GCI Liberty Q3 2026 Earnings Call Transcript

GCI Liberty (NASDAQ:GLIBA) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

GCI Liberty reported its strongest quarterly results of the year, with a 4% increase in revenue to $267 million and a 10% increase in adjusted EBITDA to $101 million. The adjusted EBITDA margin expanded by 200 basis points to 37.8%.

The company is progressing toward the closing of the Quintillion acquisition, which is expected to enhance network redundancy and contribute approximately $50 million to EBITDA.

GCI Liberty announced a new capital return policy, including the declaration of its first quarterly dividend of 37.5 cents per share and a $100 million share repurchase authorization.

Consumer revenue grew by 3%, driven by a 4% increase in wireless sales. Business revenue grew by 5%, led by data revenue from existing healthcare and education customers.

GCI Liberty enhanced its credit facilities by retiring $453 million of 2028 senior notes and extending the nearest debt maturity to 2030.

Capital expenditures are expected to peak in 2026 at $290 million, with a decline anticipated in subsequent years. The company remains confident in its competitive position against Starlink.

The regulatory environment in Alaska is viewed positively, with potential growth opportunities from oil and gas developments.

Full Transcript

OPERATOR

Welcome to the GCI Liberty 2026 third quarter earnings call. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press star one on your telephone. As a reminder, this conference will be recorded November 5th. I would now like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations. Please go ahead.

Hooper Stevens (Senior Vice President, Investor Relations)

Thank you, everybody, for joining us on today’s earnings call. This call will include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by GCI Liberty with the SEC. These forward-looking statements speak only as of the date of this call, and GCI Liberty expressly disclaims any obligation or undertaking to disseminate updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

On today’s call, we will discuss certain non-GAAP financial measures for GCI Liberty, including adjusted OIBDA, adjusted OIBDA margin, and free cash flow. Information regarding the required definitions, along with the comparable GAAP metrics and reconciliations, are on Schedule 1 and can be found in GCI Liberty’s earnings press release issued today, which is available on our IR website. Speaking on today’s call will be Ron Duncan, the CEO of GCI Liberty, and Brian Wendling, GCI Liberty’s Chief Accounting Officer and Principal Financial Officer. Additional members of GCI Liberty and GCI Management will be available to answer questions. I’ll now hand the call over to Ron. Thank you.

Ron Duncan (Chief Executive Officer)

Thank you, Hooper, and good morning. This was a quarter of execution at GCI Liberty. GCI delivered its strongest quarterly results of the year. We made progress towards closing the Quintillion acquisition, and in October we retired our 2028 senior notes, pushing our nearest maturity out to 2030. Today we also formally rolled out our capital return policy, including declaring our first quarterly dividend and our inaugural $100 million share repurchase authorization.

Starting with the quarterly results, GCI Liberty generated revenue of $267 million, up 4%, and adjusted EBITDA of $101 million, up 10%, with adjusted EBITDA margin expanding 200 basis points to 37.8%. Both businesses grew revenue and gross margin dollars over the trailing 12 months. Free cash flow was $37 million, reflecting the peak capital spending year we have discussed. Brian will cover the financial results in greater detail. Turning to the consumer business, consumer revenue grew 3%, led by wireless, where revenue grew 4% on more lines in service and higher handset sales. Consumer wireless lines ended the quarter at 202,000, up 1% year over year, and we added 1,400 postpaid consumer wireless lines sequentially. Convergence remains one cornerstone of retention. Forty-three percent of broadband customers now take wireless service from us, and 64% of postpaid wireless lines sold in the quarter were part of a converged relationship.

Broadband subscribers were 154,500, down 900 sequentially. On the business side, revenue grew 5%, led by data revenue from service upgrades with existing healthcare and education customers. Business gross margin was 78.5%, up 30 basis points, as revenue growth outpaced the higher distribution costs we have been absorbing from restored service on the Quintillion network. Our operating priorities are unchanged: invest in network quality, complete our Alaska plan commitments, drive convergence, and extend high-quality connectivity across Alaska. 5G service is now live in approximately 150 communities, reaching more than 80% of the state’s population. Year to date, we have invested $202 million net of grant proceeds, principally in the rural wireless and statewide data networks, with the year-over-year increase driven by hybrid fiber-coaxial upgrades in urban Alaska.

We continue to expect $290 million of net capital expenditures in 2026, our peak year, followed by meaningful declines in 2027 and 2028 as GCI returns to its historical capital intensity range. Regarding Starlink, we remain confident in our competitive position, supported by the strength of our services and our unique position as the only converged operator in Alaska. We believe we are well positioned relative to Starlink from a bandwidth speed, network reliability, and customer service perspective. On the wireless front, we do not believe SpaceX can be a viable competitor unless they build out or buy a terrestrial network, and that challenge would be particularly daunting in Alaska.

Finally, capital returns: we announced today that our board declared the company’s first quarterly dividend under our new policy, 37.5 cents per share of GCI Group common stock, or approximately $15 million per quarter. The dividend provides a durable baseline return through normal business and investment cycles, and we intend to grow it over time. Today we also announced a new share buyback authorization of $100 million, and we intend to be in the market opportunistically as our free cash flow inflects in 2027.

Share repurchases can supplement cash returned to our shareholders via the dividend in a way that increases value while also maintaining significant capital for growth investments. We remain excited to deploy capital towards growth opportunities. If we do not identify sufficiently attractive higher-return uses, we expect to return additional cash to shareholders. Lastly, to touch on the regulatory environment, Alaska’s economy could be poised for long-overdue growth supported by renewed momentum in oil and gas development. Conditions around the potential development of a gas line continue to improve, and we are increasingly optimistic that the project could ultimately move forward, which together with broader energy investment could drive meaningful economic growth and increased demand for our services.

In closing, the pieces we described last quarter are now in place: GCI’s best quarter of the year, the 2028 maturity addressed, and the dividend declared. With capital intensity declining from here and Quintillion contributing, we expect GCI’s cash generation to expand meaningfully beginning in 2027, and GCI Liberty is positioned to allocate it with discipline. With that, I’ll turn the call over to Brian for more financial details.

Brian Wendling (Chief Accounting Officer and Principal Financial Officer)

Thanks, Ron, and good morning, everyone. I’ll start with some balance sheet discussion. At the end of the third quarter, GCI Liberty had consolidated cash, cash equivalents, and restricted cash of $417 million, including $103 million of cash and cash equivalents and restricted cash at GCI. Total principal amount of debt at GCI Liberty was approximately $1.1 billion. At quarter end, GCI Liberty’s consolidated net leverage was 2.1 times, which incorporates cash at the parent level as well as the non-voting preferred stock.

At quarter end, GCI’s net leverage, as defined in its credit agreement, was 2.7 times. Additionally, GCI’s credit facility had $383 million of undrawn capacity net of letters of credit. During the third quarter, we repurchased $147 million principal amount of our 2028 senior notes, and subsequent to quarter end we retired approximately $453 million aggregate principal amount of the 2028 senior notes, which represented all the outstanding senior notes. This was done using $300 million of additional financing capacity raised in October and revolver borrowings. This was done at a favorable outcome relative to pricing in the public markets, and with these balance sheet actions, our nearest maturities have now been extended out to 2030.

Pro forma for these financings and the retirement, our net leverage is effectively unchanged and the undrawn capacity is at $228 million. Flipping to GCI’s results for the third quarter, GCI generated total revenue of $267 million, a 4% increase as compared to the prior year, and adjusted OIBDA of $101 million, which was a 10% increase year over year. Consumer revenue increased 3% during the third quarter, largely driven by growth in wireless, and consumer gross margin decreased 20 basis points to 72% for the quarter as growth in wireless was offset by an increase in wireless handset costs.

Business revenue increased 5% during the third quarter, driven by growth in business data revenue from service upgrades with existing healthcare and education customers. Business gross margin increased 30 basis points to 78.5% as revenue growth was partially offset by an increase in distribution costs for healthcare and education customers and restored service on the Quintillion network. Capital expenditures, net of grant proceeds, totaled $77 million during the quarter. We expect 2026 capex of approximately $290 million, which includes $20 million that was carried over from 2025 due to normal-course timing shifts. As Ron mentioned, we expect 2026 to represent our peak year of capex spend. GCI Liberty generated $37 million in free cash flow for the trailing 12 months through the end of the third quarter, a decline year over year.

This was largely driven by the increase in capex as discussed, net of grant proceeds, and then ordinary-course working capital swings. And with that, I’ll turn the call back over to Ron.

Ron Duncan (Chief Executive Officer)

Thank you, Brian. We appreciate your interest in GCI Liberty and look forward to continuing to update you on our progress. And with that, we’ll open the call up for Q&A.

OPERATOR

Thank you. We’ll now be conducting the question-and-answer session. If you’d like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for the first question.

Thank you. And the first question is from the line of David Joyce with Seaport Research Partners. Please proceed with your questions.

David Joyce (Analyst)

Thank you. A couple questions, please. First, could you update us on your outlook for Quintillion since that’ll be closing soon in terms of their revenue and EBITDA contribution and kind of conceptually what that does for your network? And do you have a, you know, kind of a sense of, you know, what this buy does for you economically versus a build for the network redundancy? And then I’ll have some follow-ups.

Ron Duncan (Chief Executive Officer)

Okay. Thank you for going one at a time; that’s easier for me to remember. We expect to close Quintillion very soon, and the results will be as previously discussed. It’s approximately a $50 million increase to our EBITDA and a substantial improvement in the redundancy and quality of our network. We will be closing earlier than originally anticipated, which will mean that we’ll be taking over some of their capital expenditures for projects that they haven’t completed.

That was built into our deal. That will reduce the purchase price. Net-net, the cash flows from the transaction will be as we originally expected. And by the middle of next year, all of the upgrade projects should be complete, and we should be in a position to start turning on the material redundancy in our network, which will allow us to provide both higher bandwidth and more reliable services to our customers. We’re excited about the closing. We’re excited to put that transaction behind us and start implementing on the network front.

We think it will be excellent for both us and our customers.

David Joyce (Analyst)

And that $50 million EBITDA is net of what your standalone GCI relationship was with them before the deal?

Ron Duncan (Chief Executive Officer)

That will include some foregone payments that we’re making to them today that we’ll no longer make once we own them, obviously, and revenues from other customers on the network, combined with substantially reduced operating costs for the Quintillion network as the synergies are realized.

David Joyce (Analyst)

Okay. Secondly, on the buybacks, good to see the holistic capital returns are in place. Is there a read-through to what M&A opportunities you’ve been seeing or haven’t been as intrigued in? Or is this not distinct from the opportunities that could still be out there, since you have the tax attributes that you’d be looking to monetize?

Ron Duncan (Chief Executive Officer)

We continue to pursue growth opportunities. We believe that with the possible turning in the Alaska economy and the construction of a gas line, some related opportunities may arise out of that. We’re also looking at other potential opportunities in higher-growth segments. The capital return through stock repurchases is conditional both on how much capital we might deploy to growth opportunities and the acceleration of the free cash flow in the business.

We would prefer to continue to grow the company by investing in new opportunities not related to our core business. But if we’re unable to find those in a reasonable time frame as the free cash flow builds up, we would direct more to share repurchases. Share repurchases would also be driven by opportunistic situations relating to the current stock price.

David Joyce (Analyst)

Okay, and then finally, you did discuss the Starlink, and I was just wondering, with them starting to launch higher-capacity satellites for their broadband service, when do you expect those would have some impact on the Alaskan market? I know Starlink is also a—you also have a relationship there to kind of offhand your remote customers when they’re not on your network. But I was just wondering what their new technology would be doing.

Ron Duncan (Chief Executive Officer)

It’s hard to predict when the Starlink version 3s would be in a polar orbit and available to serve Alaska. They need to successfully complete the development of the Starship first, which involves successfully landing the second stage, before they can get to the launch cadence necessary to populate version 3 satellites. We don’t know how they’ll prioritize limited launch resources between Starlink version 3, in-space data centers, other government contracts, direct-to-device satellites—all of which are separate vehicles requiring separate launches.

My guess is it’ll be a year or more before we see any version 3 satellites in the Alaska constellation. But there’s an awful lot of uncertainty in that. Depending on when they get the launch sequence up to where it needs to be and how they allocate scarce launches, it could be substantially longer than that.

David Joyce (Analyst)

All right, thank you very much, Ron.

Ron Duncan (Chief Executive Officer)

Thanks, David.

Hooper Stevens (Senior Vice President, Investor Relations)

David, thank you for the good questions, and everyone else for listening in on today’s call. We will look forward to more dialogue in the coming days and weeks. With that, we will conclude. Thank you.

OPERATOR

Thank you for your participation. Ladies and gentlemen, you may now disconnect your lines at this time. Have a wonderful day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.