STAMFORD, Conn., April 29,
2022 /PRNewswire/ -- Charter Communications, Inc. (along with
its subsidiaries, the "Company" or "Charter") today reported
financial and operating results for the three months ended
March 31, 2022.
Key highlights:
- First quarter total residential and small and medium business
("SMB") customer relationships increased by 129,000. As of
March 31, 2022, Charter served a
total of 32.2 million residential and SMB customers.
- First quarter total residential and SMB Internet customers
increased by 185,000. As of March 31,
2022, Charter served a total of 30.3 million residential and
SMB Internet customers.
- First quarter total residential and SMB mobile lines increased
by 373,000. As of March 31, 2022,
Charter served a total of 3.9 million mobile lines.
- First quarter revenue of $13.2
billion grew by 5.4% year-over-year, driven by residential
revenue growth of 3.7%, mobile revenue growth of 40.2% and
commercial revenue growth of 4.3%.
- First quarter Adjusted EBITDA1 of $5.2 billion grew by 5.4% year-over-year.
- Net income attributable to Charter shareholders totaled
$1.2 billion in the first
quarter.
- First quarter capital expenditures totaled $1.9 billion and included $232 million of rural construction initiative
capital expenditures and $74 million
of mobile-related capital expenditures.
- First quarter free cash flow1 of $1.8 billion decreased by 3.0% year-over-year.
Excluding a $220 million one-time
payment in the first quarter of 2022, free cash flow grew by 8.9%
year-over-year.
- During the first quarter, Charter purchased 6.0 million shares
of Charter Class A common stock and Charter Communications
Holdings, LLC ("Charter Holdings") common units for approximately
$3.6 billion.
"We remain focused on our primary goal of driving connected
customer and mobile broadband relationship growth," said
Tom Rutledge, Chairman and CEO of
Charter. "We continue to grow our business by offering superior
converged connectivity products. And our new joint venture with
Comcast will allow us to provide a next generation streaming
platform that offers new and differentiated direct-to-consumer
products to meet demand in a fast-changing video
environment."
1.
|
Adjusted EBITDA and
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
|
|
|
|
|
March 31,
2022 (a)
|
|
March 31,
2021 (a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
|
Estimated
Passings
|
|
54,739
|
|
53,708
|
|
1.9 %
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
Residential
|
|
30,035
|
|
29,361
|
|
2.3 %
|
SMB
|
|
2,163
|
|
2,071
|
|
4.4 %
|
Total Customer
Relationships
|
|
32,198
|
|
31,432
|
|
2.4 %
|
|
|
|
|
|
|
|
Residential
|
|
109
|
|
282
|
|
(173)
|
SMB
|
|
20
|
|
20
|
|
—
|
Total Customer
Relationships Quarterly Net Additions
|
|
129
|
|
302
|
|
(173)
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.8 %
|
|
58.5 %
|
|
0.3 ppts
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
113.28
|
|
$
112.18
|
|
1.0 %
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
163.96
|
|
$
163.79
|
|
0.1 %
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
47.2 %
|
|
45.2 %
|
|
2.0 ppts
|
Double Play
Penetration (g)
|
|
33.0 %
|
|
32.6 %
|
|
0.4 ppts
|
Triple Play
Penetration (g)
|
|
19.8 %
|
|
22.2 %
|
|
(2.4) ppts
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
49.7 %
|
|
47.3 %
|
|
2.4 ppts
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
Residential
|
|
28,301
|
|
27,357
|
|
3.4 %
|
SMB
|
|
1,973
|
|
1,877
|
|
5.1 %
|
Total Internet
Customers
|
|
30,274
|
|
29,234
|
|
3.6 %
|
|
|
|
|
|
|
|
Residential
|
|
164
|
|
334
|
|
(170)
|
SMB
|
|
21
|
|
21
|
|
—
|
Total Internet
Quarterly Net Additions
|
|
185
|
|
355
|
|
(170)
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
Residential
|
|
15,093
|
|
15,483
|
|
(2.5) %
|
SMB
|
|
628
|
|
579
|
|
8.6 %
|
Total Video
Customers
|
|
15,721
|
|
16,062
|
|
(2.1) %
|
|
|
|
|
|
|
|
Residential
|
|
(123)
|
|
(156)
|
|
33
|
SMB
|
|
11
|
|
18
|
|
(7)
|
Total Video
Quarterly Net Additions
|
|
(112)
|
|
(138)
|
|
26
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
Residential
|
|
8,465
|
|
9,113
|
|
(7.1) %
|
SMB
|
|
1,288
|
|
1,238
|
|
4.1 %
|
Total Voice
Customers
|
|
9,753
|
|
10,351
|
|
(5.8) %
|
|
|
|
|
|
|
|
Residential
|
|
(156)
|
|
(102)
|
|
(54)
|
SMB
|
|
6
|
|
14
|
|
(8)
|
Total Voice
Quarterly Net Additions
|
|
(150)
|
|
(88)
|
|
(62)
|
|
|
|
|
|
|
|
Mobile Lines
(h)
|
|
|
|
|
|
|
Residential
|
|
3,805
|
|
2,605
|
|
46.0 %
|
SMB
|
|
132
|
|
70
|
|
88.8 %
|
Total Mobile
Lines
|
|
3,937
|
|
2,675
|
|
47.2 %
|
|
|
|
|
|
|
|
Residential
|
|
357
|
|
285
|
|
72
|
SMB
|
|
16
|
|
15
|
|
1
|
Total Mobile
Lines Quarterly Net Additions
|
|
373
|
|
300
|
|
73
|
|
|
|
|
|
|
|
Enterprise
(i)
|
|
|
|
|
|
|
Enterprise Primary
Service Units ("PSUs")
|
|
274
|
|
261
|
|
5.2 %
|
Enterprise Quarterly
Net Additions
|
|
2
|
|
2
|
|
—
|
|
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 first quarter of 2022, Charter's residential customer
relationships grew by 109,000, compared to growth of 282,000 in the
first quarter of 2021. As of March 31, 2022, Charter had
30.0 million residential customer relationships, with
year-over-year growth of 2.3%.
Charter added 164,000 residential Internet customers during the
first quarter of 2022, compared to 334,000 during the first quarter
of 2021. Currently, 200 Mbps is the minimum speed offered to new
Spectrum Internet® customers across Charter's
footprint. As of March 31, 2022, over 80% of total Internet
customers subscribed to tiers that provided 200 Mbps or more of
speed. Charter also offers Spectrum Internet Ultra (400
Mbps) and Spectrum Internet Gig (1 Gbps) across its entire
footprint. Charter's Advanced Home WiFi, a managed WiFi service
that provides customers an optimized home network while providing
greater control of their connected devices, is available to nearly
all Spectrum Internet customers.
Residential video customers decreased by 123,000 in the first
quarter of 2022, compared to a decline of 156,000 in the first
quarter of 2021. As of March 31, 2022, Charter had
15.1 million residential video customers.
During the first quarter of 2022, residential wireline voice
customers declined by 156,000, compared to a decline of 102,000 in
the first quarter of 2021. As of March 31, 2022, Charter had
8.5 million residential wireline voice customers.
First quarter 2022 residential revenue per residential customer
(excluding mobile) totaled $113.28,
and increased by 1.0% compared to the prior year period, given
promotional rate step-ups and video rate adjustments that pass
through programmer rate increases, partly offset by a higher mix of
non-video customer relationships, a higher mix of lower priced
video packages within Charter's video customer base and
$20 million of sports network credits
recorded in the current year period to be provided to qualified
video customers given fewer sporting events being broadcast during
COVID-19.
SMB customer relationships grew by 20,000 in the first quarters
of 2022 and 2021, while enterprise PSUs grew by 2,000 in the first
quarters of 2022 and 2021.
During the first quarter of 2022, Charter added 373,000 mobile
lines, compared to growth of 300,000 during the first quarter of
2021. Spectrum MobileTM is available to all
new and existing Spectrum Internet customers. Spectrum
Mobile customers can choose "Unlimited" or "By the Gig" data
plans. In October 2021, Spectrum
Mobile introduced new Unlimited pricing starting at
$29.99/month per Unlimited line for
customers with at least two lines. Additionally, customers qualify
for the new multiline pricing when combining By the Gig lines for
$14/GB with Unlimited lines. All
Spectrum Mobile plans include 5G access, with taxes and fees
included and no contracts. Spectrum Mobile's new Unlimited
pricing is part of Charter's converged network strategy to provide
consumers a differentiated connectivity experience with highly
competitive, simple data plans and pricing.
First 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
March 31,
|
|
2022
|
|
2021
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
5,452
|
|
$
5,086
|
|
7.2 %
|
Video
|
4,346
|
|
4,344
|
|
0.1 %
|
Voice
|
391
|
|
399
|
|
(2.1) %
|
Residential
revenue
|
10,189
|
|
9,829
|
|
3.7 %
|
Small and medium
business
|
1,059
|
|
1,012
|
|
4.6 %
|
Enterprise
|
661
|
|
638
|
|
3.7 %
|
Commercial
revenue
|
1,720
|
|
1,650
|
|
4.3 %
|
Advertising
sales
|
383
|
|
344
|
|
11.5 %
|
Mobile
|
690
|
|
492
|
|
40.2 %
|
Other
|
218
|
|
207
|
|
5.2 %
|
Total
Revenue
|
13,200
|
|
12,522
|
|
5.4 %
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Total operating costs
and expenses
|
7,987
|
|
7,577
|
|
5.4 %
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
5,213
|
|
$
4,945
|
|
5.4 %
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
39.5
%
|
|
39.5
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
1,857
|
|
$
1,821
|
|
|
% Total
Revenue
|
14.1 %
|
|
14.5 %
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
1,203
|
|
$
807
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
7.05
|
|
$
4.22
|
|
|
Diluted
|
$
6.90
|
|
$
4.11
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
3,647
|
|
$
3,751
|
|
|
Free cash
flow
|
$
1,800
|
|
$
1,855
|
|
|
Revenues
First quarter revenue increased by 5.4% year-over-year to
$13.2 billion, driven primarily by
growth in residential, mobile and commercial revenues.
Residential revenue totaled $10.2
billion in the first quarter, an increase of 3.7%
year-over-year. The year-over-year revenue growth rate was
negatively impacted by $20 million of
sports network credits recorded in the current year period.
Internet revenue grew by 7.2% year-over-year to $5.5 billion, driven by growth in Internet
customers during the last year, promotional rate step-ups and
reduced bundled discounts, partly offset by lower bundled revenue
allocation.
Video revenue totaled $4.3 billion
in the first quarter, an increase of 0.1% compared to the prior
year period, driven by promotional rate step-ups, video rate
adjustments that pass through programmer rate increases and higher
bundled revenue allocation, mostly offset by a higher mix of lower
priced video packages within Charter's video customer base, a
decline in video customers during the last year and the
aforementioned $20 million of sports
network credits recorded in the current year period.
Voice revenue totaled $391
million in the first quarter, a decrease of 2.1% compared to
the first quarter of 2021, driven by a decline in wireline voice
customers over the last twelve months, partly offset by voice rate
adjustments.
Commercial revenue increased by 4.3% year-over-year to
$1.7 billion, driven by SMB and
enterprise revenue growth of 4.6% and 3.7% year-over-year,
respectively. First quarter 2022 SMB revenue growth was primarily
driven by customer relationship growth. Enterprise revenue
excluding wholesale increased by 6.5% year-over-year, reflecting
PSU growth.
First quarter advertising sales revenue of $383 million increased by 11.5% compared to the
year-ago quarter, driven by higher political revenue and advanced
advertising revenue. Excluding political revenue in both periods,
advertising sales revenue increased by 5.1% year-over-year.
First quarter mobile revenue totaled $690
million, an increase of 40.2% year-over-year, primarily
driven by mobile line growth.
Operating Costs and Expenses
First quarter total operating costs and expenses increased by
$410 million, or 5.4%
year-over-year.
First quarter programming costs decreased by $11 million, or 0.4% as compared to the first
quarter of 2021, reflecting fewer video customers and a higher mix
of lower cost packages within Charter's video customer base,
$20 million of sports network rebates
in the first quarter of 2022 that resulted from fewer sporting
events being broadcast during COVID-19 and $34 million of other favorable adjustments,
mostly offset by contractual programming increases and
renewals.
Regulatory, connectivity and produced content expenses decreased
by $44 million, or 7.4%
year-over-year, primarily driven by lower sports rights costs given
a normalized game schedule in the first quarter of 2022 compared to
the first quarter of 2021 when more games were played due to a
delayed start of the 2020-2021 NBA season, lower video CPE sold to
customers and lower regulatory and franchise fees.
Costs to service customers increased by $95 million, or 5.3% year-over-year. The
year-over-year increase in costs to service customers was primarily
driven by unusually low bad debt in the first quarter of 2021,
which benefited from government stimulus packages. Costs to service
customers excluding bad debt increased by 1.8% year-over-year
primarily due to a larger customer base, previously announced wage
increases to a $20 per hour starting
wage for hourly field operations and call center employees and
higher health benefit and fuel costs.
Marketing expenses increased by $75
million, or 10.1% year-over-year, due to higher labor
costs driven by previously announced wage increases to a
$20 per hour starting wage and
temporarily greater staffing levels as Charter completes the
insourcing of its inbound sales and retention call centers with a
focus on providing better service to new and existing
customers.
First quarter mobile costs totaled $760
million, an increase of 32.8% year-over-year, and were
comprised of device costs, customer acquisition costs, and service
and operating costs.
Other expenses increased by $107
million, or 12.5% as compared to the first quarter of 2021,
primarily due to a favorable non-recurring adjustment in the prior
year period and higher labor costs.
Adjusted EBITDA
First quarter Adjusted EBITDA of $5.2
billion grew by 5.4% year-over-year, reflecting growth in
revenue and operating expenses of 5.4% and 5.4%,
respectively.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$1.2 billion in the first quarter of
2022, compared to $807 million in the
first quarter of 2021. The year-over-year increase in net income
attributable to Charter shareholders was primarily driven by higher
Adjusted EBITDA and non-recurring litigation settlement charges
recorded in the first quarter of 2021.
Net income per basic common share attributable to Charter
shareholders totaled $7.05 in the
first quarter of 2022 compared to $4.22 during the same period last year. The
increase was primarily the result of the factors described above in
addition to a 10.8% decrease in basic weighted average common
shares outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $1.9 billion in the first quarter of 2022,
compared to $1.8 billion during the
first quarter of 2021, primarily driven by an increase in line
extensions, partly offset by decreases in support capital and
scalable infrastructure. The increase in line extensions was due to
Charter's rural construction initiative. The decrease in support
capital was driven by lower mobile capital expenditures and the
timing of vehicle spend. The decrease in scalable infrastructure
spending was primarily due to timing. First quarter capital
expenditures included $232 million of
rural construction initiative spend, most of which was included in
line extensions. First quarter capital expenditures also included
$74 million of mobile costs, most of
which related to information technology systems and were included
in support capital.
Charter currently expects full year 2022 cable capital
expenditures, excluding capital expenditures associated with its
rural construction initiative, to be between $7.1 billion and $7.3
billion.
Cash Flow and Free Cash Flow
During the first quarter of 2022, net cash flows from operating
activities totaled $3.6 billion,
compared to $3.8 billion in the prior
year quarter. The year-over-year decrease in net cash flows from
operating activities was primarily due to the $220 million payment of a previously recorded
litigation settlement charge and an unfavorable change in working
capital, excluding the change in accrued interest and accrued
expenses related to capital expenditures, partly offset by higher
Adjusted EBITDA.
Free cash flow in the first quarter of 2022 totaled $1.8 billion, compared to $1.9 billion during the same period last year.
The year-over-year decrease in free cash flow was primarily driven
by a decrease in net cash flows from operating activities.
Liquidity & Financing
As of March 31, 2022, total principal amount of debt was
$94.9 billion and Charter's credit
facilities provided approximately $4.7
billion of additional liquidity in excess of Charter's
$2.4 billion cash position.
In January 2022, CCO Holdings, LLC
and CCO Holdings Capital Corp. jointly issued $1.2 billion of 4.750% senior unsecured notes due
2032 at par. Net proceeds were used for general corporate purposes,
including to fund buybacks of Charter Class A common stock and
Charter Holdings common units, to repay certain indebtedness and to
pay related fees and expenses.
In March 2022, Charter
Communications Operating, LLC and Charter Communications Operating
Capital Corp. jointly issued $1.0 billion aggregate principal amount of
4.400% senior secured notes due April
2033 at a price of 99.634% of the aggregate principal
amount, $1.5 billion aggregate
principal amount of 5.250% senior secured notes due April 2053 at a price of 99.300% of the aggregate
principal amount and $1.0 billion aggregate principal amount of
5.500% senior secured notes due April
2063 at a price of 99.255% of the aggregate principal
amount. The net proceeds were used for general corporate purposes,
including to fund buybacks of Charter Class A common stock and
Charter Holdings common units, to repay certain indebtedness and to
pay related fees and expenses.
Share Repurchases
During the three months ended March 31, 2022, Charter
purchased 6.0 million shares of Charter Class A common stock and
Charter Holdings common units for approximately $3.6 billion.
Webcast
Charter will host a webcast on Friday, April 29, 2022 at
8:30 a.m. Eastern Time (ET) related
to the contents of this release.
The webcast can be accessed live via the Company's investor
relations website at ir.charter.com. Participants should go to the
webcast link no later than 10 minutes prior to the start time to
register. The webcast will be archived at ir.charter.com two hours
after completion of the webcast.
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 months
ended March 31, 2022, which will be posted on the "Results
& SEC Filings" section of the Company's 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, other income (expenses),
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 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 $342
million and $277 million for
the three months ended March 31, 2022 and 2021,
respectively.
About Charter
Charter Communications, Inc. (NASDAQ:CHTR) is a leading
broadband connectivity company and cable operator serving more than
32 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," "grow," "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:
- 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;
- general business conditions, unemployment levels and the level
of activity in the housing sector and economic uncertainty or
downturn, including the impacts of the Novel Coronavirus
("COVID-19") pandemic to sales opportunities from residential move
activity, our customers, our vendors and local, state and federal
governmental responses to the pandemic;
- 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 and
distribution requirements);
- our ability to develop and deploy new products and technologies
including 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 subsidies to consumers, subsidies and incentives for
competitors, costs, disruptions and possible limitations on
operating flexibility related to, and our ability to comply with,
regulatory conditions applicable to us;
- the ability to hire and retain key personnel;
- our ability to procure necessary services and equipment from
our vendors in a timely manner and at reasonable costs;
- 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
March 31,
|
|
2022
|
|
2021
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
5,452
|
|
$
5,086
|
|
7.2 %
|
Video
|
4,346
|
|
4,344
|
|
0.1 %
|
Voice
|
391
|
|
399
|
|
(2.1) %
|
Residential
revenue
|
10,189
|
|
9,829
|
|
3.7 %
|
Small and medium
business
|
1,059
|
|
1,012
|
|
4.6 %
|
Enterprise
|
661
|
|
638
|
|
3.7 %
|
Commercial
revenue
|
1,720
|
|
1,650
|
|
4.3 %
|
Advertising
sales
|
383
|
|
344
|
|
11.5 %
|
Mobile
|
690
|
|
492
|
|
40.2 %
|
Other
|
218
|
|
207
|
|
5.2 %
|
Total
Revenue
|
13,200
|
|
12,522
|
|
5.4 %
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Programming
|
2,977
|
|
2,988
|
|
(0.4) %
|
Regulatory,
connectivity and produced content
|
556
|
|
600
|
|
(7.4) %
|
Costs to service
customers
|
1,899
|
|
1,804
|
|
5.3 %
|
Marketing
|
826
|
|
751
|
|
10.1 %
|
Mobile
|
760
|
|
572
|
|
32.8 %
|
Other
expense
|
969
|
|
862
|
|
12.5 %
|
Total operating
costs and expenses (exclusive of items shown separately
below)
|
7,987
|
|
7,577
|
|
5.4 %
|
Adjusted
EBITDA
|
5,213
|
|
4,945
|
|
5.4 %
|
Adjusted EBITDA
margin
|
39.5
%
|
|
39.5
%
|
|
|
Depreciation and
amortization
|
2,294
|
|
2,441
|
|
|
Stock compensation
expense
|
147
|
|
134
|
|
|
Other operating
expenses, net
|
1
|
|
302
|
|
|
Income from
operations
|
2,771
|
|
2,068
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
Interest expense,
net
|
(1,060)
|
|
(983)
|
|
|
Other income,
net
|
23
|
|
52
|
|
|
|
(1,037)
|
|
(931)
|
|
|
Income before income
taxes
|
1,734
|
|
1,137
|
|
|
Income tax
expense
|
(345)
|
|
(216)
|
|
|
Consolidated net
income
|
1,389
|
|
921
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(186)
|
|
(114)
|
|
|
Net income
attributable to Charter shareholders
|
$
1,203
|
|
$
807
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
|
|
|
|
|
|
Basic
|
$
7.05
|
|
$
4.22
|
|
|
Diluted
|
$
6.90
|
|
$
4.11
|
|
|
Weighted average
common shares outstanding, basic
|
170,688,127
|
|
191,404,527
|
|
|
Weighted average
common shares outstanding, diluted
|
174,500,472
|
|
205,872,536
|
|
|
|
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)
|
|
|
March
31,
|
|
December
31,
|
|
2022
|
|
2021
|
ASSETS
|
(unaudited)
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
2,431
|
|
$
601
|
Accounts receivable,
net
|
2,530
|
|
2,579
|
Prepaid expenses and
other current assets
|
555
|
|
386
|
Total current
assets
|
5,516
|
|
3,566
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,173
|
|
34,310
|
Customer
relationships, net
|
3,699
|
|
4,060
|
Franchises
|
67,347
|
|
67,346
|
Goodwill
|
29,563
|
|
29,562
|
Total investment in
cable properties, net
|
134,782
|
|
135,278
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
3,650
|
|
3,647
|
|
|
|
|
Total
assets
|
$
143,948
|
|
$
142,491
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
9,386
|
|
$
9,461
|
Current portion of
long-term debt
|
4,543
|
|
2,997
|
Total current
liabilities
|
13,929
|
|
12,458
|
|
|
|
|
LONG-TERM
DEBT
|
90,679
|
|
88,564
|
DEFERRED INCOME
TAXES
|
19,070
|
|
19,096
|
OTHER LONG-TERM
LIABILITIES
|
4,326
|
|
4,217
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
12,060
|
|
14,050
|
Noncontrolling
interests
|
3,884
|
|
4,106
|
Total shareholders'
equity
|
15,944
|
|
18,156
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
143,948
|
|
$
142,491
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Consolidated net
income
|
$
1,389
|
|
$
921
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
Depreciation
and amortization
|
2,294
|
|
2,441
|
Stock
compensation expense
|
147
|
|
134
|
Noncash
interest income, net
|
(3)
|
|
(7)
|
Deferred income
taxes
|
38
|
|
156
|
Other,
net
|
(21)
|
|
(5)
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
Accounts
receivable
|
49
|
|
144
|
Prepaid
expenses and other assets
|
(185)
|
|
(182)
|
Accounts
payable, accrued liabilities and other
|
(61)
|
|
149
|
Net cash flows
from operating activities
|
3,647
|
|
3,751
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Purchases of property,
plant and equipment
|
(1,857)
|
|
(1,821)
|
Change in accrued
expenses related to capital expenditures
|
10
|
|
(75)
|
Other, net
|
60
|
|
(60)
|
Net cash flows from
investing activities
|
(1,787)
|
|
(1,956)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Borrowings of
long-term debt
|
6,713
|
|
5,289
|
Repayments of
long-term debt
|
(2,954)
|
|
(3,164)
|
Payments for debt
issuance costs
|
(37)
|
|
(22)
|
Purchase of treasury
stock
|
(3,333)
|
|
(3,652)
|
Proceeds from exercise
of stock options
|
1
|
|
9
|
Purchase of
noncontrolling interest
|
(416)
|
|
(507)
|
Distributions to
noncontrolling interest
|
(2)
|
|
(39)
|
Other, net
|
(2)
|
|
62
|
Net cash flows from
financing activities
|
(30)
|
|
(2,024)
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
1,830
|
|
(229)
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
601
|
|
1,001
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
2,431
|
|
$
772
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
982
|
|
$
1,017
|
CASH PAID FOR
TAXES
|
$
29
|
|
$
20
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY
OF OPERATING STATISTICS
(in thousands,
except per customer and penetration data)
|
|
|
|
Approximate as
of
|
|
|
March 31,
2022 (a)
|
|
December 31,
2021 (a)
|
|
March 31,
2021 (a)
|
Footprint
(b)
|
|
|
|
|
|
|
Estimated
Passings
|
|
54,739
|
|
54,521
|
|
53,708
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
Residential
|
|
30,035
|
|
29,926
|
|
29,361
|
SMB
|
|
2,163
|
|
2,143
|
|
2,071
|
Total Customer
Relationships
|
|
32,198
|
|
32,069
|
|
31,432
|
|
|
|
|
|
|
|
Residential
|
|
109
|
|
103
|
|
282
|
SMB
|
|
20
|
|
17
|
|
20
|
Total Customer
Relationships Quarterly Net Additions
|
|
129
|
|
120
|
|
302
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.8 %
|
|
58.8 %
|
|
58.5 %
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
113.28
|
|
$
114.14
|
|
$
112.18
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
163.96
|
|
$
164.59
|
|
$
163.79
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
47.2 %
|
|
46.7 %
|
|
45.2 %
|
Double Play
Penetration (g)
|
|
33.0 %
|
|
33.0 %
|
|
32.6 %
|
Triple Play
Penetration (g)
|
|
19.8 %
|
|
20.4 %
|
|
22.2 %
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
49.7 %
|
|
49.2 %
|
|
47.3 %
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
Residential
|
|
28,301
|
|
28,137
|
|
27,357
|
SMB
|
|
1,973
|
|
1,952
|
|
1,877
|
Total Internet
Customers
|
|
30,274
|
|
30,089
|
|
29,234
|
|
|
|
|
|
|
|
Residential
|
|
164
|
|
172
|
|
334
|
SMB
|
|
21
|
|
18
|
|
21
|
Total Internet
Quarterly Net Additions
|
|
185
|
|
190
|
|
355
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
Residential
|
|
15,093
|
|
15,216
|
|
15,483
|
SMB
|
|
628
|
|
617
|
|
579
|
Total Video
Customers
|
|
15,721
|
|
15,833
|
|
16,062
|
|
|
|
|
|
|
|
Residential
|
|
(123)
|
|
(71)
|
|
(156)
|
SMB
|
|
11
|
|
13
|
|
18
|
Total Video
Quarterly Net Additions
|
|
(112)
|
|
(58)
|
|
(138)
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
Residential
|
|
8,465
|
|
8,621
|
|
9,113
|
SMB
|
|
1,288
|
|
1,282
|
|
1,238
|
Total Voice
Customers
|
|
9,753
|
|
9,903
|
|
10,351
|
|
|
|
|
|
|
|
Residential
|
|
(156)
|
|
(163)
|
|
(102)
|
SMB
|
|
6
|
|
9
|
|
14
|
Total Voice
Quarterly Net Additions
|
|
(150)
|
|
(154)
|
|
(88)
|
|
|
|
|
|
|
|
Mobile Lines
(h)
|
|
|
|
|
|
|
Residential
|
|
3,805
|
|
3,448
|
|
2,605
|
SMB
|
|
132
|
|
116
|
|
70
|
Total Mobile
Lines
|
|
3,937
|
|
3,564
|
|
2,675
|
|
|
|
|
|
|
|
Residential
|
|
357
|
|
363
|
|
285
|
SMB
|
|
16
|
|
17
|
|
15
|
Total Mobile
Lines Quarterly Net Additions
|
|
373
|
|
380
|
|
300
|
|
|
|
|
|
|
|
Enterprise
(i)
|
|
|
|
|
|
|
Enterprise Primary
Service Units ("PSUs")
|
|
274
|
|
272
|
|
261
|
Enterprise Quarterly
Net Additions
|
|
2
|
|
3
|
|
2
|
(a)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at March 31, 2022, December
31, 2021 and March 31, 2021, customers included approximately
164,900, 150,700 and 125,100 customers, respectively, whose
accounts were over 60 days past due, approximately 51,600, 39,900
and 26,500 customers, respectively, whose accounts were over 90
days past due and approximately 74,800, 43,500 and 20,000
customers, respectively, whose accounts were over 120 days past
due. The increase in past due accounts is predominately due
to pre-existing balances for customers participating in government
assistance programs through which a customer's monthly payment is
subsidized by the federal government.
|
|
|
(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)
|
Mobile lines include
phones and tablets which require one of our standard rate plans
(e.g., "Unlimited" or "By the Gig"). Mobile lines exclude
wearables and other devices that do not require standard phone rate
plans.
|
|
|
(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
March 31,
|
|
2022
|
|
2021
|
Net income
attributable to Charter shareholders
|
$
1,203
|
|
$
807
|
Plus: Net income
attributable to noncontrolling interest
|
186
|
|
114
|
Interest expense,
net
|
1,060
|
|
983
|
Income tax
expense
|
345
|
|
216
|
Depreciation and
amortization
|
2,294
|
|
2,441
|
Stock compensation
expense
|
147
|
|
134
|
Other (income)
expenses, net
|
(22)
|
|
250
|
Adjusted EBITDA
(a)
|
$
5,213
|
|
$
4,945
|
|
|
|
|
Net cash flows from
operating activities
|
$
3,647
|
|
$
3,751
|
Less: Purchases
of property, plant and equipment
|
(1,857)
|
|
(1,821)
|
Change in accrued
expenses related to capital expenditures
|
10
|
|
(75)
|
Free cash
flow
|
$
1,800
|
|
$
1,855
|
|
(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 and 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
March 31,
|
|
2022
|
|
2021
|
Customer premise
equipment (a)
|
$
469
|
|
$
489
|
Scalable
infrastructure (b)
|
371
|
|
411
|
Line extensions
(c)
|
542
|
|
399
|
Upgrade/rebuild
(d)
|
146
|
|
145
|
Support capital
(e)
|
329
|
|
377
|
Total
capital expenditures
|
$
1,857
|
|
$
1,821
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
Commercial
services
|
$
365
|
|
$
333
|
Mobile
|
$
74
|
|
$
112
|
Rural construction
initiative (f)
|
$
232
|
|
$
—
|
(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.,
digital receivers 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).
|
(f)
|
The rural
construction initiative subcategory includes expenditures
associated with our Rural Construction Initiative (for which
separate reporting was initiated in 2022), excluding customer
premise equipment and installation.
|
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SOURCE Charter Communications, Inc.