total revenue of $3,306.6 million for the nine months ended September 30, 2024.
- Adjusted OIBDA: The company reported an Adjusted OIBDA of $1,166.4 million for the nine months ending September 30, 2024.
- Debt Management: The total debt as of September 30, 2024, was $4,945.8 million.
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $3,333.1 million | $3,380.9 million |
| Net Loss | $(478.4) million | $18.9 million |
| Adjusted OIBDA | $1,166.4 million | $1,269.7 million |
| Total Debt | $4,945.8 million | $2,759.6 million |
Liberty Latin America Ltd. (LILAK) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Liberty Latin America Ltd. (LILAK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Liberty Latin America Ltd. (LILAK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Liberty Latin America Ltd. (LILAK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.