Liberty Posted March 3, 2016 Share Posted March 3, 2016 Down over 13% today. Link to comment Share on other sites More sharing options...
muscleman Posted March 6, 2016 Share Posted March 6, 2016 There are a few things that makes me puzzled. Can anyone she me some lights? 1. Capex continues to be high and FCF continues to be low. LBTYK's capex is usually 14% of revenue, which should also include some growth capex. GNCMA's capex guidance for 2016 is 210 m. I know that they plan to fund North Slope of Alaska and TERRA projects but the $85 m required capex will be funded through sale of some wireless towers. Why is that? This is a sign that FCF is very weak. Otherwise they could simply fund it through FCF right? 2. Why is there the decline of revenue and EBITDA? I understand that ALSK's economy is related to oil and in recession since 2014. But isn't Puerto Rico in a worse shape? It seems to me that Liberty is doing better in Puerto Rico than GNCMA in ALSK. Link to comment Share on other sites More sharing options...
Packer16 Posted March 6, 2016 Author Share Posted March 6, 2016 A good part of next years cap-ex is growth into the North Slope and TERRA (greenfield sites) where they will be the monopoly provider. I am not sure FCF is weak as much as they are expanding their network while the comps have no more regions to expand into. The decline in EBITDA is due to a more realistic level of roaming revenues. This has been GNCMA's weak point to date as roaming revenue are not contractually recurring & this adjustment provides more visibility into this line. They continue to grow nicely despite the oil economics and part of the decline was also due to political ad declines. As 2016 ramps up we may see some of that come back. Packer Link to comment Share on other sites More sharing options...
muscleman Posted March 6, 2016 Share Posted March 6, 2016 A good part of next years cap-ex is growth into the North Slope and TERRA (greenfield sites) where they will be the monopoly provider. I am not sure FCF is weak as much as they are expanding their network while the comps have no more regions to expand into. The decline in EBITDA is due to a more realistic level of roaming revenues. This has been GNCMA's weak point to date as roaming revenue are not contractually recurring & this adjustment provides more visibility into this line. They continue to grow nicely despite the oil economics and part of the decline was also due to political ad declines. As 2016 ramps up we may see some of that come back. Packer Thanks you! I am comparing their reports with LBTYK side by side. There are a few things puzzling to me. 1. SG&A cost is 35% of revenue. In LBTYK this is much lower. Probably because of large scale and better efficiency? 2. D&A is only 19% of revenue vs LBTYK's 33%. I don't know why such a big difference. 3. Adjusted EBITDA margin is 33% and they project an even lower one for 2016 vs LBTYK's 47%. Do they have plans to close this gap? Link to comment Share on other sites More sharing options...
Packer16 Posted March 6, 2016 Author Share Posted March 6, 2016 LBTYK has a larger scale but also a more compact network footprint. Part of LBTYK's D&A includes acquisition amortization versus GNCMA has done few acquisitions thus has a much smaller amortization. GNCMA may never approach LBTYK's margin as the GNCMA's network is more dispersed than LBTYK's and foreign cable firms have much lower content costs than US cable cos. Packer Link to comment Share on other sites More sharing options...
muscleman Posted April 25, 2016 Share Posted April 25, 2016 https://www.sec.gov/Archives/edgar/data/808461/000080846116000186/gciform8k02122016.htm Does anyone feel uncomfortable with this compensation plan? The bonus is only slightly correlated to the Adjusted EBITDA and Capex Goal. The major portion is "Discretionary". https://www.sec.gov/Archives/edgar/data/808461/000080846115000058/gcidef14a5-4x2015.htm "Discretionary. The board will take various factors into account when deciding on the payout of the discretionary portion of the plan applying to the Named Executive Officers. These factors include, but are not limited to, leadership, crisis management, succession planning, strategic planning, risk management, special projects, financial reporting, and compliance with our debt covenants. " This is full of shit! This basically means they will get the bonus no matter what. In addition to that, there is a huge amount of stock awards each year. See page 32. Link to comment Share on other sites More sharing options...
muscleman Posted April 25, 2016 Share Posted April 25, 2016 A good part of next years cap-ex is growth into the North Slope and TERRA (greenfield sites) where they will be the monopoly provider. I am not sure FCF is weak as much as they are expanding their network while the comps have no more regions to expand into. The decline in EBITDA is due to a more realistic level of roaming revenues. This has been GNCMA's weak point to date as roaming revenue are not contractually recurring & this adjustment provides more visibility into this line. They continue to grow nicely despite the oil economics and part of the decline was also due to political ad declines. As 2016 ramps up we may see some of that come back. Packer The reason I am saying their FCF might be weaker than what they reported is because they said in the 8-k that "Tower Sales: During 2016, we expect to monetize our urban wireless towers and rooftop locations for approximately $90 million in a sale lease back transaction. We will redeploy and invest the cash received into our broadband infrastructure in Alaska." Their OCF per year is around 250 Million and their capex target is about 176 million, and I believe this includes the North Slope projects already, so there is no need to do the sell lease back transaction on the towers. Link to comment Share on other sites More sharing options...
kab60 Posted August 8, 2016 Share Posted August 8, 2016 Company reported Q2 results the other day and slashed capex guidance for 2017 to 158-168m, so those longing for FCF should see a bunch next year. Disclosure: No position Link to comment Share on other sites More sharing options...
Packer16 Posted August 8, 2016 Author Share Posted August 8, 2016 And possibly more in the years after as the cap ex may decline another 25% the next year also. Packer Link to comment Share on other sites More sharing options...
muscleman Posted August 15, 2016 Share Posted August 15, 2016 https://www.sec.gov/Archives/edgar/data/808461/000080846116000186/gciform8k02122016.htm Does anyone feel uncomfortable with this compensation plan? The bonus is only slightly correlated to the Adjusted EBITDA and Capex Goal. The major portion is "Discretionary". https://www.sec.gov/Archives/edgar/data/808461/000080846115000058/gcidef14a5-4x2015.htm "Discretionary. The board will take various factors into account when deciding on the payout of the discretionary portion of the plan applying to the Named Executive Officers. These factors include, but are not limited to, leadership, crisis management, succession planning, strategic planning, risk management, special projects, financial reporting, and compliance with our debt covenants. " This is full of shit! This basically means they will get the bonus no matter what. In addition to that, there is a huge amount of stock awards each year. See page 32. In addition to the issue above, there is also this: https://www.sec.gov/Archives/edgar/data/808461/000080846116000256/gci10q6-30x2016.htm#s1CB41D14F4ADEE382F49C521826B1202 "Related Party Transactions We entered into a long-term capital lease agreement in 1991 with the wife of GCI’s President and CEO for property occupied by us. The leased asset was capitalized in 1991 at the owner’s cost of $0.9 million and the related obligation was recorded. The lease agreement was amended in April 2008 and our existing capital lease asset and liability increased by $1.3 million to record the extension of this capital lease. The amended lease terminates on September 30, 2026. In January 2001 we entered into an aircraft operating lease agreement with a company owned by GCI’s President and CEO. The lease was amended several times, most recently in May 2011. The lease term of the aircraft may be terminated at any time by us upon 12 months written notice. The monthly lease rate of the aircraft is $132,000. In 2001, we paid a deposit of $1.5 million in connection with the lease. The deposit will be repaid to us no later than six months after the agreement terminates. As disclosed in Note 4 of this Form 10-Q, we have an unsecured promissory note and stock appreciation rights with Searchlight. Searchlight received the right to nominate one person for appointment or election as a member of our Board of Directors pursuant to a Securityholder Agreement dated as of December 4, 2014. Searchlight became a related party on February 2, 2015 when we closed the Wireless Acquisition. Searchlight's nominee was appointed as a member of our Board of Directors on March 4, 2015. " Link to comment Share on other sites More sharing options...
Munger_Disciple Posted August 15, 2016 Share Posted August 15, 2016 I agree that the related party transactions with the CEO and wife look and smell bad. The Searchlight transaction however is ok I think. Searchlight is a private equity firm that invested $75M in 2015 to facilitate the Alaska Wireless transaction and the stock appreciation rights were negotiated as a part of the deal. It does seem like the stock is very cheap though it does have some Alaska specific issues. A decent acquisition candidate for somebody. Link to comment Share on other sites More sharing options...
muscleman Posted August 15, 2016 Share Posted August 15, 2016 I agree that the related party transactions with the CEO and wife look and smell bad. The Searchlight transaction however is ok I think. Searchlight is a private equity firm that invested $75M in 2015 to facilitate the Alaska Wireless transaction and the stock appreciation rights were negotiated as a part of the deal. It does seem like the stock is very cheap though it does have some Alaska specific issues. A decent acquisition candidate for somebody. It is cheap on a EV/EBITDA basis but I haven't seen much FCF as of date. The Capex/revenue is much higher than CHTR or LGI. I find it interesting that they are doing the sale-lease back transactions on their wireless towers. With low competition and harsh weather, these are supposed to be good assets. Yet they fail to generate enough FCF in order to fund their capex without these transactions. Link to comment Share on other sites More sharing options...
Packer16 Posted August 15, 2016 Author Share Posted August 15, 2016 The FCF is coming. The cap-ex is going to be slashed by $47 million in 2017 and an additional $36 million 2018 if no new projects can be economically found. That is $82 million more FCF in 2018 than in 2016 assuming no growth which management is stating growth will slow but not decline. Packer Link to comment Share on other sites More sharing options...
mbrock77 Posted August 16, 2016 Share Posted August 16, 2016 It seems that the GCI bonds have held up well, even rallied a bit, during this decline in the equity. A newbie question: how much can you read into this and is this necessarily a good sign? Link to comment Share on other sites More sharing options...
mbrock77 Posted January 3, 2017 Share Posted January 3, 2017 Well, this has been quite a move since September. Not sure why it got that low and what's changed since then (oil?), but I'll take it. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted January 3, 2017 Share Posted January 3, 2017 Might have turned the buybacks really up since they're going to have lots of FCF this year. Link to comment Share on other sites More sharing options...
kab60 Posted January 3, 2017 Share Posted January 3, 2017 I'm a little baffled as well since ALSK is still trading at a depressed valuation so I don't think it can all be oil related. But no idea. I'll take it. Link to comment Share on other sites More sharing options...
mbrock77 Posted January 11, 2017 Share Posted January 11, 2017 In today's announcement of GCI's acquisition of Seattle-based Northpoint Consulting (text below) I was surprised to read in the press release from GCI: "As we expand our footprint in the Pacific Northwest and across the nation". Have they had any real business outside of Alaska? ===== SEATTLE, Jan. 11, 2017 /PRNewswire/ -- GCI (GNCMA) has expanded its presence in the Pacific Northwest, announcing today its acquisition of Northpoint Consulting LLC., a premier network consulting firm based in Seattle. The move positions GCI to provide broader management offerings nationwide, including unified communication, network security and cloud integration. "We are thrilled to welcome Northpoint's team of network experts to the GCI family," said Martin Cary, senior vice president and general manager of GCI Business. "As we expand our footprint in the Pacific Northwest and across the nation, GCI will continue to recruit expert staff and invest in the latest technology in order to deliver the best possible solutions to our customers." Northpoint provides consulting services like network analysis and security, cloud migration management and communications design, to many of the top Fortune 500 companies nationwide. "GCI has been delivering services for more than 35 years and we're excited for Northpoint customers to be able to benefit from GCI's extensive portfolio," said Nathan Clark, founder of Northpoint. "We recognize the value of offering managed services to our customers to free up valuable resources and reduce costs." As part of the acquisition, Clark will transition to vice president of business development in the Pacific Northwest for GCI and Northpoint's staff of 23 will become GCI employees. Link to comment Share on other sites More sharing options...
stylized_fact Posted February 2, 2017 Share Posted February 2, 2017 Private Management Group lightening up... https://www.sec.gov/Archives/edgar/data/808461/000114203117000005/gncma-123116.txt Link to comment Share on other sites More sharing options...
OracleofCarolina Posted March 2, 2017 Share Posted March 2, 2017 The FCF is coming. The cap-ex is going to be slashed by $47 million in 2017 and an additional $36 million 2018 if no new projects can be economically found. That is $82 million more FCF in 2018 than in 2016 assuming no growth which management is stating growth will slow but not decline. Packer Results are out. Thoughts? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted March 2, 2017 Share Posted March 2, 2017 The FCF is coming. The cap-ex is going to be slashed by $47 million in 2017 and an additional $36 million 2018 if no new projects can be economically found. That is $82 million more FCF in 2018 than in 2016 assuming no growth which management is stating growth will slow but not decline. Packer Results are out. Thoughts? All going to plan, guiding $25MM higher EBITDA for 2017 midpoint guidance vs 2016 actual and that's not even counting the roaming adjustment. I'm interested to see if they are increasing their buybacks with the rush of FCF available. The price action has been pretty wild since the beginning of the year. So many big moves around $19-$20, wouldn't be surprised to see them in the market there. Link to comment Share on other sites More sharing options...
kab60 Posted March 2, 2017 Share Posted March 2, 2017 Yep, looks pretty solid. Still don't quiet get the price action nor the run up versus Alsk (which I also own). Have considered lighting up a bit and add to Alsk but I vastly prefer Gncmas management (and its large ownership). Link to comment Share on other sites More sharing options...
Packer16 Posted March 2, 2017 Author Share Posted March 2, 2017 It appears to be playing out. I calculate close to $71m in FCF in 17 using the midpoint of the guidance. No taxes due to a $139m NOL carryforward. If cap-ex can be cut by an additional 20% in 18 then that adds an additional $30m in FCF with no cash flow growth. That is almost $100m in FCF in 18 with a market cap of $700m & a good capital allocator in a challenging economic environment. Packer Link to comment Share on other sites More sharing options...
Munger_Disciple Posted March 2, 2017 Share Posted March 2, 2017 Hi Packer, My calculation for 2017 shows an estimated FCF of $81M based on the guidance provided. Here is the breakdown: Adjusted EBITDA: $312 M (mid-point of guidance) Roaming cash in excess of revenue: $20M Capex: ($165 M) Interest Cost plus preferred dividend: ($86 M) same as in 2016 FCF assuming zero taxes due to NOL carry forwards = $81 M Best regards Link to comment Share on other sites More sharing options...
Packer16 Posted March 2, 2017 Author Share Posted March 2, 2017 Thanks for the corrections. I forgot about the GAAP/cash roming delta plus the preferred dividend. Packer Link to comment Share on other sites More sharing options...
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