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Windstream (WIN) Q4 Earnings and Revenues Top Estimates

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Windstream Holdings Inc. (WIN - Free Report) delivered impressive financial results in the fourth quarter of 2017.  Both the top and bottom line outpaced the Zacks Consensus Estimate.  

On a GAAP basis, the company reported net loss of $1,835.7 million or a loss of $10.26 per share compared with a net loss of $86.9 million or a loss of 94 cent per share in the year-ago quarter. However, after adjusting impairment costs, the company generated earnings per share of 3 cents, in contrast with the Zacks Consensus Estimate of a loss of 39 cents per share. 

Windstream Holdings, Inc. Price, Consensus and EPS Surprise

 

Total revenues increased 14% year over year to $1,497.9 million in the reported quarter, surpassing the Zacks Consensus Estimate of $1,488.4 million. Service revenues increased 15% to $1,477.3 million while Product revenues rose 3% to $20.6 million.

In the reported quarter, total operating expense was $3,287.2 million, up a whopping 166% year over year due to $1,840.8 million of goodwill impairment. Operating loss was $1,789.3 million compared with an operating income of $73.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $357.4 million compared with $363.6 million in the year-ago quarter.  

Cash Flow

In the fourth quarter of 2017, Windstream generated $325.3 million of cash from operations compared with $302.3 million in the prior-year quarter. Adjusted free cash flow was $47 million in the reported quarter.

Liquidity

Windstream exited 2017 with $43.4 million of cash and cash equivalents and $5,843.9 million of total debt compared with $59.1 million and $4,863.3 million, respectively, at the end of 2016.

Segment-Wise Information

Consumer & Small Business - ILEC:  Total revenues were $481.8 million, down 5% year over year. Of the total, Services revenues were $475.9 million, down 25.2%. Product revenues totaled $5.9 million, down 32%. Total profit for the segment was $282 million, down 7%.

Consumer & Small Business - CLEC: Revenues totaled $51.4 million compared with a mere $3.5 million in the year-ago quarter. Segment profit was $27.5 million compared with $0.5 mllion in the prior-year quarter.

Wholesale: Revenues came in at $190 million, up 10% year over year. Segment profit was $116.4 million, down 7.9%.

Enterprise: Total revenues were $774.7 million, up 24% year over year. Of the total, Service revenues were $760.3 million, up 24%. Product sales were $14.4 million, up 27%. Total profit for the segment was $164.1 million, up 27% year over year.

Subscriber Statistics

As of Dec 31, 2017, the company had 1.2688 million household customers, down 6% year over year. High-speed internet customer base was 1.0066 million, down 4% while the digital TV customer base was 0.2779 million, down 13%. ILEC small business customers totaled 0.1281 million, down 8%. Enterprise customers were 0.1335 million, down 1% year over year. CLEC consumer customers were 0.6621 million compared with a mere 0.7 million in the year-ago quarter.

Outlook

For 2018, Windstream anticipates service revenues to improve slightly year over year. The company projects capital expenditure in the band of $750–$800 million. Adjusted OIBDAR is projected at around $1,950 – $2,010 million. Management expects to generate around $165 million of free cash flow in 2018.

Recent Development

Windstream will be enhancing its Cloud Connect solution by introducing a wide range of connectivity options for its cloud customers. Customers can choose any network connection from Windstream to create a dedicated, high-speed, vastly secure cloud-optimized network connection to major Cloud Service Providers including Amazon.com Inc.’s (AMZN - Free Report) Web Services, Microsoft Corp.’s (MSFT - Free Report) Azure, International Business Machines Corp.’s (IBM - Free Report) Bluemix, Google Cloud, Oracle Fast Connect and Salesforce.. Windstream carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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