10-QPeriod: Q1 FY2015

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 1, 2015For Securities:CHTR

Summary

Charter Communications, Inc. reported a net loss of $81 million for the first quarter of 2015, a wider loss than the $37 million in the same period last year. Revenue increased by 7% year-over-year to $2.36 billion, primarily driven by growth in Internet and commercial services, partially offset by a decline in video customers. The company's financial results were significantly impacted by the termination of the proposed Comcast transaction in April 2015. This termination led to the repayment of substantial escrowed funds related to the transaction. Charter also announced a definitive agreement for the Bright House transaction in March 2015, which is pending regulatory approvals and is subject to renegotiation following the Comcast deal's termination. Despite the net loss, operating cash flow remained strong, and the company generated positive free cash flow of $101 million. Management is focused on leveraging these cash flows to reduce leverage, invest in business growth, and explore strategic opportunities, including potential acquisitions.

Financial Highlights

50 data points
Beta

Revenue

$2.36B

Net Income

-$81.00M

-3.4% Net Margin

EPS (Diluted)

$-0.81

Total Assets

$24.41B

Cash & Equivalents

$20.00M

Free Cash Flow

$177.00M

Financial Statements
Beta
Revenue$2.36B
Operating Expenses$2.11B
Operating Income$249.00M
Interest Expense$289.00M
Net Income-$81.00M
EPS (Basic)$-0.81
EPS (Diluted)$-0.81
Shares Outstanding (Basic)100.96M
Shares Outstanding (Diluted)100.96M

Key Highlights

  • 1Net loss widened to $81 million in Q1 2015 from $37 million in Q1 2014.
  • 2Total revenue grew 7% to $2.36 billion, driven by strong performance in Internet and commercial services.
  • 3The proposed Comcast transaction was terminated in April 2015, resulting in the repayment of escrowed funds.
  • 4Charter entered into an agreement for the Bright House transaction in March 2015, which is subject to ongoing negotiations and approvals.
  • 5Operating cash flow was $528 million, and free cash flow was $101 million in Q1 2015.
  • 6Capital expenditures decreased to $351 million in Q1 2015 from $539 million in Q1 2014.
  • 7The company has significant debt, with long-term debt (excluding current portion) totaling $13.98 billion as of March 31, 2015.

Frequently Asked Questions

Revenue increased by 7% to $2.36 billion primarily due to growth in residential Internet customers and commercial business, as well as increases in expanded basic and digital video penetration, promotional and annual rate adjustments, and higher advanced services penetration. This growth was partially offset by a decrease in video customers.

The termination of the Comcast Transactions Agreement in April 2015 led to the repayment of $3.5 billion in Term G Loans and the redemption of $3.5 billion in CCOH Safari Notes, which were previously held in escrow. This event resulted in the reclassification of these debt instruments and related escrowed funds to current liabilities and current restricted cash, respectively, on the balance sheet as of March 31, 2015.

Charter has a substantial amount of debt. The company plans to utilize its free cash flow, availability under its credit facilities, and potential future refinancing transactions to manage its debt obligations, extend maturities, or reduce principal. They are also evaluating the deployment of future free cash flow towards reducing leverage and investing in business growth or strategic opportunities.

Charter entered into a definitive agreement for the Bright House transaction on March 31, 2015. However, due to the termination of the Comcast transaction (which was a condition for the Bright House deal), the parties are currently in a 30-day negotiation period to amend the terms to potentially consummate the transaction. The deal is still subject to regulatory approvals and other customary closing conditions.