10-QPeriod: Q1 FY2020

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 1, 2020For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) reported a solid first quarter of 2020, demonstrating revenue growth driven by increases in residential internet and mobile services, alongside commercial business customer expansion. Despite the emerging impacts of the COVID-19 pandemic, the company maintained service delivery and saw increased demand for connectivity. Management highlighted investments in network infrastructure and digital self-service capabilities to address this demand and support employees and customers during the crisis. The company also provided an update on its participation in the FCC's "Keep Americans Connected" pledge, pausing collection efforts for customers facing payment challenges. Financially, Charter reported a significant increase in net income attributable to shareholders, up from $253 million in Q1 2019 to $396 million in Q1 2020. Earnings per diluted share also saw a substantial rise to $1.86 from $1.11 year-over-year. The company's liquidity remains strong, with substantial cash on hand and availability under its credit facilities, although debt levels remain significant at $79.1 billion. The company provided forward-looking statements regarding expected declines in cable capital expenditures as a percentage of revenue in 2020.

Financial Highlights

48 data points
Beta

Revenue

$11.74B

Net Income

$396.00M

3.4% Net Margin

EPS (Diluted)

$1.86

Total Assets

$146.55B

Cash & Equivalents

$2.94B

Free Cash Flow

$1.76B

Financial Statements
Beta
Revenue$11.74B
Operating Expenses$9.94B
Operating Income$1.80B
Net Income$396.00M
EPS (Basic)$1.91
EPS (Diluted)$1.86
Shares Outstanding (Basic)207.83M
Shares Outstanding (Diluted)212.81M

Key Highlights

  • 1Revenue increased by 4.8% year-over-year to $11.74 billion, driven by growth in residential internet, mobile, and commercial services.
  • 2Net income attributable to Charter shareholders surged by 56.5% to $396 million, leading to a significant increase in diluted EPS to $1.86.
  • 3Adjusted EBITDA grew by 8.4% to $4.40 billion, reflecting revenue growth and efficient cost management.
  • 4Free Cash Flow more than doubled to $1.37 billion, benefiting from higher Adjusted EBITDA and decreased capital expenditures.
  • 5The company added 1.45 million residential Internet customers year-over-year, including 119,000 from the 'Remote Education Offer' in March due to COVID-19.
  • 6Spectrum Mobile lines grew substantially, reaching 1.37 million, though this service line continues to have a negative impact on Adjusted EBITDA and free cash flow due to growth costs.
  • 7The company ended the quarter with $2.9 billion in cash and cash equivalents and approximately $4.7 billion available under its credit facilities, maintaining strong liquidity despite total debt of $79.1 billion.

Frequently Asked Questions

Charter Communications reported a strong Q1 2020 with total revenues of $11.74 billion, a 4.8% increase year-over-year. Net income attributable to Charter shareholders grew significantly to $396 million from $253 million in Q1 2019. Diluted earnings per share also increased to $1.86 from $1.11. Adjusted EBITDA rose by 8.4% to $4.40 billion, and Free Cash Flow more than doubled to $1.37 billion.

Revenue growth was primarily driven by an increase in residential Internet customers, higher average rates for Internet and Video services, and substantial growth in Spectrum Mobile lines. Commercial business customer growth also contributed positively. While video and voice customer numbers saw declines, the overall growth in higher-margin Internet and Mobile services offset these decreases.

The company stated that it has continued to deliver services uninterrupted by the pandemic and has seen increased demand for connectivity. Charter has invested in network capacity and digital self-service tools. They are participating in the FCC's "Keep Americans Connected" pledge and offering relief to customers. However, management acknowledges uncertainty regarding the ultimate impact on customer payment ability, supply chains, and operational limitations.

Charter Communications has a significant debt load of approximately $79.1 billion. However, the company maintains a strong liquidity position with $2.9 billion in cash and cash equivalents and $4.7 billion available under its credit facilities as of March 31, 2020. Management believes it has sufficient liquidity to meet its projected cash needs and plans to utilize free cash flow and potential refinancing to manage its debt obligations.