STAMFORD, Conn., May 1, 2020 /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, 2020.
Key highlights:
- First quarter total residential and SMB customer
relationships1 increased by 486,000, compared to 351,000
during the first quarter of 2019. First quarter total residential
and SMB Internet customers1 increased by 582,000,
compared to 428,000 during the first quarter of 2019.
- Charter added 290,000 Spectrum MobileTM lines
in the first quarter and as of March 31,
2020, Charter served a total of 1.4 million mobile
lines.
- First quarter revenue of $11.7
billion grew by 4.8% year-over-year, driven by residential
revenue growth of 4.2%, mobile revenue growth of 85.0% and SMB
revenue growth of 5.4%.
- First quarter Adjusted EBITDA2 of $4.4 billion grew by 8.4% year-over-year, while
first quarter cable Adjusted EBITDA2 of $4.5 billion grew by 8.1% year-over-year.
- Net income attributable to Charter shareholders totaled
$396 million in the first quarter,
compared to $253 million during the
same period last year.
- First quarter capital expenditures totaled $1.5 billion and included $87 million of mobile-related capital
expenditures.
- Consolidated free cash flow2 for the first quarter
of 2020 totaled $1.4 billion,
compared to $645 million in 2019.
Cable free cash flow2 totaled $1.6 billion for the first quarter of 2020,
versus $936 million in 2019.
- During the first quarter, Charter purchased approximately 5.2
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $2.6 billion.
"Thanks to the dedication of our employees and the quality of
our network, we have continued to deliver high quality connectivity
services to millions of existing and new customers in the
communities we serve, including homes, businesses, hospital and
educational systems, and local, state and federal government
institutions. And I am very proud that the products we deliver have
played a key role in enabling social distancing, remote working,
distance learning, and much more" said Tom
Rutledge, CEO and Chairman of Charter Communications, Inc.
"Our ability to service existing customers with significantly more
data, and install new customers at an accelerated rate, is a direct
result of the commitment of our employees and the $40 billion of investment we have made in our
infrastructure in just the last five years. Charter remains
committed to delivering outstanding products and services, keeping
the communities we serve connected, working and learning, and doing
our part to help our country recover from this crisis. And we
continue to invest in the next generation of communications
technology and infrastructure that will allow us to service the
future of connectivity."
1.
|
Results include the
impact of COVID-19 related offers and programs launched by Charter
in the first quarter of 2020. See page 4 for additional
information.
|
2.
|
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
|
|
|
|
March 31, 2020
(a)
|
|
March 31, 2019
(a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
Estimated
Passings
|
52,418
|
|
|
51,384
|
|
|
2.0
|
%
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings
|
56.7
|
%
|
|
55.4
|
%
|
|
1.3 ppts
|
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
|
27,745
|
|
|
26,591
|
|
|
4.3
|
%
|
Small and Medium
Business
|
1,976
|
|
|
1,863
|
|
|
6.1
|
%
|
Total Customer
Relationships
|
29,721
|
|
|
28,454
|
|
|
4.5
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Residential
|
468
|
|
|
321
|
|
|
45.6
|
%
|
Small and Medium
Business
|
18
|
|
|
30
|
|
|
(39.0)
|
%
|
Total Customer
Relationships
|
486
|
|
|
351
|
|
|
38.3
|
%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Internet
|
25,471
|
|
|
24,023
|
|
|
6.0
|
%
|
Video
|
15,550
|
|
|
15,952
|
|
|
(2.5)
|
%
|
Voice
|
9,360
|
|
|
10,015
|
|
|
(6.5)
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Internet
|
563
|
|
|
398
|
|
|
41.6
|
%
|
Video
|
(70)
|
|
|
(152)
|
|
|
53.5
|
%
|
Voice
|
(83)
|
|
|
(120)
|
|
|
31.5
|
%
|
|
|
|
|
|
|
Single Play
(e)
|
12,099
|
|
|
11,189
|
|
|
8.1
|
%
|
Double Play
(e)
|
8,655
|
|
|
7,412
|
|
|
16.8
|
%
|
Triple Play
(e)
|
6,991
|
|
|
7,990
|
|
|
(12.5)
|
%
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
43.6
|
%
|
|
42.1
|
%
|
|
1.5 ppts
|
|
Double Play
Penetration (f)
|
31.2
|
%
|
|
27.9
|
%
|
|
3.3 ppts
|
|
Triple Play
Penetration (f)
|
25.2
|
%
|
|
30.0
|
%
|
|
(4.8) ppts
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
44.0
|
%
|
|
40.0
|
%
|
|
4.0 ppts
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$112.73
|
|
|
$112.47
|
|
|
0.2
|
%
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Internet
|
1,775
|
|
|
1,664
|
|
|
6.7
|
%
|
Video
|
524
|
|
|
509
|
|
|
2.8
|
%
|
Voice
|
1,162
|
|
|
1,072
|
|
|
8.4
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Internet
|
19
|
|
|
30
|
|
|
(38.4)
|
%
|
Video
|
—
|
|
|
7
|
|
|
(109.4)
|
%
|
Voice
|
18
|
|
|
21
|
|
|
(12.7)
|
%
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$168.83
|
|
|
$170.64
|
|
|
(1.1)
|
%
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
Residential and Small
and Medium Business Mobile Lines
|
1,372
|
|
|
310
|
|
|
342.7
|
%
|
Net
Additions
|
290
|
|
|
176
|
|
|
64.2
|
%
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
Enterprise
PSUs
|
269
|
|
|
253
|
|
|
6.5
|
%
|
Net
Additions
|
2
|
|
|
5
|
|
|
(61.3)
|
%
|
|
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.
|
Ending
Customers and Net Additions on COVID-19
Offers
As of and for the
quarter ended March 31, 2020
(in
thousands)
|
|
|
Remote
Education
Offer (a)
|
|
Keep
Americans
Connected (b)
|
|
Small and
Medium
Business
Seasonal Plan (c)
|
|
Total
|
Residential
|
|
|
|
|
|
|
|
Ending
Customers
|
|
|
|
|
|
|
|
Customer
Relationships
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Video PSUs
|
46
|
|
(d)
|
1
|
|
|
n/a
|
|
|
47
|
|
Voice PSUs
|
34
|
|
(d)
|
—
|
|
|
n/a
|
|
|
34
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
n/a
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions
|
|
|
|
|
|
|
|
Customer
Relationships
|
113
|
|
|
1
|
|
|
n/a
|
|
|
114
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Video PSUs
|
41
|
|
(d)
|
1
|
|
|
n/a
|
|
|
42
|
|
Voice PSUs
|
33
|
|
(d)
|
—
|
|
|
n/a
|
|
|
33
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
n/a
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
|
|
Ending
Customers
|
|
|
|
|
|
|
|
Customer
Relationships
|
n/a
|
|
|
—
|
|
|
5
|
|
|
5
|
|
Internet
PSUs
|
n/a
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Video PSUs
|
n/a
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Voice PSUs
|
n/a
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Mobile Lines
|
n/a
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions
|
|
|
|
|
|
|
|
Customer
Relationships
|
n/a
|
|
|
—
|
|
|
5
|
|
|
5
|
|
Internet
PSUs
|
n/a
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Video PSUs
|
n/a
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Voice PSUs
|
n/a
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Mobile Lines
|
n/a
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(a)
|
The Remote Education
Offer ("REO") represents residential customers participating in
Charter's free 60-day Internet offer available to households with
K-12 and/or college students or educators who are not currently
Spectrum Internet customers. These residential customers are
generally eligible to purchase additional products and services
(i.e., video, voice and mobile) at current promotional
rates.
|
|
|
(b)
|
As part of our pledge
to the FCC, Keep Americans Connected customers represents customers
who would have been disconnected by quarter end as a result of
non-payment under our normal policies, but were not disconnected
and collection efforts paused due to COVID-19 related payment
challenges. As of quarter end, approximately 140,000
residential customers had requested protection from disconnection
under the pledge of which 1,000 would have been disconnected for
non-payment under our normal policies. At the end of April,
36,000 of those 140,000 customers' outstanding balance is now fully
current, and in total nearly 50% have made partial or full payments
since entering disconnection protection. However, at the end
of April, 67,000 of those 140,000 customers now have past due
balances beyond the point of normal disconnection.
|
|
|
(c)
|
Small and Medium
Business Seasonal Plan represents small and medium business
customers who have requested a reduced level of service and now pay
a reduced price for their service due to temporary business closure
or because these customers have reduced their service offering to
their own customers.
|
|
|
(d)
|
Customers that
connected as part of the REO who have subscribed to products in
addition to Spectrum Internet (i.e., video, voice, mobile) during
the 60-day free Internet offer. Billings are not deferred for
these additional services. Approximately 5,000 and 1,000 of
the REO customers were current video and voice customers,
respectively.
|
To assist communities impacted by the COVID-19 pandemic, Charter
launched a Remote Education Offer in March, providing free
Spectrum Internet® for 60 days to households with
K-12 and/or college students as well as educators that do not
already have Spectrum Internet service. The majority
of customers participating in the Remote Education Offer are
choosing to be provided with Internet service at flagship speeds
(i.e., 200 Mbps or 100 Mbps). Furthermore, as of March 31,
2020, approximately 50% of participants in the Remote Education
Offer chose to subscribe to additional services (i.e., video,
voice, mobile) from Charter, and are currently being billed for
these additional services. Charter is also participating in the
FCC's Keep Americans Connected Pledge, pausing disconnects and
collection efforts for residential and SMB customers impacted by
COVID-19. Finally, Charter has offered a seasonal plan at reduced
rates to SMB customers that have temporarily closed or because
these customers have reduced their service offerings to their own
customers. The following discussion includes the impact of
Charter's COVID-19 related offers and programs, which continue in
the second quarter, on customer results and data. See page 4 for
the total number of customers participating in these COVID-19
related offers and programs as of March 31, 2020.
During the first quarter of 2020, Charter's residential customer
relationships grew by 468,000, while first quarter 2019 residential
customer relationships grew by 321,000. As of March 31, 2020,
Charter had 27.7 million residential customer relationships, with
year-over-year growth of 1.2 million, or 4.3%.
Charter added 563,000 residential Internet customers in the
first quarter of 2020, versus first quarter 2019 residential
Internet customer net additions of 398,000. As of March 31,
2020, Charter had 25.5 million residential Internet customers, with
over 85% subscribing to tiers that provided 100 Mbps or more of
speed. Currently, 200 Mbps is the slowest speed offered to new
Internet customers in approximately 60% of Charter's footprint,
with 100 Mbps the slowest speed offered in the remaining 40% of its
footprint.
Since early March, Charter has seen a substantial increase in
network traffic, particularly in the daytime, with more people
working and learning from home. Residential data usage for
Internet-only customers was over 600 gigabytes per month in March,
increasing by more than 20% since the fourth quarter of 2019. Due
to our significant investment in infrastructure and
technology, Charter's network continues to perform well
despite higher levels of data traffic.
Residential video customers decreased by 70,000 in the first
quarter of 2020, while first quarter 2019 residential video
customers decreased by 152,000. As of March 31, 2020, Charter
had 15.6 million residential video customers.
During the first quarter of 2020, residential wireline voice
customers declined by 83,000, while first quarter 2019 voice
customers declined by 120,000. As of March 31, 2020, Charter
had 9.4 million residential wireline voice customers.
First quarter 2020 residential revenue per residential customer
(excluding mobile) totaled $112.73,
and grew by 0.2% compared to the prior year period, given
promotional rate step-ups, rate adjustments and a lower rate of
customers migrating to Spectrum pricing and packaging, partly
offset by a higher percentage of non-video customers, a higher mix
of streaming and lighter video packages within Charter's video
customer base, lower video equipment revenue, lower pay-per-view
and video on demand revenue and Charter's Remote Education
Offer.
During the first quarter of 2020, Charter added 290,000 mobile
lines, and as of March 31, 2020, Charter served a total of 1.4
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" for $45 a month (per line), or "By the Gig" at
$14/GB, in both cases including
applicable fees and taxes. In the first quarter of 2020,
Spectrum Mobile launched 5G service. Customers with
a $45/monthly unlimited data plan can use 5G phones to access
5G service at no additional cost in select cities nationwide.
SMB customer relationships grew by 18,000 during the first quarter
of 2020, compared to growth of 30,000 during the first quarter of
2019. As of March 31, 2020, Charter had 2.0 million SMB
customer relationships, with year-over-year growth of 6.1%.
Enterprise PSUs grew by 2,000 during the first quarter of 2020
compared to growth of 5,000 during the first quarter of 2019. As of
March 31, 2020, Charter had 269,000 enterprise PSUs, with
growth of 6.5% year-over-year.
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,
|
|
2020
|
|
2019
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
|
4,407
|
|
|
$
|
4,024
|
|
|
9.5
|
%
|
Video
|
4,422
|
|
|
4,384
|
|
|
0.9
|
%
|
Voice
|
457
|
|
|
504
|
|
|
(9.4)
|
%
|
Residential
revenue
|
9,286
|
|
|
8,912
|
|
|
4.2
|
%
|
Small and medium
business
|
996
|
|
|
945
|
|
|
5.4
|
%
|
Enterprise
|
622
|
|
|
643
|
|
|
(3.2)
|
%
|
Commercial
revenue
|
1,618
|
|
|
1,588
|
|
|
1.9
|
%
|
Advertising
sales
|
365
|
|
|
345
|
|
|
5.7
|
%
|
Mobile
|
258
|
|
|
140
|
|
|
85.0
|
%
|
Other
|
211
|
|
|
221
|
|
|
(4.4)
|
%
|
Total
Revenue
|
11,738
|
|
|
11,206
|
|
|
4.8
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Cable operating costs
and expenses
|
6,968
|
|
|
6,891
|
|
|
1.1
|
%
|
Mobile operating costs
and expenses
|
374
|
|
|
260
|
|
|
44.4
|
%
|
Total operating costs
and expenses
|
7,342
|
|
|
7,151
|
|
|
2.7
|
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,396
|
|
|
$
|
4,055
|
|
|
8.4
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
37.4
|
%
|
|
36.2
|
%
|
|
|
|
|
|
|
|
|
Cable Adjusted
EBITDA
|
$
|
4,512
|
|
|
$
|
4,175
|
|
|
8.1
|
%
|
Cable Adjusted EBITDA
margin
|
39.3
|
%
|
|
37.7
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
1,461
|
|
|
$
|
1,665
|
|
|
|
% Total
Revenue
|
12.4
|
%
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
Cable Capital
Expenditures
|
$
|
1,374
|
|
|
$
|
1,577
|
|
|
|
% Total Cable
Revenue
|
12.0
|
%
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
396
|
|
|
$
|
253
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
1.91
|
|
|
$
|
1.13
|
|
|
|
Diluted
|
$
|
1.86
|
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,220
|
|
|
$
|
2,686
|
|
|
|
Free cash
flow
|
$
|
1,371
|
|
|
$
|
645
|
|
|
|
Cable free cash
flow
|
$
|
1,631
|
|
|
$
|
936
|
|
|
|
Revenues
First quarter revenue increased by 4.8% year-over-year to
$11.7 billion, driven by growth in
Internet, mobile, SMB, video and advertising revenue. Excluding
mobile revenue and advertising revenue, which benefited from
political spend in the first quarter of 2020, revenue grew by
3.7% year-over-year.
Internet revenue grew by 9.5% compared to the year-ago quarter,
to $4.4 billion, driven by growth in
Internet customers during the last year, promotional rolloff and
rate adjustments.
Video revenue totaled $4.4 billion
in the first quarter, an increase of 0.9% compared to the prior
year period. Video revenue growth was driven by rate adjustments
and promotional rolloff, partly offset by a decline in video
customers during the last year, a higher mix of streaming and
lighter video packages within Charter's video customer base, lower
video equipment revenue and lower pay-per-view and video on demand
revenue.
Voice revenue totaled $457 million
in the first quarter, a decrease of 9.4% compared to the first
quarter of 2019, driven by a decline in wireline voice customers
over the last twelve months and value-based pricing.
Commercial revenue increased to $1.6
billion, an increase of 1.9% over the prior year
period, driven by SMB revenue growth of 5.4%, partly offset by a
decline in enterprise revenue of 3.2%. First quarter commercial
revenue was impacted by Charter's sale of Navisite, its managed
cloud services business within Spectrum Enterprise, in the
third quarter of 2019. Excluding Navisite revenue from the first
quarter of 2019, commercial and enterprise revenue grew by 4.3% and
2.7% over the prior year period, respectively.
First quarter advertising sales revenue of $365 million increased by 5.7% compared to the
year-ago quarter, driven by higher political revenue. Excluding
political revenue in both periods, advertising sales revenue
declined by 5.9% year-over-year, driven by COVID-19 related
cancellations in March.
First quarter mobile revenue totaled $258
million, an increase of 85.0% year-over-year.
Other revenue totaled $211 million
in the first quarter, a decrease of 4.4% year-over-year, driven by
lower home security revenue and lower processing fees, partly
offset by higher video customer premise equipment ("CPE") sold to
customers.
Operating Costs and Expenses
First quarter total operating costs and expenses increased by
$191 million, or 2.7%
year-over-year, and 1.1% when excluding mobile costs in both
periods.
First quarter programming costs increased by $27 million, or 0.9% as compared to the first
quarter of 2019, reflecting contractual programming increases and
renewals, partly offset by lower video customers, a higher mix of
streaming and lighter video packages within Charter's video
customer base, a nonrecurring financial benefit and lower
pay-per-view expenses.
Regulatory, connectivity and produced content expenses decreased
by $10 million, or 1.7%
year-over-year, primarily driven by lower regulatory fees and
delayed sports rights costs in March, partly offset by higher
original programming costs and video CPE sold to customers.
Costs to service customers increased by $26 million, or 1.4% year-over-year, despite
year-over-year residential and SMB customer growth of 4.5% and
previously announced accelerated wage benefits for hourly field
operations and call center employees. The year-over-year increase
in costs to service customers was entirely driven by bad debt, with
a higher estimate of expected losses on current receivables related
to COVID-19 in accordance with the new Current Expected Credit
Losses (CECL) accounting standard adopted in January. Costs to
service customers excluding bad debt decreased 0.7% year-over-year
and was primarily driven by lower service transactions per customer
and lower churn.
Marketing expenses increased by $31
million, or 4.2% year-over-year, primarily driven by higher
labor costs and commissions.
Other expenses increased by $3
million, or 0.4% as compared to the first quarter of 2019
primarily driven by higher corporate costs and advertising sales
expense, partly offset by lower costs related to the sale of
Navisite.
First quarter mobile costs totaled $374
million, an increase of 44.4% year-over-year, and were
comprised of device costs, customer acquisition costs, and service
and operating costs.
Adjusted EBITDA
First quarter Adjusted EBITDA of $4.4
billion grew by 8.4% year-over-year, reflecting growth
in revenue and operating expenses of 4.8% and 2.7%, respectively.
First quarter cable Adjusted EBITDA grew by 8.1% year-over-year
reflecting growth in cable revenue and cable operating expenses of
3.7% and 1.1%, respectively.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$396 million in the first quarter of
2020, compared to $253
million in the first quarter of 2019. The year-over-year
increase in net income attributable to Charter shareholders was
primarily driven by higher Adjusted EBITDA, other income, net and
lower tax expense, partly offset by a non-cash loss on financial
instruments in the current year period versus a gain in the prior
year period.
Net income per basic common share attributable to Charter
shareholders totaled $1.91 in the
first quarter of 2020 compared to $1.13 during the same period last year. The
increase was primarily the result of the factors described above in
addition to a 7.5% decrease in weighted average common shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $1.5 billion in the first quarter of 2020,
compared to $1.7 billion during the
first quarter of 2019, primarily driven by declines in scalable
infrastructure and CPE spending. The year-over-year decrease in
scalable infrastructure spending was primarily driven by timing.
The decrease in CPE spending was primarily driven by a higher mix
of boxless video outlets, increasing customer self-installations
and a decline in the pace of migration of Legacy TWC and Legacy
Bright House customers to Spectrum pricing and packaging.
First quarter capital expenditures included $87 million of mobile costs, most of which are
included in support capital.
Charter currently expects 2020 cable capital expenditures to
decline as a percentage of cable revenue versus 2019.
Cash Flow and Free Cash Flow
During the first quarter of 2020, net cash flows from operating
activities totaled $3.2 billion,
compared to $2.7 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.
Consolidated free cash flow for the first quarter of 2020
totaled $1.4 billion, compared to
$645 million during the same period
last year. Cable free cash flow for the first quarter of 2020
totaled $1.6 billion, compared to
$936 million during the same period
last year. The year-over-year increases in consolidated free cash
flow and cable free cash flow were driven by an increase in net
cash flows from operating activities and a decline in capital
expenditures.
Liquidity & Financing
As of March 31, 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
$2.9 billion cash position.
In February 2020, CCO Holdings,
LLC ("CCO Holdings") and CCO Holdings Capital Corp. issued
$1.65 billion of 4.500% senior
unsecured notes due 2030. The net proceeds were used to redeem
$1.0 billion aggregate principal
amount of CCO Holdings' 5.125% senior notes due 2023, $500 million aggregate principal amount of CCO
Holdings' 5.750% senior notes due 2023 and $150 million aggregate principal amount of CCO
Holdings' outstanding 5.750% senior notes due 2024.
In March 2020, CCO Holdings and
CCO Holdings Capital Corp. issued an additional $1.1 billion of the same 4.500% senior unsecured
notes due 2030 that were issued earlier in February and
$1.4 billion of 4.500% senior
unsecured notes due 2032. A portion of the net proceeds were or
will be used to redeem $1.25 billion
aggregate principal amount of CCO Holdings' 5.250% senior notes due
2022 and $1.15 billion aggregate
principal amount of CCO Holdings' 5.125% senior notes due 2023, and
the remaining net proceeds were or will be used for general
corporate purposes.
In April 2020, Charter
Communications Operating, LLC and Charter Communications Operating
Capital Corp. issued $1.6 billion of
2.800% senior secured notes due 2031 and $1.4 billion of 3.700% senior secured notes due
2051. The proceeds were or will be used to pay related fees and
expenses and for general corporate purposes.
Share Repurchases
During the three months ended March 31, 2020, Charter
purchased approximately 5.2 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$2.6 billion.
Conference Call
Charter will host a conference call on Friday, May 1, 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
2229456.
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 May 15,
2020. The conference ID code for the replay is 2229456.
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, 2020, which will be posted on the "Financial
Information" section of our investor relations website at
ir.charter.com, when it is filed with the Securities and Exchange
Commission (the "SEC"). A slide presentation to accompany the
conference call and a trending schedule containing historical
customer and financial data will also be available in the
"Financial Information" section.
Use of Adjusted EBITDA and Free Cash Flow
Information
The company uses certain measures that are not defined by U.S.
generally accepted accounting principles ("GAAP") to evaluate
various aspects of its business. Adjusted EBITDA and free cash flow
are non-GAAP financial measures and should be considered in
addition to, not as a substitute for, 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, 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 $311
million and $300 million for
the three months ended March 31, 2020 and 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
29 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
March 31,
|
|
2020
|
|
2019
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
|
4,407
|
|
|
$
|
4,024
|
|
|
9.5
|
%
|
Video
|
4,422
|
|
|
4,384
|
|
|
0.9
|
%
|
Voice
|
457
|
|
|
504
|
|
|
(9.4)
|
%
|
Residential
revenue
|
9,286
|
|
|
8,912
|
|
|
4.2
|
%
|
Small and medium
business
|
996
|
|
|
945
|
|
|
5.4
|
%
|
Enterprise
|
622
|
|
|
643
|
|
|
(3.2)
|
%
|
Commercial
revenue
|
1,618
|
|
|
1,588
|
|
|
1.9
|
%
|
Advertising
sales
|
365
|
|
|
345
|
|
|
5.7
|
%
|
Mobile
|
258
|
|
|
140
|
|
|
85.0
|
%
|
Other
|
211
|
|
|
221
|
|
|
(4.4)
|
%
|
Total
Revenue
|
11,738
|
|
|
11,206
|
|
|
4.8
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Programming
|
2,892
|
|
|
2,865
|
|
|
0.9
|
%
|
Regulatory,
connectivity and produced content
|
551
|
|
|
561
|
|
|
(1.7)
|
%
|
Costs to service
customers
|
1,848
|
|
|
1,822
|
|
|
1.4
|
%
|
Marketing
|
766
|
|
|
735
|
|
|
4.2
|
%
|
Mobile
|
374
|
|
|
260
|
|
|
44.4
|
%
|
Other
expense
|
911
|
|
|
908
|
|
|
0.4
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
7,342
|
|
|
7,151
|
|
|
2.7
|
%
|
Adjusted
EBITDA
|
4,396
|
|
|
4,055
|
|
|
8.4
|
%
|
Adjusted EBITDA
margin
|
37.4
|
%
|
|
36.2
|
%
|
|
|
Depreciation and
amortization
|
2,497
|
|
|
2,550
|
|
|
|
Stock compensation
expense
|
90
|
|
|
85
|
|
|
|
Other operating
(income) expenses, net
|
7
|
|
|
(5)
|
|
|
|
Income from
operations
|
1,802
|
|
|
1,425
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
Interest expense,
net
|
(980)
|
|
|
(925)
|
|
|
|
Loss on extinguishment
of debt
|
(27)
|
|
|
—
|
|
|
|
Gain (loss) on
financial instruments, net
|
(318)
|
|
|
37
|
|
|
|
Other pension
benefits, net
|
10
|
|
|
9
|
|
|
|
Other income
(expense), net
|
9
|
|
|
(110)
|
|
|
|
|
(1,306)
|
|
|
(989)
|
|
|
|
Income before income
taxes
|
496
|
|
|
436
|
|
|
|
Income tax
expense
|
(29)
|
|
|
(119)
|
|
|
|
Consolidated net
income
|
467
|
|
|
317
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(71)
|
|
|
(64)
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
396
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
|
|
|
|
|
|
Basic
|
$
|
1.91
|
|
|
$
|
1.13
|
|
|
|
Diluted
|
$
|
1.86
|
|
|
$
|
1.11
|
|
|
|
Weighted average
common shares outstanding, basic
|
207,831,305
|
|
|
224,630,122
|
|
|
|
Weighted average
common shares outstanding, diluted
|
212,810,613
|
|
|
227,595,365
|
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 8 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,
|
|
2020
|
|
2019
|
ASSETS
|
(unaudited)
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
2,908
|
|
|
$
|
3,483
|
|
Accounts receivable,
net
|
2,091
|
|
|
2,227
|
|
Prepaid expenses and
other current assets
|
760
|
|
|
761
|
|
Total current
assets
|
5,759
|
|
|
6,471
|
|
|
|
|
|
RESTRICTED
CASH
|
28
|
|
|
66
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,096
|
|
|
34,591
|
|
Customer
relationships, net
|
6,955
|
|
|
7,453
|
|
Franchises
|
67,322
|
|
|
67,322
|
|
Goodwill
|
29,554
|
|
|
29,554
|
|
Total investment in
cable properties, net
|
137,927
|
|
|
138,920
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
2,838
|
|
|
2,731
|
|
|
|
|
|
Total
assets
|
$
|
146,552
|
|
|
$
|
148,188
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,310
|
|
|
$
|
8,885
|
|
Current portion of
long-term debt
|
4,905
|
|
|
3,500
|
|
Total current
liabilities
|
13,215
|
|
|
12,385
|
|
|
|
|
|
LONG-TERM
DEBT
|
74,787
|
|
|
75,578
|
|
DEFERRED INCOME
TAXES
|
17,665
|
|
|
17,711
|
|
OTHER LONG-TERM
LIABILITIES
|
4,163
|
|
|
3,703
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
29,628
|
|
|
31,445
|
|
Noncontrolling
interests
|
7,094
|
|
|
7,366
|
|
Total shareholders'
equity
|
36,722
|
|
|
38,811
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
146,552
|
|
|
$
|
148,188
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Consolidated net
income
|
$
|
467
|
|
|
$
|
317
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,497
|
|
|
2,550
|
|
Stock compensation
expense
|
90
|
|
|
85
|
|
Noncash interest
income, net
|
(12)
|
|
|
(55)
|
|
Other pension
benefits, net
|
(10)
|
|
|
(9)
|
|
Loss on extinguishment
of debt
|
27
|
|
|
—
|
|
(Gain) loss on
financial instruments, net
|
318
|
|
|
(37)
|
|
Deferred income
taxes
|
(14)
|
|
|
81
|
|
Other, net
|
(20)
|
|
|
98
|
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
Accounts
receivable
|
136
|
|
|
155
|
|
Prepaid expenses and
other assets
|
(104)
|
|
|
(300)
|
|
Accounts payable,
accrued liabilities and other
|
(155)
|
|
|
(199)
|
|
Net cash flows from
operating activities
|
3,220
|
|
|
2,686
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Purchases of property,
plant and equipment
|
(1,461)
|
|
|
(1,665)
|
|
Change in accrued
expenses related to capital expenditures
|
(388)
|
|
|
(376)
|
|
Real estate
investments through variable interest entities
|
(38)
|
|
|
(39)
|
|
Other, net
|
37
|
|
|
—
|
|
Net cash flows from
investing activities
|
(1,850)
|
|
|
(2,080)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Borrowings of
long-term debt
|
4,339
|
|
|
6,884
|
|
Repayments of
long-term debt
|
(3,589)
|
|
|
(5,572)
|
|
Payments for debt
issuance costs
|
(41)
|
|
|
(25)
|
|
Issuance of
equity
|
23
|
|
|
—
|
|
Purchase of treasury
stock
|
(2,352)
|
|
|
(940)
|
|
Proceeds from exercise
of stock options
|
93
|
|
|
44
|
|
Purchase of
noncontrolling interest
|
(393)
|
|
|
(93)
|
|
Distributions to
noncontrolling interest
|
(39)
|
|
|
(39)
|
|
Other, net
|
(24)
|
|
|
(4)
|
|
Net cash flows from
financing activities
|
(1,983)
|
|
|
255
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(613)
|
|
|
861
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, beginning of period
|
3,549
|
|
|
765
|
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, end of period
|
$
|
2,936
|
|
|
$
|
1,626
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
1,050
|
|
|
$
|
966
|
|
CASH PAID FOR
TAXES
|
$
|
19
|
|
|
$
|
4
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY
OF OPERATING STATISTICS
(in thousands,
except per customer and penetration data)
|
|
|
Approximate as
of
|
|
March 31, 2020
(a)
|
|
December 31,
2019
(a)
|
|
March 31, 2019
(a)
|
Footprint
(b)
|
|
|
|
|
|
Estimated
Passings
|
52,418
|
|
|
52,154
|
|
|
51,384
|
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings
|
56.7
|
%
|
|
56.1
|
%
|
|
55.4
|
%
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
|
27,745
|
|
|
27,277
|
|
|
26,591
|
|
Small and Medium
Business
|
1,976
|
|
|
1,958
|
|
|
1,863
|
|
Total Customer
Relationships
|
29,721
|
|
|
29,235
|
|
|
28,454
|
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Residential
|
468
|
|
|
240
|
|
|
321
|
|
Small and Medium
Business
|
18
|
|
|
28
|
|
|
30
|
|
Total Customer
Relationships
|
486
|
|
|
268
|
|
|
351
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Internet
|
25,471
|
|
|
24,908
|
|
|
24,023
|
|
Video
|
15,550
|
|
|
15,620
|
|
|
15,952
|
|
Voice
|
9,360
|
|
|
9,443
|
|
|
10,015
|
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Internet
|
563
|
|
|
313
|
|
|
398
|
|
Video
|
(70)
|
|
|
(105)
|
|
|
(152)
|
|
Voice
|
(83)
|
|
|
(152)
|
|
|
(120)
|
|
|
|
|
|
|
|
Single Play
(e)
|
12,099
|
|
|
11,741
|
|
|
11,189
|
|
Double Play
(e)
|
8,655
|
|
|
8,377
|
|
|
7,412
|
|
Triple Play
(e)
|
6,991
|
|
|
7,159
|
|
|
7,990
|
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
43.6
|
%
|
|
43.0
|
%
|
|
42.1
|
%
|
Double Play
Penetration (f)
|
31.2
|
%
|
|
30.7
|
%
|
|
27.9
|
%
|
Triple Play
Penetration (f)
|
25.2
|
%
|
|
26.2
|
%
|
|
30.0
|
%
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
44.0
|
%
|
|
42.7
|
%
|
|
40.0
|
%
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$
|
112.73
|
|
|
$
|
113.79
|
|
|
$
|
112.47
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Internet
|
1,775
|
|
|
1,756
|
|
|
1,664
|
|
Video
|
524
|
|
|
524
|
|
|
509
|
|
Voice
|
1,162
|
|
|
1,144
|
|
|
1,072
|
|
|
|
|
|
|
|
Quarterly Net
Additions (Losses)
|
|
|
|
|
|
Internet
|
19
|
|
|
26
|
|
|
30
|
|
Video
|
—
|
|
|
4
|
|
|
7
|
|
Voice
|
18
|
|
|
24
|
|
|
21
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$
|
168.83
|
|
|
$
|
169.06
|
|
|
$
|
170.64
|
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
Residential and Small
and Medium Business Mobile Lines
|
1,372
|
|
|
1,082
|
|
|
310
|
|
Net
Additions
|
290
|
|
|
288
|
|
|
176
|
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
Enterprise
PSUs
|
269
|
|
|
267
|
|
|
253
|
|
Net
Additions
|
2
|
|
|
3
|
|
|
5
|
|
|
|
(a)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at March 31, 2020, December 31,
2019 and March 31, 2019, customers included approximately 140,800,
154,200 and 171,100 customers, respectively, whose accounts were
over 60 days past due, approximately 12,500, 13,500 and 19,500
customers, respectively, whose accounts were over 90 days past due
and approximately 8,200, 10,000 and 20,800 customers, respectively,
whose accounts were over 120 days past due. As detailed on
page 6, our customer counts include those customers who connected
as part of our Remote Education Offer and those customers who we
have not disconnected in our normal timelines associated with our
Keep Americans Connected pledge.
|
|
|
(b)
|
Passings represent
our estimate of the number of units, such as single family homes,
apartment and condominium units and small and medium business and
enterprise sites passed by our cable distribution network in the
areas where we offer the service indicated. These estimates
are based upon the information available at this time and are
updated for all periods presented when new information becomes
available. Passings in prior periods have been updated to reflect
standardization of definitions and presentation among legacy
companies.
|
|
|
(c)
|
Penetration
represents residential and small and medium business customers as a
percentage of estimated passings. Penetration excludes
mobile-only customers.
|
|
|
(d)
|
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.
|
|
|
(e)
|
Single play, double
play and triple play customers represent customers that subscribe
to one, two or three of our cable service offerings, respectively,
excluding mobile.
|
|
|
(f)
|
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.
|
|
|
(g)
|
Monthly residential
revenue per residential customer is calculated as total residential
Internet, video and voice quarterly revenue divided by three
divided by average residential customer relationships during the
respective quarter. Monthly residential revenue per
residential customers excludes mobile revenue and
customers.
|
|
|
(h)
|
Monthly small and
medium business revenue per small and medium business customer is
calculated as total small and medium business quarterly revenue
divided by three divided by average small and medium business
customer relationships during the respective quarter. Monthly
small and medium business revenue per small and medium customer
excludes mobile revenue and customers.
|
|
|
(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 ENDING
CUSTOMERS AND NET ADDITIONS ON COVID-19 OFFERS
AS OF AND FOR THE
QUARTER ENDED MARCH 31, 2020
(in
thousands)
|
|
|
Remote
Education
Offer (a)
|
|
Keep
Americans
Connected (b)
|
|
Small and
Medium
Business
Seasonal Plan (c)
|
|
Total
|
Residential
|
|
|
|
|
|
|
|
Ending
Customers
|
|
|
|
|
|
|
|
Customer
Relationships
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Video PSUs
|
46
|
|
(d)
|
1
|
|
|
n/a
|
|
|
47
|
|
Voice PSUs
|
34
|
|
(d)
|
—
|
|
|
n/a
|
|
|
34
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
n/a
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions
|
|
|
|
|
|
|
|
Customer
Relationships
|
113
|
|
|
1
|
|
|
n/a
|
|
|
114
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
n/a
|
|
|
120
|
|
Video PSUs
|
41
|
|
(d)
|
1
|
|
|
n/a
|
|
|
42
|
|
Voice PSUs
|
33
|
|
(d)
|
—
|
|
|
n/a
|
|
|
33
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
n/a
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
|
|
Ending
Customers
|
|
|
|
|
|
|
|
Customer
Relationships
|
n/a
|
|
|
—
|
|
|
5
|
|
|
5
|
|
Internet
PSUs
|
n/a
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Video PSUs
|
n/a
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Voice PSUs
|
n/a
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Mobile Lines
|
n/a
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions
|
|
|
|
|
|
|
|
Customer
Relationships
|
n/a
|
|
|
—
|
|
|
5
|
|
|
5
|
|
Internet
PSUs
|
n/a
|
|
|
—
|
|
|
4
|
|
|
4
|
|
Video PSUs
|
n/a
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Voice PSUs
|
n/a
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Mobile Lines
|
n/a
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Residential and
Small and Medium Business
|
|
|
|
|
|
|
|
Ending
Customers
|
|
|
|
|
|
|
|
Customer
Relationships
|
119
|
|
|
1
|
|
|
5
|
|
|
125
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
4
|
|
|
124
|
|
Video PSUs
|
46
|
|
(d)
|
1
|
|
|
2
|
|
|
49
|
|
Voice PSUs
|
34
|
|
(d)
|
—
|
|
|
3
|
|
|
37
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
—
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions
|
|
|
|
|
|
|
|
Customer
Relationships
|
113
|
|
|
1
|
|
|
5
|
|
|
119
|
|
Internet
PSUs
|
119
|
|
|
1
|
|
|
4
|
|
|
124
|
|
Video PSUs
|
41
|
|
(d)
|
1
|
|
|
2
|
|
|
44
|
|
Voice PSUs
|
33
|
|
(d)
|
—
|
|
|
3
|
|
|
36
|
|
Mobile Lines
|
3
|
|
(d)
|
—
|
|
|
—
|
|
|
3
|
|
|
|
(a)
|
The Remote Education
Offer ("REO") represents residential customers participating in
Charter's free 60-day Internet offer available to households with
K-12 and/or college students or educators who are not currently
Spectrum Internet customers. These residential customers are
generally eligible to purchase additional products and services
(i.e., video, voice and mobile) at current promotional
rates.
|
|
|
(b)
|
As part of our pledge
to the FCC, Keep Americans Connected customers represents customers
who would have been disconnected by quarter end as a result of
non-payment under our normal policies, but were not disconnected
and collection efforts paused due to COVID-19 related payment
challenges. As of quarter end, approximately 140,000
residential customers had requested protection from disconnection
under the pledge of which 1,000 would have been disconnected for
non-payment under our normal policies. At the end of April,
36,000 of those 140,000 customers' outstanding balance is now fully
current, and in total nearly 50% have made partial or full payments
since entering disconnection protection. However, at the end
of April, 67,000 of those 140,000 customers now have past due
balances beyond the point of normal disconnection.
|
|
|
(c)
|
Small and Medium
Business Seasonal Plan represents small and medium business
customers who have requested a reduced level of service and now pay
a reduced price for their service due to temporary business closure
or because these customers have reduced their service offering to
their own customers.
|
|
|
(d)
|
Customers that
connected as part of the REO who have subscribed to products in
addition to Spectrum Internet (i.e., video, voice, mobile) during
the 60-day free Internet offer. Billings are not deferred for
these additional services. Approximately 5,000 and 1,000 of
the REO customers were current video and voice customers,
respectively.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Net income
attributable to Charter shareholders
|
$
|
396
|
|
|
$
|
253
|
|
Plus: Net income
attributable to noncontrolling interest
|
71
|
|
|
64
|
|
Interest expense,
net
|
980
|
|
|
925
|
|
Income tax
expense
|
29
|
|
|
119
|
|
Depreciation and
amortization
|
2,497
|
|
|
2,550
|
|
Stock compensation
expense
|
90
|
|
|
85
|
|
Loss on extinguishment
of debt
|
27
|
|
|
—
|
|
(Gain) loss on
financial instruments, net
|
318
|
|
|
(37)
|
|
Other pension
benefits, net
|
(10)
|
|
|
(9)
|
|
Other, net
|
(2)
|
|
|
105
|
|
Adjusted EBITDA
(a)
|
4,396
|
|
|
4,055
|
|
Less: Mobile
revenue
|
(258)
|
|
|
(140)
|
|
Plus: Mobile
costs and expenses
|
374
|
|
|
260
|
|
Cable Adjusted
EBITDA
|
$
|
4,512
|
|
|
$
|
4,175
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,220
|
|
|
$
|
2,686
|
|
Less: Purchases
of property, plant and equipment
|
(1,461)
|
|
|
(1,665)
|
|
Change in accrued
expenses related to capital expenditures
|
(388)
|
|
|
(376)
|
|
Free cash
flow
|
1,371
|
|
|
645
|
|
Plus: Mobile net
cash outflows from operating activities
|
173
|
|
|
203
|
|
Purchases of mobile property, plant and equipment
|
87
|
|
|
88
|
|
Cable free cash
flow
|
$
|
1,631
|
|
|
$
|
936
|
|
|
|
(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
March 31,
|
|
2020
|
|
2019
|
Customer premise
equipment (a)
|
$
|
463
|
|
|
$
|
565
|
|
Scalable
infrastructure (b)
|
170
|
|
|
297
|
|
Line extensions
(c)
|
343
|
|
|
321
|
|
Upgrade/rebuild
(d)
|
129
|
|
|
131
|
|
Support capital
(e)
|
356
|
|
|
351
|
|
Total
capital expenditures
|
1,461
|
|
|
1,665
|
|
Less: Mobile
capital expenditures
|
(87)
|
|
|
(88)
|
|
Cable capital
expenditures
|
$
|
1,374
|
|
|
$
|
1,577
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
Commercial
services
|
$
|
261
|
|
|
$
|
305
|
|
|
|
(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.