STAMFORD, Conn., Jan. 31,
2019 /PRNewswire/ -- Charter Communications, Inc. (along with
its subsidiaries, the "Company" or "Charter") today reported
financial and operating results for the three and twelve months
ended December 31, 2018.
Key highlights:
- During the fourth quarter, Charter completed its all-digital
and DOCSIS 3.1 initiatives. As of December
31, 2018, virtually all of Charter's national footprint was
all-digital and Charter's Spectrum Internet Gig service is
now available throughout Charter's footprint.
- Fourth quarter total residential and SMB customer relationships
increased 248,000, compared to 209,000 during the fourth quarter of
2017. During the year ended December 31,
2018, total residential and SMB customer relationships grew
by 3.5% to 28.1 million, and total residential and SMB Internet
customers grew by 1.3 million, or 5.3% to 25.3 million, with
329,000 residential and SMB Internet customer net additions in the
fourth quarter of 2018.
- Fourth quarter revenues of $11.2
billion grew 5.9%, as compared to the prior year period,
driven by residential revenue growth of 3.9%, commercial revenue
growth of 4.5%, and advertising revenue growth of 34.1%.
- Fourth quarter Adjusted EBITDA1 of $4.2 billion grew 4.6% year-over-year, and 7.6%
when excluding fourth quarter mobile revenue and operating
expenses.
- For the year ended December 31,
2018, revenues rose to $43.6
billion, 4.9% higher than in 2017. Adjusted EBITDA totaled
$16.1 billion for the year ended
December 31, 2018, an increase of
5.0% compared to the prior year. Excluding mobile revenue and
operating expenses in 2018, Adjusted EBITDA grew by 6.5%
year-over-year.
- Net income attributable to Charter shareholders totaled
$296 million in the fourth quarter,
compared to $9.6 billion during the
same period last year. For the year ended December 31, 2018, net income attributable to
Charter shareholders totaled $1.2
billion, compared to $9.9
billion in 2017. The year-over-year decrease in net income
in the fourth quarter and for the year ended December 31, 2018 was primarily driven by a GAAP
tax benefit from a reduction in the deferred tax liability as a
result of Federal tax reform in 2017.
- Fourth quarter capital expenditures totaled $2.4 billion and included $28 million of all-digital costs and $106 million of mobile-related capital
expenditures. For the year ended December
31, 2018, capital expenditures totaled $9.1 billion, or $8.9
billion excluding mobile-related capital expenditures.
- During the fourth quarter, Charter purchased approximately 4.3
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $1.4 billion. For the
year ended December 31, 2018, Charter
purchased approximately 16.2 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$5.0 billion.
"We performed well in 2018, growing our Internet customer base
by 1.3 million, cable revenue by 4.7%, and cable Adjusted EBITDA by
6.5% -- very strong operating and financial performance,
particularly in the midst of what we believe is the largest cable
integration ever," said Tom
Rutledge, Chairman and CEO of Charter Communications. "In
2019, we expect the operating and cash flow performance of our
cable business will further demonstrate the superiority of our
network, the returns of our recent investments, and the long-term
value creation driven by our consumer-focused operating
strategy."
1.
|
Adjusted EBITDA,
Adjusted EBITDA - Cable, free cash flow and free cash flow - Cable
are non-GAAP measures defined in the "Use of Adjusted EBITDA and
Free Cash Flow Information" section and are reconciled to
consolidated net income and net cash flows from operating
activities, respectively, in the addendum of this news
release.
|
Key Operating
Results
|
|
|
|
|
|
Approximate as
of
|
|
|
|
December 31,
2018 (a)
|
|
December 31,
2017 (a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
Estimated Video
Passings
|
50,824
|
|
|
49,973
|
|
|
1.7
|
%
|
Estimated Internet
Passings
|
50,652
|
|
|
49,727
|
|
|
1.9
|
%
|
Estimated Voice
Passings
|
50,086
|
|
|
48,995
|
|
|
2.2
|
%
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
32.7
|
%
|
|
33.7
|
%
|
|
(1.0)
|
ppts
|
Internet Penetration
of Estimated Internet Passings
|
49.9
|
%
|
|
48.2
|
%
|
|
1.7
|
ppts
|
Voice Penetration of
Estimated Voice Passings
|
22.3
|
%
|
|
23.2
|
%
|
|
(0.9)
|
ppts
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
|
26,270
|
|
|
25,499
|
|
|
3.0
|
%
|
Small and Medium
Business
|
1,833
|
|
|
1,662
|
|
|
10.2
|
%
|
Total Customer
Relationships
|
28,103
|
|
|
27,161
|
|
|
3.5
|
%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Video
|
16,104
|
|
|
16,400
|
|
|
(1.8)
|
%
|
Internet
|
23,625
|
|
|
22,518
|
|
|
4.9
|
%
|
Voice
|
10,135
|
|
|
10,424
|
|
|
(2.8)
|
%
|
|
49,864
|
|
|
49,342
|
|
|
1.1
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
(36)
|
|
|
2
|
|
|
NM
|
|
Internet
|
289
|
|
|
263
|
|
|
10.1
|
%
|
Voice
|
(83)
|
|
|
23
|
|
|
NM
|
|
|
170
|
|
|
288
|
|
|
(40.9)
|
%
|
|
|
|
|
|
|
Single Play
(e)
|
10,928
|
|
|
10,341
|
|
|
5.7
|
%
|
Double Play
(e)
|
7,097
|
|
|
6,473
|
|
|
9.6
|
%
|
Triple Play
(e)
|
8,245
|
|
|
8,685
|
|
|
(5.1)
|
%
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
41.6
|
%
|
|
40.6
|
%
|
|
1.0
|
ppts
|
Double Play
Penetration (f)
|
27.0
|
%
|
|
25.4
|
%
|
|
1.6
|
ppts
|
Triple Play
Penetration (f)
|
31.4
|
%
|
|
34.1
|
%
|
|
(2.7)
|
ppts
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
38.7
|
%
|
|
35.7
|
%
|
|
3.0
|
ppts
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$111.78
|
|
|
$110.74
|
|
|
0.9
|
%
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Video
|
502
|
|
|
450
|
|
|
11.5
|
%
|
Internet
|
1,634
|
|
|
1,470
|
|
|
11.1
|
%
|
Voice
|
1,051
|
|
|
930
|
|
|
13.1
|
%
|
|
3,187
|
|
|
2,850
|
|
|
11.8
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
14
|
|
|
12
|
|
|
10.1
|
%
|
Internet
|
40
|
|
|
41
|
|
|
(2.5)
|
%
|
Voice
|
27
|
|
|
32
|
|
|
(11.6)
|
%
|
|
81
|
|
|
85
|
|
|
(4.0)
|
%
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$170.62
|
|
|
$181.57
|
|
|
(6.0)
|
%
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
Enterprise
PSUs
|
248
|
|
|
220
|
|
|
13.0
|
%
|
Footnotes
In thousands, except per customer and
penetration data. See footnotes to unaudited summary of operating
statistics on page 5 of the addendum of this news release. The
footnotes contain important disclosures regarding the definitions
used for these operating statistics.
All percentages are calculated using whole numbers. Minor
differences may exist due to rounding. NM - Not
meaningful
During the fourth quarter of 2018, Charter's residential
customer relationships grew by 207,000, while fourth quarter 2017
residential customer relationships grew by 170,000. Residential
PSUs increased by 170,000 in the fourth quarter of 2018, compared
to fourth quarter 2017 residential PSU net additions of 288,000.
The year-over-year decrease in PSU net additions was driven by a
decline in voice and video net additions in the fourth quarter of
2018. As of December 31, 2018, Charter had 26.3 million
residential customer relationships and 49.9 million residential
PSUs.
Charter added 289,000 residential Internet customers in the
fourth quarter of 2018, versus fourth quarter 2017 Internet
customer net additions of 263,000. As of December 31, 2018,
Charter had 23.6 million residential Internet customers, with over
80% of those residential Internet customers subscribing to tiers
that provided 100 Mbps or more of speed. Currently, 100 Mbps is the
slowest speed offered to new Internet customers in 99% of Charter's
footprint. Additionally, Charter has doubled minimum Internet
speeds to 200 Mbps in a number of markets at no additional cost to
new and existing Spectrum Internet customers.
During the fourth quarter, Charter further expanded the
availability of its Spectrum Internet Gig service to a
number of new markets. The service, which uses DOCSIS 3.1
technology, is now available in 99% of Charter's footprint.
Residential video customers decreased by 36,000 in the fourth
quarter of 2018, while fourth quarter 2017 video customers
increased by 2,000. As of December 31, 2018, Charter had 16.1
million residential video customers.
During the fourth quarter of 2018, Charter completed its
all-digital efforts in its Legacy TWC and Legacy Bright House
footprints. As of December 31, 2018, virtually all of
Charter's national footprint was all-digital. All-digital allows
Charter to offer more advanced products and services, and provides
residential customers with two-way digital set-top boxes, which
offer better video picture quality, an interactive programming
guide and video on demand on all TV outlets in the home.
During the fourth quarter of 2018, residential voice customers
declined by 83,000, while fourth quarter 2017 voice customers grew
by 23,000. As of December 31, 2018, Charter had 10.1 million
residential voice customers.
Fourth quarter 2018 residential revenue per customer
relationship (excluding mobile revenue) totaled $111.78, and grew by 0.9% compared to the prior
year period, as promotional rate step-ups and modest rate
adjustments, were partly offset by continued single play Internet
sell-in.
In September of 2018, Charter completed the full market launch
of its Spectrum MobileTM service
to new and existing Spectrum Internet customers across its
footprint. Spectrum Mobile runs on America's largest, most
reliable LTE network and is combined with a nationwide network of
Spectrum WiFi hotspots. Spectrum Mobile customers can
choose one of two simple ways to pay for data, "Unlimited" for
$45 a month (per line), or "By the
Gig" at $14/GB. During the fourth
quarter of 2018, Charter added 113,000 mobile lines, and as of
December 31, 2018, Charter served a total of 134,000 mobile
lines.
SMB customer relationships grew by 41,000 during the fourth
quarter of 2018, compared to growth of 39,000 during the fourth
quarter of 2017. SMB PSUs increased 81,000, compared to 85,000
during the fourth quarter of 2017. As of December 31, 2018,
Charter had 1.8 million SMB customer relationships and 3.2 million
SMB PSUs. Enterprise PSUs grew by 5,000 during the fourth quarter
of 2018 compared to growth of 10,000 during the fourth quarter of
2017. As of December 31, 2018, Charter had 248,000 enterprise
PSUs.
Fourth Quarter
Financial Results
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share data)
|
|
|
|
Three Months Ended
December 31,
|
|
2018
|
|
2017
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
4,361
|
|
|
$
|
4,220
|
|
|
3.4
|
%
|
Internet
|
3,895
|
|
|
3,637
|
|
|
7.1
|
%
|
Voice
|
515
|
|
|
587
|
|
|
(12.3)
|
%
|
Residential
revenue
|
8,771
|
|
|
8,444
|
|
|
3.9
|
%
|
Small and medium
business
|
928
|
|
|
895
|
|
|
3.6
|
%
|
Enterprise
|
647
|
|
|
612
|
|
|
5.7
|
%
|
Commercial
revenue
|
1,575
|
|
|
1,507
|
|
|
4.5
|
%
|
Advertising
sales
|
562
|
|
|
419
|
|
|
34.1
|
%
|
Mobile
|
89
|
|
|
—
|
|
|
NM
|
|
Other
|
234
|
|
|
232
|
|
|
1.2
|
%
|
Total
Revenue
|
11,231
|
|
|
10,602
|
|
|
5.9
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Operating costs and
expenses - Cable
|
6,856
|
|
|
6,621
|
|
|
3.6
|
%
|
Operating costs and
expenses - Mobile
|
211
|
|
|
—
|
|
|
NM
|
|
Total operating costs
and expenses
|
7,067
|
|
|
6,621
|
|
|
6.7
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
4,164
|
|
|
$
|
3,981
|
|
|
4.6
|
%
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
37.1
|
%
|
|
37.5
|
%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA -
Cable
|
$
|
4,286
|
|
|
$
|
3,981
|
|
|
7.6
|
%
|
Adjusted EBITDA
margin - Cable
|
38.5
|
%
|
|
37.5
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
2,433
|
|
|
$
|
2,585
|
|
|
|
% Total
Revenues
|
21.7
|
%
|
|
24.4
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
296
|
|
|
$
|
9,553
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
1.31
|
|
|
$
|
39.66
|
|
|
|
Diluted
|
$
|
1.29
|
|
|
$
|
34.56
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,168
|
|
|
$
|
3,258
|
|
|
|
Free cash
flow
|
$
|
885
|
|
|
$
|
1,217
|
|
|
|
Free cash flow -
Cable
|
$
|
1,189
|
|
|
$
|
1,217
|
|
|
|
Revenue
Fourth quarter revenues rose 5.9% year-over-year to $11.2 billion, driven by growth in Internet,
advertising, video and commercial revenues. Excluding advertising
revenue, which benefited from political spend in the fourth quarter
of 2018 and mobile, revenue grew 3.9% year-over-year.
Video revenues totaled $4.4
billion in the fourth quarter, an increase of 3.4% compared
to prior year period. Video revenue growth was driven by annual
rate adjustments, promotional rolloff and higher bundled revenue
allocation relating to the launch of Spectrum pricing and
packaging in Legacy TWC and Legacy Bright House.
Internet revenues grew 7.1%, compared to the year-ago quarter,
to $3.9 billion, driven by growth in
Internet customers during the last year, promotional rolloff and
rate adjustments.
Voice revenues totaled $515
million in the fourth quarter, a decrease of 12.3% compared
to the fourth quarter of 2017, driven by value-based pricing, lower
bundled revenue allocation relating to the launch of
Spectrum pricing and packaging in Legacy TWC and Legacy
Bright House, and a decline in voice customers over the last twelve
months.
Commercial revenues rose to $1.6
billion, an increase of 4.5% over the prior year
period, driven by enterprise revenue growth of 5.7% and SMB revenue
growth of 3.6%. Fourth quarter 2018 commercial revenue growth was
lower than fourth quarter 2018 commercial customer relationship
growth, given the migration of Legacy TWC and Legacy Bright House
commercial customers to more attractively priced Spectrum
pricing and packaging for both SMB and enterprise services.
Fourth quarter advertising sales revenues of $562 million increased 34.1% compared to the
year-ago quarter, driven by higher political revenue. Fourth
quarter mobile revenue totaled $89
million.
Operating Costs and Expenses
Fourth quarter total operating costs and expenses increased by
$446 million, or 6.7% year-over-year,
and 3.6% when excluding fourth quarter mobile costs.
Fourth quarter programming expense increased by $147 million, or 5.5% as compared to the fourth
quarter of 2017, reflecting contractual programming increases and
renewals, partly offset by lower video customers.
Regulatory, connectivity and produced content expenses increased
by $60 million, or 11.8%
year-over-year, primarily driven by higher franchise and regulatory
fees, sports and news costs and the Company's adoption of FASB's
ASU 2014-09 as of January 1,
2018.
Costs to service customers decreased by $15 million, or 0.8% year-over-year, despite
year-over-year residential and SMB customer growth of 3.5%. The
year-over-year decrease in costs to service customers was primarily
the result of a decrease in bad debt.
Marketing expenses decreased by $18
million, or 2.3% year-over-year.
Other expenses increased by $61
million, or 7.0% as compared to the fourth quarter of 2017
driven by higher advertising sales, software costs, property tax
and insurance costs and costs related to the launch of Charter's
Spectrum 1 News channel in Los
Angeles.
In the fourth quarter of 2018, mobile costs were comprised of
launch costs, device costs and service and operating costs totaling
$211 million.
Adjusted EBITDA
Fourth quarter Adjusted EBITDA of $4.2
billion grew by 4.6% year-over-year, reflecting revenue
growth and operating expense growth of 5.9% and 6.7%, respectively.
Excluding mobile revenue and mobile operating expenses in the
fourth quarter of 2018, Adjusted EBITDA grew by 7.6%
year-over-year.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$296 million in the fourth quarter of
2018, compared to $9.6 billion in the
fourth quarter of 2017. The year-over-year decrease in net income
was primarily driven by a GAAP tax benefit from a reduction in the
deferred tax liability as a result of Federal tax reform in 2017
offset by higher Adjusted EBITDA and lower deprecation and
amortization costs.
Net income per basic common share attributable to Charter
shareholders totaled $1.31 in the
fourth quarter of 2018 compared to $39.66 during the same period last year. The
decrease was primarily the result of the factors described above
offset by a 5.7% decrease in weighted average common shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $2.4 billion in the fourth quarter of 2018,
compared to $2.6 billion during the
fourth quarter of 2017, primarily driven by a decline in CPE and
scalable infrastructure spending. The decrease in CPE spending was
mostly driven by lower set-top box purchases given a year-over-year
decline in the pace of migration of Legacy TWC and Legacy Bright
House customers to Spectrum pricing and packaging and a
decline in all-digital activity. The decrease in scalable
infrastructure spending was related to more consistent timing of
in-year spend. Support capital declined due to lower back office
systems spend, timing of vehicle purchases and lower facilities
improvement, partly offset by $99
million of support capital spending related to Spectrum
Mobile. Fourth quarter capital expenditures included
$28 million of all-digital costs and
$106 million of mobile
costs.
Cash Flow and Free Cash Flow
During the fourth quarter of 2018, net cash flows from operating
activities totaled $3.2 billion,
compared to $3.3 billion in the
fourth quarter of 2017. The year-over-year decline in net cash
flows from operating activities was primarily due to a smaller
working capital benefit and higher cash interest, partly offset by
higher Adjusted EBITDA and lower severance-related expenses.
Consolidated free cash flow for the fourth quarter of 2018
totaled $885 million, compared to
$1.2 billion during the same period
last year. The decrease was driven by lower net cash flows from
operating activities and a smaller increase in accrued capital
expenditures in the fourth quarter of 2018 versus the prior year
quarter, partly offset by lower capital expenditures. Excluding the
impact of mobile revenue, expenses, capital expenditures and
working capital from devices, fourth quarter 2018 free cash flow
totaled $1.2 billion.
Liquidity & Financing
As of December 31, 2018, total principal amount of debt was
$72.0 billion and Charter's credit
facilities provided approximately $2.8
billion of additional liquidity in excess of Charter's
$551 million cash position.
In January 2019, Charter
Communications Operating, LLC ("CCO") and Charter Communications
Operating Capital Corp. issued $1.25
billion of 5.050% senior secured notes due 2029 and
$750 million of 5.750% senior secured
notes due 2048 (collectively, the "Notes"). Charter intends to use
the net proceeds from the sale of the Notes for general corporate
purposes, including to fund potential buybacks of Class A common
stock of Charter or common units of Charter Holdings and to repay
certain indebtedness, including to repurchase, redeem or repay at
maturity Time Warner Cable, LLC's 8.750% senior notes due 2019
and/or to repay a portion of the outstanding balance under CCO's
revolving credit facility.
In January 2019, Charter Operating
entered into an amendment to its Credit Agreement raising an
additional $1.7 billion term loan A-3
and increasing revolving loan capacity to $4.75 billion from $4.0
billion, as well as extending the maturities on a portion of
the term loan A-2 and a portion of the revolving loan to 2024.
Share Repurchases
During the three months ended December 31, 2018, Charter
purchased approximately 4.3 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$1.4 billion.
Year to Date
Financial Results
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share data)
|
|
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
17,348
|
|
|
$
|
16,621
|
|
|
4.4
|
%
|
Internet
|
15,181
|
|
|
14,101
|
|
|
7.7
|
%
|
Voice
|
2,114
|
|
|
2,542
|
|
|
(16.8)
|
%
|
Residential
revenue
|
34,643
|
|
|
33,264
|
|
|
4.1
|
%
|
Small and medium
business
|
3,665
|
|
|
3,547
|
|
|
3.3
|
%
|
Enterprise
|
2,528
|
|
|
2,373
|
|
|
6.5
|
%
|
Commercial
revenue
|
6,193
|
|
|
5,920
|
|
|
4.6
|
%
|
Advertising
sales
|
1,785
|
|
|
1,510
|
|
|
18.2
|
%
|
Mobile
|
106
|
|
|
—
|
|
|
NM
|
Other
|
907
|
|
|
887
|
|
|
2.3
|
%
|
Total
Revenue
|
43,634
|
|
|
41,581
|
|
|
4.9
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Operating costs and
expenses - Cable
|
27,229
|
|
|
26,280
|
|
|
3.6
|
%
|
Operating costs and
expenses - Mobile
|
346
|
|
|
—
|
|
|
NM
|
Total operating costs
and expenses
|
27,575
|
|
|
26,280
|
|
|
4.9
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
16,059
|
|
|
$
|
15,301
|
|
|
5.0
|
%
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
36.8
|
%
|
|
36.8
|
%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA -
Cable
|
$
|
16,299
|
|
|
$
|
15,301
|
|
|
6.5
|
%
|
Adjusted EBITDA
margin - Cable
|
37.4
|
%
|
|
36.8
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
9,125
|
|
|
$
|
8,681
|
|
|
|
% Total
Revenues
|
20.9
|
%
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
1,230
|
|
|
$
|
9,895
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
5.29
|
|
|
$
|
38.55
|
|
|
|
Diluted
|
$
|
5.22
|
|
|
$
|
34.09
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
11,767
|
|
|
$
|
11,954
|
|
|
|
Free cash
flow
|
$
|
2,172
|
|
|
$
|
4,093
|
|
|
|
Free cash flow -
Cable
|
$
|
2,766
|
|
|
$
|
4,093
|
|
|
|
Revenue
For the year ended December 31, 2018, revenues rose to
$43.6 billion, 4.9% higher than in
2017 driven by continued growth in Internet, video, commercial and
advertising revenues. Excluding advertising revenue, which
benefited from political spend in the fourth quarter of 2018 and
mobile revenue, revenue grew 4.2% year-over-year.
Operating Costs and Expenses
Operating costs and expenses totaled $27.6 billion in 2018, an increase of
$1.3 billion, or 4.9% compared to the
year-ago period, primarily driven by an increase in programming
costs, and grew 3.6% year-over-year when excluding mobile
costs.
Adjusted EBITDA
Adjusted EBITDA totaled $16.1
billion for the year ended December 31, 2018, an
increase of 5.0% compared to 2017, reflecting revenue growth and
operating cost and expense growth of 4.9% each. Excluding
mobile revenue and mobile operating expenses in 2018, Adjusted
EBITDA grew by 6.5% year-over-year.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$1.2 billion for the year ended
December 31, 2018, compared to $9.9
billion in 2017. The year-over-year decrease in net income
was primarily related to a GAAP tax benefit from a reduction in the
deferred tax liability as a result of Federal tax reform in
December 2017 and higher interest
expense offset by higher Adjusted EBITDA and lower depreciation and
amortization expense. Net income per basic common share
attributable to Charter shareholders totaled $5.29 for the year ended December 31, 2018,
compared to $38.55 during the same
period last year.
Capital Expenditures
Capital expenditures totaled $9.1
billion for the year ended December 31, 2018, compared
to $8.7 billion in 2017. The increase
was primarily the result of integration-related spending, including
product improvements and mobile-related systems and facilities
spend. Capital expenditures for the year ended December 31,
2018 included $344 million of
all-digital costs and $242 million of
mobile costs.
We currently expect capital expenditures, excluding capital
expenditures related to mobile, to be approximately $7 billion in 2019, versus $8.9 billion in 2018. Our expectation for lower
capital expenditures in 2019 versus 2018, is primarily driven by
our expectation for lower customer premise equipment spend with the
completion of our all-digital conversion, lower scalable
infrastructure spend with the completion of the roll-out of DOCSIS
3.1 technology across our footprint and lower support capital spend
with the substantial completion of the integration of Legacy TWC
and Legacy Bright House.
Cash Flow & Free Cash Flow
In 2018, net cash flows from operating activities totaled
$11.8 billion, compared to
$12.0 billion in 2017. The
year-over-year decrease in net cash flows from operating activities
was primarily due to an unfavorable change in working capital in
2018 versus a working capital benefit in 2017 and higher cash paid
for interest, partly offset by higher Adjusted EBITDA.
Free cash flow for the year ended December 31, 2018 was
$2.2 billion, compared to
$4.1 billion during the same period
last year. The decrease was due to lower cash flow from operating
activities, higher cash payments for capital expenditures due to
both a higher level of in-year capital expenditures and a lower
amount of associated payables at December 31, 2018. Excluding
the impact of mobile revenue, expenses, capital expenditures and
working capital from devices, free cash flow for the year ended
December 31, 2018 totaled $2.8
billion.
Share Repurchases
For the year ended December 31, 2018, Charter purchased
approximately 16.2 million shares of Charter Class A common stock
and Charter Holdings common units for approximately $5.0 billion.
Conference Call
Charter will host a conference call on Thursday,
January 31, 2019 at 8:30 a.m. Eastern
Time (ET) related to the contents of this release.
The conference call will be webcast live via the Company's
investor relations website at ir.charter.com. The call will be
archived under the "Financial Information" section two hours after
completion of the call. Participants should go to the webcast link
no later than 10 minutes prior to the start time to register.
Those participating via telephone should dial 866-919-0894 no
later than 10 minutes prior to the call. International participants
should dial 706-679-9379. The conference ID code for the call is
4699068.
A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on February 14,
2019. The conference ID code for the replay is 4699068.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2018, which will be posted on the "Financial
Information" section of our investor relations website at
ir.charter.com, when it is filed with the Securities and Exchange
Commission (the "SEC"). A slide presentation to accompany the
conference call and a trending schedule containing historical
customer and financial data will also be available in the
"Financial Information" section.
Use of Adjusted EBITDA and Free Cash Flow
Information
The company uses certain measures that are not defined by U.S.
generally accepted accounting principles ("GAAP") to evaluate
various aspects of its business. Adjusted EBITDA and free cash flow
are non-GAAP financial measures and should be considered in
addition to, not as a substitute for, consolidated net income and
net cash flows from operating activities reported in accordance
with GAAP. These terms, as defined by Charter, may not be
comparable to similarly titled measures used by other companies.
Adjusted EBITDA and free cash flow are reconciled to consolidated
net income and net cash flows from operating activities,
respectively, in the Addendum to this release.
Adjusted EBITDA is defined as consolidated net income plus net
interest expense, income taxes, depreciation and amortization,
stock compensation expense, loss on extinguishment of debt, (gain)
loss on financial instruments, other expense, net and other
operating (income) expenses, such as merger and restructuring
costs, special charges and (gain) loss on sale or retirement of
assets. As such, it eliminates the significant non-cash
depreciation and amortization expense that results from the
capital-intensive nature of the Company's businesses as well as
other non-cash or special items, and is unaffected by the Company's
capital structure or investment activities. However, this measure
is limited in that it does not reflect the periodic costs of
certain capitalized tangible and intangible assets used in
generating revenues and the cash cost of financing. These costs are
evaluated through other financial measures.
Free cash flow is defined as net cash flows from operating
activities, less capital expenditures and changes in accrued
expenses related to capital expenditures.
Management and Charter's board of directors use Adjusted EBITDA
and free cash flow to assess Charter's performance and its ability
to service its debt, fund operations and make additional
investments with internally generated funds. In addition, Adjusted
EBITDA generally correlates to the leverage ratio calculation under
the Company's credit facilities or outstanding notes to determine
compliance with the covenants contained in the facilities and notes
(all such documents have been previously filed with the the SEC).
For the purpose of calculating compliance with leverage covenants,
the Company uses Adjusted EBITDA, as presented, excluding certain
expenses paid by its operating subsidiaries to other Charter
entities. The Company's debt covenants refer to these expenses as
management fees, which were $274
million and $271 million for
the three months ended December 31, 2018 and 2017,
respectively, and were $1.1 billion
for both years ended December 31, 2018 and 2017.
Adjusted EBITDA-Cable is defined as Adjusted EBITDA less mobile
revenues plus mobile operating costs and expenses. Free cash
flow-Cable is defined as free cash flow plus net cash outflows from
operating activities and capital expenditures related to mobile.
Management and Charter's board of directors use Adjusted
EBITDA-Cable and free cash flow-Cable to provide management and
investors a more meaningful year over year perspective on the
financial and operational performance and trends of our core cable
business without the impact of the revenue, costs and capital
expenditures in the initial funding period to grow a new product
line as well as the negative working capital impacts from the
timing of device-related cash flows when we provide the handset or
tablet to customers pursuant to equipment installment plans.
About Charter
Charter Communications, Inc. (NASDAQ:CHTR) is a leading
broadband communications company and the second largest cable
operator in the United States.
Charter provides a full range of advanced residential broadband
services, including Spectrum TV® programming, Spectrum
Internet®, Spectrum Voice®, and Spectrum
Mobile™. Under the Spectrum Business® brand, Charter
provides scalable, and cost-effective broadband communications
solutions to small and medium-sized business organizations,
including Internet access, business telephone, and TV services.
Through the Spectrum Enterprise brand, Charter is a national
provider of scalable, fiber-based technology solutions serving many
of America's largest businesses and communications service
providers. Charter's advertising sales and production services are
sold under the Spectrum Reach® brand. Charter's news and
sports networks are operated under the Spectrum Networks brand.
More information about Charter can be found at
newsroom.charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This communication includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, regarding, among other things, our plans,
strategies and prospects, both business and financial.
Although we believe that our plans, intentions and expectations as
reflected in or suggested by these forward-looking statements are
reasonable, we cannot assure you that we will achieve or realize
these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and
assumptions including, without limitation, the factors described
under "Risk Factors" from time to time in our filings with the
SEC. Many of the forward-looking statements contained in this
communication may be identified by the use of forward-looking words
such as "believe," "expect," "anticipate," "should," "planned,"
"will," "may," "intend," "estimated," "aim," "on track," "target,"
"opportunity," "tentative," "positioning," "designed," "create,"
"predict," "project," "initiatives," "seek," "would," "could,"
"continue," "ongoing," "upside," "increases" and "potential," among
others. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in
this communication are set forth in our annual report on Form 10-K,
and in other reports or documents that we file from time to time
with the SEC, and include, but are not limited to:
- our ability to sustain and grow revenues and cash flow from
operations by offering video, Internet, voice, mobile, advertising
and other services to residential and commercial customers, to
adequately meet the customer experience demands in our service
areas and to maintain and grow our customer base, particularly in
the face of increasingly aggressive competition, the need for
innovation and the related capital expenditures;
- the impact of competition from other market participants,
including but not limited to incumbent telephone companies, direct
broadcast satellite ("DBS") operators, wireless broadband and
telephone providers, digital subscriber line ("DSL") providers,
fiber to the home providers, video provided over the Internet by
(i) market participants that have not historically competed in the
multichannel video business, (ii) traditional multichannel video
distributors, and (iii) content providers that have historically
licensed cable networks to multichannel video distributors, and
providers of advertising over the Internet;
- our ability to efficiently and effectively integrate acquired
operations;
- the effects of governmental regulation on our business
including costs, disruptions and possible limitations on operating
flexibility related to, and our ability to comply with, regulatory
conditions applicable to us as a result of the Time Warner Cable
Inc. and Bright House Networks, LLC Transactions;
- general business conditions, economic uncertainty or downturn,
unemployment levels and the level of activity in the housing
sector;
- our ability to obtain programming at reasonable prices or to
raise prices to offset, in whole or in part, the effects of higher
programming costs (including retransmission consents);
- our ability to develop and deploy new products and technologies
including mobile products and any other consumer services and
service platforms;
- any events that disrupt our networks, information systems or
properties and impair our operating activities or our
reputation;
- the ability to retain and hire key personnel;
- the availability and access, in general, of funds to meet our
debt obligations prior to or when they become due and to fund our
operations and necessary capital expenditures, either through (i)
cash on hand, (ii) free cash flow, or (iii) access to the capital
or credit markets; and
- our ability to comply with all covenants in our indentures and
credit facilities, any violation of which, if not cured in a timely
manner, could trigger a default of our other obligations under
cross-default provisions.
All forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation
to update any of the forward-looking statements after the date of
this communication.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA (dollars in millions, except per share
data)
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
4,361
|
|
|
$
|
4,220
|
|
|
3.4
|
%
|
|
$
|
17,348
|
|
|
$
|
16,621
|
|
|
4.4
|
%
|
Internet
|
3,895
|
|
|
3,637
|
|
|
7.1
|
%
|
|
15,181
|
|
|
14,101
|
|
|
7.7
|
%
|
Voice
|
515
|
|
|
587
|
|
|
(12.3)
|
%
|
|
2,114
|
|
|
2,542
|
|
|
(16.8)
|
%
|
Residential
revenue
|
8,771
|
|
|
8,444
|
|
|
3.9
|
%
|
|
34,643
|
|
|
33,264
|
|
|
4.1
|
%
|
Small and medium
business
|
928
|
|
|
895
|
|
|
3.6
|
%
|
|
3,665
|
|
|
3,547
|
|
|
3.3
|
%
|
Enterprise
|
647
|
|
|
612
|
|
|
5.7
|
%
|
|
2,528
|
|
|
2,373
|
|
|
6.5
|
%
|
Commercial
revenue
|
1,575
|
|
|
1,507
|
|
|
4.5
|
%
|
|
6,193
|
|
|
5,920
|
|
|
4.6
|
%
|
Advertising
sales
|
562
|
|
|
419
|
|
|
34.1
|
%
|
|
1,785
|
|
|
1,510
|
|
|
18.2
|
%
|
Mobile
|
89
|
|
|
—
|
|
|
NM
|
|
106
|
|
|
—
|
|
|
NM
|
Other
|
234
|
|
|
232
|
|
|
1.2
|
%
|
|
907
|
|
|
887
|
|
|
2.3
|
%
|
Total
Revenue
|
11,231
|
|
|
10,602
|
|
|
5.9
|
%
|
|
43,634
|
|
|
41,581
|
|
|
4.9
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
2,791
|
|
|
2,644
|
|
|
5.5
|
%
|
|
11,124
|
|
|
10,596
|
|
|
5.0
|
%
|
Regulatory,
connectivity and produced content
|
571
|
|
|
511
|
|
|
11.8
|
%
|
|
2,210
|
|
|
2,064
|
|
|
7.0
|
%
|
Costs to service
customers
|
1,835
|
|
|
1,850
|
|
|
(0.8)
|
%
|
|
7,327
|
|
|
7,235
|
|
|
1.3
|
%
|
Marketing
|
732
|
|
|
750
|
|
|
(2.3)
|
%
|
|
3,042
|
|
|
3,036
|
|
|
0.2
|
%
|
Mobile
|
211
|
|
|
—
|
|
|
NM
|
|
346
|
|
|
—
|
|
|
NM
|
Other
expense
|
927
|
|
|
866
|
|
|
7.0
|
%
|
|
3,526
|
|
|
3,349
|
|
|
5.3
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
7,067
|
|
|
6,621
|
|
|
6.7
|
%
|
|
27,575
|
|
|
26,280
|
|
|
4.9
|
%
|
Adjusted
EBITDA
|
4,164
|
|
|
3,981
|
|
|
4.6
|
%
|
|
16,059
|
|
|
15,301
|
|
|
5.0
|
%
|
Adjusted EBITDA
margin
|
37.1
|
%
|
|
37.5
|
%
|
|
|
|
36.8
|
%
|
|
36.8
|
%
|
|
|
Depreciation and
amortization
|
2,534
|
|
|
2,742
|
|
|
|
|
10,318
|
|
|
10,588
|
|
|
|
Stock compensation
expense
|
72
|
|
|
63
|
|
|
|
|
285
|
|
|
261
|
|
|
|
Other operating
(income) expenses, net
|
119
|
|
|
(28)
|
|
|
|
|
235
|
|
|
346
|
|
|
|
Income from
operations
|
1,439
|
|
|
1,204
|
|
|
|
|
5,221
|
|
|
4,106
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(910)
|
|
|
(840)
|
|
|
|
|
(3,540)
|
|
|
(3,090)
|
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(5)
|
|
|
|
|
—
|
|
|
(40)
|
|
|
|
Gain (loss) on
financial instruments, net
|
(110)
|
|
|
84
|
|
|
|
|
(110)
|
|
|
69
|
|
|
|
Other pension
benefits (costs)
|
(55)
|
|
|
(8)
|
|
|
|
|
192
|
|
|
1
|
|
|
|
Other expense,
net
|
(2)
|
|
|
(4)
|
|
|
|
|
(77)
|
|
|
(18)
|
|
|
|
|
(1,077)
|
|
|
(773)
|
|
|
|
|
(3,535)
|
|
|
(3,078)
|
|
|
|
Income before income
taxes
|
362
|
|
|
431
|
|
|
|
|
1,686
|
|
|
1,028
|
|
|
|
Income tax benefit
(expense)
|
(2)
|
|
|
9,186
|
|
|
|
|
(180)
|
|
|
9,087
|
|
|
|
Consolidated net
income
|
360
|
|
|
9,617
|
|
|
|
|
1,506
|
|
|
10,115
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(64)
|
|
|
(64)
|
|
|
|
|
(276)
|
|
|
(220)
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
296
|
|
|
$
|
9,553
|
|
|
|
|
$
|
1,230
|
|
|
$
|
9,895
|
|
|
|
EARNINGS PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.31
|
|
|
$
|
39.66
|
|
|
|
|
$
|
5.29
|
|
|
$
|
38.55
|
|
|
|
Diluted
|
$
|
1.29
|
|
|
$
|
34.56
|
|
|
|
|
$
|
5.22
|
|
|
$
|
34.09
|
|
|
|
Weighted average
common shares outstanding, basic
|
227,005,966
|
|
|
240,833,636
|
|
|
|
|
232,356,665
|
|
|
256,720,715
|
|
|
|
Weighted average
common shares outstanding, diluted
|
230,131,933
|
|
|
278,257,245
|
|
|
|
|
235,525,226
|
|
|
296,703,956
|
|
|
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 6 of this addendum for the
reconciliation of Adjusted EBITDA to consolidated net income as
defined by GAAP. All percentages are calculated using whole
numbers. Minor differences may exist due to rounding. NM -
Not meaningful
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (dollars
in millions)
|
|
|
|
December
31,
|
|
2018
|
|
2017
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
551
|
|
|
$
|
621
|
|
Accounts receivable,
net
|
1,733
|
|
|
1,635
|
|
Prepaid expenses and
other current assets
|
446
|
|
|
299
|
|
Total current
assets
|
2,730
|
|
|
2,555
|
|
|
|
|
|
RESTRICTED
CASH
|
214
|
|
|
—
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
35,126
|
|
|
33,888
|
|
Customer
relationships, net
|
9,565
|
|
|
11,951
|
|
Franchises
|
67,319
|
|
|
67,319
|
|
Goodwill
|
29,554
|
|
|
29,554
|
|
Total investment in
cable properties, net
|
141,564
|
|
|
142,712
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
1,622
|
|
|
1,356
|
|
|
|
|
|
Total
assets
|
$
|
146,130
|
|
|
$
|
146,623
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,805
|
|
|
$
|
9,045
|
|
Current portion of
long-term debt
|
3,290
|
|
|
2,045
|
|
Total current
liabilities
|
12,095
|
|
|
11,090
|
|
|
|
|
|
LONG-TERM
DEBT
|
69,537
|
|
|
68,186
|
|
DEFERRED INCOME
TAXES
|
17,389
|
|
|
17,314
|
|
OTHER LONG-TERM
LIABILITIES
|
2,837
|
|
|
2,502
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
36,285
|
|
|
39,084
|
|
Noncontrolling
interests
|
7,987
|
|
|
8,447
|
|
Total shareholders'
equity
|
44,272
|
|
|
47,531
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
146,130
|
|
|
$
|
146,623
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS (dollars in millions)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
360
|
|
|
$
|
9,617
|
|
|
$
|
1,506
|
|
|
$
|
10,115
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
2,534
|
|
|
2,742
|
|
|
10,318
|
|
|
10,588
|
|
Stock
compensation expense
|
72
|
|
|
63
|
|
|
285
|
|
|
261
|
|
Accelerated
vesting of equity awards
|
—
|
|
|
6
|
|
|
5
|
|
|
49
|
|
Noncash
interest income, net
|
(65)
|
|
|
(87)
|
|
|
(307)
|
|
|
(370)
|
|
Other pension
(benefits) costs
|
55
|
|
|
8
|
|
|
(192)
|
|
|
(1)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
5
|
|
|
—
|
|
|
40
|
|
(Gain) loss on
financial instruments, net
|
110
|
|
|
(84)
|
|
|
110
|
|
|
(69)
|
|
Deferred
income taxes
|
(27)
|
|
|
(9,169)
|
|
|
110
|
|
|
(9,116)
|
|
Other,
net
|
94
|
|
|
(77)
|
|
|
175
|
|
|
16
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
3
|
|
|
17
|
|
|
(98)
|
|
|
(84)
|
|
Prepaid
expenses and other assets
|
(123)
|
|
|
39
|
|
|
(270)
|
|
|
76
|
|
Accounts
payable, accrued liabilities and other
|
155
|
|
|
178
|
|
|
125
|
|
|
449
|
|
Net cash flows
from operating activities
|
3,168
|
|
|
3,258
|
|
|
11,767
|
|
|
11,954
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(2,433)
|
|
|
(2,585)
|
|
|
(9,125)
|
|
|
(8,681)
|
|
Change in accrued
expenses related to capital expenditures
|
150
|
|
|
544
|
|
|
(470)
|
|
|
820
|
|
Purchases of cable
systems, net of cash acquired
|
—
|
|
|
(9)
|
|
|
—
|
|
|
(9)
|
|
Real estate
investments through variable interest entities
|
(6)
|
|
|
(105)
|
|
|
(21)
|
|
|
(105)
|
|
Other, net
|
(17)
|
|
|
(60)
|
|
|
(120)
|
|
|
(123)
|
|
Net cash flows from
investing activities
|
(2,306)
|
|
|
(2,215)
|
|
|
(9,736)
|
|
|
(8,098)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
2,268
|
|
|
13,161
|
|
|
13,820
|
|
|
25,276
|
|
Repayments of
long-term debt
|
(1,805)
|
|
|
(10,973)
|
|
|
(10,769)
|
|
|
(16,507)
|
|
Payments for debt
issuance costs
|
—
|
|
|
(28)
|
|
|
(29)
|
|
|
(111)
|
|
Purchase of treasury
stock
|
(1,185)
|
|
|
(3,967)
|
|
|
(4,399)
|
|
|
(11,715)
|
|
Proceeds from
exercise of stock options
|
13
|
|
|
5
|
|
|
69
|
|
|
116
|
|
Purchase of
noncontrolling interest
|
(183)
|
|
|
(743)
|
|
|
(656)
|
|
|
(1,665)
|
|
Distributions to
noncontrolling interest
|
(39)
|
|
|
(38)
|
|
|
(153)
|
|
|
(153)
|
|
Borrowings for real
estate investments through variable interest entities
|
172
|
|
|
—
|
|
|
342
|
|
|
—
|
|
Distributions to
variable interest entities noncontrolling interest
|
—
|
|
|
—
|
|
|
(107)
|
|
|
—
|
|
Other, net
|
2
|
|
|
(3)
|
|
|
(5)
|
|
|
(11)
|
|
Net cash flows from
financing activities
|
(757)
|
|
|
(2,586)
|
|
|
(1,887)
|
|
|
(4,770)
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
105
|
|
|
(1,543)
|
|
|
144
|
|
|
(914)
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, beginning of period
|
660
|
|
|
2,164
|
|
|
621
|
|
|
1,535
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, end of period
|
$
|
765
|
|
|
$
|
621
|
|
|
$
|
765
|
|
|
$
|
621
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
945
|
|
|
$
|
877
|
|
|
$
|
3,865
|
|
|
$
|
3,421
|
|
CASH PAID FOR
TAXES
|
$
|
18
|
|
|
$
|
3
|
|
|
$
|
45
|
|
|
$
|
41
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED SUMMARY
OF OPERATING STATISTICS (in thousands, except per
customer and penetration data)
|
|
|
|
Approximate as
of
|
|
December 31,
2018 (a)
|
|
September 30,
2018 (a)
|
|
December 31,
2017 (a)
|
Footprint
(b)
|
|
|
|
|
|
Estimated Video
Passings
|
50,824
|
|
|
50,616
|
|
|
49,973
|
|
Estimated Internet
Passings
|
50,652
|
|
|
50,421
|
|
|
49,727
|
|
Estimated Voice
Passings
|
50,086
|
|
|
49,833
|
|
|
48,995
|
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
32.7
|
%
|
|
32.9
|
%
|
|
33.7
|
%
|
Internet Penetration
of Estimated Internet Passings
|
49.9
|
%
|
|
49.4
|
%
|
|
48.2
|
%
|
Voice Penetration of
Estimated Voice Passings
|
22.3
|
%
|
|
22.6
|
%
|
|
23.2
|
%
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
|
26,270
|
|
|
26,063
|
|
|
25,499
|
|
Small and Medium
Business
|
1,833
|
|
|
1,792
|
|
|
1,662
|
|
Total Customer
Relationships
|
28,103
|
|
|
27,855
|
|
|
27,161
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Video
|
16,104
|
|
|
16,140
|
|
|
16,400
|
|
Internet
|
23,625
|
|
|
23,336
|
|
|
22,518
|
|
Voice
|
10,135
|
|
|
10,218
|
|
|
10,424
|
|
|
49,864
|
|
|
49,694
|
|
|
49,342
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
(36)
|
|
|
(66)
|
|
|
2
|
|
Internet
|
289
|
|
|
266
|
|
|
263
|
|
Voice
|
(83)
|
|
|
(107)
|
|
|
23
|
|
|
170
|
|
|
93
|
|
|
288
|
|
|
|
|
|
|
|
Single Play
(e)
|
10,928
|
|
|
10,858
|
|
|
10,341
|
|
Double Play
(e)
|
7,097
|
|
|
6,789
|
|
|
6,473
|
|
Triple Play
(e)
|
8,245
|
|
|
8,416
|
|
|
8,685
|
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
41.6
|
%
|
|
41.7
|
%
|
|
40.6
|
%
|
Double Play
Penetration (f)
|
27.0
|
%
|
|
26.1
|
%
|
|
25.4
|
%
|
Triple Play
Penetration (f)
|
31.4
|
%
|
|
32.3
|
%
|
|
34.1
|
%
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
38.7
|
%
|
|
38.1
|
%
|
|
35.7
|
%
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$
|
111.78
|
|
|
$
|
111.13
|
|
|
$
|
110.74
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Video
|
502
|
|
|
488
|
|
|
450
|
|
Internet
|
1,634
|
|
|
1,594
|
|
|
1,470
|
|
Voice
|
1,051
|
|
|
1,024
|
|
|
930
|
|
|
3,187
|
|
|
3,106
|
|
|
2,850
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
14
|
|
|
12
|
|
|
12
|
|
Internet
|
40
|
|
|
42
|
|
|
41
|
|
Voice
|
27
|
|
|
30
|
|
|
32
|
|
|
81
|
|
|
84
|
|
|
85
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$
|
170.62
|
|
|
$
|
173.52
|
|
|
$
|
181.57
|
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
Enterprise
PSUs
|
248
|
|
|
243
|
|
|
220
|
|
|
|
|
|
(a)
|
Customer statistics
do not include mobile. We calculate the aging of customer
accounts based on the monthly billing cycle for each account.
On that basis, at December 31, 2018, September 30, 2018 and
December 31, 2017, actual customers include approximately 217,600,
231,400 and 248,900 customers, respectively, whose accounts were
over 60 days past due, approximately 24,000, 23,100 and 20,600
customers, respectively, whose accounts were over 90 days past due
and approximately 19,200, 18,500 and 13,200 customers,
respectively, whose accounts were over 120 days past
due.
|
|
|
(b)
|
Passings represent
our estimate of the number of units, such as single family homes,
apartment and condominium units and small and medium business and
enterprise sites passed by our cable distribution network in the
areas where we offer the service indicated. These estimates
are based upon the information available at this time and are
updated for all periods presented when new information becomes
available.
|
|
|
(c)
|
Penetration
represents residential and small and medium business customers as a
percentage of estimated passings for the service
indicated.
|
|
|
(d)
|
Customer
relationships include the number of customers that receive one or
more levels of service, encompassing video, Internet and voice
services, without regard to which service(s) such customers
receive. Customers who reside in residential multiple
dwelling units ("MDUs") and that are billed under bulk contracts
are counted based on the number of billed units within each bulk
MDU. Total customer relationships exclude enterprise customer
relationships.
|
|
|
(e)
|
Single play, double
play and triple play customers represent customers that subscribe
to one, two or three of Charter service offerings,
respectively.
|
|
|
(f)
|
Single play, double
play and triple play penetration represents the number of
residential single play, double play and triple play customers,
respectively, as a percentage of residential customer
relationships.
|
|
|
(g)
|
Monthly residential
revenue per residential customer is calculated as total residential
video, Internet and voice quarterly revenue divided by three
divided by average residential customer relationships during the
respective quarter.
|
|
|
(h)
|
Monthly small and
medium business revenue per customer is calculated as total small
and medium business quarterly revenue divided by three divided by
average small and medium business customer relationships during the
respective quarter.
|
|
|
(i)
|
Enterprise PSUs
represents the aggregate number of fiber service offerings counting
each separate service offering at each customer location as an
individual PSU.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP
MEASURES (dollars in millions)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Consolidated net
income
|
$
|
360
|
|
|
$
|
9,617
|
|
|
$
|
1,506
|
|
|
$
|
10,115
|
|
Plus: Interest
expense, net
|
910
|
|
|
840
|
|
|
3,540
|
|
|
3,090
|
|
Income tax (benefit)
expense
|
2
|
|
|
(9,186)
|
|
|
180
|
|
|
(9,087)
|
|
Depreciation and
amortization
|
2,534
|
|
|
2,742
|
|
|
10,318
|
|
|
10,588
|
|
Stock compensation
expense
|
72
|
|
|
63
|
|
|
285
|
|
|
261
|
|
Loss on extinguishment
of debt
|
—
|
|
|
5
|
|
|
—
|
|
|
40
|
|
(Gain) loss on
financial instruments, net
|
110
|
|
|
(84)
|
|
|
110
|
|
|
(69)
|
|
Other pension
(benefits) costs
|
55
|
|
|
8
|
|
|
(192)
|
|
|
(1)
|
|
Other, net
|
121
|
|
|
(24)
|
|
|
312
|
|
|
364
|
|
Adjusted EBITDA
(a)
|
4,164
|
|
|
3,981
|
|
|
16,059
|
|
|
15,301
|
|
Less: Revenue -
Mobile
|
(89)
|
|
|
—
|
|
|
(106)
|
|
|
—
|
|
Plus: Costs and
Expenses - Mobile
|
211
|
|
|
—
|
|
|
346
|
|
|
—
|
|
Adjusted EBITDA -
Cable (a)
|
$
|
4,286
|
|
|
$
|
3,981
|
|
|
$
|
16,299
|
|
|
$
|
15,301
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,168
|
|
|
$
|
3,258
|
|
|
$
|
11,767
|
|
|
$
|
11,954
|
|
Less: Purchases
of property, plant and equipment
|
(2,433)
|
|
|
(2,585)
|
|
|
(9,125)
|
|
|
(8,681)
|
|
Change in accrued
expenses related to capital expenditures
|
150
|
|
|
544
|
|
|
(470)
|
|
|
820
|
|
Free cash
flow
|
885
|
|
|
1,217
|
|
|
2,172
|
|
|
4,093
|
|
Plus: Net cash
outflows from operating activities - Mobile
|
198
|
|
|
—
|
|
|
352
|
|
|
—
|
|
Purchases of property, plant and equipment - Mobile
|
106
|
|
|
—
|
|
|
242
|
|
|
—
|
|
Free cash flow -
Cable
|
$
|
1,189
|
|
|
$
|
1,217
|
|
|
$
|
2,766
|
|
|
$
|
4,093
|
|
|
|
(a)
|
See page 1 of this
addendum for detail of the components included within Adjusted
EBITDA.
|
|
|
The above schedule is
presented in order to reconcile Adjusted EBITDA, Adjusted EBITDA -
Cable, free cash flow and free cash flow - Cable, non-GAAP
measures, to the most directly comparable GAAP measures in
accordance with Section 401(b) of the Sarbanes-Oxley
Act.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CAPITAL EXPENDITURES (dollars in
millions)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Customer premise
equipment (a)
|
$
|
687
|
|
|
$
|
806
|
|
|
$
|
3,124
|
|
|
$
|
3,385
|
|
Scalable
infrastructure (b)
|
649
|
|
|
725
|
|
|
2,227
|
|
|
2,007
|
|
Line extensions
(c)
|
381
|
|
|
312
|
|
|
1,373
|
|
|
1,176
|
|
Upgrade/rebuild
(d)
|
182
|
|
|
157
|
|
|
704
|
|
|
572
|
|
Support capital
(e)
|
534
|
|
|
585
|
|
|
1,697
|
|
|
1,541
|
|
Total
capital expenditures
|
$
|
2,433
|
|
|
$
|
2,585
|
|
|
$
|
9,125
|
|
|
$
|
8,681
|
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
$
|
379
|
|
|
$
|
360
|
|
|
$
|
1,313
|
|
|
$
|
1,305
|
|
All-digital
transition
|
$
|
28
|
|
|
$
|
69
|
|
|
$
|
344
|
|
|
$
|
122
|
|
Mobile
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
242
|
|
|
$
|
—
|
|
(a)
|
Customer premise
equipment includes costs incurred at the customer residence to
secure new customers and revenue generating units, including
customer installation costs and customer premise equipment (e.g.,
set-top boxes and cable modems).
|
(b)
|
Scalable
infrastructure includes costs, not related to customer premise
equipment, to secure growth of new customers and revenue generating
units, or provide service enhancements (e.g., headend
equipment).
|
(c)
|
Line extensions
include network costs associated with entering new service areas
(e.g., fiber/coaxial cable, amplifiers, electronic equipment,
make-ready and design engineering).
|
(d)
|
Upgrade/rebuild
includes costs to modify or replace existing fiber/coaxial cable
networks, including betterments.
|
(e)
|
Support capital
includes costs associated with the replacement or enhancement of
non-network assets due to technological and physical obsolescence
(e.g., non-network equipment, land, buildings and
vehicles).
|
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SOURCE Charter Communications, Inc.