Charter Communications Inc. (CHTR) reported mixed financial results for the first quarter of 2014. While net loss missed the Zacks Consensus Estimate, total revenue outpaced the same. Charter Communications currently has a Zacks Rank #3 (Hold).
GAAP net loss in the first quarter of 2014 stood at $37 million or 35 cents per share compared with a net loss of $42 million or 42 cents per share in the year-ago quarter. Quarterly, loss per share of 35 cents was markedly in contrast to the Zacks Consensus Estimate of an income of 15 cents per share.
Total revenue in the reported quarter came in at $2,202 million, up 14.9% year over year and also above the Zacks Consensus Estimate of $2,185 million. Segment wise, Video revenues were $1,090 million, up 13.8% year over year. Internet revenues were $616 million, up 23% from the prior-year quarter. Voice revenues stood at $150 million, down 12.3% from the year-ago quarter.
Commercial revenues totaled $234 million, up 29.3% year over year. Advertising revenues were $68 million, up 13.3% year over year. Other revenues came in at $44 million, down 4.3% year over year.
Quarterly operating income was $243 million compared with $223 million in the year-ago quarter. Operating margin stood at 11% against 11.6% in the prior-year quarter. First-quarter, 2014 adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $767 million compared with $670 million in the year-ago quarter. EBITDA margin came in at 34.8% as against 35% in the prior-year quarter.
During the first quarter of 2014, Charter Communications generated $577 million of cash from operations compared with $541 million in the year-ago quarter. Free cash flow, in the reported quarter was $38 million against $129 million in the first quarter of 2013.
At the end of the first quarter of 2014, Charter Communications had $4 million of cash and cash equivalents and $14,090 million of outstanding debt compared with $21 million of cash and cash equivalents and $14,181 million of outstanding debt at the end of 2013. The debt-to-capitalization ratio, at the end of the reported quarter was 0.99, remaining same with the figure reported at the end of 2013.
Subscribers Statistics
Residential segment: As of Mar 31, 2014, Charter Communications had 4.195 million video, 4.519 million Internet and 2.325 million voice customers. During the reported quarter, the company gained 18,000 video customers, 136,000 Internet and 52,000 voice customers.
Average revenue per customer relationship was $110.29 compared with $107.33 in the prior-year quarter. Single Play penetration was 37.9%, Double Play penetration was 29.5%, Triple Play penetration was 32.6% and Digital penetration was 93.2%.
Commercial Segment: As of Mar 31, 2014, Charter Communications had 160,000 video, 269,000 Internet and 152,000 voice subscribers. During the reported quarter, the company lost 5,000 video customers but added 12,000 Internet and 7,000 voice customers.
Strategic Move
Yesterday, Comcast Corp. (CMCSA) reached an agreement with Charter Communications to divest 3.9 million subscribers as a strategic decision to ease the regulatory concern over its proposed merger with Time Warner Cable Inc. (TWC).
In Feb 2014, Comcast has reached an agreement with Time Warner Cable to acquire the latter in an all-stock deal valued at around $45.3 billion. Liberty Media Corp. (LMCA), which controls a 27.3% stake in Charter Communications, was also aggressively pursuing the idea of Charter Communications taking over Time Warner Cable. However, Charter Communications lost to Comcast in the bid.
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