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Shaw Communications (SJR) Q1 Earnings Miss, Revenues Down Y/Y

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Shaw Communications SJR reported first-quarter fiscal 2021 adjusted earnings from continuing operations of 24 cents per share, missing the Zacks Consensus Estimate by 4%.

Total revenues of $1.02 billion lagged the consensus mark by 5%.

In domestic currency, the company reported adjusted earnings of C$0.31 per share, flat year over year. Moreover, total revenues decreased 0.9% to C$1.37 billion.

Segmental Update

Wireline revenues (77.1% of total revenues) dipped 1% on a year-over-year basis to C$1.06 billion.

Wireline - Consumer revenues slid 1.4% to C$911 million, primarily due to decline in video, satellite and phone revenues partially offset by growth in Internet revenues.

Shaw Communications Inc. Price, Consensus and EPS Surprise

Shaw Communications Inc. Price, Consensus and EPS Surprise
Shaw Communications Inc. Price, Consensus and EPS Surprise

Shaw Communications Inc. price-consensus-eps-surprise-chart | Shaw Communications Inc. Quote

Wireline - Business revenues of C$145 million was up 1.4% year over year.

Wireless revenues (23.1% of total revenues) fell 0.3% on a year-over-year basis to C$317 million.

Wireless - Service revenues (67.8% of total segment revenues) were up 9.7% from the year-ago quarter to C$215 million.

ABPU fell 2.2% year over year to C$42.66, driven by Shaw’s bundled growth strategy through the acquisition of lower revenue Shaw Mobile customers. ARPU also declined 1.3% from the year-ago quarter to C$38.25.

Wireless - Equipment revenues (32.2% of total revenues) plunged 16.4% year over year to C$102 million.

Subscriber/RGU Details

Wireline RGUs declined by 100,900 in the reported quarter compared with a loss of roughly 57,500 a year ago.

In the Wireline - Consumer segment, the video cable lost 34,437 subscribers in the three months ended Nov 30, 2020. Video satellite customer count decreased by 33,587. Phone lost 23,760 customers. Moreover, Shaw Communications’ Internet business lost 15,068 customers in the quarter.

In the Wireline - Business Network Service segment, the video cable lost 33 customers in the reported quarter. Moreover, the company gained 2,365 video-satellite customers. Moreover, Shaw Communications gained 2,422 phone customers and 1,191 Internet customers.

In the Wireless Segment, Shaw Communications added 101,000 net RGUs. While the company added 87,300 post-paid subscribers, it gained 13,700 pre-paid customers.

Post-paid churn of 1.81% in the reported quarter was higher than 1.50% in the year-ago quarter.

Operating Details

In first-quarter fiscal 2021, operating, general & administrative expenses slipped 4% year over year to C$763 million. Operating, general & administrative expenses, as a percentage of revenues, decreased 180 basis points (bps) to 55.7%.

Adjusted EBITDA grew 3.2% year over year to C$607 million. Adjusted EBITDA margin expanded 180 bps on a year-over-year basis to 44.3%.

Segment-wise, Wireline’s adjusted EBITDA increased 2.9% to C$532 million. Wireline segment adjusted EBITDA margin expanded 190 bps on a year-over-year basis to 50.4%.

Wireless adjusted EBITDA climbed 5.6% to C$75 million. Wireless segment adjusted EBITDA margin declined 130 bps to 34.9%.

Balance Sheet & Cash Flow Details

As of Nov 30, 2020 Shaw Communications had cash worth $571 million. Moreover, the company’s net debt position was C$2.41 billion.

Moreover, the company’s net debt leverage was 2.3X, below management’s optimal range of 2.5X-3X.

In the quarter under review, capital expenditures of C$234 million compared with C$260 million in the year-ago quarter.

Wireline capital spending decreased by C$44 million year over year to C$161 million. Wireless spending decreased by C$18 million year over year to C$73 million due to continued network expansion, spectrum deployment and higher IT-related spending to support Shaw Mobile launch and digital initiatives.

Free cash flow was C$225 million, up 23% year over year.


For fiscal 2021, Shaw Communications still expects to deliver adjusted EBITDA growth on a year-over-year basis. Free cash flow is still expected to be $800 million.

Zacks Rank & Stocks to Consider

Shaw Communications currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader consumer discretionary sector include Fox FOXA, Nextstar Media NXST and TEGNA TGNA. While both Fox and Nextstar Media carry a Zacks Rank #2 (Buy), TEGNA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox and Nextstar Media are scheduled to report their quarterly results on Feb 9 and 23, respectively. TEGNA is set to report the same on Mar 1.

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