Charter Communications Inc. (NASDAQ:CHTR)

Current Income Tax Expense

The current income tax expense exhibits a consistent upward trend over the five-year period. Starting at $161 million in 2020, the expense increases moderately to $242 million in 2021, followed by a significant jump to $1,526 million in 2022. This upward trajectory continues in 2023 and 2024, reaching $1,673 million and $1,736 million respectively. This pattern indicates growing taxable income or changes in tax rates or regulations impacting current tax obligations.

Deferred Income Tax Expense (Benefit)

The deferred income tax component reflects greater volatility compared to the current tax expense. Beginning at a positive expense of $465 million in 2020, it rises substantially to $826 million in 2021 but then sharply declines to $87 million in 2022. Notably, it turns into a deferred tax benefit in 2023 and 2024, with values of -$80 million and -$87 million respectively. This shift suggests adjustments in temporary differences or recognition of deferred tax assets, potentially due to changes in the company’s future tax expectations or accounting estimates.

Total Income Tax Expense

The overall income tax expense follows an increasing trend similar to the current tax expense, starting at $626 million in 2020 and rising steadily through the years, peaking at $1,649 million in 2024. Although the growth is generally consistent, the total tax expense shows a slight decline from $1,613 million in 2022 to $1,593 million in 2023 before increasing again in 2024. This fluctuation aligns with the deferred tax expense transitioning to a benefit, somewhat offsetting the current tax expense in those years.

Summary

The data reveals a steady increase in the current income tax expense over the five-year span, indicating growing taxable profits or increased tax liabilities. The deferred income tax expense shows considerable variability, culminating in a shift to a deferred tax benefit in the later years. This change moderates the total income tax expense growth rate despite rising current expenses. Overall, the dynamics of deferred taxes suggest adjustments related to temporary timing differences or reassessments of tax positions, contributing to the complexity of the company’s tax expense profile.

Statutory Federal Income Tax Rate

The statutory federal income tax rate remained constant at 21% across all five years, from 2020 through 2024. This indicates no changes in the federally mandated corporate tax rate during this period.

Effective Tax Rate

The effective tax rate exhibited a gradual upward trend over the five-year period. In 2020, the effective tax rate was 14.55%, substantially below the statutory rate. It increased to 16.72% in 2021 and then rose more significantly to 21.62% in 2022. In 2023, the effective tax rate peaked at 23.24%, exceeding the statutory rate by approximately 2.24 percentage points. By 2024, it declined moderately to 21.98%, remaining slightly above the statutory rate.

This pattern suggests that the company experienced changes in tax planning, deductions, credits, or income composition leading to a rising effective tax burden relative to the statutory rate over most of the period. The effective rate approaching and sometimes exceeding the statutory rate from 2022 onward may imply reduced availability or utilization of tax benefits or increased taxable income subject to higher rates.

The financial data reveals several noteworthy trends over the five-year period. The carryforwards experienced a significant drop from 2020 to 2021, falling from 1,344 million US dollars to 325 million, followed by a gradual increase through 2024, reaching 642 million. This suggests a decline and then partial recovery in available tax loss carryforwards or similar deferred tax items.

Accrued and other deferred tax assets show some volatility but generally remain within a moderate range, fluctuating between 512 million and 612 million, indicating relatively stable short-term timing differences impacting deferred tax calculations.

Gross deferred tax assets declined sharply from 1,925 million in 2020 to 937 million in 2021, then slightly decreased to 887 million in 2022. From 2023 onwards, there was a noticeable recovery, with values rising to 1,142 million and 1,177 million in 2023 and 2024 respectively. This pattern aligns with the trends seen in carryforwards and accrued items, indicating adjustments in the recognition or realization potential of deferred tax assets.

The valuation allowance, which offsets deferred tax assets, increased in magnitude from -32 million in 2020 to a peak negative value of -40 million in 2022, then decreased to -15 million by 2024. This reduction in valuation allowance suggests improved expectations of future taxable income against which deferred tax assets can be utilized.

Net deferred tax assets grew from 1,893 million in 2020 down to 847 million in 2022, but bounced back to 1,162 million by 2024. This reflects the combined impact of the gross deferred tax asset movements and valuation allowance changes, indicating oscillations in the recoverability outlook for these tax assets.

The investment in partnership line remained consistently large and negative, near the 20,000 million mark throughout the period, suggesting a significant and stable investment position with possibly negative basis or cost structure implications for deferred taxes.

Deferred tax liabilities closely mirror the investment in partnership values, holding steady around the negative 20,000 million level. This near equivalence implies that deferred tax liabilities are largely driven by this investment, potentially offsetting the deferred tax assets to some extent.

Consequently, the net deferred tax assets (liabilities), which combine deferred assets and liabilities, have remained substantially negative, fluctuating from -18,108 million in 2020 to -18,845 million in 2024. This persistent net liability position signals an overall deferred tax liability excess, primarily influenced by the partnership investment and associated tax complexities.

The deferred tax liabilities of the entity remained relatively stable over the reviewed period from December 31, 2020, to December 31, 2024. Initially, there was a noticeable increase from US$18,108 million at the end of 2020 to US$19,096 million at the end of 2021, marking the highest point in the period.

Subsequently, the deferred tax liabilities showed a slight downward trend, decreasing marginally each year from US$19,096 million in 2021 to US$18,845 million by the end of 2024. This represents a gradual reduction though the overall variation is modest.

The stability and minor decrease in deferred tax liabilities could indicate consistent tax-related obligations without significant fluctuations in underlying factors such as temporary differences or changes in tax rates.

Trend Overview

An initial increase followed by a slow but steady decline.

Magnitude of change

The peak value was about 5.5% higher than the starting value, with an eventual decrease bringing the figure close to the original amount.

Implications

The relatively stable deferred tax liabilities imply stable financial and tax planning activities over the years, suggesting no significant tax law changes or major shifts in timing differences affecting the company’s tax expense recognition.

The financial data reveals distinct patterns and changes over the five-year period ending December 31, 2024, across reported and adjusted metrics related to liabilities, shareholders' equity, and net income attributable to shareholders.

Liabilities Trends

Reported total liabilities show a gradual increase from 113,925 million USD in 2020 to a peak of 132,475 million USD in 2023, followed by a slight decrease to 130,313 million USD in 2024. Adjusted total liabilities follow a similar upward trend but remain consistently lower than reported liabilities, increasing from 95,817 million USD in 2020 to 113,521 million USD in 2023 before decreasing to 111,468 million USD in 2024. The adjustment appears to reduce total liabilities by a significant margin across all periods, indicating accounting treatments or classifications affecting the reporting of liabilities.

Shareholders’ Equity Trends

Reported total Charter shareholders’ equity has declined considerably from 23,805 million USD in 2020 to 9,119 million USD in 2022, representing a substantial reduction in equity during this interval. However, from 2022 onwards, reported equity demonstrates a recovery trend, increasing to 15,587 million USD by 2024. Conversely, adjusted total shareholders’ equity exhibits a different magnitude and pattern. The adjusted equity starts much higher at 41,913 million USD in 2020, decreases to 28,177 million USD in 2022, and then rises steadily to 34,432 million USD in 2024. This disparity between reported and adjusted equity levels suggests that adjustments have a considerable impact on shareholders’ equity presentation, likely reflecting deferred tax effects or other accounting adjustments aimed at providing a more accurate financial position.

Net Income Attributable to Shareholders

Reported net income attributable to Charter shareholders increases from 3,222 million USD in 2020 to 5,055 million USD in 2022, showing strong growth during this period. There is a slight decline in 2023 to 4,557 million USD, followed by a partial rebound to 5,083 million USD in 2024. Adjusted net income follows a somewhat parallel pattern but at consistently higher values, starting at 3,687 million USD in 2020 and reaching 5,480 million USD in 2021. It then decreases slightly to 5,142 million USD in 2022, followed by a more pronounced decline to 4,477 million USD in 2023 before increasing again to 4,996 million USD in 2024. The adjustments appear to smooth income fluctuations while maintaining a broadly similar trend to reported figures.

Overall Insights

The adjusted figures generally show more conservative liability values and higher equity levels compared to reported data, which may reflect the deferred income tax adjustments that affect both balance sheet and income statement accounts. The divergence between reported and adjusted equity is particularly notable, emphasizing the importance of considering deferred tax impacts when evaluating the company’s financial position. Net income trends indicate growth with some volatility, and adjustment effects seem to moderate this volatility slightly. The data suggests an underlying improvement in financial health after a dip in the early years, supported by recovering equity and maintained profitability despite changes in liabilities.

The company's financial performance over the observed periods reveals several noteworthy trends when considering both reported and adjusted financial metrics.

Net Profit Margin

The reported net profit margin displays a general upward movement from 6.7% in 2020 to a peak of 9.36% in 2022, followed by a decline in 2023 to 8.35%, and then a slight recovery to 9.23% by 2024. The adjusted net profit margin follows a somewhat similar pattern but consistently remains higher than the reported margin. It rises sharply from 7.67% in 2020 to 10.6% in 2021, decreases to 8.2% by 2023, and marginally improves to 9.07% in 2024. This indicates that adjustments, likely for deferred income taxes, have a meaningful effect on net profitability, especially in early years.

Financial Leverage

Reported financial leverage exhibits substantial variability with a pronounced increase from 6.06 times in 2020 to 15.85 times in 2022, decreasing thereafter to 9.62 times in 2024. The adjusted financial leverage, however, is significantly lower across all years and shows a more stable trend, increasing steadily from 3.44 times in 2020 to 5.13 times in 2022, before declining gradually to 4.36 times in 2024. This suggests that the reported leverage may have been influenced by items adjusted out in the deferred taxes, and the adjusted leverage presents a more conservative and stable measure of debt usage or risk.

Return on Equity (ROE)

The reported ROE displays very high values relative to the adjusted ROE, with a rapid increase from 13.53% in 2020 to an exceptional 55.43% in 2022, followed by a decrease to 32.61% in 2024. Conversely, the adjusted ROE progresses more moderately and steadily from 8.8% in 2020 to 18.25% in 2022, then gradually declines to 14.51% by 2024. The divergence between reported and adjusted ROE illustrates the impact of adjustments, possibly related to deferred tax effects and financial leverage differences, enhancing reported profitability measures. The declining trend in recent years may warrant analysis of operational efficiency or earnings quality.

Return on Assets (ROA)

The reported ROA remains relatively low but shows consistent improvement from 2.23% in 2020 to 3.5% in 2022, then slightly declines to 3.1% in 2023 before rebounding to 3.39% in 2024. The adjusted ROA is generally higher than the reported values in the early years, increasing from 2.56% to a peak of 3.85% in 2021, though thereafter it trends downward to 3.04% in 2023 and recovers somewhat to 3.33% in the final year. The relatively stable adjusted ROA suggests that asset utilization efficiency is somewhat consistent, while reported figures fluctuate more with leverage and profit margin effects.

Overall, the adjusted financial measures provide a steadier and less volatile insight into financial performance and leverage, indicating that deferred income tax adjustments significantly affect reported financial ratios. The trends reveal a peak in profitability and leverage metrics around 2022, followed by declines or stabilization in subsequent years. The data suggests a cautious improvement in profit generation and asset efficiency after adjustment, with moderated leverage, underscoring the importance of considering both reported and adjusted figures for comprehensive financial analysis.

Net Income Attributable to Charter Shareholders

The reported net income exhibited consistent growth from 2020 through 2022, rising from 3,222 million US dollars in 2020 to 5,055 million US dollars in 2022. However, a decline to 4,557 million US dollars occurred in 2023, followed by a recovery to 5,083 million US dollars in 2024. Similarly, the adjusted net income increased from 3,687 million US dollars in 2020 to a peak of 5,480 million US dollars in 2021, then decreased to 5,142 million US dollars in 2022. This was followed by a notable drop to 4,477 million US dollars in 2023 and a subsequent rise to 4,996 million US dollars in 2024.

Net Profit Margins

The reported net profit margin increased steadily from 6.7% in 2020 to 9.36% in 2022, indicating improved profitability during this period. This margin then declined to 8.35% in 2023 before rebounding to 9.23% in 2024, reflecting some fluctuation yet maintaining a generally strong margin. The adjusted net profit margin followed a similar pattern, growing from 7.67% in 2020 to 10.6% in 2021, then decreasing to 9.52% in 2022. A significant dip to 8.2% occurred in 2023, with a recovery to 9.07% in 2024, indicating variability influenced potentially by adjustments related to income tax or other factors.

Overall Trends and Insights

Both reported and adjusted net incomes demonstrate an overall upward movement over the five-year span, despite a downturn in 2023. The margins reflect a similar trajectory with peaks in the early years followed by declines and partial recoveries, suggesting the company experienced periods of strong profitability punctuated by short-term reduction in earnings efficiency. The close alignment between reported and adjusted figures indicates that deferred income tax adjustments impact the financial outcomes but do not drastically alter the underlying profitability trend.

The analysis of the financial data reveals notable trends in shareholders’ equity and financial leverage over the five-year period.

Shareholders’ Equity

Reported total shareholders’ equity demonstrates a declining trend from 23,805 million USD in 2020 to 9,119 million USD in 2022, followed by a moderate recovery reaching 15,587 million USD in 2024. This pattern indicates significant erosion in reported equity during the initial years, with gradual improvement thereafter.

Adjusted total shareholders’ equity, which accounts for deferred income tax adjustments, starts significantly higher at 41,913 million USD in 2020. It similarly decreases over the first three years to 28,177 million USD in 2022, then shows a steady upward trend to 34,432 million USD in 2024. Overall, the adjusted values remain notably higher than the reported values, suggesting that deferred tax adjustments have a considerable positive impact on equity measurement.

Financial Leverage

Reported financial leverage ratios increase sharply from 6.06 in 2020 to a peak of 15.85 in 2022, reflecting a substantial increase in leverage or debt relative to reported equity in that year. After reaching this peak, the reported leverage decreases to 9.62 by 2024, indicating deleveraging or equity growth relative to debt in recent years.

Adjusted financial leverage ratios follow a similar but less extreme trajectory, rising from 3.44 in 2020 to 5.13 in 2022, then declining gradually to 4.36 in 2024. These lower ratios compared to reported leverage suggest that the adjustments to equity for deferred income taxes reduce the perceived leverage risk and depict a more conservative financial position.

In summary, the data reflect an initial period of weakening equity and rising leverage up to 2022, followed by a phase of recovery and stabilization through 2024. The adjusted figures based on deferred income tax considerations provide a more favorable view of equity and leverage, highlighting the importance of these adjustments for financial analysis and risk assessment.

The analysis of the financial data over the five-year period reveals distinct trends in both reported and adjusted figures for net income, shareholders' equity, and return on equity (ROE).

Net Income

Reported net income attributable to Charter shareholders shows a general upward trend from 2020 through 2024, rising from $3,222 million to $5,083 million. There is a peak in 2022 at $5,055 million, a slight dip in 2023 to $4,557 million, followed by a recovery in 2024.

The adjusted net income follows a somewhat similar pattern but with notable differences in absolute values. It starts higher than reported income at $3,687 million in 2020, peaks earlier in 2021 at $5,480 million, then declines through 2024. The adjusted income drops steadily after 2021, reaching $4,996 million in 2024, indicating adjustments impact income recognition and possibly reflect deferred tax considerations.

Shareholders’ Equity

Reported total Charter shareholders’ equity declines sharply from $23,805 million in 2020 to $9,119 million in 2022, suggesting significant reduction in equity possibly due to losses, share repurchases, or other equity adjustments. However, the equity rebounds gradually in 2023 and 2024, reaching $15,587 million.

In contrast, adjusted total shareholders’ equity displays a less volatile but overall declining trend from $41,913 million in 2020 to $28,177 million in 2022, followed by a moderate recovery back up to $34,432 million by 2024. The adjusted equity consistently remains higher than the reported figures, indicating that adjustments normalize or add back certain equity elements reduced or excluded in reported figures.

Return on Equity (ROE)

Reported ROE exhibits significant volatility and notably high values, increasing sharply from 13.53% in 2020 to a peak of 55.43% in 2022. This is followed by a decline to 32.61% in 2024, though it remains substantially elevated compared to 2020. The amplified ROE reflects the steep decline in reported shareholders' equity combined with relatively stable or growing net income, resulting in high efficiency ratios.

Adjusted ROE is more stable and considerably lower than the reported ROE, starting at 8.8% in 2020 and peaking at 18.25% in 2022. It then declines gently through 2023 and 2024 to around 14.51%. The adjusted ROE suggests a more conservative and normalized view of profitability relative to shareholders’ equity, accounting for deferred tax adjustments and smoothing of equity fluctuations.

Overall, the data suggests that while net income shows modest growth with some fluctuations, the reported equity base experiences substantial variability impacting the reported ROE figures significantly. Adjusted measures provide a more moderated view of financial performance and position, reflecting tax adjustments and possibly other non-recurring items that affect the reported financial outcomes. The elevated reported ROE in certain years appears to be driven primarily by the reduced equity base rather than a proportionate increase in net income.

Net Income Trends

The reported net income attributable to Charter shareholders demonstrates an overall positive trajectory from 2020 to 2024, increasing from 3,222 million US dollars in 2020 to 5,083 million US dollars in 2024. There was a substantial growth from 2020 to 2021, followed by a smaller increase in 2022. However, a decline is observed in 2023 before net income rises again in 2024 to nearly match the previous peak.

Adjusted net income follows a similar pattern with values starting at 3,687 million US dollars in 2020 and rising to 4,996 million US dollars in 2024. The adjusted figures are consistently higher than the reported figures, indicating adjustments that likely reflect deferred income tax impacts or other non-cash items. The highest adjusted net income was recorded in 2021, followed by a decrease in subsequent years, with a minor recovery in 2024.

Return on Assets (ROA) Trends

Reported ROA shows a growth trend from 2.23% in 2020 to a peak of 3.5% in 2022, indicating improved efficiency in generating profits from assets. This is followed by a decline to 3.1% in 2023, before a partial rebound to 3.39% in 2024. The overall trend suggests a positive but somewhat volatile asset utilization performance over the period.

Adjusted ROA follows a comparable pattern but consistently remains higher than reported ROA, starting at 2.56% in 2020 and peaking at 3.85% in 2021. This adjusted metric declines steadily through 2023 before increasing slightly in 2024 to 3.33%. The higher adjusted ROA may reflect the impact of deferred tax adjustments on asset profitability metrics.

Comparative Observations

The difference between reported and adjusted net income and ROA points to the significance of income tax and other adjustments in the company's financial performance assessment. The adjusted figures provide a more favorable view of profitability and efficiency, which can be critical for internal decision-making and performance evaluation.

Summary

The financial data shows that the company experienced growth in net income and improved asset efficiency in the early part of the period, particularly between 2020 and 2022. Despite a dip in 2023, both reported and adjusted metrics indicate a recovery in 2024. The adjusted figures, reflecting deferred income tax treatment, consistently present a more optimistic financial health picture compared to the reported results.