Time Warner Cable Inc.
(
TWC
) reported robust first-quarter 2012 financial results, with both
the top line and bottom line beating the Zacks Consensus Estimate.
There are primarily three reasons for this solid performance: (1)
newly acquired entities, e.g. Insight, NewWave, and NeviSite
enhanced the company's overall financials. Besides, growth rate of
revenue exceeds the growth rate of operating expenses (2)
increasing demand for residential high-speed Internet services (3)
continuation of strong performance of the company's Business
Services segment.
Quarterly GAAP net income was $382 million or $1.20 per share
compared with a net income of $325 million or 93 cents per share in
the prior-year quarter. First-quarter 2012 adjusted (excluding
special items) EPS of $1.30 handily beats the Zacks Consensus
Estimate of $1.22. Total revenue in the reported quarter increased
6.4% year over year to $5,134 million, surpassing the Zacks
Consensus Estimate of $5,121 million.
Quarterly adjusted operating income before depreciation and
amortization (OIBDA) climbed 8.2% year over year to $1,873 million.
GAAP operating income grew 6.9% year over year to $1,042 million.
During the first quarter of 2012, Time Warner Cable repurchased 4.8
million shares for a total consideration of $353 million. In the
reported quarter, the company also paid $179 million in
dividends.
During the first quarter of 2012, Time Warner Cable generated
$1,383 million of cash from operations compared with $1,570 million
in the prior-year quarter. Free cash flow in the previous quarter
was $718 million compared with $927 million in the year-ago
quarter.
At the end of the first quarter of 2012, Time Warner Cable had
$2,629 million in cash & marketable securities compared with
$5,177 million at the end of 2011. Total debt at the end of the
reported quarter was $26,838 million compared with $24,320 million
at the end of 2011. At the end of the first quarter of 2012,
debt-to-capitalization ratio was 0.76 compared with 0.76 at the end
of 2011.
Residential Services Segment
Quarterly total revenue was $4,433 million, up 4.1% year over
year. Within the segment, video revenue was $2,711 million, up 1.9%
year over year. High-speed data revenue was $1,199 million, up 9.6%
year over year. Voice revenue was $508 million, up 3% year over
year. Other revenue was $15 million, up 36.4% year over year.
Business Services Segment
Quarterly revenue was $429 million, up 37.5% year over year.
Within the segment, video revenue was $76 million, up 10.1% year
over year. High-speed data revenue was $208 million, up 24.6% year
over year. Voice revenue was $63 million, up 50% year over year.
Wholesale transport revenue was $41 million, up 28.1% year over
year. Other revenue was $41 million compared with a mere $2 million
in the year-ago quarter.
Advertising Segment
Advertising revenue increased 7.1% year over year to $211
million.
Other Segment
Other revenue was $61 million, up 3.4% year over year.
Subscriber Statistics
At the end of the first quarter of 2012, Residential Video
subscribers' base was 12.468 million. Time Warner Cable lost 94,000
residential video subscribers organically but added 673,000 new
clients through acquisitions. Commercial Video subscribers' base
was 185,000. The company lost 4,000 commercial video subscribers
organically but added 10,000 new customers through
acquisitions.
Residential High-speed Data subscribers' base was 10.716
million. Time Warner Cable added 214,000 residential High-Speed
Data subscribers organically coupled with an additional 548,000
clients through acquisitions. Commercial High-speed Data
subscribers' base was 420,000. The company added 13,000 commercial
High-speed Data subscribers organically coupled with an additional
20,000 subscribers through acquisitions.
Residential voice subscribers' base was 4.945 million. Time
Warner Cable added 112, 000 residential voice subscribers
organically along with an additional 289,000 clients through
acquisitions. Commercial voice subscribers' base was 184,000. The
company added 12,000 commercial voice subscribers organically
together with an additional 10,000 voice clients through
acquisitions.
In the previous quarter, Time Warner Cable gained 352,000 Triple
play subscribers totaling 4.190 million, added 260,000 Double play
subscribers totaling 5.184 million, and also gained 235,000 Single
play subscribers to 5.980 million.
Recommendation
After
Comcast Corp.
(
CMCSA
), Time Warner Cable is the second largest cable MSO in the U.S. We
reiterate our long-term Neutral recommendation on Time Warner
Cable. Currently, the company enjoys a Zacks #2 Rank (Buy) on the
stock.
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
TIME WARNER CAB (
TWC
): Free Stock Analysis Report
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