News Release
Charter Announces Fourth Quarter 2019 Results
STAMFORD, Conn., Jan. 31, 2020 /PRNewswire/ --
Key highlights:
- Fourth quarter total residential and SMB customer relationships increased by 268,000, compared to 248,000 during the fourth quarter of 2018. Fourth quarter total residential and SMB Internet customers increased by 339,000, compared to 329,000 during the fourth quarter of 2018.
- During the year ended
December 31, 2019 , total residential and SMB customer relationships grew by 1.1 million, or 4.0% to 29.2 million, and total residential and SMB Internet customers grew by 1.4 million, or 5.6% to 26.7 million. - Charter added 288,000 Spectrum MobileTM lines in the fourth quarter and as of
December 31, 2019 , Charter served a total of 1.1 million mobile lines, with 948,000 mobile lines added in 2019. - Fourth quarter revenue of
$11.8 billion grew by 4.7% year-over-year, driven by residential revenue growth of 5.7%, mobile revenue growth of$147 million and SMB revenue growth of 6.3%. - Fourth quarter Adjusted EBITDA1 of
$4.5 billion grew by 8.8% year-over-year, while fourth quarter cable Adjusted EBITDA1 of$4.7 billion grew by 8.9% year-over-year. - For the year ended
December 31, 2019 , revenue of$45.8 billion increased by 4.9% year-over-year. Full year 2019 Adjusted EBITDA totaled$16.9 billion , 5.0% higher than in 2018, while cable Adjusted EBITDA of$17.4 billion grew by 6.6% year-over-year. - Net income attributable to Charter shareholders totaled
$714 million in the fourth quarter, compared to$296 million during the same period last year. For the year endedDecember 31, 2019 , net income attributable to Charter shareholders totaled$1.7 billion , compared to$1.2 billion in 2018. - Fourth quarter capital expenditures totaled
$2.3 billion and included$151 million of mobile-related capital expenditures. For the year endedDecember 31, 2019 , capital expenditures totaled$7.2 billion , down from$9.1 billion in 2018, and included$432 million of mobile-related capital expenditures. - For the year 2019, consolidated free cash flow1 totaled
$4.6 billion , compared to$2.2 billion in 2018. Cable free cash flow1 totaled$5.8 billion for the full year 2019, versus$2.8 billion in 2018. - During the fourth quarter, Charter purchased approximately 5.6 million shares of Charter Class A common stock and
Charter Communications Holdings, LLC ("Charter Holdings ") common units for approximately$2.6 billion . For the year endedDecember 31, 2019 , Charter purchased 19.0 million shares of Charter Class A common stock andCharter Holdings common units for approximately$7.6 billion .
"Our operating strategy continues to deliver strong results and in 2019, we created over 1.1 million new customer relationships, substantially more than in 2018. And we added over 1.4 million new Internet customers, also more than in 2018," said
1. Adjusted EBITDA, cable Adjusted EBITDA, free cash flow and cable free cash flow are non-GAAP measures defined in the "Use of Adjusted EBITDA and Free Cash Flow Information" section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.
Key Operating Results
Approximate as of |
||||||||
December 31, |
December 31, |
Y/Y Change |
||||||
Footprint (b) |
||||||||
Estimated Passings |
52,154 |
51,185 |
1.9 |
% |
||||
Penetration Statistics (c) |
||||||||
Total Customer Relationship Penetration of Estimated Passings |
56.1 |
% |
54.9 |
% |
1.2 |
ppts |
||
Customer Relationships (d) |
||||||||
Residential |
27,277 |
26,270 |
3.8 |
% |
||||
Small and Medium Business |
1,958 |
1,833 |
6.8 |
% |
||||
Total Customer Relationships |
29,235 |
28,103 |
4.0 |
% |
||||
Quarterly Net Additions (Losses) |
||||||||
Residential |
240 |
207 |
16.2 |
% |
||||
Small and Medium Business |
28 |
41 |
(33.3) |
% |
||||
Total Customer Relationships |
268 |
248 |
8.1 |
% |
||||
Residential |
||||||||
Primary Service Units ("PSUs") |
||||||||
Video |
15,620 |
16,104 |
(3.0) |
% |
||||
Internet |
24,908 |
23,625 |
5.4 |
% |
||||
Voice |
9,443 |
10,135 |
(6.8) |
% |
||||
Quarterly Net Additions (Losses) |
||||||||
Video |
(105) |
(36) |
(184.9) |
% |
||||
Internet |
313 |
289 |
8.1 |
% |
||||
Voice |
(152) |
(83) |
(83.9) |
% |
||||
Single Play (e) |
11,741 |
10,928 |
7.4 |
% |
||||
Double Play (e) |
8,377 |
7,097 |
18.0 |
% |
||||
Triple Play (e) |
7,159 |
8,245 |
(13.2) |
% |
||||
Single Play Penetration (f) |
43.0 |
% |
41.6 |
% |
1.4 |
ppts |
||
Double Play Penetration (f) |
30.7 |
% |
27.0 |
% |
3.7 |
ppts |
||
Triple Play Penetration (f) |
26.2 |
% |
31.4 |
% |
(5.2) |
ppts |
||
% Residential Non-Video Customer Relationships |
42.7 |
% |
38.7 |
% |
4.0 |
ppts |
||
Monthly Residential Revenue per Residential Customer (g) |
$113.79 |
$111.78 |
1.8 |
% |
||||
Small and Medium Business |
||||||||
PSUs |
||||||||
Video |
524 |
502 |
4.4 |
% |
||||
Internet |
1,756 |
1,634 |
7.5 |
% |
||||
Voice |
1,144 |
1,051 |
8.8 |
% |
||||
Quarterly Net Additions (Losses) |
||||||||
Video |
4 |
14 |
(71.7) |
% |
||||
Internet |
26 |
40 |
(32.2) |
% |
||||
Voice |
24 |
27 |
(14.2) |
% |
||||
Monthly Small and Medium Business Revenue per Customer (h) |
$169.06 |
$170.62 |
(0.9) |
% |
||||
Mobile Lines |
||||||||
Residential and Small and Medium Business Mobile Lines |
1,082 |
134 |
713.3 |
% |
||||
Net Additions (Losses) |
288 |
113 |
156.0 |
% |
||||
Enterprise PSUs (i) |
||||||||
Enterprise PSUs |
267 |
248 |
7.6 |
% |
||||
Net Additions (Losses) |
3 |
5 |
(40.5) |
% |
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 fourth quarter of 2019, Charter's residential customer relationships grew by 240,000, while fourth quarter 2018 residential customer relationships grew by 207,000. As of December 31, 2019, Charter had 27.3 million residential customer relationships, with year-over-year growth of 1.0 million, or 3.8%.
Charter added 313,000 residential Internet customers in the fourth quarter of 2019, versus fourth quarter 2018 residential Internet customer net additions of 289,000. As of December 31, 2019, Charter had 24.9 million residential Internet customers, with 85% subscribing to tiers that provided 100 Mbps or more of speed. Over the course of 2019, Charter doubled minimum Internet speeds in a number of markets at no additional cost to new and existing Spectrum Internet® customers. 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.
Residential video customers decreased by 105,000 in the fourth quarter of 2019, while fourth quarter 2018 residential video customers decreased by 36,000. As of December 31, 2019, Charter had 15.6 million residential video customers.
During the fourth quarter of 2019, residential wireline voice customers declined by 152,000, while fourth quarter 2018 voice customers declined by 83,000. As of December 31, 2019, Charter had 9.4 million residential wireline voice customers.
Fourth quarter 2019 residential revenue per residential customer (excluding mobile) totaled
During the fourth quarter of 2019, Charter added 288,000 mobile lines, and as of December 31, 2019, Charter served a total of 1.1 million mobile lines. Spectrum Mobile is available to all new and existing Spectrum Internet customers and runs on America's most awarded LTE network combined with Spectrum WiFi. Spectrum Mobile customers can choose one of two simple ways to pay for data, "Unlimited" for
SMB customer relationships grew by 28,000 during the fourth quarter of 2019, compared to growth of 41,000 during the fourth quarter of 2018. As of December 31, 2019, Charter had 2.0 million SMB customer relationships, with year-over-year growth of 6.8%. Enterprise PSUs grew by 3,000 during the fourth quarter of 2019 compared to growth of 5,000 during the fourth quarter of 2018. As of December 31, 2019, Charter had 267,000 enterprise PSUs, with growth of 7.6% year-over-year.
Fourth 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 December 31, |
||||||||||
2019 |
2018 |
% Change |
||||||||
REVENUES: |
||||||||||
Video |
$ |
4,473 |
$ |
4,361 |
2.6 |
% |
||||
Internet |
4,345 |
3,895 |
11.5 |
% |
||||||
Voice |
450 |
515 |
(12.5) |
% |
||||||
Residential revenue |
9,268 |
8,771 |
5.7 |
% |
||||||
Small and medium business |
986 |
928 |
6.3 |
% |
||||||
Enterprise |
617 |
647 |
(4.5) |
% |
||||||
Commercial revenue |
1,603 |
1,575 |
1.8 |
% |
||||||
Advertising sales |
434 |
562 |
(22.7) |
% |
||||||
Mobile |
236 |
89 |
163.7 |
% |
||||||
Other |
220 |
234 |
(6.6) |
% |
||||||
Total Revenue |
11,761 |
11,231 |
4.7 |
% |
||||||
COSTS AND EXPENSES: |
||||||||||
Cable operating costs and expenses |
6,860 |
6,856 |
— |
% |
||||||
Mobile operating costs and expenses |
372 |
211 |
75.9 |
% |
||||||
Total operating costs and expenses |
7,232 |
7,067 |
2.3 |
% |
||||||
Adjusted EBITDA |
$ |
4,529 |
$ |
4,164 |
8.8 |
% |
||||
Adjusted EBITDA margin |
38.5 |
% |
37.1 |
% |
||||||
Cable Adjusted EBITDA |
$ |
4,665 |
$ |
4,286 |
8.9 |
% |
||||
Cable Adjusted EBITDA margin |
40.5 |
% |
38.5 |
% |
||||||
Capital Expenditures |
$ |
2,282 |
$ |
2,433 |
||||||
% Total Revenue |
19.4 |
% |
21.7 |
% |
||||||
Cable Capital Expenditures |
$ |
2,131 |
$ |
2,327 |
||||||
% Total Cable Revenue |
18.5 |
% |
20.9 |
% |
||||||
Net income attributable to Charter shareholders |
$ |
714 |
$ |
296 |
||||||
Earnings per common share attributable to Charter shareholders: |
||||||||||
Basic |
$ |
3.36 |
$ |
1.31 |
||||||
Diluted |
$ |
3.28 |
$ |
1.29 |
||||||
Net cash flows from operating activities |
$ |
3,358 |
$ |
3,168 |
||||||
Free cash flow |
$ |
1,580 |
$ |
885 |
||||||
Cable free cash flow |
$ |
1,897 |
$ |
1,189 |
Revenues
Fourth quarter revenue increased by 4.7% year-over-year to
Video revenue totaled
Internet revenue grew by 11.5%, compared to the year-ago quarter, to
Voice revenue totaled
Commercial revenue increased to
Fourth quarter advertising sales revenue of
Fourth quarter mobile revenue totaled
Other revenue totaled
Operating Costs and Expenses
Fourth quarter total operating costs and expenses increased by
Fourth quarter programming costs increased by
Regulatory, connectivity and produced content expenses increased by
Costs to service customers decreased by
Marketing expenses increased by
Other expenses decreased by
Fourth quarter mobile costs totaled
Adjusted EBITDA
Fourth quarter Adjusted EBITDA of
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
Net income per basic common share attributable to Charter shareholders totaled
Capital Expenditures
Property, plant and equipment expenditures totaled
Cash Flow and Free Cash Flow
During the fourth quarter of 2019, net cash flows from operating activities totaled
Consolidated free cash flow for the fourth quarter of 2019 totaled
Liquidity & Financing
As of December 31, 2019, total principal amount of debt was
In
In
In
Share Repurchases
During the three months ended December 31, 2019, Charter purchased approximately 5.6 million shares of Charter Class A common stock and
Year to Date Financial Results
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES |
||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA |
||||||||||
(dollars in millions, except per share data) |
||||||||||
Year Ended December 31, |
||||||||||
2019 |
2018 |
% Change |
||||||||
REVENUES: |
||||||||||
Video |
$ |
17,607 |
$ |
17,348 |
1.5 |
% |
||||
Internet |
16,667 |
15,181 |
9.8 |
% |
||||||
Voice |
1,920 |
2,114 |
(9.1) |
% |
||||||
Residential revenue |
36,194 |
34,643 |
4.5 |
% |
||||||
Small and medium business |
3,868 |
3,665 |
5.6 |
% |
||||||
Enterprise |
2,556 |
2,528 |
1.1 |
% |
||||||
Commercial revenue |
6,424 |
6,193 |
3.7 |
% |
||||||
Advertising sales |
1,568 |
1,785 |
(12.1) |
% |
||||||
Mobile |
726 |
106 |
NM |
|||||||
Other |
852 |
907 |
(6.2) |
% |
||||||
Total Revenue |
45,764 |
43,634 |
4.9 |
% |
||||||
COSTS AND EXPENSES: |
||||||||||
Cable operating costs and expenses |
27,663 |
27,229 |
1.6 |
% |
||||||
Mobile operating costs and expenses |
1,246 |
346 |
NM |
|||||||
Total operating costs and expenses |
28,909 |
27,575 |
4.8 |
% |
||||||
Adjusted EBITDA |
$ |
16,855 |
$ |
16,059 |
5.0 |
% |
||||
Adjusted EBITDA margin |
36.8 |
% |
36.8 |
% |
||||||
Cable Adjusted EBITDA |
$ |
17,375 |
$ |
16,299 |
6.6 |
% |
||||
Cable Adjusted EBITDA margin |
38.6 |
% |
37.4 |
% |
||||||
Capital Expenditures |
$ |
7,195 |
$ |
9,125 |
||||||
% Total Revenue |
15.7 |
% |
20.9 |
% |
||||||
Cable Capital Expenditures |
$ |
6,763 |
$ |
8,883 |
||||||
% Total Cable Revenue |
15.0 |
% |
20.4 |
% |
||||||
Net income attributable to Charter shareholders |
$ |
1,668 |
$ |
1,230 |
||||||
Earnings per common share attributable to Charter shareholders: |
||||||||||
Basic |
$ |
7.60 |
$ |
5.29 |
||||||
Diluted |
$ |
7.45 |
$ |
5.22 |
||||||
Net cash flows from operating activities |
$ |
11,748 |
$ |
11,767 |
||||||
Free cash flow |
$ |
4,608 |
$ |
2,172 |
||||||
Cable free cash flow |
$ |
5,769 |
$ |
2,766 |
Revenue
For the year ended December 31, 2019, revenues increased to
Operating Costs and Expenses
Operating costs and expenses totaled
Adjusted EBITDA
Adjusted EBITDA totaled
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
Net income per basic common share attributable to Charter shareholders totaled
Capital Expenditures
Capital expenditures totaled
Charter currently expects 2020 cable capital expenditures to decline as a percentage of cable revenue versus 2019.
Cash Flow & Free Cash Flow
For the year ended December 31, 2019, net cash flows from operating activities totaled
Free cash flow for the year ended December 31, 2019 was
Share Repurchases
For the year ended December 31, 2019, Charter purchased approximately 19.0 million shares of Charter Class A common stock and
Conference Call
Charter will host a conference call on Friday, January 31, 2020 at
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 9162126.
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
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 Annual Report on Form 10-K for the year ended December 31, 2019, which will be posted on the "Financial Information" section of our investor relations website at ir.charter.com, when it is filed with the
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
Cable Adjusted EBITDA is defined as Adjusted EBITDA less mobile revenues plus mobile operating costs and expenses. Cable free cash flow is defined as free cash flow plus mobile net cash outflows from operating activities and mobile capital expenditures. Management and Charter's board of directors use cable Adjusted EBITDA and cable free cash flow to provide management and investors a more meaningful year-over-year perspective on the financial and operational performance and trends of our core cable business without the impact of the revenue, costs and capital expenditures in the initial funding period to grow a new product line as well as the negative working capital impacts from the timing of device-related cash flows when we provide the handset or tablet to customers pursuant to equipment installment plans.
About Charter
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
- our ability to sustain and grow revenues and cash flow from operations by offering video, Internet, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
- the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line ("DSL") providers, fiber to the home providers 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, 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 December 31, |
Year Ended December 31, |
||||||||||||||||||||
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
||||||||||||||||
REVENUES: |
|||||||||||||||||||||
Video |
$ |
4,473 |
$ |
4,361 |
2.6 |
% |
$ |
17,607 |
$ |
17,348 |
1.5 |
% |
|||||||||
Internet |
4,345 |
3,895 |
11.5 |
% |
16,667 |
15,181 |
9.8 |
% |
|||||||||||||
Voice |
450 |
515 |
(12.5) |
% |
1,920 |
2,114 |
(9.1) |
% |
|||||||||||||
Residential revenue |
9,268 |
8,771 |
5.7 |
% |
36,194 |
34,643 |
4.5 |
% |
|||||||||||||
Small and medium business |
986 |
928 |
6.3 |
% |
3,868 |
3,665 |
5.6 |
% |
|||||||||||||
Enterprise |
617 |
647 |
(4.5) |
% |
2,556 |
2,528 |
1.1 |
% |
|||||||||||||
Commercial revenue |
1,603 |
1,575 |
1.8 |
% |
6,424 |
6,193 |
3.7 |
% |
|||||||||||||
Advertising sales |
434 |
562 |
(22.7) |
% |
1,568 |
1,785 |
(12.1) |
% |
|||||||||||||
Mobile |
236 |
89 |
163.7 |
% |
726 |
106 |
NM |
||||||||||||||
Other |
220 |
234 |
(6.6) |
% |
852 |
907 |
(6.2) |
% |
|||||||||||||
Total Revenue |
11,761 |
11,231 |
4.7 |
% |
45,764 |
43,634 |
4.9 |
% |
|||||||||||||
COSTS AND EXPENSES: |
|||||||||||||||||||||
Programming |
2,808 |
2,791 |
0.6 |
% |
11,290 |
11,124 |
1.5 |
% |
|||||||||||||
Regulatory, connectivity and produced content |
596 |
571 |
4.3 |
% |
2,366 |
2,210 |
7.1 |
% |
|||||||||||||
Costs to service customers |
1,794 |
1,835 |
(2.3) |
% |
7,277 |
7,327 |
(0.7) |
% |
|||||||||||||
Marketing |
748 |
732 |
2.1 |
% |
3,044 |
3,042 |
0.1 |
% |
|||||||||||||
Mobile |
372 |
211 |
75.9 |
% |
1,246 |
346 |
NM |
||||||||||||||
Other expense |
914 |
927 |
(1.4) |
% |
3,686 |
3,526 |
4.5 |
% |
|||||||||||||
Total operating costs and expenses (exclusive of items shown separately below) |
7,232 |
7,067 |
2.3 |
% |
28,909 |
27,575 |
4.8 |
% |
|||||||||||||
Adjusted EBITDA |
4,529 |
4,164 |
8.8 |
% |
16,855 |
16,059 |
5.0 |
% |
|||||||||||||
Adjusted EBITDA margin |
38.5 |
% |
37.1 |
% |
36.8 |
% |
36.8 |
% |
|||||||||||||
Depreciation and amortization |
2,461 |
2,534 |
9,926 |
10,318 |
|||||||||||||||||
Stock compensation expense |
77 |
72 |
315 |
285 |
|||||||||||||||||
Other operating expenses, net |
32 |
119 |
103 |
235 |
|||||||||||||||||
Income from operations |
1,959 |
1,439 |
6,511 |
5,221 |
|||||||||||||||||
OTHER INCOME (EXPENSES): |
|||||||||||||||||||||
Interest expense, net |
(964) |
(910) |
(3,797) |
(3,540) |
|||||||||||||||||
Loss on extinguishment of debt |
(25) |
— |
(25) |
— |
|||||||||||||||||
Gain (loss) on financial instruments, net |
62 |
(110) |
(54) |
(110) |
|||||||||||||||||
Other pension benefits (costs), net |
(96) |
(55) |
(69) |
192 |
|||||||||||||||||
Other expense, net |
(4) |
(2) |
(135) |
(77) |
|||||||||||||||||
(1,027) |
(1,077) |
(4,080) |
(3,535) |
||||||||||||||||||
Income before income taxes |
932 |
362 |
2,431 |
1,686 |
|||||||||||||||||
Income tax expense |
(110) |
(2) |
(439) |
(180) |
|||||||||||||||||
Consolidated net income |
822 |
360 |
1,992 |
1,506 |
|||||||||||||||||
Less: Net income attributable to noncontrolling interests |
(108) |
(64) |
(324) |
(276) |
|||||||||||||||||
Net income attributable to Charter shareholders |
$ |
714 |
$ |
296 |
$ |
1,668 |
$ |
1,230 |
|||||||||||||
EARNINGS PER COMMON SHARE |
|||||||||||||||||||||
ATTRIBUTABLE TO CHARTER SHAREHOLDERS: |
|||||||||||||||||||||
Basic |
$ |
3.36 |
$ |
1.31 |
$ |
7.60 |
$ |
5.29 |
|||||||||||||
Diluted |
$ |
3.28 |
$ |
1.29 |
$ |
7.45 |
$ |
5.22 |
|||||||||||||
Weighted average common shares outstanding, basic |
212,648,072 |
227,005,966 |
219,506,735 |
232,356,665 |
|||||||||||||||||
Weighted average common shares outstanding, diluted |
217,778,099 |
230,131,933 |
223,786,380 |
235,525,226 |
Adjusted EBITDA is a non-GAAP term. See page 6 of this addendum for the reconciliation of Adjusted EBITDA to net income attributable to Charter shareholders as defined by GAAP. |
All percentages are calculated using whole numbers. Minor differences may exist due to rounding. |
NM - Not meaningful |
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(dollars in millions) |
|||||||
December 31, |
|||||||
2019 |
2018 |
||||||
ASSETS |
|||||||
CURRENT ASSETS: |
|||||||
Cash and cash equivalents |
$ |
3,483 |
$ |
551 |
|||
Accounts receivable, net |
2,227 |
1,733 |
|||||
Prepaid expenses and other current assets |
761 |
446 |
|||||
Total current assets |
6,471 |
2,730 |
|||||
RESTRICTED CASH |
66 |
214 |
|||||
INVESTMENT IN CABLE PROPERTIES: |
|||||||
Property, plant and equipment, net |
34,591 |
35,126 |
|||||
Customer relationships, net |
7,453 |
9,565 |
|||||
Franchises |
67,322 |
67,319 |
|||||
Goodwill |
29,554 |
29,554 |
|||||
Total investment in cable properties, net |
138,920 |
141,564 |
|||||
OPERATING LEASE RIGHT-OF-USE ASSETS |
1,092 |
— |
|||||
OTHER NONCURRENT ASSETS |
1,639 |
1,622 |
|||||
Total assets |
$ |
148,188 |
$ |
146,130 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
CURRENT LIABILITIES: |
|||||||
Accounts payable and accrued liabilities |
$ |
8,671 |
$ |
8,805 |
|||
Operating lease liabilities |
214 |
— |
|||||
Current portion of long-term debt |
3,500 |
3,290 |
|||||
Total current liabilities |
12,385 |
12,095 |
|||||
LONG-TERM DEBT |
75,578 |
69,537 |
|||||
DEFERRED INCOME TAXES |
17,711 |
17,389 |
|||||
LONG-TERM OPERATING LEASE LIABILITIES |
979 |
— |
|||||
OTHER LONG-TERM LIABILITIES |
2,724 |
2,837 |
|||||
SHAREHOLDERS' EQUITY: |
|||||||
Controlling interest |
31,445 |
36,285 |
|||||
Noncontrolling interests |
7,366 |
7,987 |
|||||
Total shareholders' equity |
38,811 |
44,272 |
|||||
Total liabilities and shareholders' equity |
$ |
148,188 |
$ |
146,130 |
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES |
|||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
(dollars in millions) |
|||||||||||||||
Three Months Ended |
Year Ended December 31, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||||||||||
Consolidated net income |
$ |
822 |
$ |
360 |
$ |
1,992 |
$ |
1,506 |
|||||||
Adjustments to reconcile consolidated net income to net cash flows from operating activities: |
|||||||||||||||
Depreciation and amortization |
2,461 |
2,534 |
9,926 |
10,318 |
|||||||||||
Stock compensation expense |
77 |
72 |
315 |
285 |
|||||||||||
Accelerated vesting of equity awards |
— |
— |
— |
5 |
|||||||||||
Noncash interest income, net |
(17) |
(65) |
(106) |
(307) |
|||||||||||
Other pension (benefits) costs, net |
96 |
55 |
69 |
(192) |
|||||||||||
Loss on extinguishment of debt |
25 |
— |
25 |
— |
|||||||||||
(Gain) loss on financial instruments, net |
(62) |
110 |
54 |
110 |
|||||||||||
Deferred income taxes |
87 |
(27) |
320 |
110 |
|||||||||||
Other, net |
10 |
94 |
158 |
175 |
|||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: |
|||||||||||||||
Accounts receivable |
59 |
3 |
(505) |
(98) |
|||||||||||
Prepaid expenses and other assets |
(172) |
(123) |
(397) |
(270) |
|||||||||||
Accounts payable, accrued liabilities and other |
(28) |
155 |
(103) |
125 |
|||||||||||
Net cash flows from operating activities |
3,358 |
3,168 |
11,748 |
11,767 |
|||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||||||||||
Purchases of property, plant and equipment |
(2,282) |
(2,433) |
(7,195) |
(9,125) |
|||||||||||
Change in accrued expenses related to capital expenditures |
504 |
150 |
55 |
(470) |
|||||||||||
Real estate investments through variable interest entities |
(23) |
(6) |
(148) |
(21) |
|||||||||||
Other, net |
(53) |
(17) |
(43) |
(120) |
|||||||||||
Net cash flows from investing activities |
(1,854) |
(2,306) |
(7,331) |
(9,736) |
|||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||||||||||
Borrowings of long-term debt |
6,528 |
2,268 |
19,685 |
13,820 |
|||||||||||
Repayments of long-term debt |
(2,423) |
(1,805) |
(13,309) |
(10,769) |
|||||||||||
Payments for debt issuance costs |
(55) |
— |
(103) |
(29) |
|||||||||||
Purchase of treasury stock |
(2,305) |
(1,185) |
(6,873) |
(4,399) |
|||||||||||
Proceeds from exercise of stock options |
12 |
13 |
118 |
69 |
|||||||||||
Purchase of noncontrolling interest |
(292) |
(183) |
(885) |
(656) |
|||||||||||
Distributions to noncontrolling interest |
(38) |
(39) |
(154) |
(153) |
|||||||||||
Borrowings for real estate investments through variable interest entities |
— |
172 |
— |
342 |
|||||||||||
Distributions to variable interest entities noncontrolling interest |
— |
— |
— |
(107) |
|||||||||||
Other, net |
21 |
2 |
(112) |
(5) |
|||||||||||
Net cash flows from financing activities |
1,448 |
(757) |
(1,633) |
(1,887) |
|||||||||||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
2,952 |
105 |
2,784 |
144 |
|||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
597 |
660 |
765 |
621 |
|||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
$ |
3,549 |
$ |
765 |
$ |
3,549 |
$ |
765 |
|||||||
CASH PAID FOR INTEREST |
$ |
898 |
$ |
945 |
$ |
3,963 |
$ |
3,865 |
|||||||
CASH PAID FOR TAXES |
$ |
16 |
$ |
18 |
$ |
71 |
$ |
45 |
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES |
|||||||||||
UNAUDITED SUMMARY OF OPERATING STATISTICS |
|||||||||||
(in thousands, except per customer and penetration data) |
|||||||||||
Approximate as of |
|||||||||||
December 31, |
September 30, |
December 31, |
|||||||||
Footprint (b) |
|||||||||||
Estimated Passings |
52,154 |
51,940 |
51,185 |
||||||||
Penetration Statistics (c) |
|||||||||||
Total Customer Relationship Penetration of Estimated Passings |
56.1 |
% |
55.8 |
% |
54.9 |
% |
|||||
Customer Relationships (d) |
|||||||||||
Residential |
27,277 |
27,037 |
26,270 |
||||||||
Small and Medium Business |
1,958 |
1,930 |
1,833 |
||||||||
Total Customer Relationships |
29,235 |
28,967 |
28,103 |
||||||||
Quarterly Net Additions (Losses) |
|||||||||||
Residential |
240 |
282 |
207 |
||||||||
Small and Medium Business |
28 |
28 |
41 |
||||||||
Total Customer Relationships |
268 |
310 |
248 |
||||||||
Residential |
|||||||||||
Primary Service Units ("PSUs") |
|||||||||||
Video |
15,620 |
15,725 |
16,104 |
||||||||
Internet |
24,908 |
24,595 |
23,625 |
||||||||
Voice |
9,443 |
9,595 |
10,135 |
||||||||
Quarterly Net Additions (Losses) |
|||||||||||
Video |
(105) |
(77) |
(36) |
||||||||
Internet |
313 |
351 |
289 |
||||||||
Voice |
(152) |
(213) |
(83) |
||||||||
Single Play (e) |
11,741 |
11,557 |
10,928 |
||||||||
Double Play (e) |
8,377 |
8,088 |
7,097 |
||||||||
Triple Play (e) |
7,159 |
7,392 |
8,245 |
||||||||
Single Play Penetration (f) |
43.0 |
% |
42.7 |
% |
41.6 |
% |
|||||
Double Play Penetration (f) |
30.7 |
% |
29.9 |
% |
27.0 |
% |
|||||
Triple Play Penetration (f) |
26.2 |
% |
27.3 |
% |
31.4 |
% |
|||||
% Residential Non-Video Customer Relationships |
42.7 |
% |
41.8 |
% |
38.7 |
% |
|||||
Monthly Residential Revenue per Residential Customer (g) |
$ |
113.79 |
$ |
112.00 |
$ |
111.78 |
|||||
Small and Medium Business |
|||||||||||
PSUs |
|||||||||||
Video |
524 |
520 |
502 |
||||||||
Internet |
1,756 |
1,730 |
1,634 |
||||||||
Voice |
1,144 |
1,120 |
1,051 |
||||||||
Quarterly Net Additions (Losses) |
|||||||||||
Video |
4 |
2 |
14 |
||||||||
Internet |
26 |
29 |
40 |
||||||||
Voice |
24 |
23 |
27 |
||||||||
Monthly Small and Medium Business Revenue per Customer (h) |
$ |
169.06 |
$ |
169.44 |
$ |
170.62 |
|||||
Mobile Lines |
|||||||||||
Residential and Small and Medium Business Mobile Lines |
1,082 |
794 |
134 |
||||||||
Net Additions (Losses) |
288 |
276 |
113 |
||||||||
Enterprise PSUs (i) |
|||||||||||
Enterprise PSUs |
267 |
264 |
248 |
||||||||
Net Additions (Losses) |
3 |
6 |
5 |
(a) |
We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, at December 31, 2019, September 30, 2019 and December 31, 2018, customers included approximately 154,200, 148,000 and 217,600 customers, respectively, whose accounts were over 60 days past due, approximately 13,500, 16,400 and 24,000 customers, respectively, whose accounts were over 90 days past due and approximately 10,000, 14,100 and 19,200 customers, respectively, whose accounts were over 120 days past due. |
(b) |
Passings represent our estimate of the number of units, such as single family homes, apartment and condominium units and small and medium business and enterprise sites passed by our cable distribution network in the areas where we offer the service indicated. These estimates are based upon the information available at this time and are updated for all periods presented when new information becomes available. 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 video, Internet and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units ("MDUs") and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise 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 video, Internet 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 RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
|||||||||||||||
(dollars in millions) |
|||||||||||||||
Three Months Ended |
Year Ended December 31, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net income attributable to Charter shareholders |
$ |
714 |
$ |
296 |
$ |
1,668 |
$ |
1,230 |
|||||||
Plus: Net income attributable to noncontrolling interest |
108 |
64 |
324 |
276 |
|||||||||||
Interest expense, net |
964 |
910 |
3,797 |
3,540 |
|||||||||||
Income tax expense |
110 |
2 |
439 |
180 |
|||||||||||
Depreciation and amortization |
2,461 |
2,534 |
9,926 |
10,318 |
|||||||||||
Stock compensation expense |
77 |
72 |
315 |
285 |
|||||||||||
Loss on extinguishment of debt |
25 |
— |
25 |
— |
|||||||||||
(Gain) loss on financial instruments, net |
(62) |
110 |
54 |
110 |
|||||||||||
Other pension (benefits) costs, net |
96 |
55 |
69 |
(192) |
|||||||||||
Other, net |
36 |
121 |
238 |
312 |
|||||||||||
Adjusted EBITDA (a) |
4,529 |
4,164 |
16,855 |
16,059 |
|||||||||||
Less: Mobile revenue |
(236) |
(89) |
(726) |
(106) |
|||||||||||
Plus: Mobile costs and expenses |
372 |
211 |
1,246 |
346 |
|||||||||||
Cable Adjusted EBITDA |
$ |
4,665 |
$ |
4,286 |
$ |
17,375 |
$ |
16,299 |
|||||||
Net cash flows from operating activities |
$ |
3,358 |
$ |
3,168 |
$ |
11,748 |
$ |
11,767 |
|||||||
Less: Purchases of property, plant and equipment |
(2,282) |
(2,433) |
(7,195) |
(9,125) |
|||||||||||
Change in accrued expenses related to capital expenditures |
504 |
150 |
55 |
(470) |
|||||||||||
Free cash flow |
1,580 |
885 |
4,608 |
2,172 |
|||||||||||
Plus: Mobile net cash outflows from operating activities |
166 |
198 |
729 |
352 |
|||||||||||
Purchases of mobile property, plant and equipment |
151 |
106 |
432 |
242 |
|||||||||||
Cable free cash flow |
$ |
1,897 |
$ |
1,189 |
$ |
5,769 |
$ |
2,766 |
(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 |
Year Ended December 31, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Customer premise equipment (a) |
$ |
543 |
$ |
687 |
$ |
2,070 |
$ |
3,124 |
|||||||
Scalable infrastructure (b) |
599 |
649 |
1,439 |
2,227 |
|||||||||||
Line extensions (c) |
390 |
381 |
1,444 |
1,373 |
|||||||||||
Upgrade/rebuild (d) |
183 |
182 |
634 |
704 |
|||||||||||
Support capital (e) |
567 |
534 |
1,608 |
1,697 |
|||||||||||
Total capital expenditures |
2,282 |
2,433 |
7,195 |
9,125 |
|||||||||||
Less: Mobile capital expenditures |
(151) |
(106) |
(432) |
(242) |
|||||||||||
Cable capital expenditures |
$ |
2,131 |
$ |
2,327 |
$ |
6,763 |
$ |
8,883 |
|||||||
Capital expenditures included in total related to: |
|||||||||||||||
Commercial services |
$ |
358 |
$ |
379 |
$ |
1,314 |
$ |
1,313 |
|||||||
All-digital transition |
$ |
— |
$ |
28 |
$ |
— |
$ |
344 |
(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). |
View original content to download multimedia:http://www.prnewswire.com/news-releases/charter-announces-fourth-quarter-2019-results-300996701.html
SOURCE
Media: Justin Venech, 203-905-7818; Analysts: Stefan Anninger, 203-905-7955