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Windstream (WIN) Reports Wider-than-Expected Loss in Q3
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Windstream Holdings Inc. reported weak financial results in the third quarter of 2016. The company posted wider-than-expected loss in the quarter and revenues lagged the Zacks Consensus Estimate.
On a GAAP basis, the company reported net loss (net income) of $66.2 million or a loss of 72 cents per share compared to a loss of $7.2 million or a loss of 8 cents in the year-ago quarter. On an adjusted basis, the company’s loss per share of 61 cents was considerably wider than the Zacks Consensus Estimate of a loss of 46 cents.
Total revenue declined 10% year over year to $1,344.9 million in the third quarter, missing the Zacks Consensus Estimate of $1,355 million. Service revenues declined 9% year over year to $1,318.9 million and Product revenues went down by 45% to $26.0 million.
In the reported quarter, total operating expenses were $1,215.5 million, down 8% year over year. Operating income was $129.4 million compared with $178.5 million a year ago, down 28% year over year. Adjusted OIBDA (operating income before depreciation and amortization) was $301.4 million, down 20% year over year.
Cash Flow
In the third quarter of 2016, Windstream generated $197.6 million of cash from operations compared with $376.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $49.9 million compared with $57.7 million in the year-ago quarter.
Liquidity
Windstream exited the third quarter of 2016 with $61.4 million of cash and cash equivalents and $9,906.3 million of total debt compared with $31.3 million and $10,323.6 million, respectively, at the end of 2015. At the end of the reported quarter, the debt-to-capitalization ratio was 0.84 versus 0.82 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 12,800 high-speed Internet customers, up 14% year over year and 25,300 digital television subscribers, up 9% year over year. Moreover, at the end of the third quarter, the company had 1,378,500 Household customers, down 6% year over year. High-speed Internet customer base was 1,063,000, down 4% year over year and digital TV customer base was 329,300, down 10% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $395.6 million, down 2% year over year. Of the total, Consumer revenues were $311.9 million, down 1%. Small Business – ILEC revenues totaled $83.7 million, down 4%. Total profit for the segment was $212.1 million, down 5%.
Small Business – CLEC: Revenues totaled $118.7 million, down 15% year over year. Segment profit was $37.3 million, down 19%.
Wholesale: Revenues came in at $155.2 million, down 8% year over year. Segment profit was $110.9 million, down 10%.
Enterprise: Total revenue was $511.2 million, down 3% year over year. Of the total, Service revenues were $495.0 million, compared with $495.7 million in the year-ago quarter. Product sales were $16.2 million, down a substantial 48%. Total profit for the segment was $83.1 million, up 31%.
Outlook
For 2016, the company expects total service revenues in the range of $5,275–$5,425 million. It projects capital expenditure in the band of $800–$850 million. Meanwhile, adjusted OIBDAR is anticipated at around $1.90–$1.95 billion.
Windstream has a Zacks Rank #3 (Hold). Here are some companies that have the right combination of elements to post an earnings beat this quarter.
International Business Machines Corporation (IBM - Free Report) , with an Earnings ESP of +0.20% and a Zacks Rank #3.The company’s earnings surpassed the Zacks Consensus Estimate in all of the previous four quarters.
Microsoft Corporation (MSFT - Free Report) , with an Earnings ESP of +1.30% and a Zacks Rank #3.The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters.
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Windstream (WIN) Reports Wider-than-Expected Loss in Q3
Windstream Holdings Inc. reported weak financial results in the third quarter of 2016. The company posted wider-than-expected loss in the quarter and revenues lagged the Zacks Consensus Estimate.
On a GAAP basis, the company reported net loss (net income) of $66.2 million or a loss of 72 cents per share compared to a loss of $7.2 million or a loss of 8 cents in the year-ago quarter. On an adjusted basis, the company’s loss per share of 61 cents was considerably wider than the Zacks Consensus Estimate of a loss of 46 cents.
Total revenue declined 10% year over year to $1,344.9 million in the third quarter, missing the Zacks Consensus Estimate of $1,355 million. Service revenues declined 9% year over year to $1,318.9 million and Product revenues went down by 45% to $26.0 million.
In the reported quarter, total operating expenses were $1,215.5 million, down 8% year over year. Operating income was $129.4 million compared with $178.5 million a year ago, down 28% year over year. Adjusted OIBDA (operating income before depreciation and amortization) was $301.4 million, down 20% year over year.
Cash Flow
In the third quarter of 2016, Windstream generated $197.6 million of cash from operations compared with $376.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $49.9 million compared with $57.7 million in the year-ago quarter.
Liquidity
Windstream exited the third quarter of 2016 with $61.4 million of cash and cash equivalents and $9,906.3 million of total debt compared with $31.3 million and $10,323.6 million, respectively, at the end of 2015. At the end of the reported quarter, the debt-to-capitalization ratio was 0.84 versus 0.82 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 12,800 high-speed Internet customers, up 14% year over year and 25,300 digital television subscribers, up 9% year over year. Moreover, at the end of the third quarter, the company had 1,378,500 Household customers, down 6% year over year. High-speed Internet customer base was 1,063,000, down 4% year over year and digital TV customer base was 329,300, down 10% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $395.6 million, down 2% year over year. Of the total, Consumer revenues were $311.9 million, down 1%. Small Business – ILEC revenues totaled $83.7 million, down 4%. Total profit for the segment was $212.1 million, down 5%.
Small Business – CLEC: Revenues totaled $118.7 million, down 15% year over year. Segment profit was $37.3 million, down 19%.
Wholesale: Revenues came in at $155.2 million, down 8% year over year. Segment profit was $110.9 million, down 10%.
Enterprise: Total revenue was $511.2 million, down 3% year over year. Of the total, Service revenues were $495.0 million, compared with $495.7 million in the year-ago quarter. Product sales were $16.2 million, down a substantial 48%. Total profit for the segment was $83.1 million, up 31%.
Outlook
For 2016, the company expects total service revenues in the range of $5,275–$5,425 million. It projects capital expenditure in the band of $800–$850 million. Meanwhile, adjusted OIBDAR is anticipated at around $1.90–$1.95 billion.
WINDSTREAM HLDG Price, Consensus and EPS Surprise
WINDSTREAM HLDG Price, Consensus and EPS Surprise | WINDSTREAM HLDG Quote
Zacks Rank and Stocks to Consider
Windstream has a Zacks Rank #3 (Hold). Here are some companies that have the right combination of elements to post an earnings beat this quarter.
International Business Machines Corporation (IBM - Free Report) , with an Earnings ESP of +0.20% and a Zacks Rank #3.The company’s earnings surpassed the Zacks Consensus Estimate in all of the previous four quarters.
Verizon Communications Inc. (VZ - Free Report) , with an Earnings ESP of +1.11% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
Microsoft Corporation (MSFT - Free Report) , with an Earnings ESP of +1.30% and a Zacks Rank #3.The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>