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Windstream (WIN) Misses Q3 Earnings & Revenue Estimates

Zacks

Windstream Holdings Inc. WIN reported disappointing results in third-quarter 2017. The company’s bottom and top line lagged the Zacks Consensus Estimate.

Windstream currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Net loss on a GAAP basis was $101.5 million or a loss of 55 cents per share compared with a net loss of $66.2 million or a loss of 72 cents in the year-ago quarter. Windstream’s quarterly loss of 55 cents was wider than the Zacks Consensus Estimate of a loss of 46 cents.


Windstream Holdings, Inc. Price, Consensus and EPS Surprise

Windstream Holdings, Inc. Price, Consensus and EPS Surprise | Windstream Holdings, Inc. Quote

Revenues

Total revenues increased 11% year over year to $1,497.7 million in the reported quarter, lagging the Zacks Consensus Estimate of $1,508 million. Service revenues increased 12% to $1,472.4 million, while Product revenues declined 3% to $25.3 million.

Operating Metrics

In the reported quarter, total operating expenses were $1,454.7 million, up 20% year over year. Operating income was $43 million compared with $129.4 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $326.8 million, down 7.1% year over year.

Cash Flow

In the third quarter of 2017, Windstream generated $271.7 million of cash from operations compared with $197.6 million in the prior-year quarter. Adjusted free cash flow was $62.2 million compared with $95.8 million in the year-ago quarter.

Liquidity

Windstream exited the third quarter with $56.5 million of cash and cash equivalents and $5,857.4 million of total debt compared with $59.1 million and $4,848.7 million, respectively, at the end of 2016.

Segment-Wise Information

Consumer & Small Business – ILEC: Total revenues were $381.1 million, down 4% year over year. Of the total, Consumer revenues were $303.2 million, down 3%. Small Business – ILEC revenues totaled $77.9 million, down 7%. Total profit for the segment was $200.9 million, down 2%.

Consumer & Small Business – CLEC: Revenues totaled $229.5 million, up 89% year over year. Segment profit was $77.5 million, up 108%.

Wholesale: Revenues in this segment were $172.5 million, up 11% year over year. Segment profit was $113.5 million, flat year over year.

Enterprise: Total revenues were $567 million, up 12% year over year. Of the total, Service revenues were $554.4 million, up 12%. Product sales were $12.6 million, down 5%. Total profit for the segment was $106 million, up 17% year over year.

Subscriber Statistics

As of Sep 30, 2017, the company had 1.2882 million household customers, down 7%. High-speed Internet customer base was 1.0174 million, down 4% while the digital-TV customer base was 0.2896 million, down 12%. ILEC small business customers totaled 0.1274 million, down 8%. Enterprise customers were 0.0339 million, up 29% year over year. CLEC consumers were 0.6465 million, down 4.9% and CLEC small business customers were 0.105 million, up 37%.

Financial Outlook for 2017

Windstream reaffirmed its 2017 financial guidance. The company expects service revenue trends similar to 2016 trends and adjusted OIBDAR between $2.02 billion and $2.04 billion. The company expects adjusted capital expenditures between $790 million and $840 million.

Recent Events

Windstream announced that it will be promoting its SDN-enabled multi-vendor services in partnership with Ciena Corporation CIEN, Infinera Corporation INFN and Coriant in the MEF17 Proof of Concept showcase from November 13-16, in Orlando. MEF17 focuses on advancing Third-Network connectivity and cloud services for the digital economy & the hyper-connected world.

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 Web Services, Microsoft Corporation’s Azure, International Business Machines Corporation’s Bluemix, Google Cloud, Oracle Fast Connect and Salesforce.

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