Back to top

Image: Bigstock

Charter (CHTR) Q1 Earnings Miss Estimates, Revenues Rise Y/Y

Read MoreHide Full Article

Charter Communications (CHTR - Free Report) reported first-quarter 2021 earnings of $4.11 per share that missed the Zacks Consensus Estimate by 5.3% but jumped 121% year over year.

Revenues of $12.5 billion increased 6.7% on a year-over-year basis, owing to growth in Internet and mobile revenues. The figure marginally beat the consensus mark by 0.2%.

Segmental Details

Residential revenues came in at $9.8 billion, up 5.8% from the year-ago quarter.

Monthly residential revenues per customer (excluding mobile) totaled $112.18, down 0.5% year over year.

Internet revenues grew 15.4% year over year to $5.1 billion driven by growth in Internet customers, promotional rate step-ups and rate adjustments.

Video revenues fell 1.8% to $4.3 billion due to lower pay-per-view and video on demand revenues and lower installation revenues, partly offset by rate adjustments and promotional rate step-ups.

Moreover, voice revenues decreased 12.6% to $33.9 million due to a decline in wireline voice customers over the last 12 months and changes in bundled revenue allocation.

Commercial revenues improved 2% year over year to $1.7 billion driven by SMB and enterprise revenue growth. Small and medium business revenues came in at $1.01 billion, up 1.6% year over year, reflecting customer relationship growth.

Enterprise revenues increased 2.5% to $638 million. Enterprise retail revenues excluding wholesale revenues increased 7.2% year over year, reflecting PSU growth.

First-quarter advertising sales revenues of $344 million decreased 5.8% year over year thanks to lower political revenues partly offset by higher advanced advertising revenues.

Mobile revenues surged 90.7% year over year to $492 million. Other revenues came in at $207 million, down 2% year over year.

Subscriber Statistics

As of Mar 31, 2021, Charter had 31.4 million total customer relationships, with 1.7 million net new customer relationships added over the last twelve months.

Moreover, the company had 27.3 million residential Internet customers, up 7.4% year over year.

During the first quarter, Charter doubled its starting download speed to 200 Mbps in 17 additional markets at no extra cost to customers. Currently, 200 Mbps is the minimum speed offered to new Spectrum Internet customers in nearly 85% of Charter's footprint, with 100 Mbps the minimum speed offered in the remainder of its footprint.

As of Mar 31, 2021, over 70% of residential Internet customers subscribed to tiers that provided 200 Mbps or more of speed.

Charter added 334K residential Internet customers in the reported quarter.

Further, Charter added 300K mobile lines in the first quarter. As of Mar 31, 2021, the company served a total of 2.67 million mobile lines. However, the company lost 171K voice customers from the year ago quarter.

Operating Details

Total operating costs and expenses increased 3.2% from the year-ago quarter to $7.57 billion.

Programming costs increased 3.3% year over year to $2.9 billion due to a rise in renewals and contractual programming. Regulatory, connectivity and produced-content costs were up 8.9% to $600 million.

Costs to service customers decreased 2.4% year over year to $1.8 billion. Marketing costs were $751 million, down 2% year over year.

Notably, mobile costs jumped 52.8% year over year to $572 million.

Adjusted EBITDA increased 12.5% year over year to $4.9 billion. Moreover, adjusted EBITDA margin expanded 210 basis points (bps) to 39.5%.

Balance Sheet & Cash Flow

As of Mar 31, 2020, cash and cash equivalents were $772 million compared with $998 million as of Dec 31, 2020. The company’s credit facilities provided roughly $4.7 billion of additional liquidity.

Further, as of Mar 31, 2021, total debt was $84.3 billion compared with debt of $82.1 billion as of Dec 31, 2020

Cash flows from operating activities totaled $3.8 billion compared with $3.2 billion in the year-ago quarter.

Property, plant and equipment expenditures totaled $1.8 billion in the reported quarter compared with $1.5 billion in the year-ago quarter, primarily driven by increase in scalable infrastructure and line extensions

Free cash flow was $1.9 billion compared with $1.4 billion in the year-ago quarter.

Zacks Rank & Stocks to Consider

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

JAKKS Pacific, Inc. (JAKK - Free Report) , Nexstar Media Group, Inc (NXST - Free Report) and TEGNA Inc. (TGNA - Free Report) are some better-ranked stocks in the broader consumer discretionary sector, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nextstar Media, TEGNA and JAKK Pacific are scheduled to report their quarterly results on May 4, 10 and 12, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>