Shaw Communications Inc. (SJR) reported disappointing first-quarter fiscal 2015 financial results wherein both the top and the bottom lines missed the Zacks Consensus Estimate. Nevertheless, the company increased its annual dividend by 8% to $1.060.
Following the release of the financial results, the company’s shares dropped 3.2% yesterday.
Adjusted earnings per share for the reported quarter were 39 cents, which fell short of the Zacks Consensus Estimate of 41 cents. GAAP net income from continuing operations was $203.1 million, down 7.3% year over year. GAAP earnings per share stood at 41 cents against 45 cents in the year-ago quarter.
On the other hand, total revenue in the quarter rose 2% year over year to approximately $1,161 million, lagging the Zacks Consensus Estimate of $1,204 million.
Quarterly operating income before amortization was around $542 million, down 0.3% from the year-ago quarter. Quarterly operating margin stood at 43.6% against 44.6% in the first quarter of fiscal 2014. In the quarter, Shaw Communications generated around $195 million of cash from operations, down 46.8% year over year. Free cash flow totaled $172 million, up 22.9% year over year.
At the end of the first quarter of fiscal 2015, Shaw Communications had cash and marketable securities of $21.5 million and outstanding debt of $4,957 million, down 57.9% and 18.1% year over year, respectively. The debt-to-capitalization ratio stood at 0.51 compared with 0.48 at the end of Aug 31, 2014.
Subscriber Statistics
As of Nov 30, 2014, video cable customer base totaled 1,942,038, reflecting a net reduction of 15,591 customers in the reported quarter. Video satellite customers decreased 17,980 to 862,643. Meanwhile, with the addition of 14,048 customers in this quarter, the company's Internet customer base now stands at 1,944,449. Digital phone lines were 1,374,735, reflecting a year-over-year net reduction of 599 lines.
Consumer Segment
Quarterly revenues reached $829.3 million, down 1.9% year over year. Quarterly operating income before amortization came in at $362.3 million, down 1.9% year over year.
Business Network Services Segment
This segment was created at the company after the acquisition of ViaWest. Quarterly total revenue herein came in at $49.2 million. The segment’s quarterly operating income before amortization was $18.8 million.
Business Infrastructure Services Segment
Quarterly total revenue of $49.2 million was up 6.7% year over year. The segment’s quarterly operating income before amortization was $54.6 million, up 5.2% from the year-ago quarter.
Media Segment
Quarterly total revenue came in at $274.6 million, down 5.5% year over year. Operating income before amortization was $106.5 million, down 13.1% year over year.
Financial Outlook
For fiscal 2015, management expects both total revenue and operating income before amortization to grow 5–7% on a year-over–year basis. Free cash flow is projected at $650 million.
Zacks Rank & Peers
Shaw Communications, which currently has a Zacks Rank #4 (Sell), competes with Canadian telecom and cable MSOs (multi-service operators) such as Rogers Communications Inc. (RCI), Telus Corp. (TU) and BCE Inc. (BCE).
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