Rogers Communications Misses on Q2 Earnings and Revenues

Zacks

Rogers Communications Inc. (RCI) declared second-quarter 2014 financial results, wherein both its top and bottom line missed the Zacks Consensus Estimate. 
 
Quarterly net income stood at $371.4 million or 69 cents per share compared with $487.8 million or 85 cents in the year-ago quarter. Moreover, adjusted earnings per share of 77 cents missed the Zacks Consensus Estimate of 80 cents. Quarterly total revenue stood at $2,945.4 million, flat year over year. However, the figure missed the Zacks Consensus Estimate of $2,962 million.  
 
Second-quarter operating profit came in at $1,204 million, up 1% year over year. Quarterly operating margin stood at 40.9% compared with 40.7% in the year-ago quarter.
 
During the second quarter of 2014, Rogers Communications generated $1,102.3 million of cash from operations compared with $972.9 million in the year-ago quarter. Free cash flow was $574 million against $491.5 million in the year- earlier quarter.
 
At the end of second-quarter of 2014, Rogers Communications had $8.3 million of cash and marketable securities on its balance sheet compared with $2,110 million at the end of fiscal 2013. Total outstanding debt stood at $12,228.2 million versus $11,162.6 million at the end of fiscal 2013. The debt-to-capitalization ratio stood at 0.72, flat as compared with fiscal 2013.
 
Wireless Segment
 
Quarterly total revenue came in at $1,650.6 million, down 1% year over year. Network revenues totaled $1,535.1 million, flat year over year. Equipment sales were $115.5 million, down 12% year over year.
 
Quarterly adjusted operating profit for the entire segment was $773 million, up 3% year over year. Adjusted operating margin was 46.8% in the second quarter of 2014, compared with 45.3% in the year-earlier quarter. Over the same time frame, Wireless Data revenues came in at $782.9 million, up 11% year over year. Wireless Data revenues represented around 51% of the total wireless network revenue against 46% in the prior-year quarter.
 
During the second quarter of 2014, the Wireless segment activated 588,000 smartphones against 678,000 in the year-earlier quarter. Most of the smartphones were either Apple Inc. (AAPL) iPhones, Black Berry Ltd. (BBRY) devices or Google Inc. (GOOG) developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $54.3, down 0.2% year over year.
 
During the reported quarter, Postpaid retail subscribers base stood at 8.114 million, up 1.7% year over year. Smartphone customers constituted a record 76% of the overall postpaid subscribers as against 72% in the year-ago quarter. Quarterly Postpaid ARPU was $60.9, down 1.4% year over year. Monthly churn rate stood at 1.1% versus 1.20% in the prior-year quarter.
 
Prepaid subscriber base totaled 1.325 million, down 8.1% from the year-ago quarter. Quarterly Prepaid ARPU was $14.1, down 2.5% year over year. Monthly churn rate was 3.92% against 4.13% in the prior-year quarter.
 
Cable Segment
 
Quarterly total revenue came in at $800 million, flat year over year. Basic cable operations revenues totaled $400.7 million, down 4% from the year-ago quarter. Internet revenues were $286.1 million, up 9% year over year. Home Telephony revenues were $111 million, down 3% year over year. Quarterly adjusted operating profit for the whole segment stood at $387.9 million, down 2% year over year. Meanwhile, adjusted operating margin stood at 48.5%, in the reported quarter, compared with 49.5% in the year-ago quarter.
 
At the end of second-quarter 2014, Cable TV subscriber base stood at 4.004 million, up 2.6% year over year. High-speed Internet subscriber base was 1.98 million, up 2.6% year over year. Digital cable subscriber base now constituted 86% of the total television subscriber base compared with 82% in the year-ago quarter.
 
Media Segment
 
Quarterly total revenue came in at $435.6 million, up 1% year over year. Quarterly adjusted operating profit was $49.5 million, down 16% year over year. 
 
RBS Segment
 
Quarterly total revenue came in at $87.1 million, up 6% year over year. Quarterly adjusted operating profit was $25.7 million, up 12% from the prior-year quarter. Adjusted operating margin stood at 29.5%, in the reported quarter, compared with 27.8% in the year-ago quarter.
 
Outlook
 
Rogers Communications expects adjusted operating profit for full-year fiscal 2014 in the range of $4,838.5–$4,983.7 million. The company also expects after-tax free cash flow  in between $1,379 million and $1,451.6 million while capital expenditure for the full year is expected in the band of $2,201.5–$2,298.3 million.
 
Currently, Rogers Communications has a Zacks Rank #3 (Hold).
Read the Full Research Report on GOOG
Read the Full Research Report on AAPL
Read the Full Research Report on RCI
Read the Full Research Report on BBRY


Zacks Investment Research

View Comments (0)