Charter Communications Releases Its 3Q15 Earnings
Charter Communications and Time Warner Cable See Revenues Rise in 3Q15
Charter 3Q15 earnings
Charter Communications (CHTR) announced its earnings on October 29, 2015. The company had revenues of $2.5 billion in 3Q15, a growth of 7.2% from the same quarter last year.
The company had adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $850 million, a rise of 8.5% over the same quarter last year. Adjusted EBITDA rose by 9.7% over 3Q14 excluding transition-related costs of $12 million in 3Q15. These transition-related costs were related to the Comcast (CMCSA), Time Warner Cable (TWC), and Bright House Networks acquisitions.
Charter’s agreement with Comcast is linked to the merger of a subsidiary of Comcast with Time Warner Cable and will result in Charter acquiring 1.3 million residential and commercial video customers from Time Warner Cable.
Charter’s net income was $54 million in 3Q15. The company had a net loss of $53 million in 3Q14. Charter has a history of net losses. Its 3Q15 rise in net income was due to a $142 million tax benefit in 3Q15. The tax benefit was related to the restructuring of the Charter Communications Holding Company partnership during the third quarter.
Charter had a basic and diluted earnings per share (or EPS) of $0.48 in 3Q15 as compared to a loss per share of $0.49 in 3Q14.
Capital expenditure
Charter had a capex (capital expenditure) of $509 million in 3Q15, a fall of $60 million as compared to its capex in the same quarter last year.
The reason for the fall in capex was a fall in expenditure on CPE (customer premise equipment) as the company completed its rollout of an all-digital initiative in 4Q14. Charter spent $24 million in transition-related capex relating to the Time Warner Cable and Bright House acquisitions.
In 2015, Charter expects capex to be $1.7 billion and to be driven by product development. The capex of $1.7 billion excludes costs related to the Comcast, Time Warner Cable, and Bright House acquisitions.
Free cash flow
Charter had a positive FCF (free cash flow) of $208 million in 3Q15. It had a negative FCF of $62 million in 3Q14. The positive FCF was due to lower capex and higher cash flows from operating activities.
You can gain diversified exposure to Charter Communications by investing in the PowerShares QQQ Trust Series 1 ETF (QQQ), which holds 0.4% of the stock. The same ETF also holds 12.4% of Apple (AAPL).
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