Charter Communications Inc. CHTR reported mixed second-quarter 2015 financial results. The company incurred loss in the reported quarter, which compared unfavourably with the Zacks Consensus Estimate of earnings. However, the top line comfortably surpassed the mark.
GAAP net loss in the reported quarter stood at $122 million or $1.09 per share compared with a net loss of $45 million or 42 cents per share in the year-ago quarter. The loss per share of $1.09 was in sharp contrast to the Zacks Consensus Estimate of an income of 35 cents.
Second-quarter total revenue of $2,430 million increased 7.6% year over year and surpassed the Zacks Consensus Estimate of $2,415 million.
Segment wise, Video revenues totaled $1,148 million, up 3.4% year over year. Internet revenues came in at $743 million, up 16.5% from the prior-year quarter. Voice revenues stood at $135 million, down 7.3% while Commercial revenues reached $278 million, up 14% year over year. Advertising revenues were $79 million, down 0.8% year over year. Other revenues came in at $47 million, up 11%.
Quarterly operating costs were $1,582 million compared with $1,464 million in the year-ago quarter. Second-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $848 million compared with $795 million in the year-earlier quarter. EBITDA margin came in at 34.9% against 35.2% in the second quarter of 2014.
During the quarter under review, Charter Communications generated $531 million of cash from operations compared with $632 million in the same quarter a year ago. Free cash flow in the reported quarter was $158 million against $70 million a year ago.
At the end of the second quarter, Charter Communications had $30 million of cash and cash equivalents and $13,896 million of outstanding debt compared with $3 million and $21,023 million, respectively, at the end of 2014. The debt-to-capitalization ratio at the end of the second quarter was 1.00 compared with 0.99 at the end of 2014.
Subscriber Statistics
Residential segment: As of Jun 30, 2015, Charter Communications had 4.120 million video, 4.961 million high-speed Internet and 2.514 million voice customers. During the reported quarter, the company gained 70,000 high-speed Internet and 33,000 voice customers but lost 33,000 video subscribers.
Average revenue per customer relationship was $113.56 compared with $110.81 in the prior-year quarter. Single Play penetration was 38.3%, Double Play penetration stood at 28.7% and Triple Play penetration was 33%.
Commercial Segment: As of Jun 30, 2015, Charter Communications had 138,000 video, 333,000 high-speed Internet and 200,000 voice subscribers. During the reported quarter, the company added 3,000 video customers, 16,000 high-speed Internet and 12,000 voice customers.
Latest Developments
In May 2015, Charter Communications made two major announcements pertaining to pending deals. The company reached an agreement to buy Time Warner Cable Inc. TWC for $78.7 billion, including debt. Charter Communications also announced that it will take over Bright House – the sixth largest U.S. cable operator – for $10.4 billion.
Notably, earlier, the Federal Communications Commission (FCC) had rejected Comcast Corp.’s CMCSA merger bid for Time Warner Cable.
Meanwhile, recently, AT&T, Inc. T has scaled up to the highest position in the U.S. pay-TV market with the acquisition of DIRECTV.
Charter Communications currently carries a Zacks Rank #5 (Strong Sell).
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