Charter Communications Inc.
) reported mixed financial results for the second quarter of 2014.
GAAP net loss in the reported quarter of 2014 stood at $45 million
or 42 cents per share compared with a net loss of $95 million or 94
cents per share in the year-ago quarter. Quarterly, loss per share
of 42 cents was markedly in contrast to the Zacks Consensus
Estimate of an income of 8 cents per share.
Total revenue in the reported quarter came in at $2,259 million,
up 7.3% year over year and exactly in line with the Zacks Consensus
Estimate. Segment wise, Video revenues were $1,110 million, up 5.1%
year over year. Internet revenues came in at $638 million, up 15.2%
from the prior-year quarter. Voice revenues stood at $145 million,
down 14.2% from the year-ago quarter. Commercial revenues totaled
$244 million, up 19% year over year. Advertising revenues were $79
million, up 3.9% year over year. Other revenues came in at $43
million, down 4.4% year over year.
Quarterly operating income was $250 million compared with $254
million in the year-ago quarter. Operating margin stood at 11.1%
against 12.1% in the prior-year quarter. Second-quarter, 2014
adjusted EBITDA (earnings before interest, tax, depreciation and
amortization) was $795 million compared with $737 million in the
year-ago quarter. EBITDA margin came in at 35.2% as against 35% in
the prior-year quarter.
During the second quarter of 2014, Charter Communications
generated $632 million of cash from operations compared with $484
million in the year-ago quarter. Free cash flow, in the reported
quarter was $70 million against $75 million in the second quarter
At the end of the second quarter of 2014, Charter Communications
had $9 million of cash and cash equivalents and $14,019 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.
As of Jun 30, 2014, Charter Communications had 4.166 million video,
4.568 million Internet and 2.36 million voice customers. During the
reported quarter, the company lost 29,000 video customers but
gained 49,000 Internet and 35,000 voice customers. Average revenue
per customer relationship was $110.81 compared with $108.71 in the
prior-year quarter. Single Play penetration was 37.9%, Double Play
penetration was 29.3%, Triple Play penetration was 32.7% and
Digital penetration was 96.1%.
As of Jun 30, 2014, Charter Communications had 154,000 video,
282,000 Internet and 164,000 voice subscribers. During the reported
quarter, the company lost 6,000 video customers but added 13,000
Internet and 12,000 voice customers.
In Apr 2014,Comcast Corp. (
) reached an agreement with Charter Communicationsto divest 3.9
million subscribers as a strategic decision to ease the regulatory
concern over its proposed merger with Time Warner Cable Inc. (
). This dates back to Feb 2014, when Comcast had reached an
agreement with Time Warner Cable to acquire the latter in an
all-stock deal valued at around $45.2 billion.
Liberty Media Corp. (
), 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. Charter Communications currently sports a Zacks
Rank #1 (Strong Buy).
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