GCI Liberty, Inc. (NASDAQ:GLIBA) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 05:00 pm ET

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GCI Liberty, Inc. (NASDAQ:GLIBA) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Remarks] Our first question comes from Michael Rollins, Citi.

Analyst
Michael Rollins

Hi, thanks for taking the questions. Curious if you could discuss at the GCI level, what's the most appropriate target leverage ratio should be for the Company and the capacity you would have to either increase investments or repurchase stock, or consider other uses for the capital?

Executive
Greg Maffei

Pete will take that. Laura, why don't talk about where we are in terms of leverage, both in the constraints we currently have at the GCI level, given covenants?

Executive
Laura Baldi

Sure.

Executive
Greg Maffei

This is Laura Baldi, our Treasurer.

Executive
Laura Baldi

So, GCI operates under both the credit agreement and some public filings. With respect to the credit agreements, we are at roughly a 5.1 times total leverage ratio using that metric. On the bond covenants, we are approximately 5.5 times versus a 6 times covenant. Obviously, we've seen some fluctuations in it -- excuse me, seen some fluctuations in the leverage covenants due to the write-offs and then the reversals of the RHC issues, and we are working towards reducing those covenants, I mean, the calculations over time. Please note that the RHC issues that were effective in first quarter '19 will begin to anniversary off this quarter, the first quarter, sorry. And that will improve these calculations going forward.

Executive
Peter Pounds

Thank you, Laura. And I think to note what is the right level given the fluctuations potentially in our regulatory matters. We have been conservative against what this might be and we're probably at the levels and we're trying to build a little cushion, particularly at various times, we had incurrence issues. We're out of that now, but want to make sure that we don't have those issues and the regulatory fluctuations that made that harder.

Analyst
Michael Rollins

And just an operating question, in Alaska, do you find that there is a greater sensitivity to natural resource pricing, for example, like the oil market, whether it's on the business side or the consumer side of the cable business? Just curious how to think about some of those sensitivities over time?

Executive
Greg Maffei

Well, if I understand your question correctly, you're basically asking how much of the price of oil drive business activity in Alaska. And I think there are people on it from the GCI side, you could certainly be more articulate. But the answer is quite a lot and particularly with some lag on what projects get started, what things get built out and what -- particularly in areas like the Northern slope, what people do, very much tied to where they think, where oil has been, where oil will be. I don't know, Peter, if Ron, you want to comment further?

Executive
Ronald Duncan

This is Ron. I'll just add, there is a substantial damper between current fluctuating oil prices in the climate in Alaska. Most oil revenue in Alaska comes to us by being recycled by the state government. So low oil prices have an impact on state budget deficits that really aren't reflected immediately in the economy. And the companies that