Time Warner Cable Beats Estimates, Subscription Revenue Up

| About: Charter Communications, (CHTR)

Time Warner Cable Inc. (TWC) reported its fourth quarter 2009 financial results today. Supported by strong free cash flow in fiscal 2009, the Board of Directors of Time Warner Cable declared a quarterly dividend of 40 cents ($1.60 per annum) per share of its common stock for the first time in the company’s history. The first dividend will be payable on March 15.

Total revenues of $4.53 billion were an improvement of 3% year over year and in line with the Zacks Consensus Estimate. This solid performance was the result of the continued growth in Subscription revenues partially offset by a decline in Advertising revenues. GAAP net income stood at $322 million or 91 cents per share, compared to a net loss of $8.2 billion or $25.1 per share in the prior-year quarter. EPS came in at 91 cents, which was well above the Zacks Consensus Estimate of 88 cents.

Adjusted operating income before depreciation and amortization was $1.71 billion, up 3% year over year. This was primarily due to healthy growth in the top-line offset by higher video programming, employee and voice costs. Video programming expense was $985 million, (up 5.2% year-over-year), Employee Cost was $934 million (up 2.9% year-over-year), and voice cost was $163 million (up 11.6% year-over-year). GAAP operating income was $891 million, compared to an operating loss of $13.9 billion in the year-ago quarter.

During full fiscal 2009, Time Warner Cable generated $5.2 billion of cash from operations, down 2.3% year-over-year. However, yearly free cash flow (cash flow from operations less capital expenditure together with principal payment for capital lease and intangible assets) was $1.92 billion, up 10.2% year-over-year. At the end of fiscal 2009, the company had $1.05 billion of cash & cash equivalents and $22.33 billion of outstanding debt on its balance sheet compared to $5.45 billion of cash & cash equivalents and $17.73 billion of outstanding debt at the end of the previous year.

Subscription Segment

Total Subscription revenues in the fourth quarter were $4,331 million, up 4.2% year over year. Within this segment, Video revenues were $2,689 million (up 1.6% year over year), High-speed Data revenues were $1,158 million (up 7.5% year over year), and Voice revenues were $484 million (up 11.3% year over year).

Advertising Segment

Revenues stood at $201 million, down 17.6% year over year.

Subscriber Statistics

During the fourth quarter, Time Warner Cable added 56,000 Digital Video subscribers to 8.866 million. The company lost 105,000 Basic Video subscribers to 12,859 million, added 120,000 Residential high-speed data subscribers to 8.994 million, added 2,000 Commercial high-speed data subscribers to 0.295 million, added 75,000 Residential Digital phone subscribers to 4.153 million, and also added 9,000 Commercial Digital phone subscribers to 0.067 million. During the same quarter the company added 64,000 Triple play subscribers to 3.448 million, added 27,000 Double play subscribers to 4.9 million, and lost 146,000 Single play subscribers to 6.224 million.