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Time Warner Cable Tops on Q1 Earnings, Lags Revs - Analyst Blog

By: Zacks.com
Posted: 4/24/2014 1:20:00 PM
Referenced Stocks: CMCSA;T;TWC;VZ

Time Warner Cable Inc. ( TWC ) reported mixed financial results for the first quarter of 2014 where its bottom line surpassed the Zacks Consensus Estimate but the top missed the same. However, the company significantly narrowed video subscriber loss in the reported quarter and also gained considerable residential High-Speed Data and voice subscribers.

Quarterly adjusted (excluding special items) earnings per share of $1.78 substantially beat the Zacks Consensus Estimate of $1.68. Quarterly GAAP net income came in at $479 million or $1.70 per share compared with $401 million or $1.34 per share in the prior-year quarter. At $5,582 million, quarterly total revenue missed the Zacks Consensus Estimate of $5,650 million, but increased 2% year over year.

Quarterly adjusted operating income before depreciation and amortization (OIBDA) grew 3.6% year over year to $1,980 million. Operating income inched up 3% year over year to $1,092 million. Average monthly revenue per user rose 0.6% to $105.45. Residential high-speed data ARPU increased 8.7% to $46.32.  

In the reported quarter, Time Warner Cable generated $1,397 million of cash from operations compared with $1,394 million in the prior-year quarter. Free cash flow in the first quarter of 2014 was $563 million as against $624 million in the year-ago quarter.

At the end of the first quarter of 2014, Time Warner Cable had $1,557 million in cash and marketable securities compared with $525 million at the end of 2013. Outstanding debt  stood at $22,792 million as against $23,285 million at the end of 2013. At the end of  the quarter under review, the debt-to-capitalization ratio was 0.76 against 0.77 at the end of fiscal 2013.

Residential Services Segment

Quarterly total revenue was $4,568 million, up 0.9% year over year. Within the segment, video revenues were $2,495 million, down 6.6% from the prior-year quarter. High-speed data revenues were $1,558 million, up 10.8% year over year. Voice revenues came in at $496 million, down 4.4% year over year. Other revenues were $19 million, up 26.7% from the year-ago quarter.

Business Services Segment

Quarterly total revenue stood at $668 million, up 24.4% year over year. Within the segment, video revenues were $89 million, up 6% year over year. High-speed data revenues were $306 million, up 19.5% year over year. Voice revenues totaled $118 million, up 22.9% from the year-earlier quarter. Wholesale transport revenues were $101 million, up by a substantial 83.6% year over year. Other revenues were $54 million, up 17.4% year over year.


Advertising Segment

Advertising revenues grew 8.3% year over year to $247 million.   

Other Segment

Other revenues came in at $153 million, up 2.7% year over year.

Subscriber Statistics

Time Warner Cable is facing the brunt of growing competition as large telecom operators, such as Verizon Communications Inc. ( VZ ) and AT&T Inc. ( T ) are gaining a strong foothold in this field.  

As on Mar 31, 2014, Residential Video subscribers' base stood at 11.163 million. Time Warner Cable lost 34,000 residential video subscribers in the reported quarter. At the same time, the Commercial Video subscribers' base was 196,000, flat year over year.

Residential High-speed Data subscribers' base was 11.358 million. The company gained a net 269,000 residential High-Speed Data subscribers. Commercial High-speed Data subscribers' base stood at 531,000. The company also added 14,000 commercial High-speed Data subscribers. Residential voice subscribers' base was 4.913 million, reflecting a quarterly gain of 107,000 subscribers. Meanwhile, commercial voice subscribers' base stood at 289,000 on 14,000 commercial voice subscribers gain in the reported quarter.

In the first quarter of 2014, Time Warner Cable gained 82,000 Triple play subscribers totaling 4.065 million, and 31,000 Double play subscribers grossing 4.772 million. Also, the company gained 35,000 single-play subscribers totaling 5.695 million.  

Earlier, Time Warner Cable had  cut a deal with Comcast Corp. ( CMCSA ),  likely to be designed as an all-stock one. Comcast will offer approximately $159 per share of Time Warner Cable, which amounts to a total consideration of around $45.2 billion. Each share of Time Warner Cable will be converted into 2.875 shares of Comcast. The deal is expected to close by the end of 2014, subject to regulatory approval and approvals of the shareholders of both the companies.

Time Warner Cable currently carries a Zacks Rank #3 (Hold).



COMCAST CORP A (CMCSA): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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