STAMFORD, Conn., April 30, 2021 /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, 2021.
Key highlights:
- First quarter total residential and small and medium business
("SMB") customer relationships increased by 302,000. As of
March 31, 2021, Charter served a total of 31.4 million
residential and SMB customers, with 1.7 million net new customer
relationships added over the last twelve months.
- First quarter total residential and SMB Internet customers
increased by 355,000. As of March 31, 2021, Charter served a
total of 29.2 million residential and SMB Internet customers, with
2.0 million total Internet customers added over the last twelve
months.
- First quarter total residential and SMB mobile lines increased
by 300,000. As of March 31, 2021, Charter served a total of
2.7 million mobile lines, with 1.3 million mobile lines added over
the last twelve months.
- First quarter revenue of $12.5
billion grew by 6.7% year-over-year, driven by residential
revenue growth of 5.8% and mobile revenue growth of 90.7%.
- First quarter Adjusted EBITDA1 of $4.9 billion grew by 12.5% year-over-year.
- Net income attributable to Charter shareholders totaled
$807 million in the first
quarter.
- First quarter capital expenditures totaled $1.8 billion and included $112 million of mobile-related capital
expenditures.
- First quarter free cash flow1 of $1.9 billion grew by 35.3%
year-over-year.
- During the first quarter, Charter purchased approximately 6.3
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $4.0 billion.
"We continue to execute well in a market environment that has
not yet returned to normal. We added 355,000 Internet customers in
the first quarter, and 2 million over the last year, for
year-over-year growth of 7.3%," said Tom
Rutledge, Chairman and CEO of Charter. "Our value-driven
operating strategy of providing multiple high-quality products at
lower prices than sold individually continues to drive our
growth."
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,
2021 (a)
|
|
March 31,
2020 (a)
|
|
March 31, 2019
(a)
|
Footprint
(b)
|
|
|
|
|
|
|
Estimated
Passings
|
|
53,592
|
|
|
52,418
|
|
|
51,384
|
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
Residential
|
|
29,361
|
|
|
27,745
|
|
|
26,591
|
|
SMB
|
|
2,071
|
|
|
1,976
|
|
|
1,863
|
|
Total Customer
Relationships
|
|
31,432
|
|
|
29,721
|
|
|
28,454
|
|
|
|
|
|
|
|
|
Residential
|
|
282
|
|
|
468
|
|
|
321
|
|
SMB
|
|
20
|
|
|
18
|
|
|
30
|
|
Total Customer
Relationships Quarterly Net Additions
|
|
302
|
|
|
486
|
|
|
351
|
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.7
|
%
|
|
56.7
|
%
|
|
55.4
|
%
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
|
112.18
|
|
|
$
|
112.73
|
|
|
$
|
112.47
|
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
|
163.79
|
|
|
$
|
168.83
|
|
|
$
|
170.64
|
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
45.2
|
%
|
|
43.6
|
%
|
|
42.1
|
%
|
Double Play
Penetration (g)
|
|
32.6
|
%
|
|
31.2
|
%
|
|
27.9
|
%
|
Triple Play
Penetration (g)
|
|
22.2
|
%
|
|
25.2
|
%
|
|
30.0
|
%
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
47.3
|
%
|
|
44.0
|
%
|
|
40.0
|
%
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
Residential
|
|
27,357
|
|
|
25,471
|
|
|
24,023
|
|
SMB
|
|
1,877
|
|
|
1,775
|
|
|
1,664
|
|
Total Internet
Customers
|
|
29,234
|
|
|
27,246
|
|
|
25,687
|
|
|
|
|
|
|
|
|
Residential
|
|
334
|
|
|
563
|
|
|
398
|
|
SMB
|
|
21
|
|
|
19
|
|
|
30
|
|
Total Internet
Quarterly Net Additions
|
|
355
|
|
|
582
|
|
|
428
|
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
Residential
|
|
15,483
|
|
|
15,550
|
|
|
15,952
|
|
SMB
|
|
579
|
|
|
524
|
|
|
509
|
|
Total Video
Customers
|
|
16,062
|
|
|
16,074
|
|
|
16,461
|
|
|
|
|
|
|
|
|
Residential
|
|
(156)
|
|
|
(70)
|
|
|
(152)
|
|
SMB
|
|
18
|
|
|
—
|
|
|
7
|
|
Total Video Quarterly
Net Additions
|
|
(138)
|
|
|
(70)
|
|
|
(145)
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
Residential
|
|
9,113
|
|
|
9,360
|
|
|
10,015
|
|
SMB
|
|
1,238
|
|
|
1,162
|
|
|
1,072
|
|
Total Voice
Customers
|
|
10,351
|
|
|
10,522
|
|
|
11,087
|
|
|
|
|
|
|
|
|
Residential
|
|
(102)
|
|
|
(83)
|
|
|
(120)
|
|
SMB
|
|
14
|
|
|
18
|
|
|
21
|
|
Total Voice Quarterly
Net Additions
|
|
(88)
|
|
|
(65)
|
|
|
(99)
|
|
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
|
Residential
|
|
2,605
|
|
|
1,359
|
|
|
310
|
|
SMB
|
|
70
|
|
|
13
|
|
|
—
|
|
Total Mobile
Lines
|
|
2,675
|
|
|
1,372
|
|
|
310
|
|
|
|
|
|
|
|
|
Residential
|
|
285
|
|
|
281
|
|
|
176
|
|
SMB
|
|
15
|
|
|
9
|
|
|
—
|
|
Total Mobile Lines
Quarterly Net Additions
|
|
300
|
|
|
290
|
|
|
176
|
|
|
|
|
|
|
|
|
Enterprise
(h)
|
|
|
|
|
|
|
Enterprise Primary
Service Units ("PSUs")
|
|
276
|
|
|
269
|
|
|
253
|
|
Enterprise Quarterly
Net Additions
|
|
2
|
|
|
2
|
|
|
5
|
|
|
Footnotes - In thousands, except
per customer and penetration data. See footnotes to unaudited
summary of operating statistics on page 5 of the addendum of this
news release. The footnotes contain important disclosures regarding
the definitions used for these operating statistics. All
percentages are calculated using whole numbers. Minor differences
may exist due to rounding.
|
During the first quarter of 2021, Charter's residential customer
relationships grew by 282,000, compared to growth of 468,000 in the
first quarter of 2020 and 321,000 in the first quarter of 2019. As
of March 31, 2021, Charter had 29.4 million residential
customer relationships, with year-over-year growth of
1.6 million, or 5.8%.
During the first quarter of 2021, Charter added 334,000
residential Internet customers, compared to 563,000 during the
first quarter of 2020 and 398,000 during the first quarter of 2019.
The lower net additions relative to 2020 and 2019 is a function of
a lower market churn environment, resulting in fewer selling
opportunities in the first quarter of 2021. During the first
quarter, Charter doubled its starting download speed to 200 Mbps in
17 additional markets at no extra cost to customers. Currently, 200
Mbps is the minimum speed offered to new Spectrum
Internet® customers in nearly 85% of Charter's
footprint, with 100 Mbps the minimum speed offered in the remainder
of its footprint. As of March 31, 2021, over 70% of customers
subscribed to Internet tiers that provided 200 Mbps or more of
speed. Charter also offers Spectrum Internet Gig across its
entire footprint. Additionally, Charter's Advanced In-Home WiFi, a
managed WiFi service that provides customers an optimized home
network while providing greater control of their connected devices,
has now been launched across more than 90% of Charter's footprint
for new Internet connects.
Residential video customers decreased by 156,000 in the first
quarter of 2021, compared to decreases of 70,000 in the first
quarter of 2020 and 152,000 in the first quarter of 2019. As of
March 31, 2021, Charter had 15.5 million residential
video customers.
During the first quarter of 2021, residential wireline voice
customers declined by 102,000, compared to declines of 83,000 in
the first quarter of 2020 and 120,000 in the first quarter of 2019.
As of March 31, 2021, Charter had 9.1 million residential
wireline voice customers.
First quarter 2021 residential revenue per residential customer
(excluding mobile) totaled $112.18,
and declined by 0.5% compared to the prior year period, given a
higher percentage of non-video customers, a higher mix of lower
priced video packages within Charter's video customer base, lower
pay-per-view and video on demand revenue and lower installation
revenue, partly offset by promotional rate step-ups and rate
adjustments.
SMB customer relationships grew by 20,000 in the first quarter
of 2021, while first quarter 2020 and 2019 SMB customer
relationships grew by 18,000 and 30,000, respectively. During the
first quarter of 2021, enterprise PSUs grew by 2,000, compared to
growth of 2,000 in the first quarter of 2020 and 5,000 in the first
quarter of 2019.
During the first quarter of 2021, Charter added 300,000 mobile
lines, compared to growth of 290,000 during the first quarter of
2020 and 176,000 during the first quarter of 2019. Spectrum
MobileTM is available to all new and
existing Spectrum Internet customers and runs on America's
most awarded LTE network combined with Spectrum WiFi.
Spectrum Mobile customers can choose one of two simple ways
to pay for data, "Unlimited" or "By the Gig." All plans include 4G
and 5G access, with no added taxes, fees or contracts.
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,
|
|
2021
|
|
2020
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
|
5,086
|
|
|
$
|
4,407
|
|
|
15.4
|
%
|
Video
|
4,344
|
|
|
4,422
|
|
|
(1.8)
|
%
|
Voice
|
399
|
|
|
457
|
|
|
(12.6)
|
%
|
Residential
revenue
|
9,829
|
|
|
9,286
|
|
|
5.8
|
%
|
Small and medium
business
|
1,012
|
|
|
996
|
|
|
1.6
|
%
|
Enterprise
|
638
|
|
|
622
|
|
|
2.5
|
%
|
Commercial
revenue
|
1,650
|
|
|
1,618
|
|
|
2.0
|
%
|
Advertising
sales
|
344
|
|
|
365
|
|
|
(5.8)
|
%
|
Mobile
|
492
|
|
|
258
|
|
|
90.7
|
%
|
Other
|
207
|
|
|
211
|
|
|
(2.0)
|
%
|
Total
Revenue
|
12,522
|
|
|
11,738
|
|
|
6.7
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Total operating costs
and expenses
|
7,577
|
|
|
7,342
|
|
|
3.2
|
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,945
|
|
|
$
|
4,396
|
|
|
12.5
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
39.5
|
%
|
|
37.4
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
1,821
|
|
|
$
|
1,461
|
|
|
|
% Total
Revenue
|
14.5
|
%
|
|
12.4
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
807
|
|
|
$
|
396
|
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
|
4.22
|
|
|
$
|
1.91
|
|
|
|
Diluted
|
$
|
4.11
|
|
|
$
|
1.86
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,751
|
|
|
$
|
3,220
|
|
|
|
Free cash
flow
|
$
|
1,855
|
|
|
$
|
1,371
|
|
|
|
Revenues
First quarter revenue increased by 6.7% year-over-year to
$12.5 billion, driven primarily by
growth in Internet and mobile revenues. Excluding advertising
revenue, which benefited from political spend in the first quarter
of 2020, revenue grew by 7.1% year-over-year.
Internet revenue grew by 15.4% year-over-year to $5.1 billion, driven by growth in Internet
customers during the last year, promotional rate step-ups, rate
adjustments and higher bundled revenue allocation.
Video revenue totaled $4.3 billion
in the first quarter, a decrease of 1.8% compared to the prior year
period, driven by a higher mix of lower priced video packages
within Charter's video customer base, lower bundled revenue
allocation, lower pay-per-view and video on demand revenue and
lower installation revenue, partly offset by promotional rate
step-ups and rate adjustments.
Voice revenue totaled $399 million
in the first quarter, a decrease of 12.6% compared to the first
quarter of 2020. Factors impacting the year-over-year change in
voice revenue included value-based pricing, a decline in wireline
voice customers over the last twelve months and changes in bundled
revenue allocation.
Residential revenue totaled $9.8
billion in the first quarter, an increase of 5.8%
year-over-year.
Commercial revenue increased by 2.0% year-over-year to
$1.7 billion, driven by enterprise
and SMB revenue growth of 2.5% and 1.6% year-over-year,
respectively. Enterprise revenue growth was impacted by lower cell
tower backhaul revenue. Enterprise retail revenue excluding
wholesale revenue increased by 7.2% year-over-year, reflecting PSU
growth. SMB revenue growth was partly reduced by some continuing
COVID-19 related seasonal plans.
First quarter advertising sales revenue of $344 million declined by 5.8% compared to the
year-ago quarter, driven by lower political revenue, partly offset
by higher advanced advertising revenue. Excluding political revenue
in both periods, advertising sales revenue increased by 5.3%
year-over-year.
First quarter mobile revenue totaled $492
million, an increase of 90.7% year-over-year.
Other revenue totaled $207 million
in the first quarter, a decrease of 2.0% year-over-year, driven by
lower processing fees, partly offset by higher regional sports
network revenue.
Operating Costs and Expenses
First quarter total operating costs and expenses increased by
$235 million, or 3.2%
year-over-year.
First quarter programming costs increased by $96 million, or 3.3% as compared to the first
quarter of 2020, reflecting contractual programming increases and
renewals, partly offset by a higher mix of lower cost packages
within Charter's video customer base and lower pay-per-view
expenses.
Regulatory, connectivity and produced content expenses increased
by $49 million, or 8.9%
year-over-year, primarily driven by higher sports rights costs as a
result of more games played in the first quarter of 2021 compared
to 2020.
Costs to service customers decreased by $44 million, or 2.4% year-over-year, despite
year-over-year residential and SMB customer growth of 5.8%. The
year-over-year decrease in costs to service customers was primarily
driven by lower bad debt as a result of stimulus packages and lower
market churn, partly offset by previously announced wage increases
for hourly field operations and call center employees as Charter
meets its commitment to a minimum $20
per hour wage in 2022.
Marketing expenses decreased by $15
million, or 2.0% year-over-year.
First quarter mobile costs totaled $572
million, an increase of 52.8% year-over-year, and were
comprised of device costs, customer acquisition costs, and service
and operating costs.
Other expenses decreased by $49
million, or 5.5% as compared to the first quarter of 2020,
primarily driven by a non-recurring adjustment to bonuses related
to COVID-19.
Adjusted EBITDA
First quarter Adjusted EBITDA of $4.9
billion grew by 12.5% year-over-year, reflecting growth
in revenue and operating expenses of 6.7% and 3.2%,
respectively.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$807 million in the first quarter of
2021, compared to $396
million in the first quarter of 2020. The year-over-year
increase in net income attributable to Charter shareholders was
primarily driven by higher Adjusted EBITDA, with a benefit from
non-cash changes in the value of financial instruments as reflected
in other income (expenses), net, largely offset by a tentative
litigation settlement charge in other operating expenses,
net.
Net income per basic common share attributable to Charter
shareholders totaled $4.22 in the
first quarter of 2021 compared to $1.91 during the same period last year. The
increase was primarily the result of the factors described above in
addition to a 7.9% decrease in basic weighted average common shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $1.8 billion in the first quarter of 2021,
compared to $1.5 billion during the
first quarter of 2020, primarily driven by increases in scalable
infrastructure and line extensions. The year-over-year increase in
scalable infrastructure spending was primarily related to
augmentation of network capacity for customer growth and usage,
with incremental spending to reclaim network headroom maintained
prior to COVID-19. The increase in line extensions was driven by
continued network expansion, including to rural areas. First
quarter capital expenditures included $112
million of mobile costs, most of which related to retail
stores and IT systems, and are included in support capital.
Charter currently expects 2021 cable capital expenditures,
excluding Rural Digital Opportunity Fund investments which will
begin later this year, to be relatively consistent as a percentage
of cable revenue versus 2020.
Cash Flow and Free Cash Flow
During the first quarter of 2021, net cash flows from operating
activities totaled $3.8 billion,
compared to $3.2 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.
Free cash flow in the first quarter of 2021 totaled $1.9 billion, compared to $1.4 billion during the same period last year.
The year-over-year increase in free cash flow was driven by an
increase in net cash flows from operating activities.
Liquidity & Financing
As of March 31, 2021, total principal amount of debt was
$84.3 billion and Charter's credit
facilities provided approximately $4.7
billion of additional liquidity in excess of Charter's
$772 million cash position.
In March 2021, Charter
Communications Operating, LLC and Charter Communications Operating
Capital Corp. jointly issued $1.5 billion aggregate principal amount of
3.500% senior secured notes due June
2041 at a price of 99.544% of the aggregate principal
amount, $1.0 billion aggregate
principal amount of 3.900% senior secured notes due June 2052 at a price of 99.951% of the aggregate
principal amount and an additional $500 million aggregate
principal amount of 3.850% senior secured notes due April 2061 at a price of 94.668% of the aggregate
principal amount. The net proceeds were used to pay related fees
and expenses and for general corporate purposes, including funding
buybacks of Charter Class A common stock and Charter Holdings
common units as well as repaying certain indebtedness, including
$750 million aggregate principal
amount of CCO Holdings 5.750% notes due February 2026.
In April 2021, CCO Holdings, LLC
and CCO Holdings Capital Corp. jointly issued $1.0 billion of 4.500% senior unsecured notes due
2033 at par. The net proceeds will be used for general corporate
purposes, including to fund potential 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, 2021, Charter
purchased approximately 6.3 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$4.0 billion.
Conference Call
Charter will host a conference call on Friday, April 30,
2021 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 "Events & Webcasts" 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
3359178.
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 26,
2021. The conference ID code for the replay is 3359178.
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, 2021, 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 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 $277
million and $311 million for
the three months ended March 31, 2021 and 2020,
respectively.
About Charter
Charter Communications, Inc. (NASDAQ:CHTR) is a leading
broadband connectivity company and cable operator serving more than
31 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:
- 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 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 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 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;
- 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,
|
|
2021
|
|
2020
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Internet
|
$
|
5,086
|
|
|
$
|
4,407
|
|
|
15.4
|
%
|
Video
|
4,344
|
|
|
4,422
|
|
|
(1.8)
|
%
|
Voice
|
399
|
|
|
457
|
|
|
(12.6)
|
%
|
Residential
revenue
|
9,829
|
|
|
9,286
|
|
|
5.8
|
%
|
Small and medium
business
|
1,012
|
|
|
996
|
|
|
1.6
|
%
|
Enterprise
|
638
|
|
|
622
|
|
|
2.5
|
%
|
Commercial
revenue
|
1,650
|
|
|
1,618
|
|
|
2.0
|
%
|
Advertising
sales
|
344
|
|
|
365
|
|
|
(5.8)
|
%
|
Mobile
|
492
|
|
|
258
|
|
|
90.7
|
%
|
Other
|
207
|
|
|
211
|
|
|
(2.0)
|
%
|
Total
Revenue
|
12,522
|
|
|
11,738
|
|
|
6.7
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Programming
|
2,988
|
|
|
2,892
|
|
|
3.3
|
%
|
Regulatory,
connectivity and produced content
|
600
|
|
|
551
|
|
|
8.9
|
%
|
Costs to service
customers
|
1,804
|
|
|
1,848
|
|
|
(2.4)
|
%
|
Marketing
|
751
|
|
|
766
|
|
|
(2.0)
|
%
|
Mobile
|
572
|
|
|
374
|
|
|
52.8
|
%
|
Other
expense
|
862
|
|
|
911
|
|
|
(5.5)
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
7,577
|
|
|
7,342
|
|
|
3.2
|
%
|
Adjusted
EBITDA
|
4,945
|
|
|
4,396
|
|
|
12.5
|
%
|
Adjusted EBITDA
margin
|
39.5
|
%
|
|
37.4
|
%
|
|
|
Depreciation and
amortization
|
2,441
|
|
|
2,497
|
|
|
|
Stock compensation
expense
|
134
|
|
|
90
|
|
|
|
Other operating
expenses, net
|
302
|
|
|
7
|
|
|
|
Income from
operations
|
2,068
|
|
|
1,802
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
Interest expense,
net
|
(983)
|
|
|
(980)
|
|
|
|
Other income
(expenses), net
|
52
|
|
|
(326)
|
|
|
|
|
(931)
|
|
|
(1,306)
|
|
|
|
Income before income
taxes
|
1,137
|
|
|
496
|
|
|
|
Income tax
expense
|
(216)
|
|
|
(29)
|
|
|
|
Consolidated net
income
|
921
|
|
|
467
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(114)
|
|
|
(71)
|
|
|
|
Net income
attributable to Charter shareholders
|
$
|
807
|
|
|
$
|
396
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
|
|
|
|
|
|
Basic
|
$
|
4.22
|
|
|
$
|
1.91
|
|
|
|
Diluted
|
$
|
4.11
|
|
|
$
|
1.86
|
|
|
|
Weighted average
common shares outstanding, basic
|
191,404,527
|
|
|
207,831,305
|
|
|
|
Weighted average
common shares outstanding, diluted
|
205,872,536
|
|
|
212,810,613
|
|
|
|
|
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,
|
|
2021
|
|
2020
|
ASSETS
|
(unaudited)
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
772
|
|
|
$
|
1,001
|
|
Accounts receivable,
net
|
2,395
|
|
|
2,539
|
|
Prepaid expenses and
other current assets
|
496
|
|
|
369
|
|
Total current
assets
|
3,663
|
|
|
3,909
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,184
|
|
|
34,357
|
|
Customer
relationships, net
|
5,185
|
|
|
5,615
|
|
Franchises
|
67,322
|
|
|
67,322
|
|
Goodwill
|
29,554
|
|
|
29,554
|
|
Total investment in
cable properties, net
|
136,245
|
|
|
136,848
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
3,531
|
|
|
3,449
|
|
|
|
|
|
Total
assets
|
$
|
143,439
|
|
|
$
|
144,206
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,911
|
|
|
$
|
8,867
|
|
Current portion of
long-term debt
|
1,005
|
|
|
1,008
|
|
Total current
liabilities
|
9,916
|
|
|
9,875
|
|
|
|
|
|
LONG-TERM
DEBT
|
83,882
|
|
|
81,744
|
|
DEFERRED INCOME
TAXES
|
18,227
|
|
|
18,108
|
|
OTHER LONG-TERM
LIABILITIES
|
4,233
|
|
|
4,198
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
20,997
|
|
|
23,805
|
|
Noncontrolling
interests
|
6,184
|
|
|
6,476
|
|
Total shareholders'
equity
|
27,181
|
|
|
30,281
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
143,439
|
|
|
$
|
144,206
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
|
(dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Consolidated net
income
|
$
|
921
|
|
|
$
|
467
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,441
|
|
|
2,497
|
|
Stock compensation
expense
|
134
|
|
|
90
|
|
Noncash interest
income, net
|
(7)
|
|
|
(12)
|
|
Deferred income
taxes
|
156
|
|
|
(14)
|
|
Other, net
|
(5)
|
|
|
315
|
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
Accounts
receivable
|
144
|
|
|
99
|
|
Prepaid expenses and
other assets
|
(182)
|
|
|
(67)
|
|
Accounts payable,
accrued liabilities and other
|
149
|
|
|
(155)
|
|
Net cash flows from
operating activities
|
3,751
|
|
|
3,220
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Purchases of property,
plant and equipment
|
(1,821)
|
|
|
(1,461)
|
|
Change in accrued
expenses related to capital expenditures
|
(75)
|
|
|
(388)
|
|
Real estate
investments through variable interest entities
|
(50)
|
|
|
(38)
|
|
Other, net
|
(10)
|
|
|
37
|
|
Net cash flows from
investing activities
|
(1,956)
|
|
|
(1,850)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Borrowings of
long-term debt
|
5,289
|
|
|
4,339
|
|
Repayments of
long-term debt
|
(3,164)
|
|
|
(3,589)
|
|
Payments for debt
issuance costs
|
(22)
|
|
|
(41)
|
|
Issuance of
equity
|
—
|
|
|
23
|
|
Purchase of treasury
stock
|
(3,652)
|
|
|
(2,352)
|
|
Proceeds from exercise
of stock options
|
9
|
|
|
93
|
|
Purchase of
noncontrolling interest
|
(507)
|
|
|
(393)
|
|
Distributions to
noncontrolling interest
|
(39)
|
|
|
(39)
|
|
Borrowings for real
estate investments through variable interest entities
|
50
|
|
|
—
|
|
Other, net
|
12
|
|
|
(24)
|
|
Net cash flows from
financing activities
|
(2,024)
|
|
|
(1,983)
|
|
|
|
|
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(229)
|
|
|
(613)
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
1,001
|
|
|
3,549
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
|
772
|
|
|
$
|
2,936
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
1,017
|
|
|
$
|
1,050
|
|
CASH PAID FOR
TAXES
|
$
|
20
|
|
|
$
|
19
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED SUMMARY
OF OPERATING STATISTICS
|
(in thousands,
except per customer and penetration data)
|
|
|
|
Approximate as
of
|
|
|
March 31, 2021
(a)
|
|
March 31, 2020
(a)
|
|
March 31, 2019
(a)
|
Footprint
(b)
|
|
|
|
|
|
|
Estimated
Passings
|
|
53,592
|
|
|
52,418
|
|
|
51,384
|
|
|
|
|
|
|
|
|
Customer
Relationships (c)
|
|
|
|
|
|
|
Residential
|
|
29,361
|
|
|
27,745
|
|
|
26,591
|
|
SMB
|
|
2,071
|
|
|
1,976
|
|
|
1,863
|
|
T otal Customer
Relationships
|
|
31,432
|
|
|
29,721
|
|
|
28,454
|
|
|
|
|
|
|
|
|
Residential
|
|
282
|
|
|
468
|
|
|
321
|
|
SMB
|
|
20
|
|
|
18
|
|
|
30
|
|
Total Customer
Relationships Quarterly Net Additions
|
|
302
|
|
|
486
|
|
|
351
|
|
|
|
|
|
|
|
|
Total Customer
Relationship Penetration of Estimated Passings (d)
|
|
58.7
|
%
|
|
56.7
|
%
|
|
55.4
|
%
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (e)
|
|
$
|
112.18
|
|
|
$
|
112.73
|
|
|
$
|
112.47
|
|
Monthly SMB Revenue
per SMB Customer (f)
|
|
$
|
163.79
|
|
|
$
|
168.83
|
|
|
$
|
170.64
|
|
|
|
|
|
|
|
|
Residential
Customer Relationships Penetration
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
|
45.2
|
%
|
|
43.6
|
%
|
|
42.1
|
%
|
Double Play
Penetration (g)
|
|
32.6
|
%
|
|
31.2
|
%
|
|
27.9
|
%
|
Triple Play
Penetration (g)
|
|
22.2
|
%
|
|
25.2
|
%
|
|
30.0
|
%
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
|
47.3
|
%
|
|
44.0
|
%
|
|
40.0
|
%
|
|
|
|
|
|
|
|
Internet
|
|
|
|
|
|
|
Residential
|
|
27,357
|
|
|
25,471
|
|
|
24,023
|
|
SMB
|
|
1,877
|
|
|
1,775
|
|
|
1,664
|
|
Total Internet
Customers
|
|
29,234
|
|
|
27,246
|
|
|
25,687
|
|
|
|
|
|
|
|
|
Residential
|
|
334
|
|
|
563
|
|
|
398
|
|
SMB
|
|
21
|
|
|
19
|
|
|
30
|
|
Total Internet
Quarterly Net Additions
|
|
355
|
|
|
582
|
|
|
428
|
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
Residential
|
|
15,483
|
|
|
15,550
|
|
|
15,952
|
|
SMB
|
|
579
|
|
|
524
|
|
|
509
|
|
Total Video
Customers
|
|
16,062
|
|
|
16,074
|
|
|
16,461
|
|
|
|
|
|
|
|
|
Residential
|
|
(156)
|
|
|
(70)
|
|
|
(152)
|
|
SMB
|
|
18
|
|
|
—
|
|
|
7
|
|
Total Video
Quarterly Net Additions
|
|
(138)
|
|
|
(70)
|
|
|
(145)
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
Residential
|
|
9,113
|
|
|
9,360
|
|
|
10,015
|
|
SMB
|
|
1,238
|
|
|
1,162
|
|
|
1,072
|
|
Total Voice
Customers
|
|
10,351
|
|
|
10,522
|
|
|
11,087
|
|
|
|
|
|
|
|
|
Residential
|
|
(102)
|
|
|
(83)
|
|
|
(120)
|
|
SMB
|
|
14
|
|
|
18
|
|
|
21
|
|
Total Voice
Quarterly Net Additions
|
|
(88)
|
|
|
(65)
|
|
|
(99)
|
|
|
|
|
|
|
|
|
Mobile
Lines
|
|
|
|
|
|
|
Residential
|
|
2,605
|
|
|
1,359
|
|
|
310
|
|
SMB
|
|
70
|
|
|
13
|
|
|
—
|
|
Total Mobile
Lines
|
|
2,675
|
|
|
1,372
|
|
|
310
|
|
|
|
|
|
|
|
|
Residential
|
|
285
|
|
|
281
|
|
|
176
|
|
SMB
|
|
15
|
|
|
9
|
|
|
—
|
|
Total Mobile
Lines Quarterly Net Additions
|
|
300
|
|
|
290
|
|
|
176
|
|
|
|
|
|
|
|
|
Enterprise
(h)
|
|
|
|
|
|
|
Enterprise Primary
Service Units ("PSUs")
|
|
276
|
|
|
269
|
|
|
253
|
|
Enterprise Quarterly
Net Additions
|
|
2
|
|
|
2
|
|
|
5
|
|
(a)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at March 31, 2021, March
31, 2020 and March 31, 2019, customers included approximately
125,100, 140,800 and 171,100 customers, respectively, whose
accounts were over 60 days past due, approximately 26,500, 12,500
and 19,500 customers, respectively, whose accounts were over 90
days past due and approximately 20,000, 8,200 and 20,800 customers,
respectively, whose accounts were over 120 days past due.
Included in the March 31, 2021 aging statistics are approximately
26,900 residential voice customers that would have been
disconnected under our normal collection policies, but were not due
to certain state mandates in place.
|
|
|
(b)
|
Passings represent
our estimate of the number of units, such as single family homes,
apartment and condominium units and SMB and enterprise sites passed
by our cable distribution network in the areas where we offer the
service indicated. These estimates are based upon the
information available at this time and are updated for all periods
presented when new information becomes available.
|
|
|
(c)
|
Customer
relationships include the number of customers that receive one or
more levels of service, encompassing Internet, video and voice
services, without regard to which service(s) such customers
receive. Customers who reside in residential multiple
dwelling units ("MDUs") and that are billed under bulk contracts
are counted based on the number of billed units within each bulk
MDU. Total customer relationships exclude enterprise and
mobile-only customer relationships.
|
|
|
(d)
|
Penetration
represents residential and SMB customers as a percentage of
estimated passings. Penetration excludes mobile-only
customers.
|
|
|
(e)
|
Monthly residential
revenue per residential customer is calculated as total residential
quarterly revenue divided by three divided by average residential
customer relationships during the respective quarter and excludes
mobile revenue and customers.
|
|
|
(f)
|
Monthly SMB revenue
per SMB customer is calculated as total SMB quarterly revenue
divided by three divided by average SMB customer relationships
during the respective quarter and excludes mobile revenue and
customers.
|
|
|
(g)
|
Single play, double
play and triple play penetration represents the number of
residential single play, double play and triple play cable
customers, respectively, as a percentage of residential customer
relationships, excluding mobile.
|
|
|
(h)
|
Enterprise PSUs
represents the aggregate number of fiber service offerings counting
each separate service offering at each customer location as an
individual PSU.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
|
(dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
Net income
attributable to Charter shareholders
|
$
|
807
|
|
|
$
|
396
|
|
Plus: Net income
attributable to noncontrolling interest
|
114
|
|
|
71
|
|
Interest expense,
net
|
983
|
|
|
980
|
|
Income tax
expense
|
216
|
|
|
29
|
|
Depreciation and
amortization
|
2,441
|
|
|
2,497
|
|
Stock compensation
expense
|
134
|
|
|
90
|
|
Other expenses,
net
|
250
|
|
|
333
|
|
Adjusted EBITDA
(a)
|
$
|
4,945
|
|
|
$
|
4,396
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
3,751
|
|
|
$
|
3,220
|
|
Less: Purchases
of property, plant and equipment
|
(1,821)
|
|
|
(1,461)
|
|
Change in accrued
expenses related to capital expenditures
|
(75)
|
|
|
(388)
|
|
Free cash
flow
|
$
|
1,855
|
|
|
$
|
1,371
|
|
|
|
(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,
|
|
2021
|
|
2020
|
Customer premise
equipment (a)
|
$
|
489
|
|
|
$
|
463
|
|
Scalable
infrastructure (b)
|
411
|
|
|
170
|
|
Line extensions
(c)
|
399
|
|
|
343
|
|
Upgrade/rebuild
(d)
|
145
|
|
|
129
|
|
Support capital
(e)
|
377
|
|
|
356
|
|
Total
capital expenditures
|
$
|
1,821
|
|
|
$
|
1,461
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
Commercial
services
|
$
|
333
|
|
|
$
|
261
|
|
Mobile
|
$
|
112
|
|
|
$
|
87
|
|
|
|
(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).
|
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SOURCE Charter Communications, Inc.