Windstream Holdings Inc. reported mixed financial results in the second quarter of 2017. While net loss was narrower than the Zacks Consensus Estimate, revenues fell below the same.
On a GAAP basis, the company reported net loss of $68.1 million or a loss of 37 cents per share compared with a net income of $1.5 million or 1 cent per share in the year-ago quarter. Windstream’s quarterly loss per share of 37 cents was narrower than the Zacks Consensus Estimate of a loss of 45 cents.
Total revenue increased 10% year over year to $1,491.6 million in the reported quarter, missing the Zacks Consensus Estimate of $1,499 million. Service revenues increased 10% to $1,465.6 million while Product revenues declined 8% to $26 million.
In the reported quarter, total operating expense was $1,384.8 million, up 15% year over year. Operating income was $106.8 million compared with $154.6 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $336.9 million, down a substantial 38.3% year over year although it improved sequentially by $1.6 million.
Cash Flow
In the second quarter of 2017, Windstream generated $221.2 million of cash from operations compared with $297.3 million in the prior-year quarter. Adjusted free cash flow was a negative $23.3 million in the reported quarter.
Liquidity
Windstream exited the second quarter of 2017 with $24.7 million of cash and cash equivalents and $5,579.2 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 0.90 compared with 0.97 at the end of 2016.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $387.2 million, down 2% year over year. Of the total, Consumer revenues were $308.8 million, down 0.7%. Small Business – ILEC revenues totaled $78.4 million, down 6.9%. Total profit for the segment was $212.4 million, down 3.7%.
Consumer & Small Business – CLEC: Revenues totaled $193.1 million, down 18.4% year over year. Segment profit was $72.1 million, down 23.6%.
Wholesale: Revenues came in at $176 million, down 7.9% year over year. Segment profit was $116.4 million, down 7.9%.
Enterprise: Total revenue was $574.9 million, down 4.7% year over year. Of the total, Service revenues were $563.9 million, down 4.2%. Product sales were $11 million, down 24.1%. Total profit for the segment was $102.8 million, flat year over year.
Subscriber Statistics
As of Jun 30, 2017, the company had 1.3078 million household customers, down 6.8%. High-speed internet customer base was 1.0258 million, down 4.6% while the digital TV customer base was 0.3007 million, down 12.1%. ILEC small business customers totaled 0.1303 million, down 7.6%. Enterprise customers were 0.0346 million, down 4.4% year over year. CLEC consumer customers were 0.6497 million, down 4.9% and CLEC small business customers were 0.0900 million, down 20.5%.
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 $2,020 – $2,040 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 (SMBs). If the deal finally materializes, it will enable the company to achieve economies of scale to compete with CenturyLink Inc. , NII Holdings Inc. and Frontier Communications Corp. . Windstream has a Zacks Rank #5 (Strong Sell). However, all other stocks mentioned above, carry 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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From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
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Windstream (WIN) Q2 Loss Narrower than Expected, Sales Lag
Windstream Holdings Inc. reported mixed financial results in the second quarter of 2017. While net loss was narrower than the Zacks Consensus Estimate, revenues fell below the same.
On a GAAP basis, the company reported net loss of $68.1 million or a loss of 37 cents per share compared with a net income of $1.5 million or 1 cent per share in the year-ago quarter. Windstream’s quarterly loss per share of 37 cents was narrower than the Zacks Consensus Estimate of a loss of 45 cents.
Total revenue increased 10% year over year to $1,491.6 million in the reported quarter, missing the Zacks Consensus Estimate of $1,499 million. Service revenues increased 10% to $1,465.6 million while Product revenues declined 8% to $26 million.
In the reported quarter, total operating expense was $1,384.8 million, up 15% year over year. Operating income was $106.8 million compared with $154.6 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $336.9 million, down a substantial 38.3% year over year although it improved sequentially by $1.6 million.
Cash Flow
In the second quarter of 2017, Windstream generated $221.2 million of cash from operations compared with $297.3 million in the prior-year quarter. Adjusted free cash flow was a negative $23.3 million in the reported quarter.
Liquidity
Windstream exited the second quarter of 2017 with $24.7 million of cash and cash equivalents and $5,579.2 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 0.90 compared with 0.97 at the end of 2016.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $387.2 million, down 2% year over year. Of the total, Consumer revenues were $308.8 million, down 0.7%. Small Business – ILEC revenues totaled $78.4 million, down 6.9%. Total profit for the segment was $212.4 million, down 3.7%.
Consumer & Small Business – CLEC: Revenues totaled $193.1 million, down 18.4% year over year. Segment profit was $72.1 million, down 23.6%.
Wholesale: Revenues came in at $176 million, down 7.9% year over year. Segment profit was $116.4 million, down 7.9%.
Enterprise: Total revenue was $574.9 million, down 4.7% year over year. Of the total, Service revenues were $563.9 million, down 4.2%. Product sales were $11 million, down 24.1%. Total profit for the segment was $102.8 million, flat year over year.
Subscriber Statistics
As of Jun 30, 2017, the company had 1.3078 million household customers, down 6.8%. High-speed internet customer base was 1.0258 million, down 4.6% while the digital TV customer base was 0.3007 million, down 12.1%. ILEC small business customers totaled 0.1303 million, down 7.6%. Enterprise customers were 0.0346 million, down 4.4% year over year. CLEC consumer customers were 0.6497 million, down 4.9% and CLEC small business customers were 0.0900 million, down 20.5%.
Windstream Holdings, Inc. Price, Consensus and EPS Surprise
Windstream Holdings, Inc. Price, Consensus and EPS Surprise | Windstream Holdings, Inc. Quote
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 $2,020 – $2,040 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 (SMBs). If the deal finally materializes, it will enable the company to achieve economies of scale to compete with CenturyLink Inc. , NII Holdings Inc. and Frontier Communications Corp. . Windstream has a Zacks Rank #5 (Strong Sell). However, all other stocks mentioned above, carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>