Windstream Holdings Inc. reported disappointing financial results for both the counts in the fourth quarter of 2016.
On a GAAP basis, the company reported net loss of $86.9 million or a loss of 94 cents per share compared with a net income of $140.5 million or $1.41 in the year-ago quarter. On an adjusted basis, the company’s quarterly loss per share of 51 cents was wider than the Zacks Consensus Estimate of a loss of 47 cents.
Total revenue declined 8% year over year to $1,309.1 million in the fourth quarter, missing the Zacks Consensus Estimate of $1,337.8 million. Service revenues declined 7% year over year to $1,289.1 million and Product revenues plunged 48% to $20 million.
In the reported quarter, total operating expense was $1,235.4 million, down 5% year over year. Operating income was $73.7 million compared with $131.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $318.1 million, down 7% year over year.
Cash Flow
In the fourth quarter of 2016, Windstream generated $302.3 million of cash from operations compared with $270.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $23.1 million compared with a negative $19.4 million in the year-ago quarter.
Liquidity
Windstream exited 2016 with $59.1 million of cash and cash equivalents and $4,863.6 million of total debt compared with $31.3 million and $5,170.5 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.97 compared with 0.94 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 11,900 high-speed Internet customers, down 18% year over year and 23,900 household subscribers, down 5% year over year. Moreover, at the end of 2016, the company had 1,354,600 Household customers, down 6% year over year. High-speed Internet customer base was 1,051,100, down 4% year over year and digital TV customer base was 321,000, down 11% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391.7 million, down 2% year over year. Of the total, Consumer revenues were $309.7 million, down 1%. Small Business – ILEC revenues totaled $82 million, down 5%. Total profit for the segment was $233.4 million, up 2%.
Small Business - CLEC: Revenues totaled $111.1 million, down 16% year over year. Segment profit was $35.3 million, down 15%.
Wholesale: Revenues came in at $152.7 million, down 11% year over year. Segment profit was $108.9 million, down 12%.
Enterprise: Total revenue was $497.6 million, down 6% year over year. Of the total, Service revenues were $486.3 million, down 2%. Product sales were $11.3 million, down a significant 62%. Total profit for the segment was $85.3 million, up 10%.
Outlook
For 2017, Windstream expects total service revenues to be inline with full year 2016. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000 – $2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
Recent Development
In Feb 2017, Windstream received all of the state and federal regulatory approvals required for its proposed acquisition of EarthLink Holdings Corp. The deal will enable Windstream to achieve economies of scale to compete with larger firms like CenturyLink Inc. , Level 3 Communications Inc. and Frontier Communications Corp. . Windstream currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Windstream (WIN) Reports Wider-than-Expected Loss in Q4
Windstream Holdings Inc. reported disappointing financial results for both the counts in the fourth quarter of 2016.
On a GAAP basis, the company reported net loss of $86.9 million or a loss of 94 cents per share compared with a net income of $140.5 million or $1.41 in the year-ago quarter. On an adjusted basis, the company’s quarterly loss per share of 51 cents was wider than the Zacks Consensus Estimate of a loss of 47 cents.
Total revenue declined 8% year over year to $1,309.1 million in the fourth quarter, missing the Zacks Consensus Estimate of $1,337.8 million. Service revenues declined 7% year over year to $1,289.1 million and Product revenues plunged 48% to $20 million.
In the reported quarter, total operating expense was $1,235.4 million, down 5% year over year. Operating income was $73.7 million compared with $131.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $318.1 million, down 7% year over year.
Cash Flow
In the fourth quarter of 2016, Windstream generated $302.3 million of cash from operations compared with $270.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $23.1 million compared with a negative $19.4 million in the year-ago quarter.
Liquidity
Windstream exited 2016 with $59.1 million of cash and cash equivalents and $4,863.6 million of total debt compared with $31.3 million and $5,170.5 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.97 compared with 0.94 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 11,900 high-speed Internet customers, down 18% year over year and 23,900 household subscribers, down 5% year over year. Moreover, at the end of 2016, the company had 1,354,600 Household customers, down 6% year over year. High-speed Internet customer base was 1,051,100, down 4% year over year and digital TV customer base was 321,000, down 11% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391.7 million, down 2% year over year. Of the total, Consumer revenues were $309.7 million, down 1%. Small Business – ILEC revenues totaled $82 million, down 5%. Total profit for the segment was $233.4 million, up 2%.
Small Business - CLEC: Revenues totaled $111.1 million, down 16% year over year. Segment profit was $35.3 million, down 15%.
Wholesale: Revenues came in at $152.7 million, down 11% year over year. Segment profit was $108.9 million, down 12%.
Enterprise: Total revenue was $497.6 million, down 6% year over year. Of the total, Service revenues were $486.3 million, down 2%. Product sales were $11.3 million, down a significant 62%. Total profit for the segment was $85.3 million, up 10%.
Outlook
For 2017, Windstream expects total service revenues to be inline with full year 2016. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000 – $2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
Recent Development
In Feb 2017, Windstream received all of the state and federal regulatory approvals required for its proposed acquisition of EarthLink Holdings Corp. The deal will enable Windstream to achieve economies of scale to compete with larger firms like CenturyLink Inc. , Level 3 Communications Inc. and Frontier Communications Corp. . Windstream currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Windstream Holdings, Inc. Price, Consensus and EPS Surprise
Windstream Holdings, Inc. Price, Consensus and EPS Surprise | Windstream Holdings, Inc. Quote
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>