CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA (dollars in millions, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||
REVENUES: | |||||||||||||||
Internet | $ | 4,722 | $ | 4,195 | 12.5 % | $ | 13,659 | $ | 12,322 | 10.8 % | |||||
Video | 4,221 | 4,359 | (3.2)% | 13,014 | 13,134 | (0.9)% | |||||||||
Voice | 449 | 477 | (5.8)% | 1,357 | 1,470 | (7.7)% | |||||||||
Residential revenue | 9,392 | 9,031 | 4.0 % | 28,030 | 26,926 | 4.1 % | |||||||||
Small and medium business | 988 | 974 | 1.5 % | 2,967 | 2,882 | 2.9 % | |||||||||
Enterprise | 617 | 644 | (4.3)% | 1,845 | 1,939 | (4.9)% | |||||||||
Commercial revenue | 1,605 | 1,618 | (0.8)% | 4,812 | 4,821 | (0.2)% | |||||||||
Advertising sales | 460 | 394 | 16.8 % | 1,074 | 1,134 | (5.3)% | |||||||||
Mobile | 368 | 192 | 91.8 % | 936 | 490 | 91.3 % | |||||||||
Other | 214 | 215 | (0.7)% | 621 | 632 | (1.8)% | |||||||||
Total Revenue | 12,039 | 11,450 | 5.1 % | 35,473 | 34,003 | 4.3 % | |||||||||
COSTS AND EXPENSES: | |||||||||||||||
Programming | 2,727 | 2,790 | (2.3)% | 8,492 | 8,482 | 0.1 % | |||||||||
Regulatory, connectivity and produced content | 612 | 612 | (0.1)% | 1,651 | 1,770 | (6.7)% | |||||||||
Costs to service customers | 1,902 | 1,894 | 0.4 % | 5,598 | 5,483 | 2.1 % | |||||||||
Marketing | 788 | 793 | (0.7)% | 2,273 | 2,296 | (1.0)% | |||||||||
Mobile | 456 | 337 | 35.2 % | 1,243 | 874 | 42.2 % | |||||||||
Other expense | 915 | 938 | (2.5)% | 2,692 | 2,772 | (2.9)% | |||||||||
Total operating costs and expenses (exclusive | 7,400 | 7,364 | 0.5 % | 21,949 | 21,677 | 1.3 % | |||||||||
of items shown separately below) | |||||||||||||||
Adjusted EBITDA | 4,639 | 4,086 | 13.6 % | 13,524 | 12,326 | 9.7 % | |||||||||
Adjusted EBITDA margin | 38.5 % | 35.7 % | 38.1 % | 36.2 % | |||||||||||
Depreciation and amortization | 2,370 | 2,415 | 7,295 | 7,465 | |||||||||||
Stock compensation expense | 83 | 71 | 263 | 238 | |||||||||||
Other operating expenses, net | 14 | 14 | 23 | 71 | |||||||||||
Income from operations | 2,172 | 1,586 | 5,943 | 4,552 | |||||||||||
OTHER INCOME (EXPENSES): | |||||||||||||||
Interest expense, net | (946) | (963) | (2,883) | (2,833) | |||||||||||
Loss on extinguishment of debt | (58) | - | (121) | - | |||||||||||
Gain (loss) on financial instruments, net | 69 | (34) | (185) | (116) | |||||||||||
Other pension benefits (costs), net | (115) | 9 | (94) | 27 | |||||||||||
Other expense, net | (13) | (5) | (13) | (131) | |||||||||||
(1,063) | (993) | (3,296) | (3,053) | ||||||||||||
Income before income taxes | 1,109 | 593 | 2,647 | 1,499 | |||||||||||
Income tax expense | (177) | (126) | (372) | (329) | |||||||||||
Consolidated net income | 932 | 467 | 2,275 | 1,170 | |||||||||||
Less: Net income attributable to noncontrolling | (118) | (80) | (299) | (216) | |||||||||||
interests | |||||||||||||||
Net income attributable to Charter shareholders | $ | 814 | $ | 387 | $ | 1,976 | $ | 954 | |||||||
EARNINGS PER COMMON SHARE | |||||||||||||||
ATTRIBUTABLE TO CHARTER SHAREHOLDERS: | |||||||||||||||
Basic | $ | 4.01 | $ | 1.77 | $ | 9.62 | $ | 4.30 | |||||||
Diluted | $ | 3.90 | $ | 1.74 | $ | 9.35 | $ | 4.23 | |||||||
Weighted average common shares outstanding, | 202,826,502 | 218,499,213 | 205,468,736 | 221,818,079 | |||||||||||
basic | |||||||||||||||
Weighted average common shares outstanding, | |||||||||||||||
208,722,129 | 222,355,867 | 211,399,781 | 225,337,984 | ||||||||||||
diluted | |||||||||||||||
Adjusted EBITDA is a non-GAAP term. See page 6 of this addendum for the reconciliation of Adjusted EBITDA to net income attributable to Charter shareholders as defined by GAAP.
All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 1 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in millions)
September 30, | December 31, | ||||
2020 | 2019 | ||||
ASSETS | (unaudited) | ||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | $ | 1,283 | $ | 3,483 | |
Accounts receivable, net | 2,068 | 2,227 | |||
Prepaid expenses and other current assets | 709 | 761 | |||
Total current assets | 4,060 | 6,471 | |||
RESTRICTED CASH | 3 | 66 | |||
INVESTMENT IN CABLE PROPERTIES: | |||||
Property, plant and equipment, net | 34,196 | 34,591 | |||
Customer relationships, net | 6,050 | 7,453 | |||
Franchises | 67,322 | 67,322 | |||
Goodwill | 29,554 | 29,554 | |||
Total investment in cable properties, net | 137,122 | 138,920 | |||
OTHER NONCURRENT ASSETS | 3,008 | 2,731 | |||
Total assets | $ | 144,193 | $ | 148,188 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
CURRENT LIABILITIES: | |||||
Accounts payable and accrued liabilities | $ | 8,541 | $ | 8,885 | |
Current portion of long-term debt | 1,715 | 3,500 | |||
Total current liabilities | 10,256 | 12,385 | |||
LONG-TERM DEBT | 77,947 | 75,578 | |||
DEFERRED INCOME TAXES | 17,929 | 17,711 | |||
OTHER LONG-TERM LIABILITIES | 4,349 | 3,703 | |||
SHAREHOLDERS' EQUITY: | |||||
Controlling interest | 26,906 | 31,445 | |||
Noncontrolling interests | 6,806 | 7,366 | |||
Total shareholders' equity | 33,712 | 38,811 | |||
Total liabilities and shareholders' equity | $ | 144,193 | $ | 148,188 | |
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 2 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions)
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Consolidated net income | $ | 932 | $ | 467 | $ | 2,275 | $ | 1,170 | |||
Adjustments to reconcile consolidated net income to net cash flows from | |||||||||||
operating activities: | |||||||||||
Depreciation and amortization | 2,370 | 2,415 | 7,295 | 7,465 | |||||||
Stock compensation expense | 83 | 71 | 263 | 238 | |||||||
Noncash interest income, net | (10) | (17) | (31) | (89) | |||||||
Other pension (benefits) costs, net | 115 | (9) | 94 | (27) | |||||||
Loss on extinguishment of debt | 58 | - | 121 | - | |||||||
(Gain) loss on financial instruments, net | (69) | 34 | 185 | 116 | |||||||
Deferred income taxes | 151 | 96 | 252 | 233 | |||||||
Other, net | (4) | (3) | (21) | 148 | |||||||
Changes in operating assets and liabilities, net of effects from acquisitions | |||||||||||
and dispositions: | |||||||||||
Accounts receivable | (74) | (227) | 159 | (564) | |||||||
Prepaid expenses and other assets | (76) | (49) | (240) | (225) | |||||||
Accounts payable, accrued liabilities and other | 188 | 165 | 61 | (75) | |||||||
Net cash flows from operating activities | 3,664 | 2,943 | 10,413 | 8,390 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchases of property, plant and equipment | (2,014) | (1,651) | (5,352) | (4,913) | |||||||
Change in accrued expenses related to capital expenditures | 104 | (21) | (70) | (449) | |||||||
Real estate investments through variable interest entities | (41) | (61) | (122) | (125) | |||||||
Other, net | (35) | 2 | (43) | 10 | |||||||
Net cash flows from investing activities | (1,986) | (1,731) | (5,587) | (5,477) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings of long-term debt | 3,030 | 2,443 | 10,352 | 13,157 | |||||||
Repayments of long-term debt | (1,819) | (763) | (9,711) | (10,886) | |||||||
Payments for debt issuance costs | (29) | (16) | (91) | (48) | |||||||
Issuance of equity | - | - | 23 | - | |||||||
Purchase of treasury stock | (3,361) | (2,767) | (6,868) | (4,568) | |||||||
Proceeds from exercise of stock options | 50 | 25 | 171 | 106 | |||||||
Purchase of noncontrolling interest | (366) | (339) | (884) | (593) | |||||||
Distributions to noncontrolling interest | (37) | (38) | (114) | (116) | |||||||
Borrowings for real estate investments through variable interest entities, net | 39 | - | 63 | - | |||||||
Other, net | (1) | (6) | (30) | (133) | |||||||
Net cash flows from financing activities | (2,494) | (1,461) | (7,089) | (3,081) | |||||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (816) | (249) | (2,263) | (168) | |||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 2,102 | 846 | 3,549 | 765 | |||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 1,286 | $ | 597 | $ | 1,286 | $ | 597 | |||
CASH PAID FOR INTEREST | $ | 1,038 | $ | 1,048 | $ | 3,023 | $ | 3,065 | |||
CASH PAID FOR TAXES | |||||||||||
$ | 34 | $ | 12 | $ | 84 | $ | 55 | ||||
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 3 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED SUMMARY OF OPERATING STATISTICS (in thousands, except per customer and penetration data)
Approximate as of | ||||||||||||
September 30, | June 30, | December 31, | September 30, | |||||||||
2020 (a) | 2020 (a) | 2019 (a) | 2019 (a) | |||||||||
Footprint (b) | ||||||||||||
Estimated Passings | 53,022 | 52,714 | 52,154 | 51,940 | ||||||||
Customer Relationships (c) | ||||||||||||
Residential | 28,912 | 28,496 | 27,277 | 27,037 | ||||||||
SMB | 2,021 | 1,980 | 1,958 | 1,930 | ||||||||
Total Customer Relationships | 30,933 | 30,476 | 29,235 | 28,967 | ||||||||
Residential | 416 | 751 | 240 | 282 | ||||||||
SMB | 41 | 4 | 28 | 28 | ||||||||
Total Customer Relationships Net Additions | 457 | 755 | 268 | 310 | ||||||||
Total Customer Relationship Penetration of Estimated Passings (d) | 58.3 % | 57.8 % | 56.1 % | 55.8 % | ||||||||
Monthly Residential Revenue per Residential Customer (e) | $ | 109.03 | $ | 110.82 | $ | 113.79 | $ | 112.00 | ||||
Monthly SMB Revenue per SMB Customer (f) | $ | 164.77 | $ | 166.06 | $ | 169.06 | $ | 169.44 | ||||
Residential Customer Relationships Penetration | ||||||||||||
Single Play Penetration (g) | 44.2 % | 44.0 % | 43.0 % | 42.7 % | ||||||||
Double Play Penetration (g) | 32.3 % | 31.7 % | 30.7 % | 29.9 % | ||||||||
Triple Play Penetration (g) | 23.5 % | 24.3 % | 26.2 % | 27.3 % | ||||||||
% Residential Non-Video Customer Relationships | 45.7 % | 45.1 % | 42.7 % | 41.8 % | ||||||||
Internet | ||||||||||||
Residential | 26,807 | 26,313 | 24,908 | 24,595 | ||||||||
SMB | 1,826 | 1,783 | 1,756 | 1,730 | ||||||||
Total Internet Customers | 28,633 | 28,096 | 26,664 | 26,325 | ||||||||
Residential | 494 | 842 | 313 | 351 | ||||||||
SMB | 43 | 8 | 26 | 29 | ||||||||
Total Internet Net Additions | 537 | 850 | 339 | 380 | ||||||||
Video | ||||||||||||
Residential | 15,705 | 15,652 | 15,620 | 15,725 | ||||||||
SMB | 530 | 516 | 524 | 520 | ||||||||
Total Video Customers | 16,235 | 16,168 | 16,144 | 16,245 | ||||||||
Residential | 53 | 102 | (105) | (77) | ||||||||
SMB | 14 | (8) | 4 | 2 | ||||||||
Total Video Net Additions | 67 | 94 | (101) | (75) | ||||||||
Voice | ||||||||||||
Residential | 9,335 | 9,398 | 9,443 | 9,595 | ||||||||
SMB | 1,207 | 1,169 | 1,144 | 1,120 | ||||||||
Total Voice Customers | 10,542 | 10,567 | 10,587 | 10,715 | ||||||||
Residential | (63) | 38 | (152) | (213) | ||||||||
SMB | 38 | 7 | 24 | 23 | ||||||||
Total Voice Net Additions | (25) | 45 | (128) | (190) | ||||||||
Mobile Lines | ||||||||||||
Residential | 2,020 | 1,672 | 1,078 | 793 | ||||||||
SMB | 40 | 25 | 4 | 1 | ||||||||
Total Mobile Lines | 2,060 | 1,697 | 1,082 | 794 | ||||||||
Residential | 348 | 313 | 285 | 275 | ||||||||
SMB | 15 | 12 | 3 | 1 | ||||||||
Total Mobile Lines Net Additions | 363 | 325 | 288 | 276 | ||||||||
Enterprise (h) | ||||||||||||
Enterprise Primary Service Unites ("PSUs") | 272 | 270 | 267 | 264 | ||||||||
Enterprise Net Additions | 2 | 1 | 3 | 6 |
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 4 of 7
- We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, at September 30, 2020, June 30, 2020, December 31, 2019 and September 30, 2019, customers included approximately 181,700, 124,500, 154,200 and 148,000 customers, respectively, whose accounts were over 60 days past due, approximately 52,300, 18,400, 13,500 and 16,400 customers, respectively, whose accounts were over 90 days past due and approximately 26,000, 10,400, 10,000 and 14,100 customers, respectively, whose accounts were over 120 days past due. Included in the September 30, 2020 aging statistics are approximately 60,200 customers that would have been disconnected under our normal collection policies, but were not due to certain state mandates in place.
- Passings represent our estimate of the number of units, such as single family homes, apartment and condominium units and SMB and enterprise sites passed by our cable distribution network in the areas where we offer the service indicated. These estimates are based upon the information available at this time and are updated for all periods presented when new information becomes available.
- Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, video and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units ("MDUs") and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer relationships.
- Penetration represents residential and SMB customers as a percentage of estimated passings. Penetration excludes mobile-only customers.
- Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter and excludes mobile revenue and customers.
- Monthly SMB revenue per SMB customer is calculated as total SMB quarterly revenue divided by three divided by average SMB customer relationships during the respective quarter and excludes mobile revenue and customers.
- Single play, double play and triple play penetration represents the number of residential single play, double play and triple play cable customers, respectively, as a percentage of residential customer relationships, excluding mobile.
- Enterprise PSUs represents the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 5 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Net income attributable to Charter shareholders | $ | 814 | $ | 387 | $ | 1,976 | $ | 954 | |||
Plus: Net income attributable to noncontrolling interest | 118 | 80 | 299 | 216 | |||||||
Interest expense, net | 946 | 963 | 2,883 | 2,833 | |||||||
Income tax expense | 177 | 126 | 372 | 329 | |||||||
Depreciation and amortization | 2,370 | 2,415 | 7,295 | 7,465 | |||||||
Stock compensation expense | 83 | 71 | 263 | 238 | |||||||
Loss on extinguishment of debt | 58 | - | 121 | - | |||||||
(Gain) loss on financial instruments, net | (69) | 34 | 185 | 116 | |||||||
Other pension (benefits) costs, net | 115 | (9) | 94 | (27) | |||||||
Other, net | 27 | 19 | 36 | 202 | |||||||
Adjusted EBITDA (a) | 4,639 | 4,086 | 13,524 | 12,326 | |||||||
Less: Mobile revenue | (368) | (192) | (936) | (490) | |||||||
Plus: Mobile costs and expenses | 456 | 337 | 1,243 | 874 | |||||||
Cable Adjusted EBITDA | $ | 4,727 | $ | 4,231 | $ | 13,831 | $ | 12,710 | |||
Net cash flows from operating activities | $ | 3,664 | $ | 2,943 | $ | 10,413 | $ | 8,390 | |||
Less: Purchases of property, plant and equipment | (2,014) | (1,651) | (5,352) | (4,913) | |||||||
Change in accrued expenses related to capital expenditures | 104 | (21) | (70) | (449) | |||||||
Free cash flow | 1,754 | 1,271 | 4,991 | 3,028 | |||||||
Plus: Mobile net cash outflows from operating activities | 126 | 156 | 407 | 563 | |||||||
Purchases of mobile property, plant and equipment | 139 | 100 | 351 | 281 | |||||||
Cable free cash flow | $ | 2,019 | $ | 1,527 | $ | 5,749 | $ | 3,872 | |||
- See page 1 of this addendum for detail of the components included within Adjusted EBITDA.
The above schedule is presented in order to reconcile Adjusted EBITDA, cable Adjusted EBITDA, free cash flow and cable free cash flow, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 6 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CAPITAL EXPENDITURES (dollars in millions)
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Customer premise equipment (a) | $ | 520 | $ | 470 | $ | 1,501 | $ | 1,527 | |||
Scalable infrastructure (b) | 424 | 320 | 979 | 840 | |||||||
Line extensions (c) | 439 | 370 | 1,204 | 1,054 | |||||||
Upgrade/rebuild (d) | 175 | 165 | 459 | 451 | |||||||
Support capital (e) | 456 | 326 | 1,209 | 1,041 | |||||||
Total capital expenditures | 2,014 | 1,651 | 5,352 | 4,913 | |||||||
Less: Mobile capital expenditures | (139) | (100) | (351) | (281) | |||||||
Cable capital expenditures | $ | 1,875 | $ | 1,551 | $ | 5,001 | $ | 4,632 | |||
Capital expenditures included in total related to: | |||||||||||
Commercial services | $ | 358 | $ | 327 | $ | 942 | $ | 956 |
- Customer premise equipment includes costs incurred at the customer residence to secure new customers and revenue generating units, including customer installation costs and customer premise equipment (e.g., set-top boxes and cable modems).
- Scalable infrastructure includes costs, not related to customer premise equipment, to secure growth of new customers and revenue generating units, or provide service enhancements (e.g., headend equipment).
- Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
- Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
- Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles).
Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 7 of 7
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Charter Communications Inc. published this content on 29 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2020 13:49:03 UTC