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America Movil (AMX) Q2 Earnings Miss Estimates, Revenues Top

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America Movil (AMX) Q2 Earnings Miss Estimates, Revenues Top

America Movil's (AMX) top line increases year over year due to strong growth in service revenues in the mobile space in Brazil and Mexico.

America Movil S.A.B. AMX reported disappointing financial results for second-quarter 2018 wherein the bottom line lagged the Zacks Consensus Estimate.

Net loss was Mex$236 million ($12.2 million) compared with net income of Mex$14,313 million in the year-ago quarter. The company reported breakeven quarterly earnings per ADR (American Depository Receipt), missing the Zacks Consensus Estimate of earnings of 16 cents.

The dollar appreciated versus most currencies primarily due to a widening yield-differential versus other countries. Notably, from Apr 18 to the end of the reported quarter, the dollar gained 5.9% versus the euro, 8.1% versus the Colombian peso and 7.6% versus the pound. The appreciation of the dollar against other currencies had an adverse impact on the earnings in the quarter.

Quarter Details

Total revenues of approximately Mex$257,309 million ($13,287.7 million) highlighted an increase of 3.2% on a year-over-year basis. Also, the figure surpassed the Zacks Consensus Estimate of $12,707 million. Segment-wise, service revenues were around $11,304.2 million, up 1.4% year over year. Equipment revenues totaled $1,983.5 million, up 14.7% from the year-ago quarter.

America Movil, S.A.B. de C.V. Price, Consensus and EPS Surprise

America Movil, S.A.B. de C.V. Price, Consensus and EPS Surprise | America Movil, S.A.B. de C.V. Quote

Strong growth of service revenues in the mobile space in Brazil and Mexico were the main drivers of top-line growth. Mobile ARPUs increased in Mexico (up 7.3%), Brazil (14.1%) and the United States (9.4%) but declined in Peru (12.7%) and Colombia (2.7%).

Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) improved 3% from the prior-year quarter to Mex$72,021 million ($3,719.2). EBITDA margin remained flat year over year at 28%. Operating profit increased 4.8% to Mex$32,645 million ($1685.8 million).

Regional Segment Results

Quarterly revenues from Mexico, America Movil's home ground, increased 8% year over year to Mex$71,102 million ($3,671.8 million) as service revenues expanded 4.7%. Mobile service revenues increased 8.7% while mobile ARPU was up 7.3% to Mex$147 ($7.59). EBITDA increased 14.9% to Mex$23,878 million ($1,233.0 million) for EBITDA margin of 33.6%.

Revenues from Argentina, Paraguay and Uruguay operation jumped 28.7% to $656.8 million. EBITDA increased 30.6% to $238.4 million. ARPU came in at $7.61, up 37% while the churn rate was 2.1%, flat year over year.

Revenues from Brazilian operation inched up 0.9% to $2,467.3 million. EBITDA increased 9.9% to $738.4 million. Brazilian ARPU came in at $4.73, up 14.1% year over year while the churn rate was 3.8% compared with 3.4% in the year-ago quarter.

Revenues from Chile operation were up 0.3% year over year to $339 million. EBITDA increased 26.6% to $60.5 million. ARPU came in at $9.19, down 1.9% while the churn rate was 5.7% compared with 5.3% in the year-ago quarter.

Revenues from Colombia operation were up 2.9% to $1,015.1 million. EBITDA increased 5.7% to $414.5 million. Churn rate was 4.6% compared with 4.3% in the year-ago quarter.

Revenues from Ecuador operation increased 0.2% year over year to $333 million. EBITDA increased 2.1% to $130 million. ARPU came in at $11, up 7% while the churn rate was 4.8% compared with 3.5% a year ago.

Revenues from Peru operation declined 5.6% year over year to $388.4 million. EBITDA decreased 15.4% to $82.3 million. ARPU came in at $7.04, down 12.7% while the churn rate was 6.1% compared with 5.5% in the year-ago quarter.

Revenues from Central America operation jumped 2.9% year over year to $594 million. EBITDA decreased 5.7% to $192 million. ARPU came in at $7 while the churn rate was 6.9% compared with 6.4% in the year-ago quarter.

Revenues from Caribbean operation fell 1.6% year over year to $472 million. EBITDA decreased 10.6% to $140 million. ARPU came in at $13 while the churn rate was 3.8% compared with 3.5% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) declined 0.4% to $1,923 million. EBITDA decreased 22.3% to $164 million. ARPU came in at $25 while the churn rate was 4.2% compared with 4.4% a year ago.

Revenues from Telekom Austria Group operation increased 1.3% to $1,310.3 million. EBITDA decreased 0.9% to $424.5 million. ARPU was flat year over year at $10.7 while the churn rate was 1.6% compared with 1.9% in the year-ago quarter.

Subscriber Statistics

As of Jun 30, 2018, America Movil's total wireless subscriber base was 279 million, down 0.4% year over year. Fixed-line revenue generating units were 83.4 million, up 1% from the year-ago quarter. The company added 1.1 million postpaid wireless subscribers in the quarter, including 537,000 in Brazil, 184,000 in Mexico and 103,000 in Colombia.

In the fixed-line platform, broadband accesses improved 5% year over year as the company gained 275,000 new accesses in the quarter, most of them in Brazil and Central America. PayTV subscriber base was marginally down annually.

Liquidity

At the quarter end, America Movil had around Mex$68,949 million ($3,458.6 million) of cash and marketable securities and long-term debt of Mex$630,211 million ($31,612.6 million).

The company’s operating cash flow in the first six months of the year enabled it to cover capital expenditures of Mex$57.1 billion and reduce its net debt by Mex$14.9 billion. It also contributed Mex$11.6 billion to its pension funds (mostly Telmex).

Stocks to Consider

America Movil currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Arista Networks, Inc. ANET, ASML Holding N.V. ASML and Avnet, Inc. AVT. While Arista Networks sports a Zacks Rank #1 (Strong Buy), ASML Holding and Avnet carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks has surpassed estimates in each of the trailing four quarters with an average beat of 25.52%.

ASML Holding has exceeded estimates in each of the trailing four quarters with an average beat of 18.64%.

Avnet has surpassed estimates in each of the trailing four quarters with an average beat of 7.68%.

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 Mex$1 = 0.051641 (period average Apr 1, 2018 to Jun 30, 2018)

1ARP = 0.043271 (period average Apr 1, 2018 to Jun 30, 2018)

1BrL = 0.278103 (period average Apr 1, 2018 to Jun 30, 2018)

1ChPL = 0.001609 (period average Apr 1, 2018 to Jun 30, 2018)

1 COP = 0.000351 (period average Apr 1, 2018 to Jun 30, 2018)

1 Sol = 0.306036 (period average Apr 1, 2018 to Jun 30, 2018)

1 EUR = 1.192279 (period average Apr 1, 2018 to Jun 30, 2018)

Mex$1 = 0.050162 (as on Jun 30, 2018)


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