10-QPeriod: Q3 FY2013

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 5, 2013For Securities:CHTR

Summary

Charter Communications, Inc. reported its third-quarter 2013 financial results, revealing a net loss of $70 million, an improvement from the $87 million net loss in the same period of the prior year. This improvement was driven by a 13% increase in total revenues to $2.118 billion, largely due to the significant acquisition of Bresnan Broadband Holdings, LLC in July 2013. The company also saw growth in its Internet and commercial businesses. Despite the revenue increase, Charter's operations continue to be impacted by substantial interest expenses and ongoing capital expenditures. The company's long-term debt stands at $14.3 billion, though it has taken steps to manage its debt profile through various refinancing activities and has an available credit facility of approximately $978 million. Management remains focused on generating positive free cash flow and strategically investing in its network and services to drive future growth and reduce customer churn.

Financial Statements
Beta
Revenue$2.12B
Operating Expenses$1.91B
Operating Income$209.00M
Interest Expense$214.00M
Net Income-$70.00M
EPS (Basic)$-0.68
Shares Outstanding (Basic)102.92M

Key Highlights

  • 1Total revenues increased by 13% to $2.118 billion for the three months ended September 30, 2013, compared to the prior year's period, primarily driven by the acquisition of Bresnan and growth in Internet and commercial services.
  • 2The company reported a net loss of $70 million for the third quarter of 2013, an improvement from the $87 million net loss in the same period of 2012.
  • 3The acquisition of Bresnan Broadband Holdings, LLC was completed in July 2013 for $1.625 billion, adding approximately 670,000 homes passed and 375,000 customer relationships.
  • 4Long-term debt remained substantial at $14.3 billion as of September 30, 2013, though the company actively engaged in debt refinancing activities during the period.
  • 5Free cash flow turned positive, reaching $132 million for the three months ended September 30, 2013, compared to a negative $17 million in the same period of 2012.
  • 6Charter continues to invest heavily in capital expenditures, with approximately $1.8 billion expected for the full year 2013, to support network enhancements, customer growth, and the transition to an all-digital platform.

Frequently Asked Questions

The acquisition of Bresnan Broadband Holdings, LLC, completed in July 2013 for $1.625 billion, significantly contributed to Charter's revenue growth, adding approximately $134 million in revenues for the third quarter of 2013. It also increased goodwill and other intangible assets on the balance sheet.

Charter's long-term debt stood at $14.3 billion as of September 30, 2013. The company has been actively refinancing its debt, issuing new notes, and amending credit facilities to manage maturities and interest rates. As of the reporting date, the company had approximately $978 million available under its credit facilities.

While Charter reported a net loss for the quarter, the loss narrowed compared to the prior year, and revenues grew significantly. The company generated positive free cash flow of $132 million in the third quarter of 2013, up from a negative amount in the prior year's quarter, and expects to generate positive free cash flow for the full year 2013. Management is focused on growing customer relationships and revenue while managing costs.

The company is involved in ongoing litigation, including a property tax dispute in Montana related to the Bresnan acquisition, which has significant amounts paid under protest. Additionally, Charter notes that it has experienced two 'ownership changes' for tax purposes, which could limit its ability to use tax loss carryforwards in the future.