STAMFORD, Conn., Oct. 30, 2020 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three and nine months ended September 30, 2020.
Key highlights:
- Third quarter total residential and small and medium business
("SMB") customer relationships increased by 457,000, compared to
310,000 during the third quarter of 2019. Over the last 12 months,
total customer relationships grew by 6.8%.
- Third quarter total residential and SMB Internet customers
increased by 537,000, compared to 380,000 during the third quarter
of 2019. Over the last 12 months, total Internet customers grew by
2.3 million, or 8.8%, to 28.6 million.
- Charter added 363,000 mobile lines in the third quarter,
compared to 276,000 during the third quarter of 2019. As of
September 30, 2020, Charter served a
total of 2.1 million mobile lines.
- Third quarter revenue of $12.0
billion grew by 5.1% year-over-year, driven by residential
revenue growth of 4.0%, mobile revenue growth of 91.8% and
advertising revenue growth of 16.8%.
- Third quarter Adjusted EBITDA1 of $4.6 billion grew by 13.6% year-over-year, while
third quarter cable Adjusted EBITDA1 of $4.7 billion grew by 11.7% year-over-year.
- Net income attributable to Charter shareholders totaled
$814 million in the third quarter,
compared to $387 million during the
same period last year.
- Third quarter capital expenditures totaled $2.0 billion and included $139 million of mobile-related capital
expenditures.
- Consolidated free cash flow1 in the third quarter of
2020 totaled $1.8 billion, compared
to $1.3 billion in 2019. Cable free
cash flow1 totaled $2.0
billion in the third quarter of 2020, versus $1.5 billion in 2019.
- During the third quarter, Charter purchased approximately 6.1
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $3.6 billion.
"Our long-term strategy of growing customer relationships by
delivering high-quality products and service remains on track,"
said Tom Rutledge, Chairman and CEO
of Charter Communications, Inc. "We've added two million customer
relationships in the past year and remain focused on executing a
proven operating and investment strategy that works for customers,
employees and the communities we serve, creating shareholder value
for the long term."
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
|
|
|
|
|
September 30,
2020 (a)
|
|
September 30,
2019 (a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
|
Estimated
Passings
|
|
53,022
|
|
|
51,940
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
Residential
|
|
28,912
|
|
|
27,037
|
|
|
6.9
|
%
|
SMB
|
|
2,021
|
|
|
1,930
|
|
|
4.7
|
%
|
Total Customer
Relationships
|
|
30,933
|
|
|
28,967
|
|
|
6.8
|
%
|
|
|
|
|
|
|
|
Residential
|
|
416
|
|
|
282
|
|
|
47.9
|
%
|
SMB
|
|
41
|
|
|
28
|
|
|
46.0
|
%
|
Total Customer
Relationships Net Additions
|
|
457
|
|
|
310
|
|
|
47.7
|
%
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.3
|
%
|
|
55.8
|
%
|
|
2.5 ppts
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
|
109.03
|
|
|
$
|
112.00
|
|
|
(2.7)
|
%
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
|
164.77
|
|
|
$
|
169.44
|
|
|
(2.8)
|
%
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
44.2
|
%
|
|
42.7
|
%
|
|
1.5 ppts
|
Double Play
Penetration (g)
|
|
32.3
|
%
|
|
29.9
|
%
|
|
2.4 ppts
|
Triple Play
Penetration (g)
|
|
23.5
|
%
|
|
27.3
|
%
|
|
(3.8) ppts
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
45.7
|
%
|
|
41.8
|
%
|
|
3.9 ppts
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
Residential
|
|
26,807
|
|
|
24,595
|
|
|
9.0
|
%
|
SMB
|
|
1,826
|
|
|
1,730
|
|
|
5.5
|
%
|
Total Internet
Customers
|
|
28,633
|
|
|
26,325
|
|
|
8.8
|
%
|
|
|
|
|
|
|
|
Residential
|
|
494
|
|
|
351
|
|
|
40.3
|
%
|
SMB
|
|
43
|
|
|
29
|
|
|
47.5
|
%
|
Total Internet Net
Additions
|
|
537
|
|
|
380
|
|
|
41.3
|
%
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
Residential
|
|
15,705
|
|
|
15,725
|
|
|
(0.1)
|
%
|
SMB
|
|
530
|
|
|
520
|
|
|
1.9
|
%
|
Total Video
Customers
|
|
16,235
|
|
|
16,245
|
|
|
(0.1)
|
%
|
|
|
|
|
|
|
|
Residential
|
|
53
|
|
|
(77)
|
|
|
169.4
|
%
|
SMB
|
|
14
|
|
|
2
|
|
|
410.1
|
%
|
Total Video Net
Additions
|
|
67
|
|
|
(75)
|
|
|
189.3
|
%
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
Residential
|
|
9,335
|
|
|
9,595
|
|
|
(2.7)
|
%
|
SMB
|
|
1,207
|
|
|
1,120
|
|
|
7.8
|
%
|
Total Voice
Customers
|
|
10,542
|
|
|
10,715
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
Residential
|
|
(63)
|
|
|
(213)
|
|
|
70.1
|
%
|
SMB
|
|
38
|
|
|
23
|
|
|
68.7
|
%
|
Total Voice Net
Additions
|
|
(25)
|
|
|
(190)
|
|
|
86.8
|
%
|
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
|
Residential
|
|
2,020
|
|
|
793
|
|
|
154.6
|
%
|
SMB
|
|
40
|
|
|
1
|
|
|
NM
|
|
Total Mobile
Lines
|
|
2,060
|
|
|
794
|
|
|
159.5
|
%
|
|
|
|
|
|
|
|
Residential
|
|
348
|
|
|
275
|
|
|
26.5
|
%
|
SMB
|
|
15
|
|
|
1
|
|
|
NM
|
|
Total Mobile Lines Net
Additions
|
|
363
|
|
|
276
|
|
|
31.5
|
%
|
|
|
|
|
|
|
|
Enterprise
(h)
|
|
|
|
|
|
|
Enterprise Primary
Service Unites ("PSUs")
|
|
272
|
|
|
264
|
|
|
3.1
|
%
|
Enterprise Net
Additions
|
|
2
|
|
|
6
|
|
|
(68.9)
|
%
|
|
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 third quarter of 2020, Charter's residential customer
relationships grew by 416,000, while third quarter 2019 residential
customer relationships grew by 282,000. As of September 30,
2020, Charter had 28.9 million residential customer relationships,
with year-over-year growth of 1.9 million, or 6.9%.
Charter added 494,000 residential Internet customers in the
third quarter of 2020, versus third quarter 2019 residential
Internet customer net additions of 351,000. As of
September 30, 2020, Charter had 26.8 million residential
Internet customers, with over 85% subscribing to tiers that
provided 100 Mbps or more of speed, and over 50% subscribing to
tiers that provided 200 Mbps or more of speed. Currently, 200 Mbps
is the slowest speed offered to new Spectrum
Internet® customers in approximately 60% of
Charter's footprint, with 100 Mbps the slowest speed offered in the
remaining 40% of its footprint.
Residential video customers increased by 53,000 in the third
quarter of 2020, while third quarter 2019 residential video
customers decreased by 77,000. As of September 30, 2020,
Charter had 15.7 million residential video customers.
During the third quarter of 2020, residential wireline voice
customers declined by 63,000, while third quarter 2019 residential
wireline voice customers declined by 213,000. As of
September 30, 2020, Charter had 9.3 million residential
wireline voice customers.
Third quarter 2020 residential revenue per residential customer
(excluding mobile) totaled $109.03,
and declined by 2.7% compared to the prior year period, driven by
$218 million of estimated credits to
be provided to Charter's video customers upon finalization of
expected rebates from sports programming networks which result from
fewer games broadcast during COVID-19. Excluding the planned credit
to video customers, residential revenue per residential customer
(excluding mobile) totaled $111.56,
and declined 0.4% year-over-year given a higher percentage of
non-video customers and a higher mix of lower priced video packages
within Charter's video customer base, lower pay-per-view and video
on demand revenue and lower installation revenue partly offset by
promotional rate step-ups and rate adjustments.
SMB customer relationships grew by 41,000 during the third
quarter of 2020, compared to growth of 28,000 during the third
quarter of 2019. As of September 30, 2020, Charter had 2.0
million SMB customer relationships, with year-over-year growth of
4.7%. Enterprise PSUs grew by 2,000 during the third quarter of
2020 compared to growth of 6,000 during the third quarter of 2019.
As of September 30, 2020, Charter had 272,000 enterprise PSUs,
with growth of 3.1% year-over-year.
During the third quarter of 2020, Charter added 363,000 mobile
lines, and as of September 30, 2020, Charter served a total of
2.1 million mobile lines. Spectrum
Mobile™ is available to all new and
existing Spectrum Internet customers and runs on America's
most awarded LTE network combined with Spectrum WiFi.
Spectrum Mobile customers can choose one of two simple ways
to pay for data, "Unlimited", or "By the Gig." All plans include 4G
and 5G access, with no added taxes, fees or contracts.
Third 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
September 30,
|
|
2020
|
|
2019
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
|
4,722
|
|
|
$
|
4,195
|
|
|
12.5
|
%
|
Video
|
4,221
|
|
|
4,359
|
|
|
(3.2)
|
%
|
Voice
|
449
|
|
|
477
|
|
|
(5.8)
|
%
|
Residential
revenue
|
9,392
|
|
|
9,031
|
|
|
4.0
|
%
|
Small and medium
business
|
988
|
|
|
974
|
|
|
1.5
|
%
|
Enterprise
|
617
|
|
|
644
|
|
|
(4.3)
|
%
|
Commercial
revenue
|
1,605
|
|
|
1,618
|
|
|
(0.8)
|
%
|
Advertising
sales
|
460
|
|
|
394
|
|
|
16.8
|
%
|
Mobile
|
368
|
|
|
192
|
|
|
91.8
|
%
|
Other
|
214
|
|
|
215
|
|
|
(0.7)
|
%
|
Total
Revenue
|
12,039
|
|
|
11,450
|
|
|
5.1
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Cable operating costs
and expenses
|
6,944
|
|
|
7,027
|
|
|
(1.2)
|
%
|
Mobile operating costs
and expenses
|
456
|
|
|
337
|
|
|
35.2
|
%
|
Total operating costs
and expenses
|
7,400
|
|
|
7,364
|
|
|
0.5
|
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,639
|
|
|
$
|
4,086
|
|
|
13.6
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
38.5
|
%
|
|
35.7
|
%
|
|
|
|
|
|
|
|
|
Cable Adjusted
EBITDA
|
$
|
4,727
|
|
|
$
|
4,231
|
|
|
11.7
|
%
|
Cable Adjusted EBITDA
margin
|
40.5
|
%
|
|
37.6
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
2,014
|
|
|
$
|
1,651
|
|
|
|
% Total
Revenue
|
16.7
|
%
|
|
14.4
|
%
|
|
|
|
|
|
|
|
|
Cable Capital
Expenditures
|
$
|
1,875
|
|
|
$
|
1,551
|
|
|
|
% Total Cable
Revenue
|
16.1
|
%
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
814
|
|
|
$
|
387
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
4.01
|
|
|
$
|
1.77
|
|
|
|
Diluted
|
$
|
3.90
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,664
|
|
|
$
|
2,943
|
|
|
|
Free cash
flow
|
$
|
1,754
|
|
|
$
|
1,271
|
|
|
|
Cable free cash
flow
|
$
|
2,019
|
|
|
$
|
1,527
|
|
|
|
Revenues
Third quarter revenue increased by 5.1% year-over-year to
$12.0 billion, driven by growth in
Internet, mobile and advertising.
Residential revenue totaled $9.4
billion in the third quarter, an increase of 4.0%
year-over-year, despite $218 million
of estimated credits to be provided to Charter's video customers
upon finalization of expected rebates from sports programming
networks which result from fewer games broadcast during
COVID-19.
Internet revenue grew by 12.5% compared to the year-ago quarter,
to $4.7 billion, driven by growth in
Internet customers during the last year, promotional rate step-ups
and rate adjustments.
Video revenue totaled $4.2 billion
in the third quarter, a decrease of 3.2% compared to the prior year
period, driven by the estimated customer credits related to sports
programming, a higher mix of lower priced video packages within
Charter's video customer base, a decline in video customers during
the last year, lower pay-per-view and video on demand revenue and
lower installation revenue partly offset by rate adjustments and
promotional rate step-ups.
Voice revenue totaled $449 million
in the third quarter, a decrease of 5.8% compared to the third
quarter of 2019, driven by a decline in wireline voice customers
over the last 12 months and value-based pricing.
Commercial revenue declined to $1.6
billion, a decrease of 0.8% over the prior year period,
driven by Charter's sale of Navisite in the third quarter of 2019,
lower cell tower backhaul and other wholesale revenue – both in
Enterprise, and an $11 million impact
from COVID-19 related seasonal plans in SMB. SMB revenue growth
absent the COVID-19 seasonal plan impact was 2.6% year-over-year,
reflecting customer relationship growth. Enterprise retail revenue
excluding Navisite in 2019 and wholesale revenue, was 5.8%,
reflecting PSU growth.
Third quarter advertising sales revenue of $460 million increased by 16.8% compared to the
year-ago quarter, driven by higher political revenue and the timing
of the return of multiple sports events and leagues, partly offset
by lower local and national sales which are recovering from
previous lows during the COVID-19 pandemic. Excluding political
revenue in both periods, advertising sales revenue declined by
11.2% year-over-year.
Third quarter mobile revenue totaled $368
million, an increase of 91.8% year-over-year.
Other revenue totaled $214 million
in the third quarter, a decrease of 0.7% year-over-year, driven by
lower processing fees, partly offset by higher video customer
premise equipment ("CPE") sold to customers.
Operating Costs and Expenses
Third quarter total operating costs and expenses increased by
$36 million, or 0.5% year-over-year.
Excluding mobile costs in both periods, operating costs and
expenses decreased by 1.2% compared to the year-ago quarter.
Third quarter programming costs decreased by $63 million, or 2.3% as compared to the third
quarter of 2019, reflecting $163
million of estimated sports network rebates which result
from fewer games broadcast during COVID-19, a higher mix of lower
cost video packages within Charter's video customer base and fewer
video customers, partly offset by contractual programming increases
and renewals.
Regulatory, connectivity and produced content expenses were
essentially unchanged year-over-year, as lower regulatory and
franchise fees were offset by higher video CPE sold to customers
and higher sports rights costs. The impact of an expected reduction
in sports rights content costs were immaterial in the quarter as
this benefit will be amortized over the life of the contract,
consistent with the deferral of second quarter expense for canceled
games. Together with the expected rebates shown in programming
expense, Charter intends to provide a credit on its video
customers' invoices for all of the rebates provided by sports
programming networks when details are finalized with the
networks.
Costs to service customers increased by $8 million, or 0.4% year-over-year, despite
year-over-year residential and SMB customer growth of 6.8%. The
year-over-year increase in costs to service customers was primarily
driven by previously announced accelerated wage benefits for hourly
field operations and call center employees, higher COVID-19 related
benefits and the timing of medical costs, partly offset by lower
bad debt and productivity improvements.
Marketing expenses decreased by $5
million, or 0.7% year-over-year.
Other expenses decreased by $23
million, or 2.5% as compared to the third quarter of 2019
primarily driven by lower enterprise costs from the sale of
Navisite, lower employee travel expense and insurance costs, partly
offset by higher information technology and advertising sales
expense.
Third quarter mobile costs totaled $456
million, an increase of 35.2% year-over-year, and were
comprised of device costs, customer acquisition costs, and service
and operating costs.
Adjusted EBITDA
Third quarter Adjusted EBITDA of $4.6
billion grew by 13.6% year-over-year, reflecting growth
in revenue and operating expenses of 5.1% and 0.5%, respectively.
Third quarter cable Adjusted EBITDA grew by 11.7% year-over-year
reflecting growth in cable revenue of 3.7% and a decline in cable
operating expenses of 1.2%.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$814 million in the third quarter of
2020, compared to $387
million in the third quarter of 2019. The year-over-year
increase in net income attributable to Charter shareholders was
primarily driven by higher Adjusted EBITDA, partly offset by a
pension remeasurement loss.
Net income per basic common share attributable to Charter
shareholders totaled $4.01 in the
third quarter of 2020 compared to $1.77 during the same period last year. The
increase was primarily the result of the factors described above in
addition to a 7.2% decrease in weighted average common shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $2.0 billion in the third quarter of 2020,
compared to $1.7 billion during the
third quarter of 2019, primarily driven by increases in support
capital, scalable infrastructure, line extensions and Internet CPE.
The year-over-year increase in support capital was primarily due to
facility improvements, the timing of back office systems
investments and mobile store build-outs. The increase in scalable
infrastructure spending was primarily due to core network
enhancements and node splits given growing customers and traffic.
The increase in line extensions was driven by continued network
expansion, including to rural areas. The increase in Internet CPE
spending was due to higher Internet customer growth. Third quarter
capital expenditures included $139
million of mobile costs, most of which are included in
support capital.
Charter currently expects 2020 cable capital expenditures to be
consistent and possibly lower as a percentage of cable revenue
versus 2019, despite the significant acceleration in customer
growth and network utilization during COVID-19.
Cash Flow and Free Cash Flow
During the third quarter of 2020, net cash flows from operating
activities totaled $3.7 billion,
compared to $2.9 billion in the prior
year quarter. The year-over-year increase in net cash flows from
operating activities was primarily due to higher Adjusted EBITDA
and a favorable change in working capital.
Consolidated free cash flow in the third quarter of 2020 totaled
$1.8 billion, compared to
$1.3 billion during the same period
last year. Cable free cash flow in the third quarter of 2020
totaled $2.0 billion, compared to
$1.5 billion during the same period
last year. The year-over-year increases in consolidated free cash
flow and cable free cash flow were driven by an increase in net
cash flows from operating activities.
Liquidity & Financing
As of September 30, 2020, total principal amount of debt
was $79.1 billion and Charter's
credit facilities provided approximately $4.7 billion of additional liquidity in excess of
Charter's $1.3 billion cash
position.
In July 2020, CCO Holdings, LLC
("CCO Holdings") and CCO Holdings Capital Corp. issued $3.0 billion of 4.250% senior unsecured notes due
2031. The proceeds were used to pay related fees and expenses and
for general corporate purposes, including repaying certain
indebtedness, including all of CCO Holdings' 5.875% senior notes
due 2024, as well as funding buybacks of Charter Class A common
stock and/or Charter Holdings common units.
In October 2020, CCO Holdings and
CCO Holdings Capital Corp. jointly issued an additional
$1.5 billion of its 4.500%
senior unsecured notes due 2032 at a price of 103.750%. The net
proceeds will be used to pay related fees and expenses and for
general corporate purposes, including repaying certain
indebtedness, including repayment of all of CCO Holdings' 5.375%
senior notes due May 1, 2025, as well
as funding potential buybacks of Charter Class A common stock and
Charter Holdings common units.
Share Repurchases
During the three months ended September 30, 2020, Charter
purchased approximately 6.1 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$3.6 billion.
Conference Call
Charter will host a conference call on Friday, October 30,
2020 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
8066249.
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 November 13,
2020. The conference ID code for the replay is 8066249.
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
nine months ended September 30, 2020, which will be posted on
the "Results & SEC Filings" 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 "Results
& SEC Filings" 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, net income attributable to
Charter shareholders 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, loss on extinguishment of
debt, (gain) loss on financial instruments, net, other pension
(benefits) costs, net, other (income) expense, net and other
operating (income) expenses, net, 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 $308
million and $927 million for
the three and nine months ended September 30, 2020,
respectively, and $317 million and
$916 million for the three and nine
months ended September 30, 2019, 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 sell the handset or tablet to
customers pursuant to equipment installment plans.
About Charter
Charter Communications, Inc. (NASDAQ:CHTR) is a leading
broadband connectivity company and cable operator serving more than
30 million customers in 41 states through its Spectrum brand. Over
an advanced communications network, the company offers a full range
of state-of-the-art residential and business services including
Spectrum Internet®, TV, Mobile and Voice.
For small and medium-sized companies, Spectrum
Business® delivers the same suite of broadband products
and services coupled with special features and applications to
enhance productivity, while for larger businesses and government
entities, Spectrum Enterprise provides highly customized,
fiber-based solutions. Spectrum Reach® delivers tailored
advertising and production for the modern media landscape. The
company also distributes award-winning news coverage, sports and
high-quality original programming to its customers through Spectrum
Networks and Spectrum Originals. More information about Charter can
be found at corporate.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," "focused on" 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:
- the impact of the COVID-19 pandemic on the economy, our
customers, our vendors, local, state and federal governmental
responses to the pandemic and our businesses generally;
- our ability to sustain and grow revenues and cash flow from
operations by offering Internet, video, 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 and providers of video content over
broadband Internet connections;
- 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 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,
including the impacts of the COVID-19 pandemic to unemployment
levels and the level of activity in the housing sector;
- 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
|
%
Change
|
|
2020
|
|
2019
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Internet
|
$
|
4,722
|
|
|
$
|
4,195
|
|
|
12.5
|
%
|
|
$
|
13,659
|
|
|
$
|
12,322
|
|
|
10.8
|
%
|
Video
|
4,221
|
|
|
4,359
|
|
|
(3.2)
|
%
|
|
13,014
|
|
|
13,134
|
|
|
(0.9)
|
%
|
Voice
|
449
|
|
|
477
|
|
|
(5.8)
|
%
|
|
1,357
|
|
|
1,470
|
|
|
(7.7)
|
%
|
Residential
revenue
|
9,392
|
|
|
9,031
|
|
|
4.0
|
%
|
|
28,030
|
|
|
26,926
|
|
|
4.1
|
%
|
Small and medium
business
|
988
|
|
|
974
|
|
|
1.5
|
%
|
|
2,967
|
|
|
2,882
|
|
|
2.9
|
%
|
Enterprise
|
617
|
|
|
644
|
|
|
(4.3)
|
%
|
|
1,845
|
|
|
1,939
|
|
|
(4.9)
|
%
|
Commercial
revenue
|
1,605
|
|
|
1,618
|
|
|
(0.8)
|
%
|
|
4,812
|
|
|
4,821
|
|
|
(0.2)
|
%
|
Advertising
sales
|
460
|
|
|
394
|
|
|
16.8
|
%
|
|
1,074
|
|
|
1,134
|
|
|
(5.3)
|
%
|
Mobile
|
368
|
|
|
192
|
|
|
91.8
|
%
|
|
936
|
|
|
490
|
|
|
91.3
|
%
|
Other
|
214
|
|
|
215
|
|
|
(0.7)
|
%
|
|
621
|
|
|
632
|
|
|
(1.8)
|
%
|
Total
Revenue
|
12,039
|
|
|
11,450
|
|
|
5.1
|
%
|
|
35,473
|
|
|
34,003
|
|
|
4.3
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
2,727
|
|
|
2,790
|
|
|
(2.3)
|
%
|
|
8,492
|
|
|
8,482
|
|
|
0.1
|
%
|
Regulatory,
connectivity and produced content
|
612
|
|
|
612
|
|
|
(0.1)
|
%
|
|
1,651
|
|
|
1,770
|
|
|
(6.7)
|
%
|
Costs to service
customers
|
1,902
|
|
|
1,894
|
|
|
0.4
|
%
|
|
5,598
|
|
|
5,483
|
|
|
2.1
|
%
|
Marketing
|
788
|
|
|
793
|
|
|
(0.7)
|
%
|
|
2,273
|
|
|
2,296
|
|
|
(1.0)
|
%
|
Mobile
|
456
|
|
|
337
|
|
|
35.2
|
%
|
|
1,243
|
|
|
874
|
|
|
42.2
|
%
|
Other
expense
|
915
|
|
|
938
|
|
|
(2.5)
|
%
|
|
2,692
|
|
|
2,772
|
|
|
(2.9)
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
7,400
|
|
|
7,364
|
|
|
0.5
|
%
|
|
21,949
|
|
|
21,677
|
|
|
1.3
|
%
|
Adjusted
EBITDA
|
4,639
|
|
|
4,086
|
|
|
13.6
|
%
|
|
13,524
|
|
|
12,326
|
|
|
9.7
|
%
|
Adjusted EBITDA
margin
|
38.5
|
%
|
|
35.7
|
%
|
|
|
|
38.1
|
%
|
|
36.2
|
%
|
|
|
Depreciation and
amortization
|
2,370
|
|
|
2,415
|
|
|
|
|
7,295
|
|
|
7,465
|
|
|
|
Stock compensation
expense
|
83
|
|
|
71
|
|
|
|
|
263
|
|
|
238
|
|
|
|
Other operating
expenses, net
|
14
|
|
|
14
|
|
|
|
|
23
|
|
|
71
|
|
|
|
Income from
operations
|
2,172
|
|
|
1,586
|
|
|
|
|
5,943
|
|
|
4,552
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(946)
|
|
|
(963)
|
|
|
|
|
(2,883)
|
|
|
(2,833)
|
|
|
|
Loss on extinguishment
of debt
|
(58)
|
|
|
—
|
|
|
|
|
(121)
|
|
|
—
|
|
|
|
Gain (loss) on
financial instruments, net
|
69
|
|
|
(34)
|
|
|
|
|
(185)
|
|
|
(116)
|
|
|
|
Other pension benefits
(costs), net
|
(115)
|
|
|
9
|
|
|
|
|
(94)
|
|
|
27
|
|
|
|
Other expense,
net
|
(13)
|
|
|
(5)
|
|
|
|
|
(13)
|
|
|
(131)
|
|
|
|
|
(1,063)
|
|
|
(993)
|
|
|
|
|
(3,296)
|
|
|
(3,053)
|
|
|
|
Income before income
taxes
|
1,109
|
|
|
593
|
|
|
|
|
2,647
|
|
|
1,499
|
|
|
|
Income tax
expense
|
(177)
|
|
|
(126)
|
|
|
|
|
(372)
|
|
|
(329)
|
|
|
|
Consolidated net
income
|
932
|
|
|
467
|
|
|
|
|
2,275
|
|
|
1,170
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(118)
|
|
|
(80)
|
|
|
|
|
(299)
|
|
|
(216)
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
814
|
|
|
$
|
387
|
|
|
|
|
$
|
1,976
|
|
|
$
|
954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
4.01
|
|
|
$
|
1.77
|
|
|
|
|
$
|
9.62
|
|
|
$
|
4.30
|
|
|
|
Diluted
|
$
|
3.90
|
|
|
$
|
1.74
|
|
|
|
|
$
|
9.35
|
|
|
$
|
4.23
|
|
|
|
Weighted average
common shares outstanding, basic
|
202,826,502
|
|
|
218,499,213
|
|
|
|
|
205,468,736
|
|
|
221,818,079
|
|
|
|
Weighted average
common shares outstanding, diluted
|
208,722,129
|
|
|
222,355,867
|
|
|
|
|
211,399,781
|
|
|
225,337,984
|
|
|
|
|
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.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(dollars in
millions)
|
|
|
September
30,
|
|
December
31,
|
|
2020
|
|
2019
|
ASSETS
|
(unaudited)
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,283
|
|
|
$
|
3,483
|
|
Accounts receivable,
net
|
2,068
|
|
|
2,227
|
|
Prepaid expenses and
other current assets
|
709
|
|
|
761
|
|
Total current
assets
|
4,060
|
|
|
6,471
|
|
|
|
|
|
RESTRICTED
CASH
|
3
|
|
|
66
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,196
|
|
|
34,591
|
|
Customer
relationships, net
|
6,050
|
|
|
7,453
|
|
Franchises
|
67,322
|
|
|
67,322
|
|
Goodwill
|
29,554
|
|
|
29,554
|
|
Total investment in
cable properties, net
|
137,122
|
|
|
138,920
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
3,008
|
|
|
2,731
|
|
|
|
|
|
Total
assets
|
$
|
144,193
|
|
|
$
|
148,188
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,541
|
|
|
$
|
8,885
|
|
Current portion of
long-term debt
|
1,715
|
|
|
3,500
|
|
Total current
liabilities
|
10,256
|
|
|
12,385
|
|
|
|
|
|
LONG-TERM
DEBT
|
77,947
|
|
|
75,578
|
|
DEFERRED INCOME
TAXES
|
17,929
|
|
|
17,711
|
|
OTHER LONG-TERM
LIABILITIES
|
4,349
|
|
|
3,703
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
26,906
|
|
|
31,445
|
|
Noncontrolling
interests
|
6,806
|
|
|
7,366
|
|
Total shareholders'
equity
|
33,712
|
|
|
38,811
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
144,193
|
|
|
$
|
148,188
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
|
(dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
932
|
|
|
$
|
467
|
|
|
$
|
2,275
|
|
|
$
|
1,170
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,370
|
|
|
2,415
|
|
|
7,295
|
|
|
7,465
|
|
Stock compensation
expense
|
83
|
|
|
71
|
|
|
263
|
|
|
238
|
|
Noncash interest
income, net
|
(10)
|
|
|
(17)
|
|
|
(31)
|
|
|
(89)
|
|
Other pension
(benefits) costs, net
|
115
|
|
|
(9)
|
|
|
94
|
|
|
(27)
|
|
Loss on extinguishment
of debt
|
58
|
|
|
—
|
|
|
121
|
|
|
—
|
|
(Gain) loss on
financial instruments, net
|
(69)
|
|
|
34
|
|
|
185
|
|
|
116
|
|
Deferred income
taxes
|
151
|
|
|
96
|
|
|
252
|
|
|
233
|
|
Other, net
|
(4)
|
|
|
(3)
|
|
|
(21)
|
|
|
148
|
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(74)
|
|
|
(227)
|
|
|
159
|
|
|
(564)
|
|
Prepaid expenses and
other assets
|
(76)
|
|
|
(49)
|
|
|
(240)
|
|
|
(225)
|
|
Accounts payable,
accrued liabilities and other
|
188
|
|
|
165
|
|
|
61
|
|
|
(75)
|
|
Net cash flows from
operating activities
|
3,664
|
|
|
2,943
|
|
|
10,413
|
|
|
8,390
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
(2,014)
|
|
|
(1,651)
|
|
|
(5,352)
|
|
|
(4,913)
|
|
Change in accrued
expenses related to capital expenditures
|
104
|
|
|
(21)
|
|
|
(70)
|
|
|
(449)
|
|
Real estate
investments through variable interest entities
|
(41)
|
|
|
(61)
|
|
|
(122)
|
|
|
(125)
|
|
Other, net
|
(35)
|
|
|
2
|
|
|
(43)
|
|
|
10
|
|
Net cash flows from
investing activities
|
(1,986)
|
|
|
(1,731)
|
|
|
(5,587)
|
|
|
(5,477)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
3,030
|
|
|
2,443
|
|
|
10,352
|
|
|
13,157
|
|
Repayments of
long-term debt
|
(1,819)
|
|
|
(763)
|
|
|
(9,711)
|
|
|
(10,886)
|
|
Payments for debt
issuance costs
|
(29)
|
|
|
(16)
|
|
|
(91)
|
|
|
(48)
|
|
Issuance of
equity
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
Purchase of treasury
stock
|
(3,361)
|
|
|
(2,767)
|
|
|
(6,868)
|
|
|
(4,568)
|
|
Proceeds from exercise
of stock options
|
50
|
|
|
25
|
|
|
171
|
|
|
106
|
|
Purchase of
noncontrolling interest
|
(366)
|
|
|
(339)
|
|
|
(884)
|
|
|
(593)
|
|
Distributions to
noncontrolling interest
|
(37)
|
|
|
(38)
|
|
|
(114)
|
|
|
(116)
|
|
Borrowings for real
estate investments through variable interest entities,
net
|
39
|
|
|
—
|
|
|
63
|
|
|
—
|
|
Other, net
|
(1)
|
|
|
(6)
|
|
|
(30)
|
|
|
(133)
|
|
Net cash flows from
financing activities
|
(2,494)
|
|
|
(1,461)
|
|
|
(7,089)
|
|
|
(3,081)
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH
|
(816)
|
|
|
(249)
|
|
|
(2,263)
|
|
|
(168)
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, beginning of period
|
2,102
|
|
|
846
|
|
|
3,549
|
|
|
765
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, end of period
|
$
|
1,286
|
|
|
$
|
597
|
|
|
$
|
1,286
|
|
|
$
|
597
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
1,038
|
|
|
$
|
1,048
|
|
|
$
|
3,023
|
|
|
$
|
3,065
|
|
CASH PAID FOR
TAXES
|
$
|
34
|
|
|
$
|
12
|
|
|
$
|
84
|
|
|
$
|
55
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED SUMMARY
OF OPERATING STATISTICS
|
(in thousands,
except per customer and penetration data)
|
|
|
|
Approximate as
of
|
|
|
September 30,
2020 (a)
|
|
June 30,
2020 (a)
|
|
December 31,
2019 (a)
|
|
September 30,
2019 (a)
|
Footprint
(b)
|
|
|
|
|
|
|
|
|
Estimated
Passings
|
|
53,022
|
|
|
52,714
|
|
|
52,154
|
|
|
51,940
|
|
|
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
|
|
Residential
|
|
28,912
|
|
|
28,496
|
|
|
27,277
|
|
|
27,037
|
|
SMB
|
|
2,021
|
|
|
1,980
|
|
|
1,958
|
|
|
1,930
|
|
Total Customer
Relationships
|
|
30,933
|
|
|
30,476
|
|
|
29,235
|
|
|
28,967
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
416
|
|
|
751
|
|
|
240
|
|
|
282
|
|
SMB
|
|
41
|
|
|
4
|
|
|
28
|
|
|
28
|
|
Total Customer
Relationships Net Additions
|
|
457
|
|
|
755
|
|
|
268
|
|
|
310
|
|
|
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.3
|
%
|
|
57.8
|
%
|
|
56.1
|
%
|
|
55.8
|
%
|
|
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
|
109.03
|
|
|
$
|
110.82
|
|
|
$
|
113.79
|
|
|
$
|
112.00
|
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
|
164.77
|
|
|
$
|
166.06
|
|
|
$
|
169.06
|
|
|
$
|
169.44
|
|
|
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
44.2
|
%
|
|
44.0
|
%
|
|
43.0
|
%
|
|
42.7
|
%
|
Double Play
Penetration (g)
|
|
32.3
|
%
|
|
31.7
|
%
|
|
30.7
|
%
|
|
29.9
|
%
|
Triple Play
Penetration (g)
|
|
23.5
|
%
|
|
24.3
|
%
|
|
26.2
|
%
|
|
27.3
|
%
|
|
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
45.7
|
%
|
|
45.1
|
%
|
|
42.7
|
%
|
|
41.8
|
%
|
|
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
|
|
Residential
|
|
26,807
|
|
|
26,313
|
|
|
24,908
|
|
|
24,595
|
|
SMB
|
|
1,826
|
|
|
1,783
|
|
|
1,756
|
|
|
1,730
|
|
Total Internet
Customers
|
|
28,633
|
|
|
28,096
|
|
|
26,664
|
|
|
26,325
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
494
|
|
|
842
|
|
|
313
|
|
|
351
|
|
SMB
|
|
43
|
|
|
8
|
|
|
26
|
|
|
29
|
|
Total Internet Net
Additions
|
|
537
|
|
|
850
|
|
|
339
|
|
|
380
|
|
|
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
|
|
Residential
|
|
15,705
|
|
|
15,652
|
|
|
15,620
|
|
|
15,725
|
|
SMB
|
|
530
|
|
|
516
|
|
|
524
|
|
|
520
|
|
Total Video
Customers
|
|
16,235
|
|
|
16,168
|
|
|
16,144
|
|
|
16,245
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
53
|
|
|
102
|
|
|
(105)
|
|
|
(77)
|
|
SMB
|
|
14
|
|
|
(8)
|
|
|
4
|
|
|
2
|
|
Total Video Net
Additions
|
|
67
|
|
|
94
|
|
|
(101)
|
|
|
(75)
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
|
|
Residential
|
|
9,335
|
|
|
9,398
|
|
|
9,443
|
|
|
9,595
|
|
SMB
|
|
1,207
|
|
|
1,169
|
|
|
1,144
|
|
|
1,120
|
|
Total Voice
Customers
|
|
10,542
|
|
|
10,567
|
|
|
10,587
|
|
|
10,715
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
(63)
|
|
|
38
|
|
|
(152)
|
|
|
(213)
|
|
SMB
|
|
38
|
|
|
7
|
|
|
24
|
|
|
23
|
|
Total Voice Net
Additions
|
|
(25)
|
|
|
45
|
|
|
(128)
|
|
|
(190)
|
|
|
|
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
|
|
|
Residential
|
|
2,020
|
|
|
1,672
|
|
|
1,078
|
|
|
793
|
|
SMB
|
|
40
|
|
|
25
|
|
|
4
|
|
|
1
|
|
Total Mobile
Lines
|
|
2,060
|
|
|
1,697
|
|
|
1,082
|
|
|
794
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
348
|
|
|
313
|
|
|
285
|
|
|
275
|
|
SMB
|
|
15
|
|
|
12
|
|
|
3
|
|
|
1
|
|
Total Mobile Lines Net
Additions
|
|
363
|
|
|
325
|
|
|
288
|
|
|
276
|
|
|
|
|
|
|
|
|
|
|
Enterprise
(h)
|
|
|
|
|
|
|
|
|
Enterprise Primary
Service Unites ("PSUs")
|
|
272
|
|
|
270
|
|
|
267
|
|
|
264
|
|
Enterprise Net
Additions
|
|
2
|
|
|
1
|
|
|
3
|
|
|
6
|
|
|
|
(a)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at September 30, 2020,
June 30, 2020, December 31, 2019 and September 30,
2019, customers included approximately 181,700, 124,500, 154,200
and 148,000 customers, respectively, whose accounts were over 60
days past due, approximately 52,300, 18,400, 13,500 and 16,400
customers, respectively, whose accounts were over 90 days past due
and approximately 26,000, 10,400, 10,000 and 14,100 customers,
respectively, whose accounts were over 120 days past due.
Included in the September 30, 2020 aging statistics are
approximately 60,200 customers that would have been disconnected
under our normal collection policies, but were not due to certain
state mandates in place.
|
|
|
(b)
|
Passings represent
our estimate of the number of units, such as single family homes,
apartment and condominium units and SMB 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)
|
Customer
relationships include the number of customers that receive one or
more levels of service, encompassing Internet, video 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 and
mobile-only customer relationships.
|
|
|
(d)
|
Penetration
represents residential and SMB customers as a percentage of
estimated passings. Penetration excludes mobile-only
customers.
|
|
|
(e)
|
Monthly residential
revenue per residential customer is calculated as total residential
quarterly revenue divided by three divided by average residential
customer relationships during the respective quarter and excludes
mobile revenue and customers.
|
|
|
(f)
|
Monthly SMB revenue
per SMB customer is calculated as total SMB quarterly revenue
divided by three divided by average SMB customer relationships
during the respective quarter and excludes mobile revenue and
customers.
|
|
|
(g)
|
Single play, double
play and triple play penetration represents the number of
residential single play, double play and triple play cable
customers, respectively, as a percentage of residential customer
relationships, excluding mobile.
|
|
|
(h)
|
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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to Charter shareholders
|
$
|
814
|
|
|
$
|
387
|
|
|
$
|
1,976
|
|
|
$
|
954
|
|
Plus: Net income
attributable to noncontrolling interest
|
118
|
|
|
80
|
|
|
299
|
|
|
216
|
|
Interest expense,
net
|
946
|
|
|
963
|
|
|
2,883
|
|
|
2,833
|
|
Income tax
expense
|
177
|
|
|
126
|
|
|
372
|
|
|
329
|
|
Depreciation and
amortization
|
2,370
|
|
|
2,415
|
|
|
7,295
|
|
|
7,465
|
|
Stock compensation
expense
|
83
|
|
|
71
|
|
|
263
|
|
|
238
|
|
Loss on extinguishment
of debt
|
58
|
|
|
—
|
|
|
121
|
|
|
—
|
|
(Gain) loss on
financial instruments, net
|
(69)
|
|
|
34
|
|
|
185
|
|
|
116
|
|
Other pension
(benefits) costs, net
|
115
|
|
|
(9)
|
|
|
94
|
|
|
(27)
|
|
Other, net
|
27
|
|
|
19
|
|
|
36
|
|
|
202
|
|
Adjusted EBITDA
(a)
|
4,639
|
|
|
4,086
|
|
|
13,524
|
|
|
12,326
|
|
Less: Mobile
revenue
|
(368)
|
|
|
(192)
|
|
|
(936)
|
|
|
(490)
|
|
Plus: Mobile
costs and expenses
|
456
|
|
|
337
|
|
|
1,243
|
|
|
874
|
|
Cable Adjusted
EBITDA
|
$
|
4,727
|
|
|
$
|
4,231
|
|
|
$
|
13,831
|
|
|
$
|
12,710
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,664
|
|
|
$
|
2,943
|
|
|
$
|
10,413
|
|
|
$
|
8,390
|
|
Less: Purchases
of property, plant and equipment
|
(2,014)
|
|
|
(1,651)
|
|
|
(5,352)
|
|
|
(4,913)
|
|
Change in accrued
expenses related to capital expenditures
|
104
|
|
|
(21)
|
|
|
(70)
|
|
|
(449)
|
|
Free cash
flow
|
1,754
|
|
|
1,271
|
|
|
4,991
|
|
|
3,028
|
|
Plus: Mobile net
cash outflows from operating activities
|
126
|
|
|
156
|
|
|
407
|
|
|
563
|
|
Purchases of mobile property, plant and equipment
|
139
|
|
|
100
|
|
|
351
|
|
|
281
|
|
Cable free cash
flow
|
$
|
2,019
|
|
|
$
|
1,527
|
|
|
$
|
5,749
|
|
|
$
|
3,872
|
|
|
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Customer premise
equipment (a)
|
$
|
520
|
|
|
$
|
470
|
|
|
$
|
1,501
|
|
|
$
|
1,527
|
|
Scalable
infrastructure (b)
|
424
|
|
|
320
|
|
|
979
|
|
|
840
|
|
Line extensions
(c)
|
439
|
|
|
370
|
|
|
1,204
|
|
|
1,054
|
|
Upgrade/rebuild
(d)
|
175
|
|
|
165
|
|
|
459
|
|
|
451
|
|
Support capital
(e)
|
456
|
|
|
326
|
|
|
1,209
|
|
|
1,041
|
|
Total
capital expenditures
|
2,014
|
|
|
1,651
|
|
|
5,352
|
|
|
4,913
|
|
Less: Mobile
capital expenditures
|
(139)
|
|
|
(100)
|
|
|
(351)
|
|
|
(281)
|
|
Cable capital
expenditures
|
$
|
1,875
|
|
|
$
|
1,551
|
|
|
$
|
5,001
|
|
|
$
|
4,632
|
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
$
|
358
|
|
|
$
|
327
|
|
|
$
|
942
|
|
|
$
|
956
|
|
|
|
(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.