Investment Thesis
Liberty Latin America exhibits severe financial distress with unsustainable leverage (14.89x debt/equity) and critically insufficient interest coverage (0.3x), unable to service $8.3B debt from operating income. The company generates positive free cash flow of $305.9M but reports a net loss of $611.2M, reflecting a capital structure broken by interest burden. Operating margins of 2.4% with declining revenue (-0.1% YoY) in a structurally declining cable/pay TV industry create an untenable long-term situation requiring debt restructuring.
Strengths
- Positive operating cash flow of $805.9M and free cash flow of $305.9M provide near-term flexibility for debt service
- Cash reserves of $783.9M create a liquidity cushion against immediate solvency risk
- Current ratio of 1.14x maintains minimal operational liquidity to meet short-term obligations
Risks
- Interest coverage of 0.3x is critically unsustainable - operating income covers only 30% of interest expense, necessitating debt restructuring or bankruptcy
- Extreme leverage at 14.89x debt/equity with $8.3B debt against $555.6M equity represents structural insolvency requiring major deleveraging
- Negative net margin of -13.8% and declining revenue in secular cable decline limits ability to generate sustainable profitability and reduce leverage
Key Metrics to Watch
- Interest coverage ratio trajectory and debt refinancing ability
- Free cash flow to total debt ratio as measure of deleveraging progress
- Operating margin sustainability amid revenue contraction
Financial Metrics
Revenue
4.4B
Net Income
-611.2M
EPS (Diluted)
$-3.06
Free Cash Flow
305.9M
Total Assets
12.2B
Cash
783.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
2.4%
Net Margin
-13.8%
ROE
-110.0%
ROA
-5.0%
FCF Margin
6.9%
Balance Sheet & Liquidity
Current Ratio
1.14x
Quick Ratio
1.14x
Debt/Equity
14.89x
Debt/Assets
91.3%
Interest Coverage
0.35x
Long-term Debt
8.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-12T15:00:26.310736 |
Data as of: 2025-12-31 |
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