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Charter Communications (CHTR) Q1 Earnings & Revenues Beat
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Charter Communications Inc. (CHTR - Free Report) delivered first-quarter 2018 adjusted earnings of 70 cents per share that beat the Zacks Consensus Estimate by 26 cents and surged 22.8% from the year-ago quarter.
Revenues increased 4.9% year over year to $10.66 billion that comfortably surpassed the Zacks Consensus Estimate of $10.63 billion.
Segment Details
Residential revenues (80.3% of revenues) came in at $8.56 billion, up 4.8% from the year-ago quarter. Video and Internet revenues increased 5.3% and 9.1%, respectively. Voice revenues plunged 19.9% year over year.
Management stated that launch of Spectrum pricing and packaging in legacy Time Warner Cable (“TWC”) and legacy Bright House footprints drove top-line growth.
Commercial revenues (14.2% of revenues) increased 5.4% year over year to $1.52 billion. Small and medium business (SMB) and Enterprise revenues increased 4.1% and 7.4%, respectively.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Advertising sales (3.3% of revenues) climbed 5.6% year over year to $356 million, primarily driven by higher political revenues. Other revenues (2.1% of revenues) came in at $224 million, up 3.2% year over year.
Subscriber Statistics
In the reported quarter, total residential and SMB customer relationships increased 261K as compared with 355K in the year-ago quarter.
As of Mar 31, 2018, Charter had 27.5 million total customer relationships and 52.5 million total Primary Service Units (PSUs).
Total residential and SMB video, Internet and voice customers increased by 225K. Charter added 362K net Internet subscribers, but lost 112K and 25K video and voice subscribers, respectively.
Moreover, Monthly Residential Revenue per Residential Customer increased 1.6% year over year to $110.89.
Higher Internet Speed Attracts Subscribers
Charter Communications now offers minimum Internet speeds of at least 100 Mbps to 99% of its total footprint. As of Mar 31, 2018, 83% of Charter's residential Internet customers subscribed to tiers that provided 60 Mbps or more of speed, and 53% subscribed to Internet tiers that provided 100 Mbps or more of speed.
In April 2018, the company further expanded the availability of its Spectrum Internet Gig service (940 Mbps) to a number of new markets. The service, which uses DOCSIS 3.1 technology, is now available to nearly 23 million passings, approximately 45% of its footprint.
Charter Communications expects to launch its Spectrum Internet Gig service to nearly its entire footprint by the end of 2018. Additionally, the company is doubling minimum Internet speeds to 200 Mbps in a number of markets at no additional cost to new and existing Spectrum Internet customers.
All-digital Initiative Continues
The company continued its all-digital efforts in almost 20% of Legacy TWC's footprint and 60% of Legacy Bright House's presence that are not yet all-digital.
All-digital initiative allows Charter to offer more advanced products and services, and provides residential customers with two-way digital set-top boxes, which offer better video picture quality, an interactive programming guide and video on demand on all TV outlets in the home.
Charter Communications remains on track to launch its new mobile services in middle of 2018 under its MVNO agreement with Verizon.
Operating Details
Total operating costs and expenses increased 3.9% from the year-ago quarter to $6.76 billion. As percentage of revenues, total operating costs and expenses declined 50 basis points (bps) to 63.5%.
Programming costs increased 5.7% year over year to $2.75 billion reflecting contractual programming increases, renewals and a higher number of expanded basic video customers on a year-over-year basis.
Regulatory, connectivity and produced content costs were up 7% from the year-ago quarter to $533 million, primarily due to the company's adoption of FASB's ASU 2014-09 standard as of Jan 1, 2018.
Costs to service customers increased 3%. Moreover, mobile costs were $8 million in the quarter.
However, marketing costs dipped 1.8% from the year-ago quarter to $751 million, primarily due to lower transition-related expenses.
Adjusted EBITDA increased 6.5% from the year-ago quarter to $3.89 billion. Adjusted EBITDA margin expanded 50 bps on a year-over-year basis to 36.5%.
Balance Sheet & Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $576 million as compared with $621 million as of Dec 31, 2017.
In first-quarter 2018, net cash flows from operating activities totaled $2.7 billion, as compared with $2.8 billion reported in the year-ago quarter.
Capital expenditures totaled $2.2 billion as compared with $1.6 billion in the year-ago quarter, primarily driven by in-year timing differences and its all-digital initiative.
The company bought back almost 2 million shares for approximately $683 million.
Guidance
Charter Communications expects mobile service to generate positive EBITDA and cash flow on a standalone basis, with broader growth benefits to its core cable services over the long term.
Zacks Rank & Stocks to Consider
Currently, Charter Communications carries a Zacks Rank #3 (Hold).
Cable One (CABO - Free Report) , Tribune Media and Discovery are stocks worth considering in the same sector. While Discovery carries a Zacks Rank #2 (Buy), both Cable One and Tribune sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Cable One and Tribune are set to report their first-quarter 2018 results on May 9. Discovery is slated to report first-quarter 2018 results on May 8.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Charter Communications (CHTR) Q1 Earnings & Revenues Beat
Charter Communications Inc. (CHTR - Free Report) delivered first-quarter 2018 adjusted earnings of 70 cents per share that beat the Zacks Consensus Estimate by 26 cents and surged 22.8% from the year-ago quarter.
Revenues increased 4.9% year over year to $10.66 billion that comfortably surpassed the Zacks Consensus Estimate of $10.63 billion.
Segment Details
Residential revenues (80.3% of revenues) came in at $8.56 billion, up 4.8% from the year-ago quarter. Video and Internet revenues increased 5.3% and 9.1%, respectively. Voice revenues plunged 19.9% year over year.
Management stated that launch of Spectrum pricing and packaging in legacy Time Warner Cable (“TWC”) and legacy Bright House footprints drove top-line growth.
Commercial revenues (14.2% of revenues) increased 5.4% year over year to $1.52 billion. Small and medium business (SMB) and Enterprise revenues increased 4.1% and 7.4%, respectively.
Charter Communications, Inc. Price, Consensus and EPS Surprise
Charter Communications, Inc. Price, Consensus and EPS Surprise | Charter Communications, Inc. Quote
Advertising sales (3.3% of revenues) climbed 5.6% year over year to $356 million, primarily driven by higher political revenues. Other revenues (2.1% of revenues) came in at $224 million, up 3.2% year over year.
Subscriber Statistics
In the reported quarter, total residential and SMB customer relationships increased 261K as compared with 355K in the year-ago quarter.
As of Mar 31, 2018, Charter had 27.5 million total customer relationships and 52.5 million total Primary Service Units (PSUs).
Total residential and SMB video, Internet and voice customers increased by 225K. Charter added 362K net Internet subscribers, but lost 112K and 25K video and voice subscribers, respectively.
Moreover, Monthly Residential Revenue per Residential Customer increased 1.6% year over year to $110.89.
Higher Internet Speed Attracts Subscribers
Charter Communications now offers minimum Internet speeds of at least 100 Mbps to 99% of its total footprint. As of Mar 31, 2018, 83% of Charter's residential Internet customers subscribed to tiers that provided 60 Mbps or more of speed, and 53% subscribed to Internet tiers that provided 100 Mbps or more of speed.
In April 2018, the company further expanded the availability of its Spectrum Internet Gig service (940 Mbps) to a number of new markets. The service, which uses DOCSIS 3.1 technology, is now available to nearly 23 million passings, approximately 45% of its footprint.
Charter Communications expects to launch its Spectrum Internet Gig service to nearly its entire footprint by the end of 2018. Additionally, the company is doubling minimum Internet speeds to 200 Mbps in a number of markets at no additional cost to new and existing Spectrum Internet customers.
All-digital Initiative Continues
The company continued its all-digital efforts in almost 20% of Legacy TWC's footprint and 60% of Legacy Bright House's presence that are not yet all-digital.
All-digital initiative allows Charter to offer more advanced products and services, and provides residential customers with two-way digital set-top boxes, which offer better video picture quality, an interactive programming guide and video on demand on all TV outlets in the home.
Charter Communications remains on track to launch its new mobile services in middle of 2018 under its MVNO agreement with Verizon.
Operating Details
Total operating costs and expenses increased 3.9% from the year-ago quarter to $6.76 billion. As percentage of revenues, total operating costs and expenses declined 50 basis points (bps) to 63.5%.
Programming costs increased 5.7% year over year to $2.75 billion reflecting contractual programming increases, renewals and a higher number of expanded basic video customers on a year-over-year basis.
Regulatory, connectivity and produced content costs were up 7% from the year-ago quarter to $533 million, primarily due to the company's adoption of FASB's ASU 2014-09 standard as of Jan 1, 2018.
Costs to service customers increased 3%. Moreover, mobile costs were $8 million in the quarter.
However, marketing costs dipped 1.8% from the year-ago quarter to $751 million, primarily due to lower transition-related expenses.
Adjusted EBITDA increased 6.5% from the year-ago quarter to $3.89 billion. Adjusted EBITDA margin expanded 50 bps on a year-over-year basis to 36.5%.
Balance Sheet & Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $576 million as compared with $621 million as of Dec 31, 2017.
In first-quarter 2018, net cash flows from operating activities totaled $2.7 billion, as compared with $2.8 billion reported in the year-ago quarter.
Capital expenditures totaled $2.2 billion as compared with $1.6 billion in the year-ago quarter, primarily driven by in-year timing differences and its all-digital initiative.
The company bought back almost 2 million shares for approximately $683 million.
Guidance
Charter Communications expects mobile service to generate positive EBITDA and cash flow on a standalone basis, with broader growth benefits to its core cable services over the long term.
Zacks Rank & Stocks to Consider
Currently, Charter Communications carries a Zacks Rank #3 (Hold).
Cable One (CABO - Free Report) , Tribune Media and Discovery are stocks worth considering in the same sector. While Discovery carries a Zacks Rank #2 (Buy), both Cable One and Tribune sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Cable One and Tribune are set to report their first-quarter 2018 results on May 9. Discovery is slated to report first-quarter 2018 results on May 8.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>