Time Warner Cable Management Discusses Q2 2012 Results - Earnings Call Transcript

Time Warner Cable (TWC)

Q2 2012 Earnings Call

August 02, 2012 8:30 am ET

Executives

Tom Robey

Glenn A. Britt - Chairman and Chief Executive officer

Robert D. Marcus - President and Chief Operating Officer

Irene M. Esteves - Chief Financial Officer and Executive Vice President

Analysts

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Philip Cusick - JP Morgan Chase & Co, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Stefan Anninger - Crédit Suisse AG, Research Division

Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division

Tuna N. Amobi - S&P Equity Research

Benjamin Swinburne - Morgan Stanley, Research Division

Richard Greenfield - BTIG, LLC, Research Division

Presentation

Operator

Hello and welcome to the Time Warner Cable's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Mr. Tom Robey, Senior Vice President of Time Warner Cable Investor Relations. Thank you. You may begin.

Tom Robey

Thanks, Candy, and good morning, everyone. Welcome to Time Warner Cable's 2012 Second Quarter Earnings Conference Call. This morning, we issued a press release detailing our 2012 second quarter results.

Before we begin, there are a couple of items I want to cover. First, we refer to certain non-GAAP measures, including operating income before depreciation and amortization or OIBDA. In addition, we refer to adjusted OIBDA, adjusted OIBDA less capital expenditures and adjusted diluted earnings per share. Definitions and schedules setting out reconciliations of these historical non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release or our training schedules.

Second, today's announcement includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by statements herein due to various factors, including economic, business, competitive, technological, strategic and/or regulatory changes that could affect our business.

These factors are discussed in detail in Time Warner Cable's SEC filings, including its most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Time Warner Cable is under no obligation to, and in fact expressly disclaims any such obligation, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

And third, today's comments do not include the impact of the expected sale of AWS spectrum by SpectrumCo.

Finally, today's press release, trending schedules, presentation slides and related reconciliation schedules are available on our company's website at twc.com/investors. A replay of today's call will be available beginning approximately 2 hours after the call has ended and will run through midnight, Eastern Time, August 6.

With that covered, I'll thank you and turn the call over to Glenn. Glenn?

Glenn A. Britt

Good morning, and thanks for joining us. We had another good quarter, with more than 9% revenue growth. In that, we benefited from continued strong performance in residential, high-speed data and business services from rising political advertising and from our recent acquisition of Insight Communications.

Quarterly adjusted OIBDA topped $2 billion for the first time, and you'll notice that we stepped up the pace of our share repurchase program. In fact, we've now bought back more than $4 billion of Time Warner Cable stock since the inception of the program. And that means we've retired over 15% of our outstanding shares.

We've been able to deliver these steady results in an environment that remains extremely challenging. Competitive activity remains intense, unemployment is unfortunately stubbornly high and the housing market is still sluggish. Despite all that, we remain focused on meeting our customers' needs, both now and in the future, to continue the operational excellence and investment in our people, products, marketing and physical infrastructure.

I feel very good about our competitive and financial position, and I'm pleased that we're on track to deliver on all of our guidance for the full year. Having said that, I'll turn the call over to Rob and then Irene for more details. Rob?

Robert D. Marcus

Thanks, Glenn, and good morning, everyone. Overall, I'm very pleased with our performance this quarter. As Glenn mentioned, residential high-speed data, business services and ad sales were standouts, but I'm also enthusiastic about the many initiatives we're pursuing to enable us to perform even better.

I'll walk you through some of them in a moment, but first a word on the environment in which we're operating. The economic climate remains pretty tough. Improvement in employment and occupied housing has been slow and sporadic, resulting in continued pressure on a lot of consumers.

Competitive intensity hasn't really changed much either. We did see a spike in DISH advertising spending and some especially rich U-verse promotions in the quarter as well as continued aggressive competition from FiOS in the roughly 12% of our footprint in which it is marketed.

Against that backdrop, our overall subscriber performance was pretty solid, with strong interest HSD and voice connects, offset by soft video connects and the usual seasonal spike in disconnects across all products. The details of our Q2 subscriber net adds are shown on Slide 3 of the presentation materials.

Consistent with our customer acquisition strategy in the first quarter, we continue to target triple plays and HSD single plays, and again, we met success on both fronts. With triple play promotions priced at $89 and $99, we drove them within 30% year-over-year increase in triple play connects, and we continue to have success in migrating existing single and double plays to triples.

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