10-QPeriod: Q1 FY2022

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 29, 2022For Securities:CHTR

Summary

Charter Communications, Inc. reported solid financial performance for the first quarter of 2022, showcasing robust revenue growth and improved profitability. Total revenues increased by 5.4% year-over-year, driven by strong performance in Internet, Mobile, and Commercial services. This growth was accompanied by a significant increase in Income from Operations, up 34.0%, indicating improved operational efficiency and cost management. While the company continues to invest heavily in network expansion and product development, including its rural construction initiative and the build-out of its 5G mobile network, its financial flexibility remains strong. The company generated substantial free cash flow and maintained a healthy liquidity position with significant cash on hand and available credit facilities. Despite ongoing investments and potential growth costs associated with its mobile segment, Charter demonstrates a commitment to returning value to shareholders through ongoing share repurchases and a strategic leverage target.

Financial Highlights

46 data points
Beta

Revenue

$13.20B

Net Income

$1.20B

9.1% Net Margin

EPS (Diluted)

$6.90

Total Assets

$143.95B

Cash & Equivalents

$2.43B

Free Cash Flow

$1.79B

Financial Statements
Beta
Revenue$13.20B
Operating Expenses$10.43B
Operating Income$2.77B
Net Income$1.20B
EPS (Basic)$7.05
EPS (Diluted)$6.90
Shares Outstanding (Basic)170.69M
Shares Outstanding (Diluted)174.50M

Key Highlights

  • 1Total revenues grew 5.4% to $13.2 billion in Q1 2022, driven by strong gains in Internet (+7.2%), Mobile (+40.2%), and Commercial services.
  • 2Income from operations surged by 34.0% to $2.77 billion, reflecting improved operational efficiency.
  • 3Net income attributable to Charter shareholders increased to $1.2 billion, or $6.90 per diluted share, a significant rise from $807 million ($4.11 per diluted share) in the prior year period.
  • 4The company continues to invest in growth, with capital expenditures of $1.86 billion in Q1 2022, focusing on line extensions, rural construction, and network infrastructure.
  • 5Spectrum Mobile lines saw substantial growth, increasing by 1.3 million year-over-year to reach 3.9 million, though the mobile segment continues to incur growth-related costs impacting Adjusted EBITDA and free cash flow.
  • 6Free cash flow remained strong at $1.8 billion, slightly down from $1.86 billion in Q1 2021, demonstrating the company's ability to generate substantial cash from operations.
  • 7Charter repurchased approximately $3.2 billion of its Class A common stock and Charter Holdings common units during the quarter, underscoring a commitment to shareholder returns.

Frequently Asked Questions

Charter's revenue growth was primarily driven by increases in residential Internet customers, a significant expansion of its mobile subscriber base (Spectrum Mobile lines), and growth in its commercial business segments. Price adjustments and increased advertising sales also contributed to the overall revenue increase.

Charter has a substantial debt principal of $94.9 billion as of March 31, 2022. The company manages this through a combination of generating strong free cash flow, maintaining significant cash on hand ($2.4 billion), having access to credit facilities ($4.7 billion available), and actively engaging in refinancing transactions to extend debt maturities. Charter also aims to maintain its target leverage ratio of net debt to Adjusted EBITDA between 4.0 to 4.5 times.

Spectrum Mobile is a significant growth area for Charter, with mobile lines increasing by 1.3 million year-over-year. While mobile revenues grew by 40.2% to $690 million, the segment incurred negative Adjusted EBITDA of approximately $70 million and negative free cash flow of approximately $290 million in Q1 2022 due to growth-related sales and marketing costs, and customer acquisition expenses. The company expects this trend to continue as it expands its mobile offerings.

Charter is making significant capital investments, with $1.86 billion in Q1 2022, focusing on network expansion (line extensions, rural construction initiative), product development, and infrastructure upgrades. For the full year 2022, cable capital expenditures (excluding the rural initiative) are expected to be between $7.1 billion and $7.3 billion. These investments are crucial for maintaining service quality, expanding its footprint, and supporting new product offerings like its 5G mobile network.