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InvestorsApril 28, 2023

Charter Announces First Quarter 2023 Results

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STAMFORD, Conn., April 28, 2023 /PRNewswire/ -- Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three months ended March 31, 2023.

  • First quarter total residential and small and medium business ("SMB") Internet customers increased by 76,000. As of March 31, 2023, Charter served a total of 30.5 million residential and SMB Internet customers.
  • First quarter total residential and SMB mobile lines increased by 686,000. As of March 31, 2023, Charter served a total of 6.0 million mobile lines.
  • As of March 31, 2023, Charter had a total of 32.2 million residential and SMB customer relationships, which excludes mobile-only relationships.
  • First quarter revenue of $13.7 billion grew by 3.4% year-over-year, driven by residential revenue growth of 2.5%, other revenue growth of 34.0%, primarily driven by higher mobile device sales, and commercial revenue growth of 2.4%.
  • Net income attributable to Charter shareholders totaled $1.0 billion in the first quarter.
  • First quarter Adjusted EBITDA1 of $5.4 billion grew by 2.6% year-over-year.
  • First quarter capital expenditures totaled $2.5 billion and included $890 million of line extensions.
  • First quarter net cash flows from operating activities totaled $3.3 billion, compared to $3.6 billion in the prior year. The year-over-year decline was primarily due to a more unfavorable change in working capital.
  • First quarter free cash flow1 of $664 million decreased from $1.8 billion in the prior year, primarily due to higher capital expenditures mostly driven by Charter's network expansion and evolution initiatives and a seasonality-driven change in working capital, excluding the impact of mobile devices.
  • During the first quarter, Charter purchased 2.6 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $1.0 billion.

"In the first quarter, we made significant progress on our three key initiatives — evolution, expansion and execution," said Chris Winfrey, President and CEO of Charter. "Our customer-first strategy is focused on delivering a differentiated, converged connectivity product that delivers the fastest speeds and saves customers money, while simultaneously driving growth and creating long-term value for Charter shareholders."

1.

Adjusted EBITDA and free cash flow are non-GAAP measures defined in the "Use of Adjusted EBITDA and Free Cash Flow Information" section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.

 

Key Operating Results

 
   

Approximate as of

   
   

March 31, 2023 (d)

 

March 31, 2022 (d)

 

Y/Y Change

Footprint (e)

           

Estimated Passings

 

55,885

 

54,739

 

2.1 %

             

Customer Relationships (f)

           

Residential

 

29,996

 

30,035

 

(0.1) %

SMB

 

2,215

 

2,163

 

2.4 %

  Total Customer Relationships

 

32,211

 

32,198

 

— %

             

Residential

 

8

 

109

 

(101)

SMB

 

8

 

20

 

(12)

  Total Customer Relationships Quarterly Net Additions

 

16

 

129

 

(113)

             

Total Customer Relationship Penetration of Estimated Passings (g)

 

57.6 %

 

58.8 %

 

(1.2) ppts

             

Monthly Residential Revenue per Residential Customer (a) (h)

 

$               120.56

 

$               117.58

 

2.5 %

Monthly SMB Revenue per SMB Customer (a) (i)

 

$               164.58

 

$               165.58

 

(0.6) %

             

Residential Customer Relationships Penetration

           

One Product Penetration (a)(j)

 

46.0 %

 

45.0 %

 

1.0 ppts

Two Product Penetration (a)(j)

 

32.8 %

 

32.5 %

 

0.3 ppts

Three or More Product Penetration (a)(j)

 

21.1 %

 

22.5 %

 

(1.4) ppts

             

% Residential Non-Video Customer Relationships

 

52.5 %

 

49.7 %

 

2.8 ppts

             

Internet

           

Residential

 

28,479

 

28,301

 

0.6 %

SMB

 

2,030

 

1,973

 

2.9 %

    Total Internet Customers

 

30,509

 

30,274

 

0.8 %

             

Residential

 

67

 

164

 

(97)

SMB

 

9

 

21

 

(12)

    Total Internet Quarterly Net Additions

 

76

 

185

 

(109)

             

Video

           

Residential

 

14,260

 

15,093

 

(5.5) %

SMB

 

646

 

628

 

2.8 %

  Total Video Customers

 

14,906

 

15,721

 

(5.2) %

             

Residential

 

(237)

 

(123)

 

(114)

SMB

 

(4)

 

11

 

(15)

  Total Video Quarterly Net Additions

 

(241)

 

(112)

 

(129)

             

Voice

           

Residential

 

7,473

 

8,465

 

(11.7) %

SMB

 

1,290

 

1,288

 

0.1 %

  Total Voice Customers

 

8,763

 

9,753

 

(10.2) %

             

Residential

 

(224)

 

(156)

 

(68)

SMB

 

4

 

6

 

(2)

  Total Voice Quarterly Net Additions

 

(220)

 

(150)

 

(70)

             

Mobile Lines (k)

           

Residential

 

5,782

 

3,805

 

51.9 %

SMB

 

196

 

132

 

48.4 %

  Total Mobile Lines

 

5,978

 

3,937

 

51.8 %

             

Residential

 

666

 

357

 

309

SMB

 

20

 

16

 

4

  Total Mobile Lines Quarterly Net Additions

 

686

 

373

 

313

             

Enterprise (l)

           

Enterprise Primary Service Units ("PSUs")

 

288

 

274

 

4.9 %

Enterprise Quarterly Net Additions

 

4

 

2

 

2

 

In thousands, except per customer and penetration data. See footnotes to unaudited summary of operating statistics on page 7 of the addendum of this news release. The footnotes contain important disclosures regarding the definitions used for these operating statistics.  All percentages are calculated using whole numbers. Minor differences may exist due to rounding. 

As of March 31, 2023, Charter had 30.0 million residential customer relationships.

First quarter residential Internet customers increased by 67,000, compared to an increase of 164,000 customers during the first quarter of 2022. Spectrum Internet® delivers the fastest Internet and WiFi download speeds in the nation.1 Charter offers Spectrum Internet products with speeds up to 1 Gbps across its entire footprint and is on plan to evolve its network to offer symmetrical and multi-gig speeds across its entire footprint over the next three years at a lower cost and more quickly than its competitors. Charter's Advanced WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices with enhanced security and privacy, became available to SMB customers in March, and is now available to all Spectrum Internet customers. At the end of the first quarter, over 40% of Charter's residential Internet customers have Charter's Advanced WiFi. In the first quarter, Charter completed the deployment of Mobile Speed Boost to all Advanced WiFi routers. In October 2022, Charter introduced Spectrum One, which brings together Spectrum Internet, Advanced WiFi and Unlimited Spectrum MobileTM. Spectrum One products work better together, provide the fastest connectivity, offer more reliable and secure online connections and save customers significant money.

Residential video customers decreased by 237,000 in the first quarter of 2023, compared to a decline of 123,000 in the first quarter of 2022, partly driven by downgrades following a January pass through of higher programming expense. As of March 31, 2023, Charter had 14.3 million residential video customers. Charter plans to begin deploying Xumo-branded streaming devices in late 2023.

During the first quarter of 2023, residential wireline voice customers declined by 224,000, compared to a decline of 156,000 in the first quarter of 2022. As of March 31, 2023, Charter had 7.5 million residential wireline voice customers.

During the first quarter of 2023, Charter added 666,000 residential mobile lines, compared to growth of 357,000 during the first quarter of 2022. Spectrum Mobile is available to all new and existing Spectrum Internet customers and offers the fastest overall speeds,2 with plans that include 5G access and taxes and fees and do not require contracts. Spectrum One and Spectrum Mobile are central to Charter's converged network strategy to provide consumers a differentiated connectivity experience with highly competitive, simple data plans and pricing.

First quarter 2023 residential revenue per residential customer totaled $120.56, and increased by 2.5% compared to the prior year period, given promotional rate step-ups, rate adjustments and the accelerated growth of Spectrum Mobile, partly offset by a higher mix of non-video customer relationships and a higher mix of lower priced video packages within Charter's video customer base.

SMB customer relationships grew by 8,000 in the first quarter of 2023, while first quarter 2022 SMB customer relationships grew by 20,000. Enterprise PSUs grew by 4,000 in the first quarter of 2023 versus 2,000 added in the first quarter of 2022.

Charter continues to work with federal, state and local governments to bring Spectrum Internet to unserved and underserved communities. During the first quarter of 2023, Charter activated 44,000 subsidized rural passings.

1.

Based on Ookla's Speedtest Global Index median fixed download speeds for Q1 2023.

2.

Fastest Overall Speed claim based on Global Wireless Solutions' combined cellular and WiFi speed test results in Spectrum service area where WiFi is available. Cellular speeds vary by location.

 

First Quarter Financial Results

(in millions)

 
 

Three Months Ended March 31,

 

2023

 

2022

 

% Change

Revenues:

         

Internet

$      5,718

 

$      5,452

 

4.9 %

Video

4,254

 

4,346

 

(2.1) %

Voice

373

 

391

 

(4.6) %

Mobile service (a)

497

 

387

 

28.3 %

Residential revenue

10,842

 

10,576

 

2.5 %

Small and medium business (a)

1,091

 

1,070

 

2.0 %

Enterprise

682

 

661

 

3.1 %

Commercial revenue

1,773

 

1,731

 

2.4 %

Advertising sales

355

 

383

 

(7.2) %

Other (a)

683

 

510

 

34.0 %

Total Revenues

$    13,653

 

$    13,200

 

3.4 %

           

Net income attributable to Charter shareholders

$      1,021

 

$      1,203

 

(15.2) %

Net income attributable to Charter shareholders margin

7.5 %

 

9.1 %

   
           

Adjusted EBITDA (b)

$      5,350

 

$      5,213

 

2.6 %

Adjusted EBITDA margin

39.2 %

 

39.5 %

   
           

Capital Expenditures

$      2,464

 

$      1,857

 

32.7 %

           

Net cash flows from operating activities

$      3,323

 

$      3,647

 

(8.9) %

Free cash flow (b)

$         664

 

$      1,800

 

(63.1) %

 

See page 1 of the addendum of this news release for a GAAP reconciliation of Adjusted EBITDA and free cash flow and page 7 of the addendum of this news release for footnotes.  The footnotes contain important disclosures regarding the definitions used for these financial results.  All percentages are calculated using whole numbers. Minor differences may exist due to rounding.

Revenues

First quarter revenue increased by 3.4% year-over-year to $13.7 billion, driven primarily by growth in residential, other and commercial revenues.

Residential revenue totaled $10.8 billion in the first quarter, an increase of 2.5% year-over-year.

Internet revenue grew by 4.9% year-over-year to $5.7 billion, driven by growth in Internet customers during the last year, promotional rate step-ups, reduced bundled discounts and rate adjustments, partly offset by lower bundled revenue allocation.

Video revenue totaled $4.3 billion in the first quarter, a decrease of 2.1% compared to the prior year period, driven by a higher mix of lower priced video packages within Charter's video customer base and a decline in video customers during the last year, partly offset by promotional rate step-ups and video rate adjustments that pass through programmer rate increases.

 Voice revenue totaled $373 million in the first quarter, a decrease of 4.6% compared to the first quarter of 2022, driven by a decline in wireline voice customers over the last twelve months, partly offset by voice rate adjustments.

First quarter mobile service revenue totaled $497 million, an increase of 28.3% year-over-year, driven by mobile line growth and higher bundled revenue allocation.

Commercial revenue increased by 2.4% year-over-year to $1.8 billion, driven by SMB and enterprise revenue growth of 2.0% and 3.1% year-over-year, respectively. First quarter 2023 SMB revenue growth was driven by customer relationship growth. Enterprise revenue excluding wholesale increased by 7.3% year-over-year, mostly reflecting PSU growth.

First quarter advertising sales revenue of $355 million decreased by 7.2% compared to the year-ago quarter, primarily driven by lower political revenue. Excluding political revenue in both periods, advertising sales revenue decreased by 2.1% year-over-year, due to lower local and national advertising revenue, partly offset by higher advanced advertising revenue.

Other revenue totaled $683 million in the first quarter, an increase of 34.0% compared to the first quarter of 2022, primarily driven by higher mobile device sales.

Operating Costs and Expenses

First quarter programming costs decreased by $178 million, or 6.0% as compared to the first quarter of 2022, reflecting fewer video customers and a higher mix of lower cost packages within Charter's video customer base, partly offset by contractual programming rate increases and renewals. First quarter 2023 programming costs include $50 million of favorable adjustments, which is similar in size to sports network rebates and other favorable adjustments in the prior year period.

Other costs of revenue increased by $220 million, or 19.9% year-over-year, primarily driven by higher mobile device sales and other mobile direct costs.

Costs to service customers increased by $136 million, or 6.9% year-over-year. The year-over-year increase in costs to service customers was primarily driven by adjustments to job structure, pay and benefits to build a more skilled and longer tenured workforce resulting in lower frontline employee attrition compared to 2022, and additional activity to support the accelerated growth of Spectrum Mobile, partly offset by productivity improvements.

Sales and marketing expenses increased by $66 million, or 7.6% year-over-year, primarily due to higher staffing across sales channels and the accelerated growth of Spectrum Mobile.

Other expenses increased by $72 million, or 6.7% as compared to the first quarter of 2022, primarily due to higher labor costs.

Net Income Attributable to Charter Shareholders

Net income attributable to Charter shareholders totaled $1.0 billion in the first quarter of 2023, compared to $1.2 billion in the first quarter of 2022. The year-over-year decrease in net income attributable to Charter shareholders was primarily driven by higher interest expense and other non-operating costs and expenses, partly offset by higher Adjusted EBITDA. 

 Net income per basic common share attributable to Charter shareholders totaled $6.74 in the first quarter of 2023 compared to $7.05 during the same period last year. The decrease was primarily the result of the factors described above, partly offset by the benefit of an 11.3% decrease in basic weighted average common shares outstanding versus the prior year period.

Adjusted EBITDA

First quarter Adjusted EBITDA of $5.4 billion grew by 2.6% year-over-year, reflecting growth in revenue and operating expenses of 3.4% and 3.9%, respectively.

Capital Expenditures

Capital expenditures totaled $2.5 billion in the first quarter of 2023, compared to $1.9 billion during the first quarter of 2022. The increase was primarily driven by higher spend on line extensions, which totaled $890 million in the first quarter of 2023, compared to $541 million in the prior year quarter, driven by Charter's subsidized rural construction initiative and continued network expansion across residential and commercial greenfield and market fill-in opportunities. First quarter capital expenditures excluding line extensions totaled $1.6 billion, compared to $1.3 billion in the first quarter of 2022, primarily driven by higher spend on upgrade/rebuild (primarily network evolution), customer premise equipment and support capital.

Charter currently expects full year 2023 capital expenditures, excluding line extensions, to be between $6.5 billion and $6.8 billion. Charter expects 2023 line extensions capital expenditures to be approximately $4 billion. The actual amount of capital expenditures in 2023 will depend on a number of factors including, but not limited to, the pace of Charter's network evolution and expansion initiatives, supply chain timing and growth rates in Charter's residential and commercial businesses.

Cash Flow and Free Cash Flow

During the first quarter of 2023, net cash flows from operating activities totaled $3.3 billion, compared to $3.6 billion in the prior year quarter. The year-over-year decrease in net cash flows from operating activities was primarily due to a more unfavorable change in working capital, partly offset by higher Adjusted EBITDA.

Free cash flow in the first quarter of 2023 totaled $664 million, compared to $1.8 billion during the same period last year. The year-over-year decrease in free cash flow was primarily driven by a decrease in net cash flows from operating activities and an increase in capital expenditures.

Liquidity & Financing

As of March 31, 2023, total principal amount of debt was $97.8 billion and Charter's credit facilities provided approximately $3.3 billion of additional liquidity in excess of Charter's $534 million cash position.

In February 2023, CCO Holdings, LLC and CCO Holdings Capital Corp. jointly issued $1.1 billion of 7.375% senior unsecured notes due 2031 at par. The net proceeds were used for general corporate purposes, including repaying certain indebtedness, funding buybacks of Charter Class A common stock and Charter Holdings common units and to pay related fees and expenses.

In February 2023, Charter Operating entered into an amendment to its credit agreement to replace London Interbank Offering Rate ("LIBOR") as the benchmark rate applicable to the Term B loans with Secured Overnight Financing Rate ("SOFR") and in March 2023, Charter Operating entered into another amendment to its credit agreement to incur a new Term B-3 loan with an aggregate principal amount of $750 million maturing in 2030 concurrently with the cancellation of certain of Charter Operating's existing Term B-1 and B-2 loans, among other amendments. Pricing on the new Term B-3 loan is SOFR plus 2.25%. After giving effect to the amendments, the aggregate principal amount of Term B-1 loans is $2.3 billion with pricing unchanged at SOFR plus 1.75% and the aggregate principal amount of Term B-2 loans is $3.1 billion with pricing unchanged at SOFR plus 1.75%.

Share Repurchases

During the three months ended March 31, 2023, Charter purchased 2.6 million shares of Charter Class A common stock and Charter Holdings common units for approximately $1.0 billion.

Webcast

Charter will host a webcast on Friday, April 28, 2023 at 8:30 a.m. Eastern Time (ET) related to the contents of this release.

The webcast can be accessed live via the Company's investor relations website at ir.charter.com. Participants should go to the webcast link no later than 10 minutes prior to the start time to register. The webcast will be archived at ir.charter.com two hours after completion of the webcast.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2023, which will be posted on the "Results & SEC Filings" section of the Company's investor relations website at ir.charter.com, when it is filed with the Securities and Exchange Commission (the "SEC"). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the "Results & SEC Filings" section.

Use of Adjusted EBITDA and Free Cash Flow Information

The Company uses certain measures that are not defined by U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to Charter shareholders and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the Addendum to this release.

Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, other income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or special items, and is unaffected by the Company's capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. These costs are evaluated through other financial measures.     

Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.   

Management and Charter's board of directors use Adjusted EBITDA and free cash flow to assess Charter's performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the SEC). For the purpose of calculating compliance with leverage covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company's debt covenants refer to these expenses as management fees, which were $374 million and $342 million for the three months ended March 31, 2023 and 2022, respectively.

About Charter

Charter Communications, Inc. (NASDAQ:CHTR) is a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states through its Spectrum brand. Over an advanced communications network, the Company offers a full range of state-of-the-art residential and business services including Spectrum Internet®, TV, Mobile and Voice.

For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. The Company also distributes award-winning news coverage and sports programming to its customers through Spectrum Networks. More information about Charter can be found at corporate.charter.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial.  Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations.  Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the SEC.  Many of the forward-looking statements contained in this communication may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity," "tentative," "positioning," "designed," "create," "predict," "project," "initiatives," "seek," "would," "could," "continue," "ongoing," "upside," "increases," "grow," "focused on" and "potential," among others.  Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

  • our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
  • the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line ("DSL") providers, fiber to the home providers and providers of video content over broadband Internet connections;
  • general business conditions, unemployment levels and the level of activity in the housing sector and economic uncertainty or downturn;
  • our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents and distribution requirements);
  • our ability to develop and deploy new products and technologies including consumer services and service platforms;
  • any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
  • the effects of governmental regulation on our business including subsidies to consumers, subsidies and incentives for competitors, costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us;
  • the ability to hire and retain key personnel;
  • our ability to procure necessary services and equipment from our vendors in a timely manner and at reasonable costs including in connection with our network evolution and rural construction initiatives;
  • the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
  • our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement.  We are under no duty or obligation to update any of the forward-looking statements after the date of this communication.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES

(dollars in millions)

 
 

Three Months Ended March 31,

 

2023

 

2022

Net income attributable to Charter shareholders

$             1,021

 

$             1,203

Plus:  Net income attributable to noncontrolling interest

162

 

186

Interest expense, net

1,265

 

1,060

Income tax expense

374

 

345

Depreciation and amortization

2,206

 

2,294

Stock compensation expense

208

 

147

Other, net

114

 

(22)

Adjusted EBITDA (b)

$             5,350

 

$             5,213

       

Net cash flows from operating activities

$             3,323

 

$             3,647

Less:  Purchases of property, plant and equipment

(2,464)

 

(1,857)

Change in accrued expenses related to capital expenditures

(195)

 

10

Free cash flow (b)

$                664

 

$             1,800

 

The above schedule is presented in order to reconcile Adjusted EBITDA and free cash flow, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.

 

UNAUDITED ALTERNATIVE PRESENTATION OF ADJUSTED EBITDA

(dollars in millions)

 
 

Three Months Ended March 31,

 

2023

 

2022

 

% Change

REVENUES:

         

Internet

$             5,718

 

$             5,452

 

4.9 %

Video

4,254

 

4,346

 

(2.1) %

Voice

373

 

391

 

(4.6) %

Mobile service (a)

497

 

387

 

28.3 %

 Residential revenue

10,842

 

10,576

 

2.5 %

Small and medium business (a)

1,091

 

1,070

 

2.0 %

Enterprise

682

 

661

 

3.1 %

 Commercial revenue

1,773

 

1,731

 

2.4 %

Advertising sales

355

 

383

 

(7.2) %

Other (a)

683

 

510

 

34.0 %

 Total Revenues

13,653

 

13,200

 

3.4 %

           

COSTS AND EXPENSES:

         

Programming

2,799

 

2,977

 

(6.0) %

Other costs of revenue (a)

1,328

 

1,108

 

19.9 %

Costs to service customers (a)

2,095

 

1,959

 

6.9 %

Sales and marketing (a)

946

 

880

 

7.6 %

Other expense (a) (c)

1,135

 

1,063

 

6.7 %

 Total operating costs and expenses (c)

8,303

 

7,987

 

3.9 %

           

Adjusted EBITDA (b)

$             5,350

 

$             5,213

 

2.6 %

 

All percentages are calculated using whole numbers. Minor differences may exist due to rounding. 

 

See footnotes on page 7.

 

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions, except per share data)

 
 

Three Months Ended March 31,

 

2023

 

2022

REVENUES

$           13,653

 

$           13,200

       

COSTS AND EXPENSES:

     

Operating costs and expenses (exclusive of items shown separately below)

8,511

 

8,134

Depreciation and amortization

2,206

 

2,294

Other operating expenses, net

10

 

1

 

10,727

 

10,429

Income from operations

2,926

 

2,771

       

OTHER INCOME (EXPENSES):

     

Interest expense, net

(1,265)

 

(1,060)

Other income (expense), net

(104)

 

23

 

(1,369)

 

(1,037)

Income before income taxes

1,557

 

1,734

Income tax expense

(374)

 

(345)

Consolidated net income

1,183

 

1,389

Less: Net income attributable to noncontrolling interests

(162)

 

(186)

Net income attributable to Charter shareholders

$             1,021

 

$             1,203

       

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:

     

Basic

$               6.74

 

$               7.05

Diluted

$               6.65

 

$               6.90

Weighted average common shares outstanding, basic

151,438,371

 

170,688,127

Weighted average common shares outstanding, diluted

153,538,359

 

174,500,472

 

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions)

 
 

March 31,

 

December 31,

 

2023

 

2022

ASSETS

(unaudited)

   

CURRENT ASSETS:

     

Cash and cash equivalents

$                    534

 

$                    645

Accounts receivable, net

2,851

 

2,921

Prepaid expenses and other current assets

682

 

451

Total current assets

4,067

 

4,017

       

INVESTMENT IN CABLE PROPERTIES:

     

Property, plant and equipment, net

36,602

 

36,039

Customer relationships, net

2,479

 

2,772

Franchises

67,366

 

67,363

Goodwill

29,563

 

29,563

Total investment in cable properties, net

136,010

 

135,737

       

OTHER NONCURRENT ASSETS

4,793

 

4,769

       

Total assets

$              144,870

 

$              144,523

       

LIABILITIES AND SHAREHOLDERS' EQUITY

     

CURRENT LIABILITIES:

     

Accounts payable and accrued liabilities

$               10,243

 

$               10,555

Current portion of long-term debt

1,999

 

1,510

Total current liabilities

12,242

 

12,065

       

LONG-TERM DEBT

95,973

 

96,093

DEFERRED INCOME TAXES

19,030

 

19,058

OTHER LONG-TERM LIABILITIES

4,723

 

4,758

       

SHAREHOLDERS' EQUITY:

     

Controlling interest

9,418

 

9,119

Noncontrolling interests

3,484

 

3,430

Total shareholders' equity

12,902

 

12,549

       

Total liabilities and shareholders' equity

$              144,870

 

$              144,523

 

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

 
 

Three Months Ended March 31,

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Consolidated net income

$             1,183

 

$             1,389

Adjustments to reconcile consolidated net income to net cash flows from operating activities:

     

  Depreciation and amortization

2,206

 

2,294

  Stock compensation expense

208

 

147

  Noncash interest income, net

(3)

 

(3)

  Deferred income taxes

(23)

 

38

  Other, net

104

 

(21)

Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:

     

  Accounts receivable

70

 

49

  Prepaid expenses and other assets

(336)

 

(185)

  Accounts payable, accrued liabilities and other

(86)

 

(61)

Net cash flows from operating activities

3,323

 

3,647

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Purchases of property, plant and equipment

(2,464)

 

(1,857)

Change in accrued expenses related to capital expenditures

(195)

 

10

Other, net

(80)

 

60

  Net cash flows from investing activities

(2,739)

 

(1,787)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Borrowings of long-term debt

7,104

 

6,713

Repayments of long-term debt

(6,740)

 

(2,954)

Payments for debt issuance costs

(18)

 

(37)

Purchase of treasury stock

(912)

 

(3,333)

Proceeds from exercise of stock options

2

 

1

Purchase of noncontrolling interest

(122)