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Charter's (CHTR) Q2 Earnings and Revenues Beat Estimates

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Charter Communications (CHTR - Free Report) reported second-quarter 2020 earnings of $3.63 per share that beat the Zacks Consensus Estimate by 43.5% and jumped 161.2% year over year.

Revenues of $11.70 billion increased 3.1% on a year-over-year basis owing to growth in Residential, Internet and mobile segment revenues. The figure comfortably beat the consensus mark of $11.61 billion.

Segmental Details

Residential revenues came in at $9.35 billion, up 4.1% from the year-ago quarter.

Monthly Residential revenue per Residential Customer (excluding mobile) totaled $110.82, down 1.2% year over year.

Internet revenues grew 10.4% year over year to $4.53 billion.

Video revenues fell 0.4% to $4.37 billion. Moreover, voice revenues decreased 7.7% to $451 million.

Commercial revenues decreased 1.7% year over year to $1.59 billion. Small and medium business revenues rose 2% year over year to $983 million. Enterprise revenues dropped 7.1% to $606 million.

Moreover, advertising sales plunged 37% year over year to $249 million primarily due to lower local and national sales amid coronavirus pandemic.

Mobile revenues surged 96.1% year over year to $310 million.

Other revenues came in at $196 million, flat year over year.

Subscriber Statistics

As of Jun 30, 2020, Charter had 30.476 million total customer relationships, up 6.3% year over year.

Moreover, the company had 26.313 million residential Internet customers, up 8.5% year over year. More than 85% of customers were subscribers to tiers that provided 100 Mbps or more speed. Currently, 200 Mbps is the slowest speed offered to new Spectrum Internet customers in roughly 60% of Charter's footprint, with 100 Mbps being the slowest speed offered in the remaining 40% of its footprint.

Charter added 842K residential Internet customers in the reported quarter.

Further, Charter added 325K mobile lines in the second quarter. As of Jun 30, 2020, the company served a total of 1.697 million mobile lines.

Moreover, Charter added 102K video customers and 38K wireline voice customers in the quarter under review.

Operating Details

Total operating costs and expenses increased 0.6% from the year-ago quarter to $7.21 billion.

Programming costs inched up1.6% year over year to $2.87 billion due to a rise in renewals and contractual programming. Regulatory, connectivity and produced-content costs were down 18.3% to $488 million.

Costs to service customers increased 4.6% year over year to $1.85 billion. Marketing costs were $719 million, down 6.3% year over year.

Notably, mobile costs jumped 48.6% year over year to $413 million.

Adjusted EBITDA increased 7.3% year over year to $4.40 billion. Moreover, adjusted EBITDA margin expanded 150 basis points (bps) to 38.4%.

Balance Sheet & Cash Flow

As of Jun 30, 2020, cash and cash equivalents were $2.10 billion compared with $2.91 billion as of Mar 31, 2020. The company’s credit facilities provided roughly $4.7 billion of additional liquidity.

Further, as of Jun 30, 2020, total debt was $77.8 billion compared with debt of $79.69 billion as of Mar 31.

Cash flows from operating activities totaled $3.5 billion compared with $2.8 billion in the year-ago quarter.

Property, plant and equipment expenditures totaled $1.9 billion in the reported quarter compared with $1.6 billion in the year-ago quarter, primarily driven by increases in scalable infrastructure, line extensions and Internet CPE.

Charter currently expects 2020 cable capital expenditures to decline as a percentage of cable revenues versus 2019.

Free cash flow was $1.9 billion compared with $1.1billion in the year-ago quarter.

Zacks Rank & Stocks to Consider

Currently, Charter carries a Zacks Rank #3 (Hold).

Liberty Global (LBTYA - Free Report) , The E.W. Scripps (SSP - Free Report) and Take Two Interactive (TTWO - Free Report) are some better-ranked stocks in the broader Consumer & Discretionary sector, all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Both Liberty Global and Take Two Interactive are scheduled to report earnings on Aug 3. The E.W. Scripps is set to release quarterly results on Aug 7.

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