Charter Communications (CHTR) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 1.1% to $54.607B and Adjusted EBITDA increased 1.3% to $21.894B; net income attributable to shareholders was $4.557B versus $5.055B in FY22.

• Internet customer growth was 0.5% for FY23; residential and SMB Internet customers declined by 61,000 in Q4, while mobile lines added 546,000 in Q4 and 2.5M for the year.

• Higher capital spending for rural expansion and network evolution reduced FY23 free cash flow; FY24 capex guidance is $12.2B–$12.4B.

Financial highlights

• Q4 revenue was $13.711B, up 0.3% YoY; Adjusted EBITDA was $5.573B, up 1.6%, with a 40.6% margin versus 40.1%.

• Q4 net income attributable to shareholders was $1.058B versus $1.196B; EPS was $7.23 versus $7.79.

• FY23 Adjusted EBITDA margin was 40.1% versus 40.0%; operating costs and expenses rose 0.9% to $32.7B.

• FY23 operating cash flow was $14.433B versus $14.925B; free cash flow was $3.490B versus $6.102B, mainly reflecting higher capex.

• Q4 other operating income included an asset-sale gain; other expense included a pension remeasurement loss.

Outlook and guidance

• FY24 capex is expected at $12.2B–$12.4B, including ~$4.5B for line extensions and ~$1.6B for network evolution, versus $4.0B and $0.9B, respectively, in FY23; guidance excludes BEAD.

• FY24–FY27 line-extension spend includes ~$4.5B for subsidized rural construction and ~$9.5B for other extensions; network evolution remains targeted at ~$100 per passing.

• Rural plans target ~1.3M RDOF passings completed by 2026, two years early; 2024 activations are estimated at ~450K passings.

• Actual FY24 capex will depend on network evolution and expansion pace, supply-chain timing, and business growth; core capex is expected to remain relatively stable in absolute dollars over time while declining as a share of revenue.