10-QPeriod: Q1 FY2014

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 30, 2014For Securities:CHTR

Summary

Charter Communications, Inc. reported a net loss of $37 million for the first quarter of 2014, a slight improvement from a loss of $42 million in the same period of 2013. Revenue increased by 15% year-over-year to $2.2 billion, largely driven by the acquisition of Bresnan and growth in internet and commercial services. Despite revenue growth, the company continues to face significant interest expenses on its substantial debt load. Capital expenditures remain elevated as Charter invests in its all-digital transition and network improvements. Notably, the company announced a significant set of transactions with Comcast on April 25, 2014, which are expected to reshape its operational footprint and customer base through asset purchases, exchanges, and a spin-off.

Financial Statements
Beta
Revenue$2.20B
Operating Expenses$1.96B
Operating Income$240.00M
Interest Expense$211.00M
Net Income-$37.00M
EPS (Basic)$-0.35
Shares Outstanding (Basic)106.44M

Key Highlights

  • 1Revenue increased 15% to $2.2 billion, boosted by the Bresnan acquisition and growth in Internet and commercial segments.
  • 2Net loss narrowed to $37 million from $42 million in the prior year's quarter.
  • 3Adjusted EBITDA grew 14% to $767 million, reflecting operational improvements and acquisition contributions.
  • 4Capital expenditures increased to $539 million, primarily for the all-digital transition and network upgrades.
  • 5The company reported approximately $4 million in cash and cash equivalents as of March 31, 2014, highlighting its reliance on credit facilities for liquidity.
  • 6A significant agreement was announced with Comcast involving asset purchases, exchanges, and a spin-off, which will substantially alter Charter's customer base and operational scale.
  • 7Long-term debt remained substantial at $14.1 billion, with ongoing interest expenses impacting profitability.

Frequently Asked Questions

Charter Communications reported a net loss of $37 million on revenue of $2.2 billion for the first quarter of 2014. This represents a slight improvement in net loss compared to the $42 million loss in Q1 2013, while revenue saw a significant 15% increase.

Revenue growth was primarily driven by the acquisition of Bresnan, which contributed approximately $137 million, and by increased demand for Internet services and commercial business offerings. Video revenue also saw an increase, though voice revenue declined.

Charter carries a substantial amount of long-term debt, totaling $14.1 billion. While the company generated positive free cash flow of $74 million in Q1 2014, it expects to continue using free cash flow and its credit facilities to manage its debt obligations. Interest expense remains a significant factor affecting profitability.

The announced transactions with Comcast are transformative. They involve acquiring approximately 1.4 million TWC customers, exchanging systems, and acquiring a stake in a spun-off entity. This will significantly increase Charter's customer base, potentially improve operational efficiencies, and reshape its competitive landscape. The transactions are subject to regulatory approvals and other closing conditions.