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Shaw Communications (SJR) Q2 Earnings In Line, Revenues Up Y/Y
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Shaw Communications reported second-quarter fiscal 2020 adjusted earnings from continuing operations of 24 cents per share, in line with the Zacks Consensus Estimate.
Total revenues of $1.04 billion beat the consensus mark of $972 million.
In Canadian currency, the company reported adjusted earnings of C$0.32 per share, up 6.7% year over year. Moreover, total revenues increased 3.7% to C$1.36 billion.
Segmental Update
Wireline revenues (78% of total revenues) dipped 0.7% on a year-over-year basis to C$ 1.06 billion.
Shaw Communications Inc. Price, Consensus and EPS Surprise
Wireline - Consumer revenues slid 1.5% to C$919 million. Growth in Internet revenues was fully offset by a decline in Video, Satellite and Phone revenues.
Wireline - Business revenues inched up 4.3% to C$144 million. Segmental results reflected continued growth in Internet revenues and demand for the SmartSuite of business products.
Wireless revenues (22.8% of total revenues) rose 22.8% on a year-over-year basis to C$302 million.
Wireless - Service revenues (66.6% of total segment revenues) were up 19.6% from the year-ago quarter to C$201 million, primarily driven by higher revenue-generating units (RGUs) or subscribers and an improved penetration of Big Gig data plans.
Average billing per subscriber unit (ABPU) grew 6.8% year over year to C$43.84, driven by increased number of customers subscribing to higher service plans. ARPU rose 3.1% from the year-ago quarter to C$38.45.
Wireless - Equipment revenues (33.4% of total revenues) jumped 29.5% year over year to C$101 million. Segmental revenues benefited from a higher number of customers who bought devices through Freedom Mobile.
Subscriber/RGU Details
Wireline RGUs declined almost 50,505 in the reported quarter compared with a loss of roughly 44,630 a year ago.
In the Wireline - Consumer segment, the video cable lost 19,310 subscribers in the three months ended Feb 29, 2020. Video satellite customer count decreased by 13,211. Phone lost 23,547 customers. However, Shaw Communications’ Wireline - Internet business gained 6,072 customers in the quarter.
In the Wireline - Business Network Service segment, the video cable lost 2,779 customers in the reported quarter. Moreover, Internet customers declined by 338. However, the company gained 1,099 Video-satellite customers and 1,509 Phone customers.
In the Wireless Segment, Shaw Communications added 51,059 net RGUs. While the company added 54,289 post-paid subscribers, it lost 3,230 pre-paid customers.
Post-paid addition reflected steady demand for the Big Gig data centric and Absolute Zero pricing and packaging options. However, a higher churn rate due to stiff competition negatively impacted the pre-paid subscriber base.
Post-paid churn of 1.57% in the reported quarter was higher than 1.36% in the year-ago quarter.
Notably, the company now serves approximately 18 million people, almost half of the Canadian population. Moreover, Freedom Mobile added roughly 54K new postpaid customers, driving its wireless subscriber base to 1.8 million.
The company’s wireless service is available in more than 700 locations.
Operating Details
In second-quarter fiscal 2020, operating, general & administrative expenses slipped 0.5% year over year to $763 million. Operating, general & administrative expenses, as a percentage of revenues, decreased 230 basis points (bps) to 56%.
Notably, almost 260 employees exited the company in the quarter due to the voluntary departure program (VDP) under the Total Business Transformation (TBT) initiative. On Mar 5, 2020, Shaw Communications announced the substantial completion of the TBT initiative.
Adjusted EBITDA grew 9.5% year over year to $600 million. Adjusted EBITDA margin expanded 230 bps on a year-over-year basis to 44%.
Excluding a $41-million impact related to the adoption of IFRS 16 (Leases), adjusted EBITDA grew roughly 2% year over year.
Segment-wise, Wireline adjusted EBITDA increased 4.4% to $519 million. Wireline segment adjusted EBITDA margin expanded 240 bps on a year-over-year basis to 48.8%.
Wireless adjusted EBITDA jumped 58.8% to C$81 million. Wireless segment adjusted EBITDA margin expanded 990 bps on a year-over-year basis to 40.3%.
Balance Sheet & Cash Flow Details
As of Feb 29, 2020 Shaw Communications had cash worth $47 million and had drawn $55 million under its $1.5-billion bank credit facility.
Moreover, as of Feb 29, 2020, the company’s net debt leverage ratio was 2.5X, within management’s optimal range of 2.5X-3X.
In the quarter, capital expenditures of C$276 million were flat year over year
Wireline capital spending increased C$28 million year over year. Wireless spending decreased roughly C$31 million year over year.
Free cash flow was $191 million compared with $159 million in the year-ago quarter.
Guidance
For fiscal 2020, Shaw Communications expects to deliver adjusted EBITDA growth on a year-over-year basis. Free cash flow is still expected to be $700 million.
Zacks Rank & Stocks to Consider
Shaw Communications currently has a Zacks Rank #4 (Sell).
Long-term earnings growth rate for Netflix, Zynga and Glu Mobile is projected to be 30%, 16.3% and 15%, respectively.
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Shaw Communications (SJR) Q2 Earnings In Line, Revenues Up Y/Y
Shaw Communications reported second-quarter fiscal 2020 adjusted earnings from continuing operations of 24 cents per share, in line with the Zacks Consensus Estimate.
Total revenues of $1.04 billion beat the consensus mark of $972 million.
In Canadian currency, the company reported adjusted earnings of C$0.32 per share, up 6.7% year over year. Moreover, total revenues increased 3.7% to C$1.36 billion.
Segmental Update
Wireline revenues (78% of total revenues) dipped 0.7% on a year-over-year basis to C$ 1.06 billion.
Shaw Communications Inc. Price, Consensus and EPS Surprise
Shaw Communications Inc. price-consensus-eps-surprise-chart | Shaw Communications Inc. Quote
Wireline - Consumer revenues slid 1.5% to C$919 million. Growth in Internet revenues was fully offset by a decline in Video, Satellite and Phone revenues.
Wireline - Business revenues inched up 4.3% to C$144 million. Segmental results reflected continued growth in Internet revenues and demand for the SmartSuite of business products.
Wireless revenues (22.8% of total revenues) rose 22.8% on a year-over-year basis to C$302 million.
Wireless - Service revenues (66.6% of total segment revenues) were up 19.6% from the year-ago quarter to C$201 million, primarily driven by higher revenue-generating units (RGUs) or subscribers and an improved penetration of Big Gig data plans.
Average billing per subscriber unit (ABPU) grew 6.8% year over year to C$43.84, driven by increased number of customers subscribing to higher service plans. ARPU rose 3.1% from the year-ago quarter to C$38.45.
Wireless - Equipment revenues (33.4% of total revenues) jumped 29.5% year over year to C$101 million. Segmental revenues benefited from a higher number of customers who bought devices through Freedom Mobile.
Subscriber/RGU Details
Wireline RGUs declined almost 50,505 in the reported quarter compared with a loss of roughly 44,630 a year ago.
In the Wireline - Consumer segment, the video cable lost 19,310 subscribers in the three months ended Feb 29, 2020. Video satellite customer count decreased by 13,211. Phone lost 23,547 customers. However, Shaw Communications’ Wireline - Internet business gained 6,072 customers in the quarter.
In the Wireline - Business Network Service segment, the video cable lost 2,779 customers in the reported quarter. Moreover, Internet customers declined by 338. However, the company gained 1,099 Video-satellite customers and 1,509 Phone customers.
In the Wireless Segment, Shaw Communications added 51,059 net RGUs. While the company added 54,289 post-paid subscribers, it lost 3,230 pre-paid customers.
Post-paid addition reflected steady demand for the Big Gig data centric and Absolute Zero pricing and packaging options. However, a higher churn rate due to stiff competition negatively impacted the pre-paid subscriber base.
Post-paid churn of 1.57% in the reported quarter was higher than 1.36% in the year-ago quarter.
Notably, the company now serves approximately 18 million people, almost half of the Canadian population. Moreover, Freedom Mobile added roughly 54K new postpaid customers, driving its wireless subscriber base to 1.8 million.
The company’s wireless service is available in more than 700 locations.
Operating Details
In second-quarter fiscal 2020, operating, general & administrative expenses slipped 0.5% year over year to $763 million. Operating, general & administrative expenses, as a percentage of revenues, decreased 230 basis points (bps) to 56%.
Notably, almost 260 employees exited the company in the quarter due to the voluntary departure program (VDP) under the Total Business Transformation (TBT) initiative. On Mar 5, 2020, Shaw Communications announced the substantial completion of the TBT initiative.
Adjusted EBITDA grew 9.5% year over year to $600 million. Adjusted EBITDA margin expanded 230 bps on a year-over-year basis to 44%.
Excluding a $41-million impact related to the adoption of IFRS 16 (Leases), adjusted EBITDA grew roughly 2% year over year.
Segment-wise, Wireline adjusted EBITDA increased 4.4% to $519 million. Wireline segment adjusted EBITDA margin expanded 240 bps on a year-over-year basis to 48.8%.
Wireless adjusted EBITDA jumped 58.8% to C$81 million. Wireless segment adjusted EBITDA margin expanded 990 bps on a year-over-year basis to 40.3%.
Balance Sheet & Cash Flow Details
As of Feb 29, 2020 Shaw Communications had cash worth $47 million and had drawn $55 million under its $1.5-billion bank credit facility.
Moreover, as of Feb 29, 2020, the company’s net debt leverage ratio was 2.5X, within management’s optimal range of 2.5X-3X.
In the quarter, capital expenditures of C$276 million were flat year over year
Wireline capital spending increased C$28 million year over year. Wireless spending decreased roughly C$31 million year over year.
Free cash flow was $191 million compared with $159 million in the year-ago quarter.
Guidance
For fiscal 2020, Shaw Communications expects to deliver adjusted EBITDA growth on a year-over-year basis. Free cash flow is still expected to be $700 million.
Zacks Rank & Stocks to Consider
Shaw Communications currently has a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader consumer discretionary sector include Netflix (NFLX - Free Report) , Zynga and Glu Mobile , all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Netflix, Zynga and Glu Mobile is projected to be 30%, 16.3% and 15%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>