Liberty TripAdvisor Holdings, Inc. :LTRPA-US: Earnings Analysis: Q3, 2017 By the Numbers : November 28, 2017

Liberty TripAdvisor Holdings, Inc. reports financial results for the quarter ended September 30, 2017.

Highlights

  • Summary numbers: Revenues of USD 439 million, Net Earnings of USD -13 million.
  • Gross margins widened from 65.21% to 70.39% compared to the same period last year, operating (EBITDA) margins now 15.03% from 20.05%.
  • Change in operating cash flow of -62.79% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 439 431 378 339 434
Revenue Growth (%YOY) 1.15 8.29 4.71 -1.74 0.46
Earnings (mil) -13 -12 -3 35 -1
Earnings Growth (%YOY) -1200 -500 75 252.17 66.67
Net Margin (%) -2.96 -2.78 -0.79 10.32 -0.23
EPS -0.17 -0.16 -0.04 0.47 -0.01
Return on Equity (%) -0.25 -0.23 -0.06 0.64 -0.02
Return on Assets (%) -0.71 -0.65 -0.16 1.89 -0.05

Access our Ratings and Scores for Liberty TripAdvisor Holdings, Inc.

Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, LTRPA-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if LTRPA-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 1.86% and earnings by -8.33% compared to the previous period.

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 20.05% to 15.03%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 65.21% to 70.39%. For comparison, gross margins were 65.89% and EBITDA margins 15.78% in the immediate last period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

LTRPA-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 127.17, compared to last year’s level of 120.56 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

LTRPA-US’s year-on-year change in operating cash flow of -62.79% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 7.14% to 3.64% and (2) one-time items that contributed to a decrease in pretax margins from 5.76% to 0%

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Liberty TripAdvisor Holdings, Inc.

Company Profile

Liberty TripAdvisor Holdings, Inc. engages in online advertising and commerce business through its subsidiaries. It operates through TripAdvisor and Corporate & Other segments. The TripAdvisors segment includes online travel community, aggregating reviews and opinions from its community of travelers about destinations, accommodations, restaurants, and activities throughout the world. The Corporate & Other segment consists of assets or businesses category which the company does not disclose separately. The company was founded on August 27, 2014 and is headquartered in Englewood, CO.

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