Windstream's 4Q, Fiscal Profits Rise

by Luke Jones and Lance Turner  on Thursday, Feb. 27, 2014 7:04 am  

Jeff Gardner, CEO of Windstream Holdings Inc. of Little Rock. (Photo by Russell Powell)

Windstream Holdings Inc. of Little Rock on Thursday reported gains in fourth-quarter and fiscal 2013 profit, citing more growth in consumer and broadband revenue.

The telecommunications firm (NYSE: WIN), which last week said it would cut 400 employees companywide by Monday, reported fourth-quarter profit of $118.4 million, or 20 cents per share, up from $10.1 million, or 2 cents per share, during the same quarter last year.

Fourth-quarter results include some one-time gains, including a non-cash benefit of 13 cents per share related to an actuarial gain on the company's pension plan and 2 cents in after-tax merger and integration, restructuring and other expenses. Excluding these gains, fourth-quarter earnings per share would have been 9 cents.

Quarterly revenue was $1.49 billion, down 3 percent from $1.53 billion in the same quarter last year.

For the year, the company reported profit of $241.0 million, or 40 cents per share, up 43 percent from $168.0 million it reported in 2012. Revenue was $5.99 billion, down 2 percent from $6.14 billion in 2012.

"2013 was a solid year for Windstream," Jeff Gardner, president and CEO, said in a news release. "Our business team finished the year strong, generating sequential revenue growth again, and our consumer team continued to grow broadband revenue and deliver steady results, all of which better position us to achieve our goals and deliver value to shareholders."

In its earnings release, Windstream touted growth in "strategic revenue," which includes total business and consumer broadband sales, of 2 percent at $4.3 billion for the year. That figure includes business service revenue of $3.7 billion, up 1 percent from 2012.

Maintaining the Dividend

In a conference call with analysts, Gardner reasserted that the company would keep its historic dividend.

"We pay an attractive dividend, which we see as the best way to create value for shareholders," Gardner said. "We recently declared a dividend of 25 cents per share, and have paid it consistently for over seven years."

The main source of the dividend is Windstream's free cash flow, which in 2013 generated $891 million, of which 67 percent was returned to shareholders in the form of the dividend. Gardner said the 2014 free cash flow should end up in the $775 million to $885 million range, with a payout of 68 to 78 percent of that.

CFO Tony Thomas said he expected for the company's capital expenditure to decrease, although one of Gardner's goals for the company this year was to "continue to invest in strategic capital initiatives," which involve deploying more fiber cable and increasing broadband speeds.

The company's fiber routes now cover about 118,000 miles. In 2013, Windstream built fiber to 2,000 towers and have completed a total of 4,500 to date, with 400 still under construction.

Capital expenditures in the fourth quarter of 2013 were $170 million, down from $188 million in the previous quarter.



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