CHARTER COMMUNICATIONS, INC. /MO/ - FORM 8-K - EX-99.1 - October 30, 2020

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NEWS

Charter Announces Third Quarter 2020 Results

Stamford, Connecticut - October 30, 2020 - Charter Communications, Inc. (along with its subsidiaries, the “Company” or “Charter”) today reported financial and operating results for the three and nine months ended September 30, 2020.

Key highlights:

•Third quarter total residential and small and medium business ("SMB") customer relationships increased by 457,000, compared to 310,000 during the third quarter of 2019. Over the last 12 months, total customer relationships grew by 6.8%.

•Third quarter total residential and SMB Internet customers increased by 537,000, compared to 380,000 during the third quarter of 2019. Over the last 12 months, total Internet customers grew by 2.3 million, or 8.8%, to 28.6 million.

•Charter added 363,000 mobile lines in the third quarter, compared to 276,000 during the third quarter of 2019. As of September 30, 2020, Charter served a total of 2.1 million mobile lines.

•Third quarter revenue of $12.0 billion grew by 5.1% year-over-year, driven by residential revenue growth of 4.0%, mobile revenue growth of 91.8% and advertising revenue growth of 16.8%.
•Third quarter Adjusted EBITDA1 of $4.6 billion grew by 13.6% year-over-year, while third quarter cable Adjusted EBITDA1 of $4.7 billion grew by 11.7% year-over-year.

•Net income attributable to Charter shareholders totaled $814 million in the third quarter, compared to $387 million during the same period last year.
•Third quarter capital expenditures totaled $2.0 billion and included $139 million of mobile-related capital expenditures.

•Consolidated free cash flow1 in the third quarter of 2020 totaled $1.8 billion, compared to $1.3 billion in 2019. Cable free cash flow1 totaled $2.0 billion in the third quarter of 2020, versus $1.5 billion in 2019.

•During the third quarter, Charter purchased approximately 6.1 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $3.6 billion.

"Our long-term strategy of growing customer relationships by delivering high-quality products and service remains on track," said Tom Rutledge, Chairman and CEO of Charter Communications, Inc. "We've added two million customer relationships in the past year and remain focused on executing a proven operating and investment strategy that works for customers, employees and the communities we serve, creating shareholder value for the long term.”


1.Adjusted EBITDA, cable Adjusted EBITDA, free cash flow and cable free cash flow are non-GAAP measures defined in the “Use of Adjusted EBITDA and Free Cash Flow Information” section and are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the addendum of this news release.
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Key Operating Results
Approximate as of
September 30, 2020 (a)September 30, 2019 (a)Y/Y Change
Footprint (b)
Estimated Passings53,022 51,940 2.1 %
Customer Relationships (c)
Residential28,912 27,037 6.9 %
SMB2,021 1,930 4.7 %
Total Customer Relationships30,933 28,967 6.8 %
Residential416 282 47.9 %
SMB41 28 46.0 %
Total Customer Relationships Net Additions457 310 47.7 %
Total Customer Relationship Penetration of Estimated Passings (d)58.3 %55.8 %2.5 ppts
Monthly Residential Revenue per Residential Customer (e)$109.03 $112.00 (2.7)%
Monthly SMB Revenue per SMB Customer (f)$164.77 $169.44 (2.8)%
Residential Customer Relationships Penetration
Single Play Penetration (g)44.2 %42.7 %1.5 ppts
Double Play Penetration (g)32.3 %29.9 %2.4 ppts
Triple Play Penetration (g)23.5 %27.3 %(3.8) ppts
% Residential Non-Video Customer Relationships45.7 %41.8 %3.9 ppts
Internet
Residential26,807 24,595 9.0 %
SMB1,826 1,730 5.5 %
Total Internet Customers28,633 26,325 8.8 %
Residential494 351 40.3 %
SMB43 29 47.5 %
Total Internet Net Additions537 380 41.3 %
Video
Residential15,705 15,725 (0.1)%
SMB530 520 1.9 %
Total Video Customers16,235 16,245 (0.1)%
Residential53 (77)169.4 %
SMB14 2 410.1 %
Total Video Net Additions67 (75)189.3 %
Voice
Residential9,335 9,595 (2.7)%
SMB1,207 1,120 7.8 %
Total Voice Customers10,542 10,715 (1.6)%
Residential(63)(213)70.1 %
SMB38 23 68.7 %
Total Voice Net Additions(25)(190)86.8 %
Mobile Lines
Residential2,020 793 154.6 %
SMB40 1 NM
Total Mobile Lines2,060 794 159.5 %
Residential348 275 26.5 %
SMB15 1 NM
Total Mobile Lines Net Additions363 276 31.5 %
Enterprise (h)
Enterprise Primary Service Unites ("PSUs")272 264 3.1 %
Enterprise Net Additions2 6 (68.9)%
Footnotes - In thousands, except per customer and penetration data. See footnotes to unaudited summary of operating statistics on page 5 of the addendum of this news release. The footnotes contain important disclosures regarding the definitions used for these operating statistics. All percentages are calculated using whole numbers. Minor differences may exist due to rounding. NM - Not meaningful
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During the third quarter of 2020, Charter's residential customer relationships grew by 416,000, while third quarter 2019 residential customer relationships grew by 282,000. As of September 30, 2020, Charter had 28.9 million residential customer relationships, with year-over-year growth of 1.9 million, or 6.9%.

Charter added 494,000 residential Internet customers in the third quarter of 2020, versus third quarter 2019 residential Internet customer net additions of 351,000. As of September 30, 2020, Charter had 26.8 million residential Internet customers, with over 85% subscribing to tiers that provided 100 Mbps or more of speed, and over 50% subscribing to tiers that provided 200 Mbps or more of speed. Currently, 200 Mbps is the slowest speed offered to new Spectrum Internet® customers in approximately 60% of Charter's footprint, with 100 Mbps the slowest speed offered in the remaining 40% of its footprint.

Residential video customers increased by 53,000 in the third quarter of 2020, while third quarter 2019 residential video customers decreased by 77,000. As of September 30, 2020, Charter had 15.7 million residential video customers.
    
    During the third quarter of 2020, residential wireline voice customers declined by 63,000, while third quarter 2019 residential wireline voice customers declined by 213,000. As of September 30, 2020, Charter had 9.3 million residential wireline voice customers.

    Third quarter 2020 residential revenue per residential customer (excluding mobile) totaled $109.03, and declined by 2.7% compared to the prior year period, driven by $218 million of estimated credits to be provided to Charter's video customers upon finalization of expected rebates from sports programming networks which result from fewer games broadcast during COVID-19. Excluding the planned credit to video customers, residential revenue per residential customer (excluding mobile) totaled $111.56, and declined 0.4% year-over-year given a higher percentage of non-video customers and a higher mix of lower priced video packages within Charter's video customer base, lower pay-per-view and video on demand revenue and lower installation revenue partly offset by promotional rate step-ups and rate adjustments.

    SMB customer relationships grew by 41,000 during the third quarter of 2020, compared to growth of 28,000 during the third quarter of 2019. As of September 30, 2020, Charter had 2.0 million SMB customer relationships, with year-over-year growth of 4.7%. Enterprise PSUs grew by 2,000 during the third quarter of 2020 compared to growth of 6,000 during the third quarter of 2019. As of September 30, 2020, Charter had 272,000 enterprise PSUs, with growth of 3.1% year-over-year.

During the third quarter of 2020, Charter added 363,000 mobile lines, and as of September 30, 2020, Charter served a total of 2.1 million mobile lines. Spectrum MobileTM is available to all new and existing Spectrum Internet customers and runs on America's most awarded LTE network combined with Spectrum WiFi. Spectrum Mobile customers can choose one of two simple ways to pay for data, "Unlimited", or "By the Gig." All plans include 4G and 5G access, with no added taxes, fees or contracts.

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Third Quarter Financial Results

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended September 30,
20202019% Change
REVENUES:
Internet$4,722 $4,195 12.5 %
Video4,221 4,359 (3.2)%
Voice449 477 (5.8)%
Residential revenue9,392 9,031 4.0 %
Small and medium business988 974 1.5 %
Enterprise617 644 (4.3)%
Commercial revenue1,605 1,618 (0.8)%
Advertising sales460 394 16.8 %
Mobile368 192 91.8 %
Other214 215 (0.7)%
Total Revenue12,039 11,450 5.1 %
COSTS AND EXPENSES:
Cable operating costs and expenses6,944 7,027 (1.2)%
Mobile operating costs and expenses456 337 35.2 %
Total operating costs and expenses7,400 7,364 0.5 %
Adjusted EBITDA$4,639 $4,086 13.6 %
Adjusted EBITDA margin38.5 %35.7 %
Cable Adjusted EBITDA$4,727 $4,231 11.7 %
Cable Adjusted EBITDA margin40.5 %37.6 %
Capital Expenditures$2,014 $1,651 
% Total Revenue16.7 %14.4 %
Cable Capital Expenditures$1,875 $1,551 
% Total Cable Revenue16.1 %13.8 %
Net income attributable to Charter shareholders$814 $387 
Earnings per common share attributable to Charter shareholders:
Basic$4.01 $1.77 
Diluted$3.90 $1.74 
Net cash flows from operating activities$3,664 $2,943 
Free cash flow$1,754 $1,271 
Cable free cash flow
$2,019 $1,527 

Revenues

    Third quarter revenue increased by 5.1% year-over-year to $12.0 billion, driven by growth in Internet, mobile and advertising.

Residential revenue totaled $9.4 billion in the third quarter, an increase of 4.0% year-over-year, despite $218 million of estimated credits to be provided to Charter's video customers upon finalization of expected rebates from sports programming networks which result from fewer games broadcast during COVID-19.

Internet revenue grew by 12.5% compared to the year-ago quarter, to $4.7 billion, driven by growth in Internet customers during the last year, promotional rate step-ups and rate adjustments.
    
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Video revenue totaled $4.2 billion in the third quarter, a decrease of 3.2% compared to the prior year period, driven by the estimated customer credits related to sports programming, a higher mix of lower priced video packages within Charter's video customer base, a decline in video customers during the last year, lower pay-per-view and video on demand revenue and lower installation revenue partly offset by rate adjustments and promotional rate step-ups.

    Voice revenue totaled $449 million in the third quarter, a decrease of 5.8% compared to the third quarter of 2019, driven by a decline in wireline voice customers over the last 12 months and value-based pricing.

    Commercial revenue declined to $1.6 billion, a decrease of 0.8% over the prior year period, driven by Charter's sale of Navisite in the third quarter of 2019, lower cell tower backhaul and other wholesale revenue – both in Enterprise, and an $11 million impact from COVID-19 related seasonal plans in SMB. SMB revenue growth absent the COVID-19 seasonal plan impact was 2.6% year-over-year, reflecting customer relationship growth. Enterprise retail revenue excluding Navisite in 2019 and wholesale revenue, was 5.8%, reflecting PSU growth.

Third quarter advertising sales revenue of $460 million increased by 16.8% compared to the year-ago quarter, driven by higher political revenue and the timing of the return of multiple sports events and leagues, partly offset by lower local and national sales which are recovering from previous lows during the COVID-19 pandemic. Excluding political revenue in both periods, advertising sales revenue declined by 11.2% year-over-year.

Third quarter mobile revenue totaled $368 million, an increase of 91.8% year-over-year.

Other revenue totaled $214 million in the third quarter, a decrease of 0.7% year-over-year, driven by lower processing fees, partly offset by higher video customer premise equipment ("CPE") sold to customers.

Operating Costs and Expenses

    Third quarter total operating costs and expenses increased by $36 million, or 0.5% year-over-year. Excluding mobile costs in both periods, operating costs and expenses decreased by 1.2% compared to the year-ago quarter.

    Third quarter programming costs decreased by $63 million, or 2.3% as compared to the third quarter of 2019, reflecting $163 million of estimated sports network rebates which result from fewer games broadcast during COVID-19, a higher mix of lower cost video packages within Charter's video customer base and fewer video customers, partly offset by contractual programming increases and renewals.

    Regulatory, connectivity and produced content expenses were essentially unchanged year-over-year, as lower regulatory and franchise fees were offset by higher video CPE sold to customers and higher sports rights costs. The impact of an expected reduction in sports rights content costs were immaterial in the quarter as this benefit will be amortized over the life of the contract, consistent with the deferral of second quarter expense for canceled games. Together with the expected rebates shown in programming expense, Charter intends to provide a credit on its video customers' invoices for all of the rebates provided by sports programming networks when details are finalized with the networks.
    Costs to service customers increased by $8 million, or 0.4% year-over-year, despite year-over-year residential and SMB customer growth of 6.8%. The year-over-year increase in costs to service customers was primarily driven by previously announced accelerated wage benefits for hourly field operations and call center employees, higher COVID-19 related benefits and the timing of medical costs, partly offset by lower bad debt and productivity improvements.
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    Marketing expenses decreased by $5 million, or 0.7% year-over-year.

    Other expenses decreased by $23 million, or 2.5% as compared to the third quarter of 2019 primarily driven by lower enterprise costs from the sale of Navisite, lower employee travel expense and insurance costs, partly offset by higher information technology and advertising sales expense.

    Third quarter mobile costs totaled $456 million, an increase of 35.2% year-over-year, and were comprised of device costs, customer acquisition costs, and service and operating costs.

Adjusted EBITDA

    Third quarter Adjusted EBITDA of $4.6 billion grew by 13.6% year-over-year, reflecting growth in revenue and operating expenses of 5.1% and 0.5%, respectively. Third quarter cable Adjusted EBITDA grew by 11.7% year-over-year reflecting growth in cable revenue of 3.7% and a decline in cable operating expenses of 1.2%.
    
Net Income Attributable to Charter Shareholders

    Net income attributable to Charter shareholders totaled $814 million in the third quarter of 2020, compared to $387 million in the third quarter of 2019. The year-over-year increase in net income attributable to Charter shareholders was primarily driven by higher Adjusted EBITDA, partly offset by a pension remeasurement loss.

    Net income per basic common share attributable to Charter shareholders totaled $4.01 in the third quarter of 2020 compared to $1.77 during the same period last year. The increase was primarily the result of the factors described above in addition to a 7.2% decrease in weighted average common shares outstanding versus the prior year period.
    
Capital Expenditures

    Property, plant and equipment expenditures totaled $2.0 billion in the third quarter of 2020, compared to $1.7 billion during the third quarter of 2019, primarily driven by increases in support capital, scalable infrastructure, line extensions and Internet CPE. The year-over-year increase in support capital was primarily due to facility improvements, the timing of back office systems investments and mobile store build-outs. The increase in scalable infrastructure spending was primarily due to core network enhancements and node splits given growing customers and traffic. The increase in line extensions was driven by continued network expansion, including to rural areas. The increase in Internet CPE spending was due to higher Internet customer growth. Third quarter capital expenditures included $139 million of mobile costs, most of which are included in support capital.

Charter currently expects 2020 cable capital expenditures to be consistent and possibly lower as a percentage of cable revenue versus 2019, despite the significant acceleration in customer growth and network utilization during COVID-19.

Cash Flow and Free Cash Flow

    During the third quarter of 2020, net cash flows from operating activities totaled $3.7 billion, compared to $2.9 billion in the prior year quarter. The year-over-year increase in net cash flows from operating activities was primarily due to higher Adjusted EBITDA and a favorable change in working capital.

    Consolidated free cash flow in the third quarter of 2020 totaled $1.8 billion, compared to $1.3 billion during the same period last year. Cable free cash flow in the third quarter of 2020 totaled $2.0 billion,
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compared to $1.5 billion during the same period last year. The year-over-year increases in consolidated free cash flow and cable free cash flow were driven by an increase in net cash flows from operating activities.

Liquidity & Financing

    As of September 30, 2020, total principal amount of debt was $79.1 billion and Charter's credit facilities provided approximately $4.7 billion of additional liquidity in excess of Charter's $1.3 billion cash position.

In July 2020, CCO Holdings, LLC ("CCO Holdings") and CCO Holdings Capital Corp. issued $3.0 billion of 4.250% senior unsecured notes due 2031. The proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including all of CCO Holdings' 5.875% senior notes due 2024, as well as funding buybacks of Charter Class A common stock and/or Charter Holdings common units.

In October 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued an additional $1.5 billion of its 4.500% senior unsecured notes due 2032 at a price of 103.750%. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.375% senior notes due May 1, 2025, as well as funding potential buybacks of Charter Class A common stock and Charter Holdings common units.

Share Repurchases

    During the three months ended September 30, 2020, Charter purchased approximately 6.1 million shares of Charter Class A common stock and Charter Holdings common units for approximately $3.6 billion.

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Conference Call

Charter will host a conference call on Friday, October 30, 2020 at 8:30 a.m. Eastern Time (ET) related to the contents of this release.

The conference call will be webcast live via the Company's investor relations website at ir.charter.com. The call will be archived under the "Financial Information" section two hours after completion of the call. Participants should go to the webcast link no later than 10 minutes prior to the start time to register.

Those participating via telephone should dial 866-919-0894 no later than 10 minutes prior to the call. International participants should dial 706-679-9379. The conference ID code for the call is 8066249.

A replay of the call will be available at 855-859-2056 or 404-537-3406 beginning two hours after the completion of the call through the end of business on November 13, 2020. The conference ID code for the replay is 8066249.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020, which will be posted on the “Results & SEC Filings” section of our investor relations website at ir.charter.com, when it is filed with the Securities and Exchange Commission (the "SEC"). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the “Results & SEC Filings” section.

Use of Adjusted EBITDA and Free Cash Flow Information

The company uses certain measures that are not defined by U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income attributable to Charter shareholders and 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 and free cash flow are reconciled to net income attributable to Charter shareholders and net cash flows from operating activities, respectively, in the Addendum to this release.

Adjusted EBITDA is defined as net income attributable to Charter shareholders plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on financial instruments, net, other pension (benefits) costs, net, other (income) expense, net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or special items, and is unaffected by the Company's capital structure or investment activities. 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. These costs are evaluated through other financial measures.  

Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.  

Management and Charter's board of directors use Adjusted EBITDA and free cash flow to assess Charter's performance and its ability to service its debt, fund operations and make additional investments
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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 the SEC). For the purpose of calculating compliance with leverage covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company's debt covenants refer to these expenses as management fees, which were $308 million and $927 million for the three and nine months ended September 30, 2020, respectively, and $317 million and $916 million for the three and nine months ended September 30, 2019, respectively.

Cable Adjusted EBITDA is defined as Adjusted EBITDA less mobile revenues plus mobile operating costs and expenses. Cable free cash flow is defined as free cash flow plus mobile net cash outflows from operating activities and mobile capital expenditures. Management and Charter’s board of directors use cable Adjusted EBITDA and cable free cash flow to provide management and investors a more meaningful year-over-year perspective on the financial and operational performance and trends of our core cable business without the impact of the revenue, costs and capital expenditures in the initial funding period to grow a new product line as well as the negative working capital impacts from the timing of device-related cash flows when we sell the handset or tablet to customers pursuant to equipment installment plans. 

About Charter

Charter Communications, Inc. (NASDAQ:CHTR) is a leading broadband connectivity company and cable operator serving more than 30 million customers in 41 states through its Spectrum brand. Over an advanced communications network, the company offers a full range of state-of-the-art residential and business services including Spectrum Internet®, TV, Mobile and Voice.

For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. The company also distributes award-winning news coverage, sports and high-quality original programming to its customers through Spectrum Networks and Spectrum Originals. More information about Charter can be found at corporate.charter.com.


# # #

Contact:
Media:
Analysts:
Justin VenechStefan Anninger
203-905-7818203-905-7955

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under “Risk Factors” from time to time in our filings with the SEC. Many of the forward-looking statements contained in this communication may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” "initiatives," “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” “increases,” "focused on" and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

•the impact of the COVID-19 pandemic on the economy, our customers, our vendors, local, state and federal governmental responses to the pandemic and our businesses generally;
•our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
•the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers and providers of video content over broadband Internet connections;
•our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);
•our ability to develop and deploy new products and technologies including mobile products and any other consumer services and service platforms;
•any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
•the effects of governmental regulation on our business including costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us as a result of the Time Warner Cable Inc. and Bright House Networks, LLC Transactions;
•general business conditions, economic uncertainty or downturn, including the impacts of the COVID-19 pandemic to unemployment levels and the level of activity in the housing sector;
•the ability to retain and hire key personnel;
•the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
•our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this communication.
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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
20202019% Change20202019% Change
REVENUES:
Internet$4,722 $4,195 12.5 %$13,659 $12,322 10.8 %
Video4,221 4,359 (3.2)%13,014 13,134 (0.9)%
Voice449 477 (5.8)%1,357 1,470 (7.7)%
Residential revenue9,392 9,031 4.0 %28,030 26,926 4.1 %
Small and medium business988 974 1.5 %2,967 2,882 2.9 %
Enterprise617 644 (4.3)%1,845 1,939 (4.9)%
Commercial revenue1,605 1,618 (0.8)%4,812 4,821 (0.2)%
Advertising sales460 394 16.8 %1,074 1,134 (5.3)%
Mobile368 192 91.8 %936 490 91.3 %
Other214 215 (0.7)%621 632 (1.8)%
Total Revenue12,039 11,450 5.1 %35,473 34,003 4.3 %
COSTS AND EXPENSES:
Programming2,727 2,790 (2.3)%8,492 8,482 0.1 %
Regulatory, connectivity and produced content612 612 (0.1)%1,651 1,770 (6.7)%
Costs to service customers1,902 1,894 0.4 %5,598 5,483 2.1 %
Marketing788 793 (0.7)%2,273 2,296 (1.0)%
Mobile456 337 35.2 %1,243 874 42.2 %
Other expense915 938 (2.5)%2,692 2,772 (2.9)%
Total operating costs and expenses (exclusive of items shown separately below)7,400 7,364 0.5 %21,949 21,677 1.3 %
Adjusted EBITDA4,639 4,086 13.6 %13,524 12,326 9.7 %
Adjusted EBITDA margin38.5 %35.7 %38.1 %36.2 %
Depreciation and amortization2,370 2,415 7,295 7,465 
Stock compensation expense83 71 263 238 
Other operating expenses, net14 14 23 71 
Income from operations2,172 1,586 5,943 4,552 
OTHER INCOME (EXPENSES):
Interest expense, net(946)(963)(2,883)(2,833)
Loss on extinguishment of debt(58)— (121)— 
Gain (loss) on financial instruments, net69 (34)(185)(116)
Other pension benefits (costs), net(115)9 (94)27 
Other expense, net(13)(5)(13)(131)
(1,063)(993)(3,296)(3,053)
Income before income taxes1,109 593 2,647 1,499 
Income tax expense(177)(126)(372)(329)
Consolidated net income 932 467 2,275 1,170 
Less: Net income attributable to noncontrolling interests
(118)(80)(299)(216)
Net income attributable to Charter shareholders$814 $387 $1,976 $954 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic$4.01 $1.77 $9.62 $4.30 
Diluted$3.90 $1.74 $9.35 $4.23 
Weighted average common shares outstanding, basic
202,826,502 218,499,213 205,468,736 221,818,079 
Weighted average common shares outstanding, diluted
208,722,129 222,355,867 211,399,781 225,337,984 


Adjusted EBITDA is a non-GAAP term. See page 6 of this addendum for the reconciliation of Adjusted EBITDA to net income attributable to Charter shareholders as defined by GAAP.

All percentages are calculated using whole numbers. Minor differences may exist due to rounding.

Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 1 of 7


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)

September 30,December 31,
20202019
ASSETS(unaudited)
CURRENT ASSETS:
Cash and cash equivalents$1,283 $3,483 
Accounts receivable, net2,068 2,227 
Prepaid expenses and other current assets709 761 
Total current assets4,060 6,471 
RESTRICTED CASH3 66 
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net34,196 34,591 
Customer relationships, net6,050 7,453 
Franchises67,322 67,322 
Goodwill29,554 29,554 
Total investment in cable properties, net137,122 138,920 
OTHER NONCURRENT ASSETS3,008 2,731 
Total assets$144,193 $148,188 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities$8,541 $8,885 
Current portion of long-term debt1,715 3,500 
Total current liabilities10,256 12,385 
LONG-TERM DEBT77,947 75,578 
DEFERRED INCOME TAXES17,929 17,711 
OTHER LONG-TERM LIABILITIES4,349 3,703 
SHAREHOLDERS' EQUITY:
Controlling interest26,906 31,445 
Noncontrolling interests6,806 7,366 
Total shareholders' equity 33,712 38,811 
Total liabilities and shareholders' equity$144,193 $148,188 

Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 2 of 7

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)

Three Months Ended September 30, Nine Months Ended September 30,
2020201920202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $932 $467 $2,275 $1,170 
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization2,370 2,415 7,295 7,465 
Stock compensation expense83 71 263 238 
Noncash interest income, net(10)(17)(31)(89)
Other pension (benefits) costs, net115 (9)94 (27)
Loss on extinguishment of debt58 — 121 — 
(Gain) loss on financial instruments, net(69)34 185 116 
Deferred income taxes151 96 252 233 
Other, net(4)(3)(21)148 
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable(74)(227)159 (564)
Prepaid expenses and other assets(76)(49)(240)(225)
Accounts payable, accrued liabilities and other188 165 61 (75)
Net cash flows from operating activities3,664 2,943 10,413 8,390 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(2,014)(1,651)(5,352)(4,913)
Change in accrued expenses related to capital expenditures104 (21)(70)(449)
Real estate investments through variable interest entities(41)(61)(122)(125)
Other, net(35)2 (43)10 
Net cash flows from investing activities(1,986)(1,731)(5,587)(5,477)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt3,030 2,443 10,352 13,157 
Repayments of long-term debt(1,819)(763)(9,711)(10,886)
Payments for debt issuance costs(29)(16)(91)(48)
Issuance of equity— — 23 — 
Purchase of treasury stock(3,361)(2,767)(6,868)(4,568)
Proceeds from exercise of stock options 50 25 171 106 
Purchase of noncontrolling interest(366)(339)(884)(593)
Distributions to noncontrolling interest(37)(38)(114)(116)
Borrowings for real estate investments through variable interest entities, net39 — 63 — 
Other, net(1)(6)(30)(133)
Net cash flows from financing activities(2,494)(1,461)(7,089)(3,081)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(816)(249)(2,263)(168)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period2,102 846 3,549 765 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$1,286 $597 $1,286 $597 
CASH PAID FOR INTEREST$1,038 $1,048 $3,023 $3,065 
CASH PAID FOR TAXES$34 $12 $84 $55 

Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 3 of 7

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except per customer and penetration data)

Approximate as of
September 30, 2020 (a)June 30, 2020 (a)December 31, 2019 (a)September 30, 2019 (a)
Footprint (b)
Estimated Passings 53,022 52,714 52,154 51,940 
Customer Relationships (c)
Residential 28,912 28,496 27,277 27,037 
SMB2,021 1,980 1,958 1,930 
Total Customer Relationships 30,933 30,476 29,235 28,967 
Residential 416 751 240 282 
SMB41 4 28 28 
Total Customer Relationships Net Additions457 755 268 310 
Total Customer Relationship Penetration of Estimated Passings (d)58.3 %57.8 %56.1 %55.8 %
Monthly Residential Revenue per Residential Customer (e)$109.03 $110.82 $113.79 $112.00 
Monthly SMB Revenue per SMB Customer (f)$164.77 $166.06 $169.06 $169.44 
Residential Customer Relationships Penetration
Single Play Penetration (g)44.2 %44.0 %43.0 %42.7 %
Double Play Penetration (g)32.3 %31.7 %30.7 %29.9 %
Triple Play Penetration (g)23.5 %24.3 %26.2 %27.3 %
% Residential Non-Video Customer Relationships45.7 %45.1 %42.7 %41.8 %
Internet
Residential26,807 26,313 24,908 24,595 
SMB1,826 1,783 1,756 1,730 
Total Internet Customers28,633 28,096 26,664 26,325 
Residential494 842 313 351 
SMB43 8 26 29 
Total Internet Net Additions537 850 339 380 
Video
Residential15,705 15,652 15,620 15,725 
SMB530 516 524 520 
Total Video Customers16,235 16,168 16,144 16,245 
Residential53 102 (105)(77)
SMB14 (8)4 2 
Total Video Net Additions67 94 (101)(75)
Voice
Residential9,335 9,398 9,443 9,595 
SMB1,207 1,169 1,144 1,120 
Total Voice Customers10,542 10,567 10,587 10,715 
Residential(63)38 (152)(213)
SMB38 7 24 23 
Total Voice Net Additions(25)45 (128)(190)
Mobile Lines
Residential2,020 1,672 1,078 793 
SMB40 25 4 1 
Total Mobile Lines2,060 1,697 1,082 794 
Residential348 313 285 275 
SMB15 12 3 1 
Total Mobile Lines Net Additions363 325 288 276 
Enterprise (h)
Enterprise Primary Service Unites ("PSUs")272 270 267 264 
Enterprise Net Additions2 1 3 6 


Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 4 of 7


(a)
We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, at September 30, 2020, June 30, 2020, December 31, 2019 and September 30, 2019, customers included approximately 181,700, 124,500, 154,200 and 148,000 customers, respectively, whose accounts were over 60 days past due, approximately 52,300, 18,400, 13,500 and 16,400 customers, respectively, whose accounts were over 90 days past due and approximately 26,000, 10,400, 10,000 and 14,100 customers, respectively, whose accounts were over 120 days past due. Included in the September 30, 2020 aging statistics are approximately 60,200 customers that would have been disconnected under our normal collection policies, but were not due to certain state mandates in place.
(b)Passings represent our estimate of the number of units, such as single family homes, apartment and condominium units and SMB and enterprise sites passed by our cable distribution network in the areas where we offer the service indicated. These estimates are based upon the information available at this time and are updated for all periods presented when new information becomes available.
(c)Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, video and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units ("MDUs") and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer relationships.
(d)Penetration represents residential and SMB customers as a percentage of estimated passings. Penetration excludes mobile-only customers.
(e)Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter and excludes mobile revenue and customers.
(f)Monthly SMB revenue per SMB customer is calculated as total SMB quarterly revenue divided by three divided by average SMB customer relationships during the respective quarter and excludes mobile revenue and customers.
(g)Single play, double play and triple play penetration represents the number of residential single play, double play and triple play cable customers, respectively, as a percentage of residential customer relationships, excluding mobile.
(h)Enterprise PSUs represents the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.

Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 5 of 7


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)

Three Months Ended September 30, Nine Months Ended September 30,
2020201920202019
Net income attributable to Charter shareholders$814 $387 $1,976 $954 
Plus: Net income attributable to noncontrolling interest118 80 299 216 
Interest expense, net946 963 2,883 2,833 
Income tax expense177 126 372 329 
Depreciation and amortization2,370 2,415 7,295 7,465 
Stock compensation expense83 71 263 238 
Loss on extinguishment of debt58 — 121 — 
(Gain) loss on financial instruments, net(69)34 185 116 
Other pension (benefits) costs, net115 (9)94 (27)
Other, net27 19 36 202 
Adjusted EBITDA (a)4,639 4,086 13,524 12,326 
Less: Mobile revenue(368)(192)(936)(490)
Plus: Mobile costs and expenses 456 337 1,243 874 
Cable Adjusted EBITDA$4,727 $4,231 $13,831 $12,710 
Net cash flows from operating activities$3,664 $2,943 $10,413 $8,390 
Less: Purchases of property, plant and equipment(2,014)(1,651)(5,352)(4,913)
Change in accrued expenses related to capital expenditures104 (21)(70)(449)
Free cash flow1,754 1,271 4,991 3,028 
Plus: Mobile net cash outflows from operating activities 126 156 407 563 
          Purchases of mobile property, plant and equipment 139 100 351 281 
Cable free cash flow$2,019 $1,527 $5,749 $3,872 


(a)See page 1 of this addendum for detail of the components included within Adjusted EBITDA.

The above schedule is presented in order to reconcile Adjusted EBITDA, cable Adjusted EBITDA, free cash flow and cable free cash flow, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.

Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 6 of 7

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CAPITAL EXPENDITURES
(dollars in millions)

Three Months Ended September 30, Nine Months Ended September 30,
2020201920202019
Customer premise equipment (a)$520 $470 $1,501 $1,527 
Scalable infrastructure (b)424 320 979 840 
Line extensions (c)439 370 1,204 1,054 
Upgrade/rebuild (d)175 165 459 451 
Support capital (e)456 326 1,209 1,041 
   Total capital expenditures2,014 1,651 5,352 4,913 
Less: Mobile capital expenditures(139)(100)(351)(281)
Cable capital expenditures$1,875 $1,551 $5,001 $4,632 
Capital expenditures included in total related to:
Commercial services$358 $327 $942 $956 

(a)Customer premise equipment includes costs incurred at the customer residence to secure new customers and revenue generating units, including customer installation costs and customer premise equipment (e.g., set-top boxes and cable modems).
(b)Scalable infrastructure includes costs, not related to customer premise equipment, to secure growth of new customers and revenue generating units, or provide service enhancements (e.g., headend equipment).
(c)Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
(d)Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
(e)Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles).


Addendum to Charter Communications, Inc. Third Quarter 2020 Earnings Release
Page 7 of 7

CHARTER COMMUNICATIONS, INC. /MO/ Reports