The largest U.S satellite TV operator, DIRECTV (DTV - Analyst Report) posted robust first-quarter 2013 financial results. Both the top line and the bottom line surpassed the Zacks Consensus Estimate. DIRECTV currently has a Zacks Rank #3 (Hold).
Total revenue in the reported quarter came in at $7,580 million, up 7.6% year over year, and well ahead of the Zacks Consensus Estimate of $7,548 million. Such impressive growth in revenues was mainly attributed to huge subscriber growth in Latin American region. Quarterly GAAP net income was $690 million or $1.20 per share compared with $731 million or $1.07 per share in the year-ago quarter. However, adjusted earnings per share (excluding the Venezuelan currency devaluation charge) of $1.43 easily beat the Zacks Consensus Estimate of $1.38. Quarterly adjusted operating profit before depreciation & amortization (OPBDA) was $2,086 million, up 9.6% year over year. Adjusted operating profit in the reported quarter stood at $1,408 million, up 7.7% year over year.
During the first quarter of 2013, DIRECTV generated $1,536 million of cash from operations compared with $1,763 million in the prior-year quarter. Free cash flow (cash flow from operations less capital expenditures) was $788 million in the reported quarter compared with $983 million in the year-ago quarter. At the end of the first quarter of 2013, DIRECTV had $1,679 million in cash & cash equivalents and $18,365 million of outstanding debt on its balance sheet compared with $1,902 million in cash & cash equivalents and $17,162 million of outstanding debt at the end of 2012.
DIRECTV U.S. Segment
Revenues from this segment were $5,790 million, up 5.3% year over year on the back of strong subscriber base and significant ARPU growth. Quarterly ARPU was $96.05 compared with $91.99 in the year-ago quarter. Quarterly operating profit before depreciation & amortization upped 7.9% to $1,521 million primarily buoyed by reduced subscriber acquisition cost. Quarterly operating profit climbed 7.4% to $1,115 million.
Average monthly subscriber churn rate in the reported quarter was 1.45% compared with 1.44% in the prior-year quarter. Quarterly net subscriber growth was 21,000 compared with 81,000 subscriber additions in the year-ago quarter. As of Mar 31, 2013, DIRECTV U.S. had 20.105 million subscribers, up 0.7% on an annualized basis. Although the rate of growth of net subscriber addition decreased, the company is still adding net subscribers while major pay-TV operators like Comcast Corp. (CMCSA - Analyst Report) and Time Warner Cable Inc. (TWC - Analyst Report) are continuously losing subscribers. The company’s closest competitor DISH Network Corp. (DISH - Analyst Report) will report on May 9, 2013.
DIRECTV Latin America Segment
Segment revenues were $1,728 million, up 16.4% year over year,on account of massive subscriber growth. Quarterly ARPU was $54.23 compared with $60.59 in the prior-year quarter, primarily driven by foreign currency fluctuation. Quarterly operating profit before depreciation & amortization increased 16.7% to $546 million and operating profit increased 13.7% to $283 million.
Average monthly subscriber churn rate in the reported quarter was 1.88% compared with 1.80% in the prior-year quarter. Quarterly net subscriber addition was 583,000 compared with 593,000 in the year-ago quarter. As of Mar 31, 2013, DIRECTV Latin America had approximately 10.912 million subscribers, up 28.9% year over year.