10-QPeriod: Q3 FY2023

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 27, 2023For Securities:CHTR

Summary

Charter Communications, Inc. reported its third-quarter 2023 financial results, showing modest revenue growth of 0.2% year-over-year to $13.58 billion, primarily driven by increases in Internet and Mobile service revenues. Despite this top-line growth, the company experienced a slight decline in net income attributable to Charter shareholders for the nine-month period, reporting $3.499 billion compared to $3.859 billion in the prior year. This was largely influenced by an increase in interest expenses and higher operating costs. The company continues to invest heavily in network upgrades and expansion, particularly in rural areas, with capital expenditures of $8.26 billion for the first nine months of 2023. While mobile subscriber additions remain strong, contributing significantly to revenue, the video segment continues to see subscriber declines. Management highlights progress in its network evolution, including multi-gigabit speed upgrades and the deployment of Xumo Stream Boxes, signaling a focus on product enhancement and customer experience improvements. Despite ongoing litigation and a challenging economic environment, Charter maintains its leverage targets and continues its share repurchase program.

Financial Highlights

46 data points
Beta

Revenue

$13.58B

Net Income

$1.25B

9.2% Net Margin

EPS (Diluted)

$8.25

Total Assets

$146.68B

Cash & Equivalents

$571.00M

Free Cash Flow

$983.00M

Financial Statements
Beta
Revenue$13.58B
Operating Expenses$10.46B
Operating Income$3.13B
Net Income$1.25B
EPS (Basic)$8.42
EPS (Diluted)$8.25
Shares Outstanding (Basic)149.00M
Shares Outstanding (Diluted)152.02M

Key Highlights

  • 1Revenue for the third quarter of 2023 was $13.58 billion, a slight increase of 0.2% year-over-year.
  • 2Net income attributable to Charter shareholders for the nine months ended September 30, 2023, was $3.499 billion, a decrease from $3.859 billion in the prior year.
  • 3The company added 594,000 mobile lines and 63,000 Internet customers in Q3 2023.
  • 4Video revenues declined by 8.6% year-over-year in the third quarter, reflecting ongoing subscriber losses in this segment.
  • 5Capital expenditures for the nine months ended September 30, 2023, totaled $8.26 billion, indicating significant investment in network infrastructure and rural construction.
  • 6Interest expense increased by $146 million and $540 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.
  • 7The company reported a leverage ratio of 4.5 times Adjusted EBITDA as of September 30, 2023, within its target range.

Frequently Asked Questions

Revenue growth is primarily driven by increases in Internet and Mobile service revenues, fueled by customer additions in these segments. Conversely, Video revenues continue to decline due to ongoing subscriber losses. Advertising sales revenue also experienced a decrease, partly due to lower political ad revenue.

Charter maintains a substantial debt load, with principal debt totaling $97.6 billion as of September 30, 2023. The company aims to manage this by utilizing free cash flow, cash on hand, and availability under its credit facilities, alongside potential refinancing. Charter also targets a leverage ratio of 4 to 4.5 times Adjusted EBITDA.

Charter is evolving its video product by entering new affiliation agreements, like the one with Disney, which allows for partnerships with content providers for both linear and direct-to-consumer app access. The deployment of Xumo Stream Boxes, which integrate live TV with access to numerous streaming apps, is also a key part of their strategy to offer a more unified and attractive video experience.

The subsidized rural construction initiative involves significant capital expenditures, totaling $1.44 billion for the first nine months of 2023. This initiative aims to expand service into new markets, contributing to Internet customer growth and mobile line additions, aligning with the company's goal of penetrating new and existing markets.