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CenturyLink, Inc. reported mixed second-quarter 2018 results wherein the top line missed the Zacks Consensus Estimate but the bottom line surpassed the same.
Net Income
Net income for the reported quarter was $292 million or 27 cents per share compared with $17 million or 3 cents per share in the year-ago quarter. The year-over-year increase was primarily attributable to higher revenues and income tax benefit.
Adjusted net income came in at $282 million or 26 cents per share compared with $131 million or 24 cents per share in the year-ago quarter. Adjusted earnings for the reported quarter beat the Zacks Consensus Estimate by 3 cents.
CenturyLink, Inc. Price, Consensus and EPS Surprise
Quarterly operating revenues increased 44.3% year over year to $5,902 million driven by incremental revenues from Level 3. The top line, however, lagged the Zacks Consensus Estimate of $5,930 million.
Operating Metrics
Total operating expenses increased 38% year over year to $5,135 million. Operating income improved 109% to $767 million primarily due to higher revenues. Operating margin was 13% compared with 9% in the year-ago quarter.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose to $2,111 million from $2,007 million in the year-ago quarter. Adjusted EBITDA margin was 35.8% compared with 33.2% in the prior-year quarter.
As of Jan 1, 2018, the company adopted the new revenue recognition standard, ASC 606. Overall, the adoption of this new standard affected total revenues by approximately $11 million in the reported quarter, reflecting $27 million negative impact on Consumer revenues and $16 million positive impact on Business revenues.
Other Quarter Details
Business revenues were $4,365 million compared with Pro Forma revenues of $4,419 million in the year-ago quarter. The sales figure was affected by slower sales and the adoption of the new revenue recognition standard.
Consumer revenues were $1,352 million compared with Pro Forma revenues of $1,436 million in the second quarter of 2017. The company incurred a net loss of about 80,000 broadband subscribers in the reported quarter.
By Business unit, Medium & Small business revenues were $884 million, while Enterprise revenues were $1,295 million. Consumer, Wholesale & Indirect, and International & Global Accounts generated $1,352 million, $1,283 million and $903 million, respectively.
By Service type, revenues from IP & Data services were $1,833 million, while that from Transport & Infrastructure, and Voice & Collaboration totaled $2,064 million and $1,658 million, respectively.
Cash Flow & Liquidity
For the first six months of 2018, CenturyLink generated $3,249 million of cash from operations compared with $1,742 million in the prior-year period. As of Jun 30, 2018, the company had $700 million of cash and cash equivalents with long-term debt of $36,878 million.
2018 View
For full-year 2018, CenturyLink has raised its adjusted EBITDA, free cash flow and free cash flow after dividends guidance on favorable growth dynamics. Adjusted EBITDA is anticipated in the range of $9.00-$9.15 billion, up from the previous view of $8.75-$8.95 billion. Free cash flow is expected in the range of $3.60-$3.80 billion, up from $3.15-$3.35 billion expected earlier. Free cash flow after dividends is projected between $1.30 billion and $1.50 billion, up from the previous range of 0.85-$1.05 billion. Effective income tax rate is expected to be around 18% for 2018.
Zacks Rank & Stocks to Consider
CenturyLink currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include United States Cellular Corporation (USM - Free Report) , AT&T Inc. (T - Free Report) and Aquantia Corp. . While United States Cellular sports a Zacks Rank #1 (Strong Buy), AT&T and Aquantia carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United States Cellular has a long-term earnings growth expectation of 1%. It surpassed earnings estimates thrice in the trailing four quarters with an average positive surprise of 303.6%.
AT&T has a long-term earnings growth expectation of 3.4%. It surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 5.9%.
Aquantia surpassed earnings estimates once in the trailing four quarters with an average positive surprise of 50%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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CenturyLink (CTL) Beats Q2 Earnings Estimates, Ups Guidance
CenturyLink, Inc. reported mixed second-quarter 2018 results wherein the top line missed the Zacks Consensus Estimate but the bottom line surpassed the same.
Net Income
Net income for the reported quarter was $292 million or 27 cents per share compared with $17 million or 3 cents per share in the year-ago quarter. The year-over-year increase was primarily attributable to higher revenues and income tax benefit.
Adjusted net income came in at $282 million or 26 cents per share compared with $131 million or 24 cents per share in the year-ago quarter. Adjusted earnings for the reported quarter beat the Zacks Consensus Estimate by 3 cents.
CenturyLink, Inc. Price, Consensus and EPS Surprise
CenturyLink, Inc. Price, Consensus and EPS Surprise | CenturyLink, Inc. Quote
Revenues
Quarterly operating revenues increased 44.3% year over year to $5,902 million driven by incremental revenues from Level 3. The top line, however, lagged the Zacks Consensus Estimate of $5,930 million.
Operating Metrics
Total operating expenses increased 38% year over year to $5,135 million. Operating income improved 109% to $767 million primarily due to higher revenues. Operating margin was 13% compared with 9% in the year-ago quarter.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose to $2,111 million from $2,007 million in the year-ago quarter. Adjusted EBITDA margin was 35.8% compared with 33.2% in the prior-year quarter.
As of Jan 1, 2018, the company adopted the new revenue recognition standard, ASC 606. Overall, the adoption of this new standard affected total revenues by approximately $11 million in the reported quarter, reflecting $27 million negative impact on Consumer revenues and $16 million positive impact on Business revenues.
Other Quarter Details
Business revenues were $4,365 million compared with Pro Forma revenues of $4,419 million in the year-ago quarter. The sales figure was affected by slower sales and the adoption of the new revenue recognition standard.
Consumer revenues were $1,352 million compared with Pro Forma revenues of $1,436 million in the second quarter of 2017. The company incurred a net loss of about 80,000 broadband subscribers in the reported quarter.
By Business unit, Medium & Small business revenues were $884 million, while Enterprise revenues were $1,295 million. Consumer, Wholesale & Indirect, and International & Global Accounts generated $1,352 million, $1,283 million and $903 million, respectively.
By Service type, revenues from IP & Data services were $1,833 million, while that from Transport & Infrastructure, and Voice & Collaboration totaled $2,064 million and $1,658 million, respectively.
Cash Flow & Liquidity
For the first six months of 2018, CenturyLink generated $3,249 million of cash from operations compared with $1,742 million in the prior-year period. As of Jun 30, 2018, the company had $700 million of cash and cash equivalents with long-term debt of $36,878 million.
2018 View
For full-year 2018, CenturyLink has raised its adjusted EBITDA, free cash flow and free cash flow after dividends guidance on favorable growth dynamics. Adjusted EBITDA is anticipated in the range of $9.00-$9.15 billion, up from the previous view of $8.75-$8.95 billion. Free cash flow is expected in the range of $3.60-$3.80 billion, up from $3.15-$3.35 billion expected earlier. Free cash flow after dividends is projected between $1.30 billion and $1.50 billion, up from the previous range of 0.85-$1.05 billion. Effective income tax rate is expected to be around 18% for 2018.
Zacks Rank & Stocks to Consider
CenturyLink currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include United States Cellular Corporation (USM - Free Report) , AT&T Inc. (T - Free Report) and Aquantia Corp. . While United States Cellular sports a Zacks Rank #1 (Strong Buy), AT&T and Aquantia carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United States Cellular has a long-term earnings growth expectation of 1%. It surpassed earnings estimates thrice in the trailing four quarters with an average positive surprise of 303.6%.
AT&T has a long-term earnings growth expectation of 3.4%. It surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 5.9%.
Aquantia surpassed earnings estimates once in the trailing four quarters with an average positive surprise of 50%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>