TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf

7/24/2019 TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf

1/12

SecondQuarter

2015

EarningsSummary

July30,2015


2/12


3/12

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%)


4/12

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%.


5/12

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

+

+


6/12

$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%



7/12

$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)


8/12

$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.


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)


9/12

$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%)


10/12

CapitalExpenditures


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.


11/12

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


12/12

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

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TWC Earnings-Summary-Presentation-2Q15-FINAL.pdf