STAMFORD, Conn., July 26, 2019 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three and six months ended June 30, 2019.
Key highlights:
- Second quarter total residential and SMB customer relationships
increased 203,000, compared to 196,000 during the second quarter of
2018. As of June 30, 2019, Charter
had 28.7 million total customer relationships, with growth of over
1.0 million year-over-year.
- During the second quarter, Charter generated residential and
SMB Internet net additions of 258,000, video net losses of 141,000
and wireline voice net losses of 182,000.
- Charter added 208,000 mobile lines in the second quarter,
compared to 176,000 mobile line net additions in the first quarter
of 2019. Late in the second quarter, our Bring Your Own Device
(BYOD) program was expanded to all sales channels. As of
June 30, 2019, Charter served a total
of 518,000 mobile lines.
- Second quarter revenues of $11.3
billion grew 4.5%, as compared to the prior year period,
driven by residential revenue growth of 3.7%, commercial revenue
growth of 4.7% and mobile revenue of $158
million.
- Second quarter Adjusted EBITDA1 of $4.2 billion grew 3.3% year-over-year, while
second quarter cable Adjusted EBITDA1 of $4.3 billion grew 5.4% year-over-year.
- Net income attributable to Charter shareholders totaled
$314 million in the second quarter,
compared to $273 million during the
same period last year. The year-over-year increase in net income
attributable to Charter shareholders in the second quarter was
primarily driven by higher Adjusted EBITDA.
- Second quarter capital expenditures totaled $1.6 billion compared to $2.4 billion during the second quarter of 2018.
Second quarter capital expenditures included $93 million of mobile-related capital
expenditures.
- Consolidated free cash flow1 for the second quarter
of 2019 totaled $1.1 billion,
compared to $804 million during the
same period last year. Cable free cash flow1 for the
second quarter totaled $1.4 billion,
compared to $920 million during the
same period last year.
- During the second quarter, Charter purchased approximately 2.7
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $998 million.
"We are realizing the benefits of consolidating three large
cable operators under one centralized operating strategy, with
lower customer churn, fewer service transactions per customer and
improving customer satisfaction resulting in growth of over 1
million customer relationships year-over-year," said Tom Rutledge, Chairman and CEO of Charter
Communications. "In the second quarter, free cash flow grew nearly
40% year-over-year. Our core business is strong and we are
positioned to be the network of choice today and in the
future."
1.
|
Adjusted EBITDA,
cable Adjusted EBITDA, free cash flow and cable free cash flow are
non-GAAP measures defined in the "Use of Adjusted EBITDA and Free
Cash Flow Information" section and are reconciled to net income
attributable to Charter shareholders and net cash flows from
operating activities, respectively, in the addendum of this news
release.
|
Key Operating Results
|
Approximate as
of
|
|
|
|
June 30, 2019
(a)
|
|
June 30, 2018
(a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
Estimated Video
Passings
|
51,258
|
|
|
50,364
|
|
|
1.8
|
%
|
Estimated Internet
Passings
|
51,093
|
|
|
50,149
|
|
|
1.9
|
%
|
Estimated Voice
Passings
|
50,538
|
|
|
49,532
|
|
|
2.0
|
%
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
31.8
|
%
|
|
33.1
|
%
|
|
(1.3)
|
ppts
|
Internet Penetration
of Estimated Internet Passings
|
50.8
|
%
|
|
49.1
|
%
|
|
1.7
|
ppts
|
Voice Penetration of
Estimated Voice Passings
|
21.6
|
%
|
|
22.9
|
%
|
|
(1.3)
|
ppts
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
|
26,755
|
|
|
25,871
|
|
|
3.4
|
%
|
Small and Medium
Business
|
1,902
|
|
|
1,750
|
|
|
8.7
|
%
|
Total Customer
Relationships
|
28,657
|
|
|
27,621
|
|
|
3.8
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Residential
|
164
|
|
|
141
|
|
|
16.1
|
%
|
Small and Medium
Business
|
39
|
|
|
55
|
|
|
(29.1)
|
%
|
Total Customer
Relationships
|
203
|
|
|
196
|
|
|
3.4
|
%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Video
|
15,802
|
|
|
16,206
|
|
|
(2.5)
|
%
|
Internet
|
24,244
|
|
|
23,070
|
|
|
5.1
|
%
|
Voice
|
9,808
|
|
|
10,325
|
|
|
(5.0)
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
(150)
|
|
|
(73)
|
|
|
(106.0)
|
%
|
Internet
|
221
|
|
|
218
|
|
|
1.8
|
%
|
Voice
|
(207)
|
|
|
(45)
|
|
|
(360.2)
|
%
|
|
|
|
|
|
|
Single Play
(e)
|
11,354
|
|
|
10,694
|
|
|
6.2
|
%
|
Double Play
(e)
|
7,709
|
|
|
6,633
|
|
|
16.2
|
%
|
Triple Play
(e)
|
7,692
|
|
|
8,544
|
|
|
(10.0)
|
%
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
42.4
|
%
|
|
41.3
|
%
|
|
1.1
|
ppts
|
Double Play
Penetration (f)
|
28.8
|
%
|
|
25.6
|
%
|
|
3.2
|
ppts
|
Triple Play
Penetration (f)
|
28.8
|
%
|
|
33.0
|
%
|
|
(4.2)
|
ppts
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
40.9
|
%
|
|
37.4
|
%
|
|
3.5
|
ppts
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$112.20
|
|
|
$111.88
|
|
|
0.3
|
%
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Video
|
518
|
|
|
476
|
|
|
8.8
|
%
|
Internet
|
1,701
|
|
|
1,552
|
|
|
9.6
|
%
|
Voice
|
1,097
|
|
|
994
|
|
|
10.5
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
9
|
|
|
16
|
|
|
(48.6)
|
%
|
Internet
|
37
|
|
|
49
|
|
|
(25.8)
|
%
|
Voice
|
25
|
|
|
37
|
|
|
(30.7)
|
%
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$170.42
|
|
|
$176.96
|
|
|
(3.7)
|
%
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
Enterprise
PSUs
|
258
|
|
|
235
|
|
|
9.5
|
%
|
|
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.
|
During the second quarter of 2019, Charter's residential
customer relationships grew by 164,000, while second quarter 2018
residential customer relationships grew by 141,000. As of
June 30, 2019, Charter had 26.8 million residential customer
relationships, with year-over-year growth of 3.4%.
Charter added 221,000 residential Internet customers in the
second quarter of 2019, versus second quarter 2018 residential
Internet customer net additions of 218,000. As of June 30,
2019, Charter had 24.2 million residential Internet customers, with
nearly 85% 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.
Residential video customers decreased by 150,000 in the second
quarter of 2019, while second quarter 2018 video customers
decreased by 73,000. As of June 30, 2019, Charter had 15.8
million residential video customers.
During the second quarter of 2019, residential wireline voice
customers declined by 207,000, while second quarter 2018 voice
customers declined by 45,000. As of June 30, 2019, Charter had
9.8 million residential wireline voice customers.
Second quarter 2019 residential revenue per residential customer
(excluding mobile) totaled $112.20,
and grew by 0.3% compared to the prior year period, as promotional
rate step-ups and rate adjustments were partly offset by a higher
percentage of non-video customers, a higher mix of Choice and
Stream customers within our video base and lower pay-per-view and
video on demand revenues.
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 most awarded
LTE network and is combined with Spectrum WiFi. 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, in both cases including applicable fees
and taxes. Late in the second quarter, BYOD was expanded to all
sales channels. Previously, our BYOD program was only available by
visiting select Spectrum Mobile stores. During the second
quarter of 2019, Charter added 208,000 mobile lines, and as of
June 30, 2019, Charter served a total of 518,000 mobile
lines.
SMB customer relationships grew by 39,000 during the second
quarter of 2019, compared to growth of 55,000 during the second
quarter of 2018. As of June 30, 2019, Charter had 1.9 million
SMB customer relationships, with year-over-year growth of 8.7%.
Enterprise PSUs grew by 5,000 during the second quarter of 2019
compared to growth of 7,000 during the second quarter of 2018. As
of June 30, 2019, Charter had 258,000 enterprise PSUs, with
growth of 9.5% year-over-year.
Second 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
June 30,
|
|
2019
|
|
2018
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
4,391
|
|
|
$
|
4,363
|
|
|
0.6
|
%
|
Internet
|
4,103
|
|
|
3,770
|
|
|
8.8
|
%
|
Voice
|
489
|
|
|
531
|
|
|
(7.8)
|
%
|
Residential
revenue
|
8,983
|
|
|
8,664
|
|
|
3.7
|
%
|
Small and medium
business
|
963
|
|
|
915
|
|
|
5.3
|
%
|
Enterprise
|
652
|
|
|
627
|
|
|
4.0
|
%
|
Commercial
revenue
|
1,615
|
|
|
1,542
|
|
|
4.7
|
%
|
Advertising
sales
|
395
|
|
|
427
|
|
|
(7.5)
|
%
|
Mobile
|
158
|
|
|
—
|
|
|
NM
|
|
Other
|
196
|
|
|
221
|
|
|
(11.3)
|
%
|
Total
Revenue
|
11,347
|
|
|
10,854
|
|
|
4.5
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Cable operating costs
and expenses
|
6,885
|
|
|
6,770
|
|
|
1.7
|
%
|
Mobile operating costs
and expenses
|
277
|
|
|
33
|
|
|
NM
|
|
Total operating costs
and expenses
|
7,162
|
|
|
6,803
|
|
|
5.3
|
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,185
|
|
|
$
|
4,051
|
|
|
3.3
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
36.9
|
%
|
|
37.3
|
%
|
|
|
|
|
|
|
|
|
Cable Adjusted
EBITDA
|
$
|
4,304
|
|
|
$
|
4,084
|
|
|
5.4
|
%
|
Cable Adjusted EBITDA
margin
|
38.5
|
%
|
|
37.6
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
1,597
|
|
|
$
|
2,391
|
|
|
|
% Total
Revenues
|
14.1
|
%
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
314
|
|
|
$
|
273
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
1.41
|
|
|
$
|
1.17
|
|
|
|
Diluted
|
$
|
1.39
|
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
2,761
|
|
|
$
|
3,096
|
|
|
|
Free cash
flow
|
$
|
1,112
|
|
|
$
|
804
|
|
|
|
Cable free cash
flow
|
$
|
1,409
|
|
|
$
|
920
|
|
|
|
Revenue
Second quarter revenues rose 4.5% year-over-year to $11.3 billion, driven by growth in Internet,
mobile, commercial and video revenues. Excluding advertising
revenue, which benefited from political spend in the second quarter
of 2018, and mobile revenue, revenue grew 3.5% year-over-year.
Video revenues totaled $4.4
billion in the second quarter, an increase of 0.6% compared
to the prior year period. Video revenue growth was driven by annual
rate adjustments and promotional rolloff, partly offset by a
decline in video customers during the last year, a higher mix of
Choice and Stream customers within our video base and lower
pay-per-view and video on demand revenues.
Internet revenues grew 8.8%, compared to the year-ago quarter,
to $4.1 billion, driven by growth in
Internet customers during the last year, promotional rolloff and
rate adjustments.
Voice revenues totaled $489
million in the second quarter, a decrease of 7.8% compared
to the second quarter of 2018, driven by value-based pricing and a
decline in wireline voice customers over the last twelve
months.
Commercial revenues rose to $1.6
billion, an increase of 4.7% over the prior year
period, driven by SMB revenue growth of 5.3% and enterprise revenue
growth of 4.0%. Second quarter 2019 commercial revenue growth was
lower than second quarter 2019 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.
Second quarter advertising sales revenues of $395 million declined 7.5% compared to the
year-ago quarter, driven by lower political revenue. Second quarter
mobile revenue totaled $158
million.
Other revenues totaled $196
million in the second quarter, a decrease of 11.3%
year-over-year, driven by lower processing fees and home shopping
revenues, partly offset by video customer premise equipment ("CPE")
sold to customers.
Operating Costs and Expenses
Second quarter total operating costs and expenses increased by
$359 million, or 5.3% year-over-year,
and 1.7% when excluding second quarter mobile costs.
Second quarter programming expense increased by $24 million, or 0.9% as compared to the second
quarter of 2018, reflecting contractual programming increases and
renewals, partly offset by lower video customers, a higher mix of
Choice and Stream customers within our video base and lower
pay-per-view expenses.
Regulatory, connectivity and produced content expenses increased
by $37 million, or 6.7%
year-over-year, primarily driven by costs of video CPE sold to
customers, higher regulatory and franchise pass-through fees and
original programming costs.
Costs to service customers decreased by $17 million, or 0.9% year-over-year, despite
year-over-year residential and SMB customer growth of 3.8%. The
year-over-year decrease in costs to service customers was primarily
the result of a decline in bad debt. In addition, we have lowered
our per relationship cost to service customers with lower service
calls and truck rolls per customer and lower churn.
Marketing expenses decreased by $1
million, or 0.1% year-over-year.
Other expenses increased by $72
million, or 8.4% as compared to the second quarter of 2018
primarily driven by software costs, insurance costs, property taxes
and enterprise costs.
In the second quarter of 2019, mobile costs totaled $277 million and were comprised of device costs,
service and operating costs and launch costs.
Adjusted EBITDA
Second quarter Adjusted EBITDA of $4.2
billion grew by 3.3% year-over-year, reflecting revenue
growth and operating expense growth of 4.5% and 5.3%, respectively.
Second quarter cable Adjusted EBITDA grew by 5.4% year-over-year
reflecting cable revenue growth and cable operating expense growth
of 3.1% and 1.7%, respectively.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$314 million in the second quarter of
2019, compared to $273 million in the
second quarter of 2018. The year-over-year increase in net income
attributable to Charter shareholders was primarily driven by higher
Adjusted EBITDA and lower depreciation and amortization costs,
partly offset by higher interest expense, a greater non-cash loss
on financial instruments and higher income tax expense.
Net income per basic common share attributable to Charter
shareholders totaled $1.41 in the
second quarter of 2019 compared to $1.17 during the same period last year. The
increase was primarily the result of the factors described above in
addition to a 5.1% decrease in weighted average common shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $1.6 billion in the second quarter of 2019,
compared to $2.4 billion during the
second quarter of 2018, primarily driven by declines in scalable
infrastructure, CPE and support spending. The decrease in scalable
infrastructure spending was primarily driven by the completion of
the rollout of DOCSIS 3.1 technology in 2018 and the associated
bandwidth benefit in 2019. The year-over-year decrease in CPE
spending was primarily driven by a decline in the pace of migration
of Legacy TWC and Legacy Bright House customers to Spectrum
pricing and packaging, the completion of Charter's all-digital
initiative in 2018, increasing customer self-installations and
a higher mix of boxless video outlets. The decrease in support
capital was due to lower insourcing and integration-related spend,
partly offset by higher mobile capital spending. Second quarter
capital expenditures included $93
million of mobile costs, of which $71
million were included in support capital.
We currently expect capital expenditures, excluding capital
expenditures related to mobile, to be approximately $7 billion in 2019, versus $8.9 billion in 2018.
Cash Flow and Free Cash Flow
During the second quarter of 2019, net cash flows from operating
activities totaled $2.8 billion,
compared to $3.1 billion in the prior
year quarter. The year-over-year decline in net cash flows from
operating activities was primarily due to a higher year-over-year
negative cash contribution from working capital resulting from
lower payables and a one-time impact from bill cycle
standardization efforts as well as higher cash interest, partly
offset by higher Adjusted EBITDA.
Consolidated free cash flow for the second quarter of 2019
totaled $1.1 billion, compared to
$804 million during the same period
last year. Cable free cash flow for the second quarter of 2019
totaled $1.4 billion, compared to
$920 million during the same period
last year. The year-over-year increases in consolidated free cash
flow and cable free cash flow were driven by a decline in capital
expenditures versus the prior year quarter, partly offset by a
decline in net cash flows from operating activities and accrued
capital expenditures.
Liquidity & Financing
As of June 30, 2019, total principal amount of debt was
$72.6 billion. Charter's credit
facilities provided approximately $4.1
billion of additional liquidity in excess of Charter's
$696 million cash position.
In May 2019, CCO Holdings, LLC and
CCO Holdings Capital Corp. issued $750
million of 5.375% senior unsecured notes due 2029 and in
July 2019, an additional $750 million of the same series of notes were
issued. Charter used the net proceeds for general corporate
purposes, including funding buybacks of Charter Class A common
stock and/or Charter Holdings common units and for repaying certain
indebtedness.
In July 2019, Charter
Communications Operating, LLC and Charter Communications
Operating Capital Corp. issued $1.25
billion of 5.125% senior secured notes due 2049. The net
proceeds will be used to repay certain indebtedness, which may
include the 5.000% Senior Notes due 2020 issued by Time Warner
Cable, LLC, with any remaining proceeds used for general corporate
purposes, including to fund potential buybacks of Charter Class A
common stock or Charter Holdings common units.
Share Repurchases
During the three months ended June 30, 2019, Charter
purchased approximately 2.7 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$998 million.
Conference Call
Charter will host a conference call on Friday, July 26,
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
9656479.
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 August 9,
2019. The conference ID code for the replay is 9656479.
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 Quarterly Report on Form 10-Q for the three and
six months ended June 30, 2019, 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 net income
attributable to Charter shareholders and net cash flows from
operating activities, respectively, in the Addendum to this
release.
Adjusted EBITDA is defined as net income attributable to Charter
shareholders plus net income attributable to noncontrolling
interest, net interest expense, income taxes, depreciation and
amortization, stock compensation expense, (gain) loss on financial
instruments, other (income) expense, net and other operating
(income) expenses, such as 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 $299
million and $599 million for
the three and six months ended June 30, 2019, respectively,
and $265 million and $538 million for the three and six months ended
June 30, 2018, respectively.
Cable Adjusted EBITDA is defined as Adjusted EBITDA less mobile
revenues plus mobile operating costs and expenses. Cable free cash
flow is defined as free cash flow plus mobile net cash outflows
from operating activities and mobile capital expenditures.
Management and Charter's board of directors use cable Adjusted
EBITDA and cable free cash flow 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
4,391
|
|
|
$
|
4,363
|
|
|
0.6
|
%
|
|
$
|
8,775
|
|
|
$
|
8,655
|
|
|
1.4
|
%
|
Internet
|
4,103
|
|
|
3,770
|
|
|
8.8
|
%
|
|
8,127
|
|
|
7,477
|
|
|
8.7
|
%
|
Voice
|
489
|
|
|
531
|
|
|
(7.8)
|
%
|
|
993
|
|
|
1,087
|
|
|
(8.6)
|
%
|
Residential
revenue
|
8,983
|
|
|
8,664
|
|
|
3.7
|
%
|
|
17,895
|
|
|
17,219
|
|
|
3.9
|
%
|
Small and medium
business
|
963
|
|
|
915
|
|
|
5.3
|
%
|
|
1,908
|
|
|
1,815
|
|
|
5.1
|
%
|
Enterprise
|
652
|
|
|
627
|
|
|
4.0
|
%
|
|
1,295
|
|
|
1,249
|
|
|
3.7
|
%
|
Commercial
revenue
|
1,615
|
|
|
1,542
|
|
|
4.7
|
%
|
|
3,203
|
|
|
3,064
|
|
|
4.5
|
%
|
Advertising
sales
|
395
|
|
|
427
|
|
|
(7.5)
|
%
|
|
740
|
|
|
783
|
|
|
(5.5)
|
%
|
Mobile
|
158
|
|
|
—
|
|
|
NM
|
|
|
298
|
|
|
—
|
|
|
NM
|
|
Other
|
196
|
|
|
221
|
|
|
(11.3)
|
%
|
|
417
|
|
|
445
|
|
|
(6.3)
|
%
|
Total
Revenue
|
11,347
|
|
|
10,854
|
|
|
4.5
|
%
|
|
22,553
|
|
|
21,511
|
|
|
4.8
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
2,827
|
|
|
2,803
|
|
|
0.9
|
%
|
|
5,692
|
|
|
5,555
|
|
|
2.5
|
%
|
Regulatory,
connectivity and produced content
|
597
|
|
|
560
|
|
|
6.7
|
%
|
|
1,158
|
|
|
1,093
|
|
|
5.9
|
%
|
Costs to service
customers
|
1,767
|
|
|
1,784
|
|
|
(0.9)
|
%
|
|
3,589
|
|
|
3,638
|
|
|
(1.3)
|
%
|
Marketing
|
768
|
|
|
769
|
|
|
(0.1)
|
%
|
|
1,503
|
|
|
1,520
|
|
|
(1.1)
|
%
|
Mobile
|
277
|
|
|
33
|
|
|
NM
|
|
|
537
|
|
|
41
|
|
|
NM
|
|
Other
expense
|
926
|
|
|
854
|
|
|
8.4
|
%
|
|
1,834
|
|
|
1,720
|
|
|
6.6
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
7,162
|
|
|
6,803
|
|
|
5.3
|
%
|
|
14,313
|
|
|
13,567
|
|
|
5.5
|
%
|
Adjusted
EBITDA
|
4,185
|
|
|
4,051
|
|
|
3.3
|
%
|
|
8,240
|
|
|
7,944
|
|
|
3.7
|
%
|
Adjusted EBITDA
margin
|
36.9
|
%
|
|
37.3
|
%
|
|
|
|
36.5
|
%
|
|
36.9
|
%
|
|
|
Depreciation and
amortization
|
2,500
|
|
|
2,592
|
|
|
|
|
5,050
|
|
|
5,302
|
|
|
|
Stock compensation
expense
|
82
|
|
|
70
|
|
|
|
|
167
|
|
|
142
|
|
|
|
Other operating
expenses, net
|
62
|
|
|
29
|
|
|
|
|
57
|
|
|
98
|
|
|
|
Income from
operations
|
1,541
|
|
|
1,360
|
|
|
|
|
2,966
|
|
|
2,402
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(945)
|
|
|
(878)
|
|
|
|
|
(1,870)
|
|
|
(1,729)
|
|
|
|
Loss on financial
instruments, net
|
(119)
|
|
|
(75)
|
|
|
|
|
(82)
|
|
|
(12)
|
|
|
|
Other pension
benefits, net
|
9
|
|
|
20
|
|
|
|
|
18
|
|
|
40
|
|
|
|
Other expense,
net
|
(16)
|
|
|
(47)
|
|
|
|
|
(126)
|
|
|
(70)
|
|
|
|
|
(1,071)
|
|
|
(980)
|
|
|
|
|
(2,060)
|
|
|
(1,771)
|
|
|
|
Income before income
taxes
|
470
|
|
|
380
|
|
|
|
|
906
|
|
|
631
|
|
|
|
Income tax
expense
|
(84)
|
|
|
(41)
|
|
|
|
|
(203)
|
|
|
(69)
|
|
|
|
Consolidated net
income
|
386
|
|
|
339
|
|
|
|
|
703
|
|
|
562
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(72)
|
|
|
(66)
|
|
|
|
|
(136)
|
|
|
(121)
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
314
|
|
|
$
|
273
|
|
|
|
|
$
|
567
|
|
|
$
|
441
|
|
|
|
EARNINGS PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.41
|
|
|
$
|
1.17
|
|
|
|
|
$
|
2.54
|
|
|
$
|
1.87
|
|
|
|
Diluted
|
$
|
1.39
|
|
|
$
|
1.15
|
|
|
|
|
$
|
2.50
|
|
|
$
|
1.84
|
|
|
|
Weighted average
common shares outstanding, basic
|
222,392,274
|
|
|
234,241,769
|
|
|
|
|
223,505,016
|
|
|
235,992,306
|
|
|
|
Weighted average
common shares outstanding, diluted
|
225,942,172
|
|
|
237,073,566
|
|
|
|
|
226,889,745
|
|
|
239,246,727
|
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 6 of this addendum for the
reconciliation of Adjusted EBITDA to net income attributable to
Charter shareholders 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)
|
|
|
June
30,
|
|
December
31,
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
696
|
|
|
$
|
551
|
|
Accounts receivable,
net
|
2,070
|
|
|
1,733
|
|
Prepaid expenses and
other current assets
|
574
|
|
|
446
|
|
Total current
assets
|
3,340
|
|
|
2,730
|
|
|
|
|
|
RESTRICTED
CASH
|
150
|
|
|
214
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,475
|
|
|
35,126
|
|
Customer
relationships, net
|
8,461
|
|
|
9,565
|
|
Franchises
|
67,319
|
|
|
67,319
|
|
Goodwill
|
29,554
|
|
|
29,554
|
|
Total investment in
cable properties, net
|
139,809
|
|
|
141,564
|
|
|
|
|
|
OPERATING LEASE
RIGHT-OF-USE ASSETS
|
1,166
|
|
|
—
|
|
OTHER NONCURRENT
ASSETS
|
1,620
|
|
|
1,622
|
|
|
|
|
|
Total
assets
|
$
|
146,085
|
|
|
$
|
146,130
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,145
|
|
|
$
|
8,805
|
|
Operating lease
liabilities
|
208
|
|
|
—
|
|
Current portion of
long-term debt
|
1,522
|
|
|
3,290
|
|
Total current
liabilities
|
9,875
|
|
|
12,095
|
|
|
|
|
|
LONG-TERM
DEBT
|
71,784
|
|
|
69,537
|
|
DEFERRED INCOME
TAXES
|
17,522
|
|
|
17,389
|
|
LONG-TERM OPERATING
LEASE LIABILITIES
|
1,052
|
|
|
—
|
|
OTHER LONG-TERM
LIABILITIES
|
2,758
|
|
|
2,837
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
35,286
|
|
|
36,285
|
|
Noncontrolling
interests
|
7,808
|
|
|
7,987
|
|
Total shareholders'
equity
|
43,094
|
|
|
44,272
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
146,085
|
|
|
$
|
146,130
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(dollars in
millions)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
386
|
|
|
$
|
339
|
|
|
$
|
703
|
|
|
$
|
562
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,500
|
|
|
2,592
|
|
|
5,050
|
|
|
5,302
|
|
Stock compensation
expense
|
82
|
|
|
70
|
|
|
167
|
|
|
142
|
|
Accelerated vesting
of equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Noncash interest
income, net
|
(17)
|
|
|
(88)
|
|
|
(72)
|
|
|
(177)
|
|
Other pension
benefits, net
|
(9)
|
|
|
(20)
|
|
|
(18)
|
|
|
(40)
|
|
Loss on financial
instruments, net
|
119
|
|
|
75
|
|
|
82
|
|
|
12
|
|
Deferred income
taxes
|
56
|
|
|
29
|
|
|
137
|
|
|
57
|
|
Other, net
|
53
|
|
|
38
|
|
|
151
|
|
|
76
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(492)
|
|
|
(210)
|
|
|
(337)
|
|
|
16
|
|
Prepaid expenses and
other assets
|
124
|
|
|
40
|
|
|
(176)
|
|
|
(91)
|
|
Accounts payable,
accrued liabilities and other
|
(41)
|
|
|
231
|
|
|
(240)
|
|
|
(69)
|
|
Net cash flows from
operating activities
|
2,761
|
|
|
3,096
|
|
|
5,447
|
|
|
5,795
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(1,597)
|
|
|
(2,391)
|
|
|
(3,262)
|
|
|
(4,574)
|
|
Change in accrued
expenses related to capital expenditures
|
(52)
|
|
|
99
|
|
|
(428)
|
|
|
(466)
|
|
Real estate
investments through variable interest entities
|
(25)
|
|
|
—
|
|
|
(64)
|
|
|
—
|
|
Other, net
|
8
|
|
|
(77)
|
|
|
8
|
|
|
(67)
|
|
Net cash flows from
investing activities
|
(1,666)
|
|
|
(2,369)
|
|
|
(3,746)
|
|
|
(5,107)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
3,830
|
|
|
2,699
|
|
|
10,714
|
|
|
5,628
|
|
Repayments of
long-term debt
|
(4,551)
|
|
|
(1,315)
|
|
|
(10,123)
|
|
|
(3,500)
|
|
Payments for debt
issuance costs
|
(7)
|
|
|
(17)
|
|
|
(32)
|
|
|
(17)
|
|
Purchase of treasury
stock
|
(861)
|
|
|
(1,664)
|
|
|
(1,801)
|
|
|
(2,281)
|
|
Proceeds from
exercise of stock options
|
37
|
|
|
7
|
|
|
81
|
|
|
43
|
|
Purchase of
noncontrolling interest
|
(161)
|
|
|
(201)
|
|
|
(254)
|
|
|
(328)
|
|
Distributions to
noncontrolling interest
|
(39)
|
|
|
(37)
|
|
|
(78)
|
|
|
(76)
|
|
Other, net
|
(123)
|
|
|
(2)
|
|
|
(127)
|
|
|
(5)
|
|
Net cash flows from
financing activities
|
(1,875)
|
|
|
(530)
|
|
|
(1,620)
|
|
|
(536)
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(780)
|
|
|
197
|
|
|
81
|
|
|
152
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, beginning of period
|
1,626
|
|
|
576
|
|
|
765
|
|
|
621
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, end of period
|
$
|
846
|
|
|
$
|
773
|
|
|
$
|
846
|
|
|
$
|
773
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
1,051
|
|
|
$
|
882
|
|
|
$
|
2,017
|
|
|
$
|
1,889
|
|
CASH PAID FOR
TAXES
|
$
|
39
|
|
|
$
|
21
|
|
|
$
|
43
|
|
|
$
|
22
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED SUMMARY
OF OPERATING STATISTICS
|
(in thousands,
except per customer and penetration data)
|
|
|
Approximate as
of
|
|
June 30,
2019 (a)
|
|
March 31,
2019 (a)
|
|
December 31,
2018 (a)
|
|
June 30,
2018 (a)
|
Footprint
(b)
|
|
|
|
|
|
|
|
Estimated Video
Passings
|
51,258
|
|
|
51,023
|
|
|
50,824
|
|
|
50,364
|
|
Estimated Internet
Passings
|
51,093
|
|
|
50,857
|
|
|
50,652
|
|
|
50,149
|
|
Estimated Voice
Passings
|
50,538
|
|
|
50,292
|
|
|
50,086
|
|
|
49,532
|
|
|
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
31.8
|
%
|
|
32.3
|
%
|
|
32.7
|
%
|
|
33.1
|
%
|
Internet Penetration
of Estimated Internet Passings
|
50.8
|
%
|
|
50.5
|
%
|
|
49.9
|
%
|
|
49.1
|
%
|
Voice Penetration of
Estimated Voice Passings
|
21.6
|
%
|
|
22.0
|
%
|
|
22.3
|
%
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
|
|
Residential
|
26,755
|
|
|
26,591
|
|
|
26,270
|
|
|
25,871
|
|
Small and Medium
Business
|
1,902
|
|
|
1,863
|
|
|
1,833
|
|
|
1,750
|
|
Total Customer
Relationships
|
28,657
|
|
|
28,454
|
|
|
28,103
|
|
|
27,621
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Residential
|
164
|
|
|
321
|
|
|
207
|
|
|
141
|
|
Small and Medium
Business
|
39
|
|
|
30
|
|
|
41
|
|
|
55
|
|
Total Customer
Relationships
|
203
|
|
|
351
|
|
|
248
|
|
|
196
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
|
|
Video
|
15,802
|
|
|
15,952
|
|
|
16,104
|
|
|
16,206
|
|
Internet
|
24,244
|
|
|
24,023
|
|
|
23,625
|
|
|
23,070
|
|
Voice
|
9,808
|
|
|
10,015
|
|
|
10,135
|
|
|
10,325
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
(150)
|
|
|
(152)
|
|
|
(36)
|
|
|
(73)
|
|
Internet
|
221
|
|
|
398
|
|
|
289
|
|
|
218
|
|
Voice
|
(207)
|
|
|
(120)
|
|
|
(83)
|
|
|
(45)
|
|
|
|
|
|
|
|
|
|
Single Play
(e)
|
11,354
|
|
|
11,189
|
|
|
10,928
|
|
|
10,694
|
|
Double Play
(e)
|
7,709
|
|
|
7,412
|
|
|
7,097
|
|
|
6,633
|
|
Triple Play
(e)
|
7,692
|
|
|
7,990
|
|
|
8,245
|
|
|
8,544
|
|
|
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
42.4
|
%
|
|
42.1
|
%
|
|
41.6
|
%
|
|
41.3
|
%
|
Double Play
Penetration (f)
|
28.8
|
%
|
|
27.9
|
%
|
|
27.0
|
%
|
|
25.6
|
%
|
Triple Play
Penetration (f)
|
28.8
|
%
|
|
30.0
|
%
|
|
31.4
|
%
|
|
33.0
|
%
|
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
40.9
|
%
|
|
40.0
|
%
|
|
38.7
|
%
|
|
37.4
|
%
|
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$
|
112.20
|
|
|
$
|
112.47
|
|
|
$
|
111.78
|
|
|
$
|
111.88
|
|
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
|
|
Video
|
518
|
|
|
509
|
|
|
502
|
|
|
476
|
|
Internet
|
1,701
|
|
|
1,664
|
|
|
1,634
|
|
|
1,552
|
|
Voice
|
1,097
|
|
|
1,072
|
|
|
1,051
|
|
|
994
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
9
|
|
|
7
|
|
|
14
|
|
|
16
|
|
Internet
|
37
|
|
|
30
|
|
|
40
|
|
|
49
|
|
Voice
|
25
|
|
|
21
|
|
|
27
|
|
|
37
|
|
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$
|
170.42
|
|
|
$
|
170.64
|
|
|
$
|
170.62
|
|
|
$
|
176.96
|
|
|
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
|
|
Enterprise
PSUs
|
258
|
|
|
253
|
|
|
248
|
|
|
235
|
|
|
|
(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 June 30, 2019, March 31, 2019, December 31, 2018
and June 30, 2018, actual customers include approximately 152,900,
171,100, 217,600 and 227,500 customers, respectively, whose
accounts were over 60 days past due, approximately 13,800, 19,500,
24,000 and 19,300 customers, respectively, whose accounts were over
90 days past due and approximately 15,800, 20,800, 19,200 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
attributable to Charter shareholders
|
$
|
314
|
|
|
$
|
273
|
|
|
$
|
567
|
|
|
$
|
441
|
|
Plus: Net
income attributable to noncontrolling interest
|
72
|
|
|
66
|
|
|
136
|
|
|
121
|
|
Interest expense,
net
|
945
|
|
|
878
|
|
|
1,870
|
|
|
1,729
|
|
Income tax
expense
|
84
|
|
|
41
|
|
|
203
|
|
|
69
|
|
Depreciation and
amortization
|
2,500
|
|
|
2,592
|
|
|
5,050
|
|
|
5,302
|
|
Stock compensation
expense
|
82
|
|
|
70
|
|
|
167
|
|
|
142
|
|
Loss on financial
instruments, net
|
119
|
|
|
75
|
|
|
82
|
|
|
12
|
|
Other pension
benefits, net
|
(9)
|
|
|
(20)
|
|
|
(18)
|
|
|
(40)
|
|
Other, net
|
78
|
|
|
76
|
|
|
183
|
|
|
168
|
|
Adjusted EBITDA
(a)
|
4,185
|
|
|
4,051
|
|
|
8,240
|
|
|
7,944
|
|
Less: Mobile
revenue
|
(158)
|
|
|
—
|
|
|
(298)
|
|
|
—
|
|
Plus: Mobile
costs and Expenses
|
277
|
|
|
33
|
|
|
537
|
|
|
41
|
|
Cable Adjusted EBITDA
(a)
|
$
|
4,304
|
|
|
$
|
4,084
|
|
|
$
|
8,479
|
|
|
$
|
7,985
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
2,761
|
|
|
$
|
3,096
|
|
|
$
|
5,447
|
|
|
$
|
5,795
|
|
Less: Purchases
of property, plant and equipment
|
(1,597)
|
|
|
(2,391)
|
|
|
(3,262)
|
|
|
(4,574)
|
|
Change in accrued
expenses related to capital expenditures
|
(52)
|
|
|
99
|
|
|
(428)
|
|
|
(466)
|
|
Free cash
flow
|
1,112
|
|
|
804
|
|
|
1,757
|
|
|
755
|
|
Plus: Mobile
net cash outflows from operating activities
|
204
|
|
|
63
|
|
|
407
|
|
|
71
|
|
Purchases of mobile property, plant and equipment
|
93
|
|
|
53
|
|
|
181
|
|
|
70
|
|
Cable free cash
flow
|
$
|
1,409
|
|
|
$
|
920
|
|
|
$
|
2,345
|
|
|
$
|
896
|
|
|
(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, cable Adjusted
EBITDA, free cash flow and cable free cash flow, 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Customer premise
equipment (a)
|
$
|
492
|
|
|
$
|
828
|
|
|
$
|
1,057
|
|
|
$
|
1,762
|
|
Scalable
infrastructure (b)
|
223
|
|
|
587
|
|
|
520
|
|
|
1,073
|
|
Line extensions
(c)
|
363
|
|
|
353
|
|
|
684
|
|
|
644
|
|
Upgrade/rebuild
(d)
|
155
|
|
|
190
|
|
|
286
|
|
|
332
|
|
Support capital
(e)
|
364
|
|
|
433
|
|
|
715
|
|
|
763
|
|
Total
capital expenditures
|
1,597
|
|
|
2,391
|
|
|
3,262
|
|
|
4,574
|
|
Less: Mobile
capital expenditures
|
(93)
|
|
|
(53)
|
|
|
(181)
|
|
|
(70)
|
|
Cable capital
expenditures
|
$
|
1,504
|
|
|
$
|
2,338
|
|
|
$
|
3,081
|
|
|
$
|
4,504
|
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
$
|
324
|
|
|
$
|
309
|
|
|
$
|
629
|
|
|
$
|
592
|
|
All-digital
transition
|
$
|
—
|
|
|
$
|
88
|
|
|
$
|
—
|
|
|
$
|
274
|
|
|
|
(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.