Windstream Holdings Inc. reported disappointing financial results in the first quarter of 2017 wherein both the top line and the bottom line fell short of the Zacks Consensus Estimate.
The company’s quarterly loss per share of 89 cents was much wider than the Zacks Consensus Estimate of a loss of 34 cents. On a GAAP basis, the company reported net loss of $111.3 million or a loss of 89 cents per share compared with a net loss of $231.9 million or $2.52 per share in the year-ago quarter.
Total revenue declined 1% year over year to $1,365.7 million in the first quarter, missing the Zacks Consensus Estimate of $1,537.6 million. Service revenues increased 0.3% year over year to $1,344.4 million and Product revenues plunged 35% to $21.3 million.
In the reported quarter, total operating expense was $1,319.7 million, up 9% year over year. Operating income was $46 million compared with $157.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $335 million, down 12% year over year.
Cash Flow
In the first quarter of 2017, Windstream generated $132.5 million of cash from operations compared with $127.2 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $56.9 million compared with a negative $97 million in the year-ago quarter.
Liquidity
Windstream exited the first quarter of 2017 with $51.5 million of cash and cash equivalents and $5,479.1 million of total debt compared with $59.1 million and $4,863.3 million, respectively, at the end of 2016. At the end of the reported quarter, the debt-to-capitalization ratio was 0.88 compared with 0.97 at the end of 2016.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391 million, down 2% year over year. Of the total, Consumer revenues were $310.9 million, down 0.4%. Small Business – ILEC revenues totaled $80.1 million, down 6%. Total profit for the segment was $221.7 million, down 3%.
Consumer & Small Business – CLEC:Revenues totaled $140.3 million, up 9% year over year. Segment profit was $48.8 million, up 18%.
Wholesale:Revenues came in at $157.5 million, down 3% year over year. Segment profit was $107.5 million, down 9%.
Enterprise:Total revenue was $525.5 million, up 2% year over year. Of the total, Service revenues were $515.9 million, up 5%. Product sales were $9.6 million, down a significant 56%. Total profit for the segment was $82.5 million, up 17%.
Subscriber Statistics
In the reported quarter, for ILEC segment, Windstream lost 3,500 high-speed Internet customers and 17,100 household subscribers, both were up 13% year over year. Moreover, at the end of the first quarter of 2017, the company had 1.3375 million household customers, down 7%. High-speed Internet customer base was 1.0476 million, down 4% while the digital TV customer base was 0.3106 million, down 11%. ILEC small business customers totaled 0.133 million, down 8%.
Enterprise customers were 0.0353 million, down 2% year over year. CLEC consumer customers were 0.6474 million, down 7% and CLEC small business customers were 0.0955 million, down 21%.
Outlook
For 2017, Windstream expects total service revenues to be inline with full year 2016. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000 – $2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
Recent Development
In Apr 2017, Windstream entered into a $228 million deal to acquire Broadview Networks, a leading provider of cloud-based unified communications solutions to small and mid-sized businesses. The company expects the acquisition to close in the third quarter of 2017 subject to necessary regulatory clearances.
In Feb 2017, Windstream acquired EarthLink Holdings Corp., which will enable the company to achieve economies of scale to compete with larger firms like CenturyLink Inc. , Level 3 Communications Inc. and Frontier Communications Corp. . Windstream currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Windstream (WIN) Reports Wider-than-Expected Loss in Q1
Windstream Holdings Inc. reported disappointing financial results in the first quarter of 2017 wherein both the top line and the bottom line fell short of the Zacks Consensus Estimate.
The company’s quarterly loss per share of 89 cents was much wider than the Zacks Consensus Estimate of a loss of 34 cents. On a GAAP basis, the company reported net loss of $111.3 million or a loss of 89 cents per share compared with a net loss of $231.9 million or $2.52 per share in the year-ago quarter.
Total revenue declined 1% year over year to $1,365.7 million in the first quarter, missing the Zacks Consensus Estimate of $1,537.6 million. Service revenues increased 0.3% year over year to $1,344.4 million and Product revenues plunged 35% to $21.3 million.
In the reported quarter, total operating expense was $1,319.7 million, up 9% year over year. Operating income was $46 million compared with $157.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $335 million, down 12% year over year.
Cash Flow
In the first quarter of 2017, Windstream generated $132.5 million of cash from operations compared with $127.2 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $56.9 million compared with a negative $97 million in the year-ago quarter.
Liquidity
Windstream exited the first quarter of 2017 with $51.5 million of cash and cash equivalents and $5,479.1 million of total debt compared with $59.1 million and $4,863.3 million, respectively, at the end of 2016. At the end of the reported quarter, the debt-to-capitalization ratio was 0.88 compared with 0.97 at the end of 2016.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391 million, down 2% year over year. Of the total, Consumer revenues were $310.9 million, down 0.4%. Small Business – ILEC revenues totaled $80.1 million, down 6%. Total profit for the segment was $221.7 million, down 3%.
Consumer & Small Business – CLEC:Revenues totaled $140.3 million, up 9% year over year. Segment profit was $48.8 million, up 18%.
Wholesale:Revenues came in at $157.5 million, down 3% year over year. Segment profit was $107.5 million, down 9%.
Enterprise:Total revenue was $525.5 million, up 2% year over year. Of the total, Service revenues were $515.9 million, up 5%. Product sales were $9.6 million, down a significant 56%. Total profit for the segment was $82.5 million, up 17%.
Subscriber Statistics
In the reported quarter, for ILEC segment, Windstream lost 3,500 high-speed Internet customers and 17,100 household subscribers, both were up 13% year over year. Moreover, at the end of the first quarter of 2017, the company had 1.3375 million household customers, down 7%. High-speed Internet customer base was 1.0476 million, down 4% while the digital TV customer base was 0.3106 million, down 11%. ILEC small business customers totaled 0.133 million, down 8%.
Enterprise customers were 0.0353 million, down 2% year over year. CLEC consumer customers were 0.6474 million, down 7% and CLEC small business customers were 0.0955 million, down 21%.
Outlook
For 2017, Windstream expects total service revenues to be inline with full year 2016. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000 – $2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
Windstream Holdings, Inc. Price, Consensus and EPS Surprise
Windstream Holdings, Inc. Price, Consensus and EPS Surprise | Windstream Holdings, Inc. Quote
Recent Development
In Apr 2017, Windstream entered into a $228 million deal to acquire Broadview Networks, a leading provider of cloud-based unified communications solutions to small and mid-sized businesses. The company expects the acquisition to close in the third quarter of 2017 subject to necessary regulatory clearances.
In Feb 2017, Windstream acquired EarthLink Holdings Corp., which will enable the company to achieve economies of scale to compete with larger firms like CenturyLink Inc. , Level 3 Communications Inc. and Frontier Communications Corp. . Windstream currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>