Windstream's 3Q Profit Drops 34 Percent to $31M

by Lance Turner and Luke Jones  on Thursday, Nov. 7, 2013 7:10 am  

Jeff Gardner

Windstream Corp. of Little Rock on Thursday reported third-quarter net income of $31 million, down 34 percent from the same quarter last year.

Earnings per share was 5 cents, down from 8 cents during the same quarter last year and missing analysts' estimates of 9 cents. Revenue was $1.50 billion, down 2 percent from $1.55 billion in the same quarter last year and missing estimates of $1.51 billion.

In its earnings news release, Windstream noted "an after-tax loss on the early extinguishment of debt and merger and integration, restructuring and other expense." Excluding those charges, adjusted earnings per share would have been 8 cents.

The company's total business customers fell from 642,000 in the third quarter 2012 to 611,100 in 2013. The company lost 9,600 customers in the quarter, compared to 5,500 in 2012. Voice lines fell from 1.86 million to 1.75 million.

In the third quarter of 2012, the company gained 5,500 high speed Internet customers and lost 11,100 in this quarter. Total high speed Internet customers were 1.18 million this quarter and 1.21 million in the same quarter of 2012. 

Still, Windstream noted growth in its business and broadband areas, where the company, born as a rural wireline telecommunications provider, has increasingly focused.

"Growth in business and consumer broadband revenues, combined with declining capital expenditures and lower cash interest expense, produced strong free cash flow during the quarter," Jeff Gardner, president and CEO, said in a news release. "We are confident that our strategy to transform Windstream into an enterprise-focused company enhances our growth opportunities and positions us for continued success.

"Windstream generates substantial free cash flow which supports our dividend. As we look forward, we will remain focused on creating and returning value to our shareholders."

In a conference call with investors, Gardner said the company's change in revenue sources over time represented a successful conversion from the declining voice line market. Gardner said when Windstream started in 2006, one third of its revenue was its business services. Now, those services represent 61 percent of its revenue.

"It is now a $3.8 billion annual revenue stream," Gardner said. "We are continuing to evolve and improve the business and are focused on three key areas to advance our goals."

Those three areas were:

  • Advancing Windstream's business capability by decreasing deficiencies.
  • Investing in capital and strategic opportunities such as increasing the company's fiber footprint.
  • Strengthening the company's balance sheet through refinancing and paying down revolver balance.

"Windstream's going to continue to get better," Gardner said. 

 

 

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