) reported dull fourth quarter and full year 2012 results, hurt
by low contributions from voice and long distance units, reduced
intrastate access rates along with loss of subscribers.
Quarterly adjusted earnings per share of 11 cents missed the
Zacks Consensus Estimate by a penny. However, comparing with the
prior-year quarter, the results dropped 42.1% from 19 cents.
Pro forma revenue decreased 2.0% year over year to $1,538.2
million in the fourth quarter and was slightly below our
expectation of $1,552.0 million. Total service revenue and
Product sales fell 0.9% and 17.7% year over year, respectively.
Adjusted OIBDA (excluding non-cash pension expense, non-cash
stock-based compensation and restructuring charges) moved up to
$618.5 million in the fourth quarter from $607.3 million in the
For full-year 2012, Windstream posted earnings per share of 45
cents (lagging our projection of 49 cents), on revenues of
$6,156.3 million (just missing the Zacks Consensus Estimate of
During the fourth quarter, total access lines, which include
voice lines, high-speed Internet and digital television
customers, decreased 2.8% year over year to 3.48 million. Voice
lines and digital television customers witnessed a year-over-year
decline of 4.5% and 4.4%, respectively, while high-speed Internet
improved a marginal 0.6%.
Windstream exited 2012 with cash and cash equivalents of $132.0
million compared with $227.0 million in the prior year. Long-term
debt and capital lease obligations were $8,114.9 million compared
with $8,936.7 million at year-end 2011.
For 2012, the company generated adjusted free cash flow of $767.9
million and capital expenditure was $1,101.2 million.
For 2013, management expects to see a 2% decline to 1% growth in
total revenue compared with the 2012 levels. Free cash flow is
expected to increase 13% to 15% year over year and capital
spending will likely be within $800 million and $850 million.
Looking ahead, we expect Windstream's strong operational base to
drive growth in business and consumer channels with the addition
of high-speed Internet customers and enhanced promotional
strategies. The company aims to sell additional services to
customers to boost its average revenue per unit.
Additionally, bringing in more subscribers and spreading
business to various new locations will add a competitive
advantage to Windstream's performance over other industry players
Consolidated Communications Holdings Inc.
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WINDSTREAM CORP (WIN): Free Stock Analysis
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Windstream currently carries a Zacks Rank #3 (Hold).