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BCE Surpasses Q2 Earnings Estimates, Misses on Revenues

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BCE Inc. (BCE - Free Report) reported mixed second-quarter 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

The Canada-based telecommunications and media company’s share price increased 1.6% on Aug 5, closing the session at $50.52.

Net Income

Net income (from continuing operations) in the June quarter jumped 194% year over year to C$685 million or C$0.76 per share. The increase resulted from higher adjusted EBITDA driven by improving consumer and commercial activity as the economy rebounds from COVID-19, lower non-cash media asset impairment charges and higher other income mainly due to net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation. This was partially offset by increased depreciation and amortization expenses as well as higher income taxes.

Adjusted net income came in at C$751 million ($611.3 million) or C$0.83 (68 cents) per share compared with C$573 million or C$0.63 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.

BCE, Inc. Price, Consensus and EPS Surprise BCE, Inc. Price, Consensus and EPS Surprise

BCE, Inc. price-consensus-eps-surprise-chart | BCE, Inc. Quote

Revenues

Quarterly total operating revenues grew 6.4% year over year to C$5,698 million ($4,639 million). This comprises 5% higher service revenues of C$5,040 million and an 18.8% increase in product revenues to C$658 million. The result was driven by strong growth in wireless, residential Internet and media. The top line, however, missed the consensus estimate of $4,682 million.

Segment Results

Bell Wireless revenues increased 10.7% year over year to C$2,128 million, reflecting both higher service and product revenues. The company led all national players in wireless service revenue growth, which increased 5.8% to C$1,580 million. This resulted from healthy subscriber base growth, driven by its focus on higher-value smartphone loadings, demand for Bell’s IoT solutions and higher average revenue per mobile phone user. Product revenues were up 27.7% to C$548 million. This reflects increased customer transaction volumes, a greater sales mix of premium mobile phones and stronger consumer electronic sales at The Source as retail stores reopened.

Bell Wireline revenues slipped 1.3% year over year to C$3,003 million due to lower service and product revenues. Wireline service revenues were adversely impacted by a C$44 million regulatory charge between March 2016 and June 2021 related to the CRTC’s decision on final aggregated rates for wholesale Internet access, which resulted in a 0.9% year-over-year decrease to C$2,891 million. Product revenues fell 11.1% to C$112 million, mainly due to lower sales of data equipment to the government sector.

Bell Media generated revenues of C$755 million, up 30.4% year over year. The growth was driven by increased advertiser spending across TV, radio, out-of-home and digital media platforms.

Other Details

Overall, adjusted EBITDA was C$2,476 million, up 6.2% year over year. The rise was driven by increases at all Bell operating segments. Adjusted EBITDA margin was 43.5%, unchanged year over year.

Cash Flow & Liquidity

During the first half of 2021, BCE generated C$4,491 million of cash from operating activities compared with C$4,013 million in the prior-year period. Free cash flow was C$2,188 million compared with C$2,222 million a year ago.

As of Jun 30, 2021, the company had C$1,752 million ($1,413 million) in cash and cash equivalents with C$25,422 million ($20,507 million) of long-term debt.

2021 Outlook Reiterated

BCE has reiterated guidance for full-year 2021. It continues to expect revenues and adjusted EBITDA to grow between 2% and 5%. Adjusted earnings per share are estimated to grow between 1% and 6%. Free cash flow is projected in the range of C$2,850-C$3,200 million.

Zacks Rank & Stocks to Consider

BCE currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader sector are Clearfield, Inc. (CLFD - Free Report) , Juniper Networks, Inc. (JNPR - Free Report) and Qualcomm, Inc. (QCOM - Free Report) . While Clearfield carries a Zacks Rank #1 (Strong Buy), Juniper and Qualcomm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.

Juniper pulled off a trailing four-quarter earnings surprise of 7.5%, on average.

Qualcomm delivered a trailing four-quarter earnings surprise of 13.5%, on average.    

Conversion rate used:

C$1 = $0.813942 (period average from Apr 1, 2021 to Jun 30, 2021)

C$1 = $0.806649 (as of Jun 30, 2021)