CenturyLink Inc. (CTL) posted fourth-quarter 2014 adjusted earnings of 60 cents per share, below the Zacks Consensus Estimate of 63 cents. GAAP net income stood at $188 million or 33 cents per share compared with a net income of $239 million or 41 cents per share in the prior-year quarter.
Quarterly revenues of $4,438 million declined 2.3% from the fourth quarter of 2013 and also missed the consensus mark of $4,474 million.
Quarterly operating expenses totaled $3,955 million, up 1.4% year over year. Meanwhile, operating income was $483 million as against an operating loss of $641 million in fourth-quarter 2013. The company repurchased 2.3 million shares of common stock for a total consideration of $91 million in the quarter under review.
Cash Flow
During the fourth quarter of 2014, CenturyLink generated $1,709 million of cash from operations compared with $1,836 million in the year-ago quarter. Free cash flow, in the reported quarter, was $373 million compared with $601 million in the year-ago quarter.
Liquidity
CenturyLink exited the final quarter of 2014 with $128 million of cash and cash equivalents compared with $163 million at the end of fiscal 2013. At quarter-end, total long-term debt stood at $20,121 million compared with $20,181 million at the end of 2013. Meanwhile, the debt-to-capitalization ratio was 0.57 as against 0.54 at 2013-end.
Segmental Results
Consumer revenues dropped a nominal 0.1% year over year to $1,494 million in the quarter. On the other hand, Strategic revenues increased on the back of high-speed Internet, Prism TV subscriber addition and rate hikes on certain products. The segment registered Prism TV subscriber growth of nearly 13,000 and ended the quarter with almost 242,000 subscribers.
Business revenues were $2,698 million, down 3.6% year over year. A drop in business segment revenues can be primarily attributed to decline in revenues from legacy services and data integration.
Subscribers
At the end of the fourth quarter of 2014, total access lines were 12.394 million compared with 12.537 million at the end of the year-ago quarter. CenturyLink gained 19,000 high-speed Internet customers, thus bringing the total to 6.082 million, at the end of fourth-quarter 2014.
Guidance
For the first quarter of 2015, the company expects adjusted earnings per share and operating revenues in the range of 56 cents to 51 cents and $4.45 billion to $4.50 billion, respectively. Operating cash flows are expected between $1.64 billion and $1.69 billion.
For full-year 2015, the company projects adjusted earnings per share of $2.50 to $2.70 and revenues of $17.9 to $18.1 billion. Free cash flow is expected between $2.5 billion and $2.7 billion whereas operating cash flow is estimated in the $6.8–$7.0 billion range.
Zacks Rank
CenturyLink currently carries a Zacks Rank #3 (Hold). However, better-ranked companies in the same industry include Ruckus Wireless, Inc. (RKUS), BlackBerry Limited (BBRY) and Telenav Inc. (TNAV). All three stocks currently hold a Zacks Rank #2 (Buy).
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