10-QPeriod: Q3 FY2020

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 30, 2020For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) reported strong financial results for the third quarter of 2020, driven by significant growth in its residential internet and mobile services. Total revenues increased by 5.1% to $12.039 billion compared to the same period last year. The company demonstrated robust operational performance with a 13.6% increase in Adjusted EBITDA to $4.639 billion, reflecting improved operational efficiencies and customer base expansion. Despite challenges related to the COVID-19 pandemic, including customer credits for video services, Charter maintained its focus on growth and network investment. The company's strategic investments in its network infrastructure and expansion of its mobile offerings are key drivers of its performance. Charter's liquidity remains strong, supported by operating cash flows and available credit facilities, enabling continued strategic initiatives, including share repurchases and potential acquisitions.

Financial Highlights

48 data points
Beta

Revenue

$12.04B

Net Income

$814.00M

6.8% Net Margin

EPS (Diluted)

$3.90

Total Assets

$144.19B

Cash & Equivalents

$1.29B

Free Cash Flow

$1.65B

Financial Statements
Beta
Revenue$12.04B
Operating Expenses$9.87B
Operating Income$2.17B
Net Income$814.00M
EPS (Basic)$4.01
EPS (Diluted)$3.90
Shares Outstanding (Basic)202.83M
Shares Outstanding (Diluted)208.72M

Key Highlights

  • 1Total revenues increased by 5.1% to $12.039 billion for the three months ended September 30, 2020, compared to $11.450 billion in the prior year period.
  • 2Adjusted EBITDA grew by 13.6% to $4.639 billion for the three months ended September 30, 2020, compared to $4.086 billion in the prior year period, indicating strong operational profitability.
  • 3Residential Internet revenue saw a significant increase of 12.5% ($527 million) for the quarter, driven by a substantial rise in customer numbers and pricing adjustments.
  • 4Mobile revenues more than doubled, increasing by 91.8% to $368 million for the three months ended September 30, 2020, reflecting successful expansion of its mobile service offerings.
  • 5Net income attributable to Charter shareholders more than doubled to $814 million for the quarter, up from $387 million in the prior year period.
  • 6The company repurchased approximately 5.5 million shares of Class A common stock for $3.3 billion during the quarter, demonstrating a commitment to returning capital to shareholders and managing its capital structure.
  • 7Free cash flow increased significantly by 44.2% to $1.754 billion for the three months ended September 30, 2020, compared to $1.271 billion in the prior year period.

Frequently Asked Questions

Revenue growth was primarily driven by increases in residential Internet and mobile customers, along with pricing adjustments. Specifically, residential Internet revenue increased by 12.5% and mobile revenues more than doubled (91.8% increase) year-over-year.

The COVID-19 pandemic had mixed impacts. While it led to increased demand for internet services and accelerated customer adoption of self-service capabilities, it also resulted in an estimated $218 million in customer credits for video services due to canceled sporting events. Additionally, $85 million in receivables were waived related to the Keep Americans Connected program.

Charter has a significant amount of debt, with a principal amount of $79.1 billion as of September 30, 2020. The company is actively managing its debt through various financing activities, including issuing new debt, repaying existing debt, and share buybacks, aiming to maintain its target leverage ratio of 4 to 4.5 times Adjusted EBITDA.

Charter continues to see strong growth in its mobile business, with revenues more than doubling year-over-year. The company launched 5G service offerings and is exploring further network enhancements, including the purchase of CBRS licenses, to improve performance and expand capacity, expecting it to drive higher sales of core products and increase profitability over time, despite initial growth costs.