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Windstream (WIN) Q2 Loss Narrower Than Estimated, Sales Fall

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Windstream Holdings, Inc. reported lackluster second-quarter 2018 results with lower revenues and wider losses on a year-over-year basis.

Net Loss

For the second quarter, the company incurred a net loss of $93.7 million or a loss of $2.30 per share compared with a net loss of $68.1 million or a loss of $1.83 per share in the year-ago quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of $2.74 per share.

Windstream Holdings, Inc. Price, Consensus and EPS Surprise

Revenues

Quarterly total revenues decreased 3% year over year to $1,444.4 million. The top line, however, surpassed the Zacks Consensus Estimate of $1,440 million. Service revenues decreased 3% to $1,424.6 million. Consolidated margin of 35.1% improved 150 basis points driven by strong expense management initiatives. Product sales were down 24% to $19.8 million.

Other Quarter Details

Total costs and expenses were $1,356.1 million, down 2% year over year. Operating income came in at $88.3 million compared with $102.5 million in the prior-year quarter. Adjusted OIBDAR came in at $507.4 million compared with $500.5 million in the year-ago quarter. Adjusted OIBDA was $343.5 million compared with $337.1 million in the year-ago quarter.

Segmental Performance

Consumer & Small Business: Total revenues were $472.5 million, down 6% year over year. Of the total, Service revenues were $465.9 million and product sales were $6.6 million. Segment income was $273.6 million, down 5% year over year.

Enterprise: Total revenues were $743.1 million, up 1% year over year. Of the total, Service revenues were $730.1 million and product sales were $13 million. Segment income was $161.2 million, up 14%.

Wholesale: Total revenues came in at $182.4 million, down 7% year over year. Segment income was $128.8 million, down 5%.

Consumer CLEC: Revenues totaled $46.4 million compared with $51.7 million in the year-ago quarter. The segment’s income was $26.5 million compared with $26 million in the prior-year quarter.

Cash Flow

In the first six months of 2018, Windstream generated $539.7 million of cash from operations compared with $374.9 million in the prior-year period. Adjusted free cash flow for the first half of the year was $113.6 million.

Liquidity

As of Jun 30, 2018, the company had $45.3 million of cash and cash equivalents with $5,867.9 million of long-term debt.

Zacks Rank & Stocks to Consider

Windstream currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include United States Cellular Corporation (USM - Free Report) , AT&T Inc. (T - Free Report) and Aquantia Corp. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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%.     

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