Charter Communications, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Charter's second quarter 2020 investor call. At this time, all participants are in a listen-only mode, and after the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star and then one on your telephone. If you require any further assistance, please press star zero. I'd now like to hand the conference over to your speaker today, Stefan Anninger. Please go ahead, sir.

Good morning, and welcome to Charter's second quarter 2020 investor call. The presentation that accompanies this call can be found on our website, ir.charter.com, under the financial information section. Before we proceed, I would like to remind you that there are a number of risk factors and other cautionary statements contained in our SEC filings, including our most recent 10-K and also our 10-Q file this morning. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully. Various remarks that we make on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements reflect management's current view only, and Charter undertakes no obligation to revise or update such statements or to make additional forward-looking statements in the future. During the course of today's call, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. These non-GAAP measures, as defined by Charter, may not be comparable to measures with similar titles used by other companies. Please also note that all growth rates noted on this call and in the presentation are calculated on a year-over-year basis unless otherwise specified. On today's call, we have Tom Rutledge, Chairman and CEO, and Chris Winfrey, our CFO. With that, let's turn the call over to Tom.

Thanks, Stephan. We've remained focused on serving our customers and the communities where we operate through a difficult period of time. These services have enabled remote working, distant learning, telehealth services, and family communications in support of the broader economy and the welfare of our communities. In mid-March, as part of our effort to keep Americans connected during the shelter-in-place orders, we pledged to do a number of things. We committed to offer Spectrum Internet for free for 60 days to households with students or educators who did not already have a Spectrum Internet subscription. And through that program, which ended for new subscriptions on June 30th, we added 450,000 customers. We also committed to suspend collection activities and not terminate service for residential or small or medium business customers who are experiencing COVID-19-related economic challenges. And through the Keep Americans Connected programs, which also ended on June 30th, we helped approximately 700,000 customers who indicated economic hardship due to COVID-19. In addition, we opened our Wi-Fi hotspots across our footprint for public use, opened up our Spectrum News website to ensure people have access to high-quality local news and information, and we rapidly connected and upgraded fiber services to healthcare providers. We've donated significant airtime to run public service announcements to our full footprint of 16 million video subscribers, And for our employees, we implemented two weeks of additional paid sick time for COVID-related illnesses and an additional 15 days of flex time to address other COVID issues. We increased our wages for all hourly field operations and customer service call center employees by $1.50 in April going back to February and committed to raise our minimum wage for hourly workers to at least $20 an hour over the next two years. We continued to perform well in the second quarter. We added 850,000 residential and SMB Internet customers, driven by the demand for our high-quality products. Our ability to connect and service the customers we created in the quarter has been the result of investments that we've made over the last several years in our insourced and U.S.-based high-quality workforce, significant systems integration and automation, our online and digital sales and self-service platforms, and our self-installation program, which ran at about 90% of installations during the quarter. Data usage and traffic in our network also remained elevated during the quarter. In June, residential data usage for Internet-only customers was 600 gigabytes per month, down 10% from the April peak, but up nearly 20% from the fourth quarter. Our customers are benefiting from a continually decreasing price per gigabyte. Peak traffic levels remain well below maximum capacity, and our network continued to perform well because of the capacity that our recent investments, including all digital and DOCSIS 3.1, created. And because we continue to invest significantly to stay ahead of that usage curve. Over the coming years, we'll invest in our network as we build to lower density in rural communities and pursue our 10G plan, which provides a cost-efficient pathway for us to offer multi-gigabit speeds and lower latency to consumers and business customers. Additionally, with our inside-out strategy, we will continue to use and develop small wireless cells powered by our network together with our MVNO to connect customers in and beyond the home, delivering our throughput and economics for customers in fixed nomadic and mobile environments. Moving back to Q2 results, we added 100,000 video and 40,000 voice customers, both of which benefited from significant broadband sales in the quarter. We also added 325,000 mobile lines, despite some disruption to our mobile sales channel in the quarter. We also performed well from a financial perspective, We grew adjusted EBITDA by 7.3%, despite some non-recurring items Chris will cover. And our second quarter free cash flow grew by nearly 70% year over year. As we look out for the rest of the year, we expect our broadband and mobile products to continue to drive demand. But our outlook depends on what happens to unemployment and income and for how long, and the impact such factors have on customers' ability to pay for the services and in the coming months, including government support to consumers. Household formation may slow. If it does, we would expect lower activity for both new sales and churn. And due to our various self-installation initiatives, we expect service transactions and cost-to-serve customer relationship to continue to decline. S&V has held up better than we expected, and we're currently selling more year over year, again, tied to how the economy and stimulus develops. In enterprise, business has been slow. During the second quarter, we struggled to gain access to customers and business premises. Sales activity is picking up back each month, but it will continue to be lower growth until businesses are fully back to normal operations. Our advertising business is inherently local and primarily supported by small and medium businesses, which have also been slow to return to local advertising. Ad sales are improving, and we still expect political advertising to be meaningful, which will help our third and fourth quarter results. Our first half financial results would have been better were it not for COVID-19, but we feel good about our current performance and long-term growth trajectory. The value and demand for our services is clear, and we're operating efficiently and serving our communities well. In 2016, we put three cable companies together to scale our business under one operating strategy. Our ability to grow our connectivity services this year for both new and existing customers is a testament to our operating strategy, the quality of our products, and our significant investment in systems and people over the last several years. Before turning the call over to Chris, I'd like to thank Charter's employees for their hard work, dedication, and diligence throughout this crisis. They've been asked to go above and beyond their regular duties, and they've delivered easing the strain for millions of families in this challenging time. Now I'll turn the call over to Chris.