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Comcast Reports 2nd Quarter 2016 Results

PHILADELPHIA--(BUSINESS WIRE)--

Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, “I am pleased to report excellent results as our momentum continues across our businesses. Our Cable subscriber and financial performance during the quarter was outstanding. We more than tripled our customer relationship net additions, with our best second quarter Internet customer results in eight years and our best second quarter video customer results in over ten years, and we successfully balanced this with strong operating cash flow growth. Despite an expected difficult comparison to last year's record second quarter film slate, NBCUniversal achieved solid results, driven by strength in our TV businesses and Theme Parks, which benefitted from the successful opening of The Wizarding World of Harry PotterTM in Hollywood. I am excited about the opportunities ahead for our company as we work together to bring people incredible technology, and memorable experiences, and there is no better example than the Olympic Games. The entire organization is gearing up to deliver the most comprehensive and innovative Olympics coverage in history starting next week, which will showcase the incredible breadth of NBCUniversal together with Comcast Cable and the X1 platform.”

Consolidated Financial Results

2nd Quarter Year to Date
($ in millions) 2015 2016 Growth 2015 2016 Growth
Revenue $18,743 $19,269 2.8% $36,596 $38,059 4.0%
Excluding Super Bowl $36,220 $38,059 5.1%
Operating Income $4,105 $4,066 (1.0%) $7,995 $8,155 2.0%
Operating Cash Flow1 $6,266 $6,455 3.0% $12,222 $12,822 4.9%
Excluding Transaction-Related Costs (see Table 7) $6,345 $6,455 1.7% $12,400 $12,822 3.4%
Earnings per Share2 $0.84 $0.83 (1.2%) $1.65 $1.70 3.0%
Excluding Adjustments (see Table 5) $1.63 $1.67 2.5%
Net Cash Provided by Operating Activities $3,589 $4,273 19.1% $8,834 $9,383 6.2%
Free Cash Flow3 $1,501 $1,420 (5.4%) $4,684 $4,225 (9.8%)

Consolidated Revenue for the second quarter of 2016 increased 2.8% to $19.3 billion. Consolidated Operating Income decreased 1.0% to $4.1 billion. Consolidated Operating Cash Flow increased 3.0% to $6.5 billion. Excluding $79 million of Time Warner Cable and Charter transaction-related costs in the second quarter of 2015, consolidated operating cash flow increased 1.7% (see Table 7).

For the six months ended June 30, 2016, consolidated revenue increased 4.0% to $38.1 billion. Excluding $376 million of revenue generated by the broadcast of the NFL’s Super Bowl in the first quarter of 2015, consolidated revenue increased 5.1% (see Table 7). Consolidated operating income increased 2.0% to $8.2 billion. Consolidated operating cash flow increased 4.9% to $12.8 billion. Excluding $178 million of transaction-related costs in the first six months of 2015, consolidated operating cash flow increased 3.4% (see Table 7).

Earnings per Share (EPS) for the second quarter of 2016 was $0.83, a 1.2% decrease compared to the second quarter of 2015 (see Table 5).

EPS for the six months ended June 30, 2016 was $1.70, a 3.0% increase from the $1.65 reported in the prior year. Excluding adjustments in the first quarter of 2016 and the first six months of 2015, EPS increased 2.5% to $1.67 (see Table 5).

Capital Expenditures increased 15.2% to $2.3 billion in the second quarter of 2016. Cable Communications’ capital expenditures increased 12.0% to $1.9 billion in the second quarter of 2016, reflecting increased investment in line extensions, a higher level of investment in scalable infrastructure to increase network capacity and continued spending on customer premise equipment related to the deployment of the X1 platform and wireless gateways. Cable capital expenditures represented 15.1% of Cable revenue in the second quarter of 2016 compared to 14.3% in last year’s second quarter. NBCUniversal’s capital expenditures increased 32.4% to $360 million in the second quarter of 2016, primarily reflecting increased spending at our Theme Parks, which now includes Universal Studios Japan.

For the six months ended June 30, 2016, capital expenditures increased 12.4% to $4.2 billion compared to the prior year. Cable Communications capital expenditures increased 10.6% to $3.5 billion and represented 14.0% of Cable revenue compared to 13.5% in 2015. NBCUniversal’s capital expenditures increased 21.3% to $655 million for the first six months of 2016.

Net Cash Provided by Operating Activities increased 19.1% to $4.3 billion in the second quarter of 2016. Free Cash Flow decreased 5.4% to $1.4 billion, reflecting growth in consolidated operating cash flow, offset by higher capital expenditures. Net cash provided by operating activities for the six months ended June 30, 2016 increased 6.2% to $9.4 billion. Free cash flow decreased 9.8% to $4.2 billion compared to 2015 (see Table 4).

Dividends and Share Repurchases. During the second quarter of 2016, Comcast paid dividends totaling $670 million and repurchased 18.4 million of its common shares for $1.1 billion. In the first six months of 2016, Comcast has repurchased 40.4 million of its common shares for $2.4 billion. As of June 30, 2016, Comcast had $7.6 billion available under its share repurchase authorization.

Cable Communications

2nd Quarter Year to Date
($ in millions)

20154

2016 Growth

20154

2016 Growth
Cable Communications Revenue
Video $5,431 $5,581 2.8% $10,762 $11,119 3.3%
High-Speed Internet 3,101 3,369 8.6% 6,145 6,644 8.1%
Voice 903 893 (1.1%) 1,809 1,789 (1.1%)
Business Services 1,163 1,360 17.0% 2,279 2,671 17.2%
Advertising 577 597 3.5% 1,076 1,156 7.5%
Other 565 644 13.7% 1,110 1,269 14.2%
Cable Communications Revenue $11,740 $12,444 6.0% $23,181 $24,648 6.3%
Cable Communications Operating Cash Flow $4,777 $5,048 5.7% $9,435 $9,937 5.3%
Operating Cash Flow Margin 40.7% 40.6% 40.7% 40.3%
Cable Communications Capital Expenditures $1,678 $1,881 12.0% $3,124 $3,457 10.6%
Percent of Cable Communications Revenue 14.3% 15.1% 13.5% 14.0%

Revenue for Cable Communications increased 6.0% to $12.4 billion in the second quarter of 2016, driven primarily by increases in high-speed Internet, business services, and video revenue. High-speed Internet revenue increased 8.6%, reflecting an increase in the number of residential high-speed Internet customers, rate adjustments and an increase in the number of customers receiving higher levels of service. Business services revenue increased 17.0%, primarily due to an increase in the number of small business customers, as well as continued growth in our medium-sized business services. Video revenue increased 2.8%, primarily reflecting rate adjustments, as well as an increase in the number of customers subscribing to additional services, partially offset by additional revenue in the prior year period associated with a boxing event available on pay-per-view. Other revenue increased 13.7%, primarily reflecting an increase in Xfinity Home revenue and higher franchise and regulatory fees. Advertising revenue increased 3.5%, reflecting an increase in political advertising revenue.

For the six months ended June 30, 2016, Cable revenue increased 6.3% to $24.6 billion compared to 2015, driven by growth in high-speed Internet, business services, and video.

Customer Relationships increased by 115,000 to 28.1 million in the second quarter of 2016, an 83,000 improvement compared to the increase in the second quarter of 2015, primarily reflecting increases in double and triple product relationships. At the end of the second quarter, penetration of our double and triple product customers increased to 70% compared to 69% in the second quarter of 2015. Video customer net losses of 4,000 were the best result for a second quarter in over 10 years, high-speed Internet customer net additions of 220,000 were the best result for a second quarter in 8 years, and Voice customer net additions improved to 64,000.

Customers Net Additions
(in thousands) 2Q15 2Q16 2Q15 2Q16
Video Customers 22,306 22,396 (69) (4)
High-Speed Internet Customers 22,548 23,987 180 220
Voice Customers 11,319 11,641 49 64
Single Product Customers 8,343 8,416 (56) 6
Double Product Customers 8,936 9,399 46 53
Triple Product Customers 9,987 10,269 42 56
Customer Relationships 27,265 28,085 31 115

Customer metrics include residential and business customers.

Operating Cash Flow for Cable Communications increased 5.7% to $5.0 billion in the second quarter of 2016, reflecting higher revenue, partially offset by a 6.2% increase in operating expenses. The higher expenses were primarily due to a 7.4% increase in video programming costs, reflecting the timing of contract renewals, as well as higher retransmission consent fees and sports programming costs, partially offset by fees associated with a boxing event available on pay-per-view in the prior year period. Technical and product support expenses increased 5.9% primarily related to the development, delivery and support of our X1 platform, Cloud DVR technology and wireless gateways, and the continued growth in business services and home security and automation services. Advertising, marketing and promotion costs increased 4.4%, primarily due to increases in spending associated with attracting new residential and business services customers. Customer service expenses increased 6.0%, primarily due to increased support for improving the customer experience and increases in total labor costs. This quarter’s operating cash flow margin was 40.6% compared to 40.7% in the second quarter of 2015.

For the six months ended June 30, 2016, Cable operating cash flow increased 5.3% to $9.9 billion compared to 2015, driven by higher revenue, partially offset by a 7.0% increase in operating expenses primarily related to an 8.4% increase in video programming costs, as well as higher technical and product support expenses, higher advertising, marketing and promotion costs, and higher customer service expenses. Year-to-date operating cash flow margin was 40.3% compared to 40.7% in 2015.

NBCUniversal

2nd Quarter Year to Date
($ in millions) 2015 2016

Reported
Growth

Pro Forma
Growth5

2015 2016

Reported
Growth

Pro Forma
Growth5

NBCUniversal Revenue
Cable Networks $2,450 $2,566 4.7% $4,809 $5,019 4.4%
Broadcast Television 1,813 2,128 17.3% 4,061 4,212 3.7%

Excluding Super Bowl

3,685

4,212

14.3%

Filmed Entertainment 2,266 1,351 (40.4%) 3,712 2,734 (26.4%)
Theme Parks 773 1,136 47.0% 10.6% 1,424 2,162 51.8% 10.2%
Headquarters, Other and Eliminations (72) (78) NM (172) (163) NM
NBCUniversal Revenue $7,230 $7,103 (1.8%) (5.1%) $13,834 $13,964 0.9% (2.8%)

Excluding Super Bowl

$13,458

$13,964

3.8%

(0.2%)

NBCUniversal Operating Cash Flow
Cable Networks $872 $944 8.3% $1,770 $1,900 7.3%
Broadcast Television 231 394 70.5% 413 678 64.3%
Filmed Entertainment 422 56 (86.7%) 715 223 (68.8%)
Theme Parks 334 469 40.5% 5.3% 578 844 46.0% 4.4%
Headquarters, Other and Eliminations (167) (174) NM (309) (334) NM
NBCUniversal Operating Cash Flow $1,692 $1,689 (0.2%) (6.4%) $3,167 $3,311 4.5% (2.6%)
NM=comparison not meaningful.

Revenue for NBCUniversal decreased 1.8% to $7.1 billion in the second quarter of 2016 and Operating Cash Flow remained stable at $1.7 billion. Pro Forma5 Revenue for NBCUniversal decreased 5.1%. Pro Forma5 Operating Cash Flow...


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