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7/24/2019 TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf
1/12
SecondQuarter
2015
EarningsSummary
July30,2015
7/24/2019 TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf
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3
FinancialHighlightsandSelectedFinancialResults
Secondquarter2015revenuegrew3.5%yearoveryearwithBusinessServicesrevenueup16.2%andResidentialServices
revenueup2.1%.
SecondquarterAdjustedOIBDA(1) was$2.0billion a1.2%decreaseyearoveryearasaresultofcontinuedaggressive
investments,aswellashigherprogrammingcostsandpensionexpense.Excludingthe$27millionincreaseinpension
expense,AdjustedOIBDA(1) wouldhavebeenflat.
Higherdepreciation
expense
from
TWC
Maxx
and
other
investments
also
reduced
second
quarter
Operating
Income
to
$1.0billion.
+ OperatingIncomeisreducedbymergerrelatedandrestructuringcostsof$82millionand$61millionforthesecondquartersof2015and2014,
respectively,and$108millionand$141millionforthesixmonthsendedJune30,2015and2014,respectively. Cashprovided by operatingactivities
andFree
Cash
Flow
are
reduced
by
merger
related
and
restructuring
payments
of
$105
million
and
$29
million
for
the
second
quarters
of
2015
and
2014,respectively,and$131millionand$87millionforthesixmonthsendedJune30,2015and2014,respectively.
RefertoEndnotesonslide12fordefinitions.
(inmillions,exceptpersharedata) 2ndQuarter YeartoDate6/30
Change Change
2015 2014 $ % 2015 2014 $ %
Revenue $ 5,926 $ 5,726 $ 200 3.5% $ 11,703 $ 11,308 $ 395 3.5%
AdjustedOIBDA(1) $ 2,030 $ 2,054 $ (24) (1.2%) $ 4,026 $ 4,034 $ (8) (0.2%)
OperatingIncome+ $ 1,029 $ 1,163 $ (134) (11.5%) $ 2,113 $ 2,255 $ (142) (6.3%)
DilutedEPS(2) $ 1.62 $ 1.76 $ (0.14) (8.0%) $ 3.21 $ 3.46 $ (0.25) (7.2%)
AdjustedDilutedEPS(3) $ 1.54 $ 1.89 $ (0.35) (18.5%) $ 3.19 $ 3.68 $ (0.49) (13.3%)
Cashprovidedbyoperatingactivities+ $ 1,698 $ 1,695 $ 3 0.2% $ 3,206 $ 3,092 $ 114 3.7%
Capitalexpenditures $ 1,263 $ 1,240 $ 23 1.9% $ 2,397 $ 2,074 $ 323 15.6%
FreeCashFlow(4)+ $ 440 $ 459 $ (19) (4.1%) $ 847 $ 1,088 $ (241) (22.2%)
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4
OperationalHighlights
Recordsecondquarterresidentialsubscriberperformance:
o Residentialvideonetdeclinesof45,000 bestsecondquartersince2008
o Residentialhighspeeddatanetadditionsof172,000 best secondquartersince2008
o Residentialvoicenetadditionsof252,000 bestsecondquarterever
o Residentialtripleplaynetadditionsof233,000 best secondquarterever
o Residentialcustomerrelationshipnetadditionsof66,000 bestsecondquartereverandfirstpositivesecond
quarternet
additions
since
2008
Firsthalfcapitalexpendituresof$2.4billionreflecttheCompanyscontinuedacceleratedinvestmentinTWCMaxx,
improvedcustomerexperienceandnetworkexpansion.
o TWCMaxx,includingalldigitalconversionandInternetspeedsofupto300Mbps,wascompletedinAustinin
midApril,iswellunderwayinKansasCity,Dallas,Raleigh,SanAntonio,CharlotteandHawaiiandwillbegininSan
Diegoin2015.
o
Also,
the
Company
has
accelerated
the
deployment
of
TWC
Maxx
in
Wilmington
and
Greensboro
in
2015.
o TWCcontinuedtoupgradecustomerpremiseequipmenttoimproveitscustomersexperience.Inthefirstsix
monthsof2015,TWCdeployed nearly5.6millionnewsettopboxes,digitaladaptersandadvancedmodemsin
customershomes.
o Duringthefirstsixmonthsof2015,TWCfurthergrewitsserviceableBusinessServicesopportunitybyaddingnearly
32,000commercialbuildingstoitsnetwork.
Investmentsinnetworkreliabilityandcustomercarecontinuedtocontributetomeaningfulyearoveryearoperational
improvementsin
the
second
quarter.
o 530,000fewerrepaircallstoTWCcallcentersyearoveryear.
o 15%reductioninrepairrelatedtruckrollspercustomerrelationship.
o 98%ontimepercentageforcustomerappointmentswithintheCompanysindustryleadingonehourappointment
window.
o Firstvisitproblemresolutionimprovedby10%.
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5
Record2QSubscriberResults
ResidentialVideo ResidentialHSD
2QNet
Adds
(Declines)
(inThousands)
+ Amountsincludedfor2009and2010representnetadditionsfortotalcustomerrelationshipsasresidentialamountsarenot available.
(45)
(200)
(175)
(150)
(125)
(100)
(75)
(50)
(25)
2009
2010
2011
2012
2013
2014
2015
2Q
252
(100)
(50)
50
100
150
200
250
300
2009
2010
2011
2012
2013
2014
2015
2Q
66
(100)
(75)
(50)
(25)
25
50
75
2009
2010
2011
2012
2013
2014
2015
2Q
ResidentialVoice ResidentialCustomerRelationships
172
25
50
75
100
125
150
175
2009
2010
2011
2012
2013
2014
2015
2Q
+
+
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$4,662 $4,758
$691$803
$373
$365
2Q14 2Q15
ResidentialServices BusinessServices Other
6
TotalRevenue
Revenue
($inMillions)
$5,926$5,726
+3.5%
$125.79$127.65
2Q14 2Q15
TotalCustomerRelationshipARPU(5)
+1.5%
RefertoEndnotesonslide12fordefinitions.
7/24/2019 TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf
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$331$391
$123
$147
$97
$120$90
$95$50
$50
2Q14 2Q15
HSD Voice Wholesale
transport
Video Other
7
RevenuebySegment
BusinessServices
$803
$691
$272 $263
$164 $168
2Q14 2Q15
Advertising Other
OtherOperations+
$2,546 $2,514
$1,606 $1,742
$490 $478
2Q14 2Q15
Video HSD Voice Other
ResidentialServices
$24$20
$4,758$4,662+2.1%
(1.1%)
+16.2%
$431$436
+Includesintersegmentrevenueof$66millionin2Q2015and$63millionin2Q2014.
($inMillions)
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$1,341 $1,489
$1,209$1,181
$544$596
$371$406
$207$224
2Q14 2Q15
Programmingandcontent Otheroperating
Salesandmarketing Technicaloperations
Customercare
8
AdjustedOIBDA(1) &OperatingIncome
DepreciationandAmortization
($inMillions)
$2,054 $2,030
2Q14 2Q15
OperatingCostsandExpenses+
+Totaloperatingcostsandexpensesexcludesdepreciation,amortizationandmergerrelatedandrestructuringcosts.
RefertoEndnotesonslide12fordefinitions.
Margin(6) 35.9% 34.3%
+6.1%
OperatingIncome
$1,163 $1,029
2Q14 2Q15
Margin(7)
(1.2%)
(11.5%)
$3,896$3,672
20.3% 17.4%
$830 $919
2Q14 2Q15
+10.7%
AdjustedOIBDA(1)
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$1.89
$1.54
2Q14 2Q15
$1.76
$1.62
2Q14 2Q15
DilutedEarningsPerShare
DilutedEPS(2) AdjustedDilutedEPS(3)
RefertoEndnotesonslide12fordefinitions.9
282.4
2Q14 2Q15
285.8
AverageDiluted
Common
Shares
Outstanding(inMillions)
(8.0%)(18.5%)
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CapitalExpenditures
RefertoEndnotesonslide12fordefinitions.
CapitalExpendituresYeartoDateJune30,
($inMillions)
$2,074 $2,397
2014 2015
CapitalIntensity(8)
Yearto
Date
June
30,
18.3%
2014 2015
20.5%
10
+15.6%
CapitalExpendituresincreasedprimarilydueto
theCompanysinvestmentstoimprovenetwork
reliability,upgrade
older
customer
premise
equipmentandexpanditsnetworktoadditional
residences,commercialbuildingsandcell
towers,including:
thedeploymentofTWCMaxxinAustin,
KansasCity,
Dallas,
Raleigh,
San
Antonio,
CharlotteandHawaii;
nearly5.6millionnewsettopboxes,digital
adaptersandadvancedmodemsdeployedin
customershomes;and
nearly32,000commercialbuildingsaddedto
TWCsnetwork.
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FreeCashFlow(4)
YeartoDateJune30,
FreeCashFlow(4)
$1,088
$847
2014 2015
RefertoEndnotesonslide12fordefinitions.11
($in
Millions)
(22.2%)
YeartoDate6/30
2014 2015
AdjustedOIBDA(1) $ 4,034 $ 4,026
Netinterestpayments (745) (697)
Netincometaxpayments (95) (35)
Allother,net,includingworking
capitalchanges (102) (88)
Cashprovidedbyoperatingactivities 3,092 3,206
Add:Excess
tax
benefit
from
exercise
ofstockoptions 99 74
Less:
Capitalexpenditures (2,074) (2,397)
Cashpaidforotherintangibleassets (24) (31)
Other (5) (5)
FreeCash
Flow(4) $
1,088
$ 847
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Endnotes
(1)AdjustedOIBDAisdefinedasOperatingIncomebeforeDepreciationandAmortizationexcludingtheimpact,ifany,of
noncashimpairmentsofgoodwill,intangibleandfixedassets;gainsandlossesonassetsales;andmergerrelatedand
restructuringcosts.
(2)Dilutedearningspershare(EPS)isdefinedasnetincomeperdilutedcommonshareattributabletoTWCcommon
shareholders.
(3)
Adjusted
Diluted
EPS
means
net
income
per
diluted
common
share
attributable
to
TWC
common
shareholders
excluding
theimpact,ifany,ofnoncashimpairmentsofgoodwill,intangibleandfixedassetsandinvestments;gainsandlosseson
assetsales;mergerrelatedandrestructuringcosts;changesintheCompanysequityawardreimbursementobligationto
TimeWarnerInc.;andcertainchangestoincometaxprovision;aswellastheimpactoftaxesontheaboveitems.
(4)FreeCashFlowisdefinedascashprovidedbyoperatingactivities(asdefinedunderGAAP)excludingtheimpact,ifany,
ofcashprovidedorusedbydiscontinuedoperations,plus(i)anyincometaxespaidoninvestmentsalesand(ii)any
excesstaxbenefitfromequitybasedcompensation,less(i)capitalexpenditures,(ii)cashpaidforotherintangibleassets
(excludingthose
associated
with
business
combinations),
(iii)
partnership
distributions
to
third
parties
and
(iv)
principal
paymentsoncapitalleases.
(5)ARPUrepresentsaveragemonthlyrevenueperunit.TotalcustomerrelationshipARPUrepresentstotalrevenuedivided
bythecorrespondingaveragecustomerrelationshipsfortheperiod.
(6)AdjustedOIBDAmarginisdefinedasAdjustedOIBDAasapercentageoftotalrevenue.
(7)OperatingIncomemarginisdefinedasOperatingIncomeasapercentageoftotalrevenue.
(8)Capital
intensity
is
defined
as
capital
expenditures
as
apercentage
of
total
revenue.
12