CHARTER COMMUNICATIO

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Charter Communications : 3Q20 Financial Addendum

10/30/2020 | 08:50am

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

  1. 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.
  2. 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.
  3. 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.
  4. Penetration represents residential and SMB customers as a percentage of estimated passings. Penetration excludes mobile-only customers.
  5. 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.
  6. 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.
  7. 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.
  8. 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

  1. 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

  1. 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).
  2. 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).
  3. Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
  4. Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
  5. 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

Disclaimer

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

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