Charter Cable High Speed Internet News Charter Reports First-Quarter 2006 Financial and Operating Results; Revenues up 8.1% Year-over-Year; 294,800 Revenue Generating Units Added in First Quarter
High Speed Internet Service Specials & Deals
Click "Check Now" above to match your location with available DSL, Cable, Satellite and Wireless high speed internet service provider specials by Broadband National. A home telephone number is required to match you with DSL internet service providers, because DSL is connected through your home telephone line. Name and valid email address is required for support and to confirm any orders. A street address is required to check availability of Cable, Satellite, and Wireless internet service deals. All internet services are managed and billed by your internet service provider.
May 02, 2006 — ST. LOUIS — Charter Communications, Inc. (Nasdaq: CHTR) (along with its subsidiaries, the “Company” or “Charter”) today reported its first-quarter 2006 financial results. First-quarter revenue increased 8.1% over the first quarter of 2005, and the Company achieved a net gain of 294,800 Revenue Generating Units (RGUs) compared with December 31, 2005. Adjusted EBITDA in the first quarter was $471 million, essentially flat compared with the first quarter of 2005, reflecting increased operating expenses associated with higher customer counts, investments in customer service enhancements, increased marketing spending, and annual programming rate increases.
Highlights
- Charter ended the first quarter with 11,293,800 RGUs, up 294,800 from December 31, 2005. It was the highest quarterly gain in more than three years and reflected growth in all customer categories.
- Average monthly revenue per customer was up in all of Charter's product lines, resulting in a 9.7% increase in total average monthly revenue per analog video customer to $77.64, from $70.75 a year ago.
- Charter's telephone customer base continued to expand rapidly, ending the first quarter at 191,100, up 57% from December 31, 2005. As a result of Charter's accelerated rollout of its telephone service, the Company's phone service was available to approximately 3.9 million homes at March 31, an increase of nearly 1 million homes during the quarter.
- Charter also recently completed a $6.85 billion refinancing of its senior secured credit facilities, which improves the company's liquidity, extends its debt maturities, and reduces interest cost.
“Disciplined execution of our growth and operating strategies is driving consistent improvement in a range of key metrics, including customer counts, average revenue per customer, total revenue, and churn,” said Neil Smit, president and chief executive officer.
“Simply put, we're selling more products to more customers at better prices. We remain sharply focused on achieving profitable revenue growth by executing our strategies to enhance the end-to-end customer experience, improve operating effectiveness, grow sales and increase retention,” Smit said.
Operating Results
Charter's increased investment in targeted marketing and improved service levels continued to drive organic customer growth across all product categories. Excluding the 53,200 RGUs that Charter acquired in January with the purchase of certain cable systems from Seren Innovations, Inc., Charter added a net 241,600 RGUs during the quarter, more than double the net gain of 117,100 RGUs in the first quarter of 2005 and handily exceeding the net gain of 133,400 RGUs in the fourth quarter of 2005. Charter achieved net gains in all customer categories during the quarter:
- Analog video customers increased by approximately 29,400, including approximately 17,500 customers acquired from Seren, compared with a net loss of 6,700 customers in the first quarter of 2005. It was Charter's first net gain in analog video customers in 10 quarters.
- Digital video customers increased by approximately 69,800, including approximately 8,000 customers acquired from Seren, compared with a net gain of 19,900 customers a year ago.
- High-speed Internet (HSI) customers increased by approximately 126,000, including approximately 13,200 customers acquired from Seren, compared with a net gain of 94,000 customers in the first quarter of 2005.
- Telephone customers increased by approximately 69,600, including approximately 14,500 customers acquired from Seren, compared with a net gain of 9,900 customers in the year-ago quarter.
As of March 31, 2006, Charter served approximately 11,293,800 RGUs, comprising 5,913,900 analog video, 2,866,400 digital video, 2,322,400 HSI and 191,100 telephone customers.
Average monthly revenue per analog video customer increased 9.7% for the first quarter of 2006 compared to 2005, with gains in all product categories.
Churn for the first quarter of 2006 declined compared with the first quarter of 2005, marking the fifth consecutive quarter of year-over-year improvement. Despite the significant growth in RGUs, bad debt expense declined as a percentage of revenue compared with the first quarter of 2005. “The increase in average revenue per customer across all product lines, coupled with the declines in churn and the bad debt rate, indicates that we're adding high-quality customer - consistent with the results we expect from our targeted marketing and bundled product strategies,” said Mr. Smit.
Charter continued to achieve strong organic growth in its telephone offering, with customer count increasing 57% (including 14,500 customers gained from Seren) in the 2006 first quarter, following a 35% increase in customers in the fourth quarter of 2005. During the first quarter, Charter made telephone service available to approximately 1 million additional homes, bringing total homes passed with telephone service to 3.9 million as of March 31, 2006. The Company remains on track to make the service available to between 6 million and 8 million homes by year-end 2006. In markets where telephone service is available, Charter is experiencing reduced customer churn, increased revenue per analog video customer, and improved customer satisfaction, as customers take advantage of Charter's bundled product offerings.
Charter continued strong growth of its HSI service, ending the quarter with 2,322,400 customers, up more than 17 percent over the prior year.
During 2005, Charter's operations in the Gulf Coast were affected by hurricanes Katrina and Rita, with an estimated net loss of approximately 7,600 analog video customers during the first quarter, which was below the Company's previous estimate of 10,000 to 15,000. This loss is included in the customer counts above, and Charter does not expect to incur further customer losses related to last year's hurricanes.
Financial Results
First-quarter 2006 revenues increased 8.1%, or $103 million, to $1.374 billion, with gains in average revenue per customer in all product categories. HSI revenues increased 18.1%, or $39 million, and telephone revenues more than doubled to $20 million. Commercial revenues increased $11 million, or 16.9%, and advertising sales revenues increased $6 million, or 9.4%. Video revenues increased $27 million, or 3.2%, as the result of both more services per customer and higher rates.
Reflecting Charter's continuing investments in customer growth and retention, as well as higher programming costs from annual rate increases, first-quarter 2006 operating costs and expenses increased $107 million, or 13.4%, to $903 million.
Income from operations decreased by $44 million to $7 million for the first quarter of 2006, versus $51 million for the first quarter of 2005, primarily due to a $68 million increase in asset impairment charges related to Charter's recently-announced asset sales to New Wave Communications and subsidiaries of Orange BroadBand Holding Company, LLC.
Net loss applicable to common stock for the first quarter of 2006 was $459 million. For the first quarter of 2005 Charter reported a net loss applicable to common stock of $353 million.
Liquidity
Net cash flows provided by operating activities for the first quarter of 2006 were $209 million, compared to $153 million for the year-ago quarter. The increase in net cash provided by operating activities is primarily the result of changes in operating assets and liabilities, which provided $100 million more cash in 2006 than in 2005, offset by an increase in cash interest expense of $45 million.
Adjusted EBITDA totaled $471 million for the three months ended March 31, 2006, a decrease of $4 million, or 0.8%, compared with the year-ago period.
Expenditures for property, plant and equipment for the first quarter of 2006 were $241 million, compared to first-quarter 2005 expenditures of $211 million. The increase in capital expenditures reflects success-based investments in customer premise equipment resulting from customer growth, primarily in digital, telephone and HSI. During 2006, Charter expects capital expenditures to be flat with 2005 at approximately $1.0 billion to $1.1 billion, primarily for purchases of customer premise equipment, support capital, and scalable infrastructure investments.
Charter reported negative free cash flow of $186 million for the first quarter of 2006, compared to negative free cash flow of $107 million for the first quarter of 2005. Higher capital expenditures, higher debt balances, and interest on cash-pay obligations contributed to the increase.
As of March 31, 2006, Charter had $19.522 billion in long-term debt and $40 million of cash on hand. On April 28, the Company completed a refinancing of its senior secured credit facilities. The $6.85 billion credit facilities include a new $350 million revolver/term credit facility, a $5.0 billion term loan due in 2013, and the existing $1.5 billion revolving credit facility. Pro forma for the refinancing, Charter's total potential availability under its credit facilities at March 31 would have been approximately $1.3 billion, although the actual availability at that time would have been $516 million because of limits imposed by covenant restrictions.
The Company expects that cash on hand, cash flows from operating activities, proceeds from sales of assets, and the amounts available under its credit facilities will be adequate to meet its cash needs through 2007. The Company plans to continue its opportunistic approach to maintain liquidity, extend maturities, and de-lever the balance sheet.
Use of Non-GAAP Financial Metrics
The Company uses certain measures that are not defined by GAAP (Generally Accepted Accounting Principles) to evaluate various aspects of its business. Adjusted EBITDA, un-levered free cash flow and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net cash flows from operating activities reported in accordance with GAAP. These terms as defined by Charter may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA is defined as income from operations before special charges, non-cash depreciation and amortization, loss on sale of assets, asset impairment charges and option compensation expense. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses and intangible assets recognized in business combinations as well as other non-cash or non-recurring items, and is unaffected by the Company's capital structure or investment activities. Adjusted EBITDA is a liquidity measure used by Company management and its Board of Directors to measure the Company's ability to fund operations and its financing obligations. For this reason, it is a significant component of Charter's annual incentive compensation program. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues, and the cash cost of financing for the Company. Company management evaluates these costs through other financial measures.
Un-levered free cash flow is defined as adjusted EBITDA less purchases of property, plant and equipment. The Company believes this is an important measure as it takes into account the period costs associated with capital expenditures used to upgrade, extend and maintain Charter's plant, without regard to the Company's leverage structure.
Free cash flow is defined as un-levered free cash flow less interest on cash pay obligations. It can also be computed as net cash flows from operating activities, less capital expenditures and cash special charges, adjusted for the change in operating assets and liabilities, net of dispositions. As such, it is unaffected by fluctuations in working capital levels from period to period.
The Company believes that adjusted EBITDA, un-levered free cash flow and free cash flow provide information useful to investors in assessing Charter's ability to service its debt, fund operations, and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). Adjusted EBITDA, as presented, is reduced for management fees in the amounts of $33 million and $26 million for the three months ended March 31, 2006 and 2005, respectively, which amounts are added back for the purposes of calculating compliance with leverage covenants. As of March 31, 2006, Charter and its subsidiaries are in compliance with their debt covenants and expect to remain in compliance for the next 12 months.
Conference Call
The Company will host a Conference Call on Tuesday, May 2, 2006, at 9:00 AM Eastern Time (ET) related to the contents of this release.
The Conference Call will be webcast live via the Company's website at www.charter.com. Access the webcast by clicking on “About Us” at the top right of the page, then again on “Investor Center” Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website beginning two hours after its completion.
Those participating via telephone should dial 888-233-1576. International participants should dial 706-643-3458.
A replay will be available at (800) 642-1687 or (706) 645-9291 beginning two hours after completion of the call through midnight May 9, 2006. The passcode for the replay is 7215682.
About Charter Communications
Charter Communications, Inc., a leading broadband communications company, provides a full range of advanced broadband services to the home, including advanced digital video entertainment programming (Charter Digital(TM)), Charter High-Speed(TM) Internet access service, and Charter Telephone(TM) services. Charter Business(TM) similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, and video and music entertainment services. Charter's advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at www.charter.com..
SOURCE: Charter Communications, Inc.
Related Internet Service Deals Web Pages
» Dial Up Internet Service Access Specials
» High Speed Internet Service Specials
» Internet Faxing Software Free Trials
» Internet Service Providers By State
» Internet Service Articles Lessons And Tutorials
