Windstream Holdings Inc. (WIN - Analyst Report) reported first-quarter 2014 adjusted earnings per share of 4 cents, below the Zacks Consensus Estimate of 9 cents and lower than 10 cents earned in the year-ago quarter.
Pro forma revenues decreased 2.1% year over year to $1,464.9 million in the first quarter and also fell short of the Zacks Consensus Estimate of $1,473.0 million. The disappointing results have pushed the stock down by 5.38% in the pre-market trade on Nasdaq.
Total Service revenues fell 2.2%, while Product revenues were flat year over year in the first quarter.
Adjusted OIBDA (excluding non-cash pension expense, non-cash stock-based compensation and restructuring charges) was $540.4 million, down 7.8%.
During the first quarter, total access lines, which include voice lines, high-speed Internet and digital television customers, decreased 4.9% year over year to 3.27 million. On a year-over-year basis, voice lines dropped 6.0% while digital television customers witnessed a decline of 5.3%. High-speed Internet also fell 2.9%.
Windstream exited first quarter with cash and cash equivalents of $70.0 million compared with $48.2 million in 2013. Long-term debt and capital lease obligations were $8,617.6 million compared with $8,622.2 million at the end of 2013.
The company generated adjusted free cash flow of $314.0 million while adjusted capital expenditure was $153.0 million in the first quarter.
The company paid dividend worth $150.2 million during the quarter.
For 2014, the company expects total revenue to range between a 2.5% fall and a 1% rise over the 2013 number. Windstream anticipates capital expenditures in the range of $800–$850 million, and adjusted free cash flow of $775–$885 million, which would result in a dividend payout ratio ranging from 68% to 78%.
Our Analysis and Zacks Rank
Windstream has a Zacks Rank #3 (Hold). We believe the company is poised for long-term growth based on its investments in fiber-to-the-tower and broadband networks along with proper cost management. However, a competitive market scenario, continuous access line loss, regulatory issues and a high debt burden will impede its growth.
United States Cellular Corp. (USM - Analyst Report), a subsidiary of Telephone and Data Systems Inc. (TDS - Analyst Report), reported first-quarter 2014 loss per share of 51 cents, much wider than the Zacks Consensus Estimate of a loss of 41 cents.
On the other hand, Frontier Communications Corp. (FTR - Analyst Report) reported its first-quarter 2014 adjusted earnings per share of 5 cents, missing the Zacks Consensus Estimate by a penny.