10-QPeriod: Q1 FY2019

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:CHTR

Summary

Charter Communications, Inc. reported solid revenue growth of 5.1% to $11.2 billion for the first quarter of 2019, driven primarily by increases in residential internet customers and commercial business clients, along with the initial contribution from its new mobile service. While video and voice subscriber numbers saw a slight decline, the growth in internet subscribers and a focus on packaging services have offset these trends. The company's profitability saw a significant boost, with income from operations increasing by 36.7% to $1.4 billion. Adjusted EBITDA also grew by 4.2% to $4.1 billion, indicating strong operational performance despite increased programming and mobile-related operating costs. The company highlighted a substantial reduction in capital expenditures for 2019 compared to the previous year, signaling greater operational efficiency and completion of major integration projects.

Financial Highlights

49 data points
Beta

Revenue

$11.21B

Net Income

$253.00M

2.3% Net Margin

EPS (Diluted)

$1.11

Total Assets

$147.26B

Cash & Equivalents

$1.45B

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$11.21B
Operating Expenses$9.78B
Operating Income$1.43B
Net Income$253.00M
EPS (Basic)$1.13
EPS (Diluted)$1.11
Shares Outstanding (Basic)224.63M
Shares Outstanding (Diluted)227.60M

Key Highlights

  • 1Revenue increased by 5.1% to $11.2 billion, driven by residential internet and commercial business growth.
  • 2Income from operations saw a significant rise of 36.7% to $1.4 billion, demonstrating improved profitability.
  • 3Adjusted EBITDA grew by 4.2% to $4.1 billion, reflecting strong operational performance.
  • 4The company launched its mobile service, Spectrum Mobile, which contributed $140 million in revenue but negatively impacted Adjusted EBITDA and free cash flow.
  • 5Capital expenditures decreased by 23.7% to $1.7 billion, with expectations for further reductions in 2019 due to completed integration and network upgrades.
  • 6Net income attributable to Charter shareholders increased by 50.6% to $253 million, with diluted EPS rising to $1.11 from $0.70 in the prior year.
  • 7Long-term debt remained substantial at $70.6 billion, with the company actively managing its leverage ratio.

Frequently Asked Questions

Charter's revenue growth in Q1 2019 was primarily driven by an increase in the number of residential Internet customers and commercial business clients. The launch of its mobile service also contributed to revenue.

The new mobile service, Spectrum Mobile, generated $140 million in revenue during the quarter. However, it had a negative impact of approximately $120 million on Adjusted EBITDA and $291 million on free cash flow due to associated growth and launch costs.

Charter expects capital expenditures to be approximately $7 billion in 2019, a significant decrease from $8.9 billion in 2018. This reduction is attributed to the completion of the all-digital conversion, the rollout of DOCSIS 3.1 technology, and the substantial completion of integration of TWC and Bright House.

Charter has a significant amount of long-term debt, totaling $70.6 billion as of March 31, 2019. The company aims to maintain a target leverage ratio of 4 to 4.5 times. They utilize free cash flow, cash on hand, and access to credit facilities and capital markets to manage debt maturities and fund operations.