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Frontier Communications (FTR) Q1 Loss Wider than Expected
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Frontier Communications Corp. reported mixed financial results in the first quarter of 2017. The company’s adjusted net loss was wider than the Zacks Consensus Estimate while revenues surpassed the mark.
On a GAAP basis, net loss in the reported quarter was $129 million or 11 cents per share compared with a net loss of $240 million or 21 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was 8 cents, worse than the Zacks Consensus Estimate of a loss of 5 cents.
Total revenue increased a whopping 73.9% year over year to $2,356 million, beating the Zacks Consensus Estimate of $2343.4 million. The significant rise in revenues can primarily be attributable to the acquisition of certain wireline assets from Verizon Communications Inc. (VZ - Free Report) .
Segment-wise, Customer revenue totaled $2,159 million, up a substantial 81.6% year over year while Switched access and subsidy revenues were $197 million, up 18.7% year over year.
Within the Customer segment, voice services revenues totaled $751 million, up 60.8%, Data and Internet services revenues came in at $993 million, up 69.2%, video revenues were $347 million, soaring an astounding 417.9% and Other revenues totaled $68 million, flat year over year.
Category-wise Residential revenues were $1,164 million, up a massive 99.7% while Business revenues came in at $995 million, up 64.2%.
Operating income in the first quarter increased an astonishing 367.2% year-over-year to $271 million. Quarterly operating expenses were $2,085 million, rising 60.8% year over year. Quarterly adjusted EBITDA was $923 million, up a considerable 74.8% year over year. However, adjusted EBITDA margin was 39.2% compared with 38.9% in the prior-year quarter.
In the first quarter of 2017, Frontier Communications generated $300 million of cash from operations compared with a negative cash generation of $52 million in the prior-year quarter. Free cash flow in the reported quarter was $175 million compared with a negative $45 million in the year-ago quarter.
Liquidity
Frontier Communications exited the first quarter of 2017 with $341 million of cash and cash equivalents compared with $522 million at 2016-end. Total debt at the end of the reported quarter was $17,889 million compared with $17,923 million at the end of 2016. At the end of first-quarter 2017, the debt-to-capitalization ratio was 0.80 compared with 0.79 at the end of 2016.
Subscriber Statistics
As of Mar 31, 2017, the number of residential customers decreased 3.2% sequentially to 4,736,000. The average monthly residential revenue per customer was $80.62, up 0.4% sequentially. Residential customer monthly churn was 2.37%, up 13.9% sequentially. Business customers decreased 3.6%, sequentially to 484,000. Frontier Communications had 4,164,000 high-speed broadband subscribers, down 2.5% sequentially and 1,065,000 video customers, down 7% sequentially.
Frontier Communications Corporation Price, Consensus and EPS Surprise
For 2017, Frontier Communications expects adjusted free cash flow in the range of $800–$1,000 million. Capital expenditures will be in the $1,000–$1,250 million range. Cash taxes will be $0–$50 million.
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Frontier Communications (FTR) Q1 Loss Wider than Expected
Frontier Communications Corp. reported mixed financial results in the first quarter of 2017. The company’s adjusted net loss was wider than the Zacks Consensus Estimate while revenues surpassed the mark.
On a GAAP basis, net loss in the reported quarter was $129 million or 11 cents per share compared with a net loss of $240 million or 21 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was 8 cents, worse than the Zacks Consensus Estimate of a loss of 5 cents.
Total revenue increased a whopping 73.9% year over year to $2,356 million, beating the Zacks Consensus Estimate of $2343.4 million. The significant rise in revenues can primarily be attributable to the acquisition of certain wireline assets from Verizon Communications Inc. (VZ - Free Report) .
Segment-wise, Customer revenue totaled $2,159 million, up a substantial 81.6% year over year while Switched access and subsidy revenues were $197 million, up 18.7% year over year.
Within the Customer segment, voice services revenues totaled $751 million, up 60.8%, Data and Internet services revenues came in at $993 million, up 69.2%, video revenues were $347 million, soaring an astounding 417.9% and Other revenues totaled $68 million, flat year over year.
Category-wise Residential revenues were $1,164 million, up a massive 99.7% while Business revenues came in at $995 million, up 64.2%.
Operating income in the first quarter increased an astonishing 367.2% year-over-year to $271 million. Quarterly operating expenses were $2,085 million, rising 60.8% year over year. Quarterly adjusted EBITDA was $923 million, up a considerable 74.8% year over year. However, adjusted EBITDA margin was 39.2% compared with 38.9% in the prior-year quarter.
Frontier Communications faces intense competition from large telecom operators like AT&T Inc. (T - Free Report) and Comcast Corp. (CMCSA - Free Report) . All three stocks mentioned above stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cash Flow
In the first quarter of 2017, Frontier Communications generated $300 million of cash from operations compared with a negative cash generation of $52 million in the prior-year quarter. Free cash flow in the reported quarter was $175 million compared with a negative $45 million in the year-ago quarter.
Liquidity
Frontier Communications exited the first quarter of 2017 with $341 million of cash and cash equivalents compared with $522 million at 2016-end. Total debt at the end of the reported quarter was $17,889 million compared with $17,923 million at the end of 2016. At the end of first-quarter 2017, the debt-to-capitalization ratio was 0.80 compared with 0.79 at the end of 2016.
Subscriber Statistics
As of Mar 31, 2017, the number of residential customers decreased 3.2% sequentially to 4,736,000. The average monthly residential revenue per customer was $80.62, up 0.4% sequentially. Residential customer monthly churn was 2.37%, up 13.9% sequentially. Business customers decreased 3.6%, sequentially to 484,000. Frontier Communications had 4,164,000 high-speed broadband subscribers, down 2.5% sequentially and 1,065,000 video customers, down 7% sequentially.
Frontier Communications Corporation Price, Consensus and EPS Surprise
Frontier Communications Corporation Price, Consensus and EPS Surprise | Frontier Communications Corporation Quote
Outlook
For 2017, Frontier Communications expects adjusted free cash flow in the range of $800–$1,000 million. Capital expenditures will be in the $1,000–$1,250 million range. Cash taxes will be $0–$50 million.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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