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Charter (CHTR) Q2 Earnings Beat Estimates, Revenues Rise Y/Y

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Charter Communications (CHTR - Free Report) reported second-quarter 2021 earnings of $5.29 per share that beat the Zacks Consensus Estimate by 10% and surged 45.7% year over year.

Revenues of $12.8 billion increased 9.5% on a year-over-year basis, owing to growth in Internet, mobile and advertising sales revenues. The figure beat the consensus mark by 1.6%.

Segmental Details

Residential revenues came in at $10 billion, up 6.8% from the year-ago quarter.

Monthly residential revenues per customer (excluding mobile) totaled $112.85, up 1.8% year over year.

Internet revenues grew 15.2% year over year to $5.2 billion driven by growth in Internet customers, promotional rate step-ups, rate adjustments and higher bundled revenue allocation.

Video revenues increased 0.2% to $4.4 billion driven by rate adjustments and promotional rate step-ups.

Commercial revenues improved 5.6% year over year to $1.7 billion driven by SMB and enterprise revenue growth. Small and medium business revenues came in at $1.04 billion, up 6% year over year, reflecting customer relationship growth.

Enterprise revenues increased 5.1% to $636 million. Enterprise revenues excluding wholesale revenues increased 10.1% year over year, reflecting PSU growth.

Second-quarter advertising sales revenues of $411 million increased 65.1% year over year driven by higher local sales, advanced advertising revenues and national sales.

Mobile revenues surged 67.5% year over year to $519 million. Other revenues came in at $201 million, up 2.8% year over year.

Meanwhile, voice revenues decreased 12.7% to $394 million due to a decline in wireline voice customers over the last 12 months and value-based pricing.

Subscriber Statistics

As of Jun 30, 2021, Charter had 31.8 million total customer relationships, with 1.3 million net new customer relationships added over the last 12 months.

Moreover, the company had 27.7 million residential Internet customers, up 5.4% year over year.

Currently, 200 Mbps is the minimum speed offered to new Spectrum Internet customers in 85% of Charter's footprint, with 100 Mbps the minimum speed offered in the remainder of its footprint. As of Jun 30, 2021, over 70% of Internet customers subscribed to tiers that provided 200 Mbps or more of speed. Charter also offers Spectrum Internet Gig across its entire footprint.

Charter added 365K residential Internet customers in the reported quarter.

Further, Charter added 265K mobile lines in the second quarter. As of Jun 30, 2021, the company served a total of 2.94 million mobile lines.

As of Jun 30, 2021, Charter had 15.4 million residential video customers. However, the company lost 294K voice customers from the year-ago quarter.

Operating Details

Total operating costs and expenses increased 8% from the year-ago quarter to $7.78 billion.

Programming costs increased 3.6% year over year to $2.97 billion due to a rise in renewals and contractual programming. Regulatory, connectivity and produced-content costs were up 36.9% to $668 million.

Costs to service customers decreased 1.2% year over year to $1.82 billion. Marketing costs were $741 million, up 3.1% year over year.

Notably, mobile costs jumped 42% year over year to $586 million.

Adjusted EBITDA increased 11.8% year over year to $5.02 billion. Moreover, adjusted EBITDA margin expanded 80 basis points (bps) to 39.2%.

Balance Sheet & Cash Flow

As of Jun 30, 2021, cash and cash equivalents were $1.71 billion compared with $772 million as of Mar 31, 2021. The company’s credit facilities provided roughly $4.7 billion of additional liquidity.

Further, as of Jun 30, 2021, total debt was $87.5 billion compared with debt of $84.3 billion as of Mar 31, 2021.

Cash flows from operating activities totaled $4 billion compared with $3.25 billion in the year-ago quarter.

Property, plant and equipment expenditures totaled $1.9 billion in the reported quarter, which remained flat year over year, with an increase in scalable infrastructure.

Free cash flow was $2.1 billion compared with $1.9 billion in the year-ago quarter.

Zacks Rank & Other Stocks to Consider

Currently, Charter carries a Zacks Rank #2 (Buy).

Delta Apparel, Inc. (DLA - Free Report) , Caesars Entertainment, Inc. (CZR - Free Report) and PlayAGS, Inc. (AGS - Free Report) are some better-ranked stocks in the broader consumer & discretionary sector. While Delta Apparel sports a Zacks Rank #1 (Strong Buy), Caesars Entertainment and PlayAGS carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caesars Entertainment is set to report quarterly results on Aug 3 while Delta Apparel and PlayAGS will report on Aug 5.