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Windstream (WIN) Reports Wider-than-Expected Loss in Q3

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Windstream Holdings Inc. (WIN - Free Report) 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.

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