Altice USA (ATUS) Incurs Loss In Q3, Revenues Beat Estimates

Altice USA Inc (NYSE:ATUS) reported mixed financial results for the third quarter of 2017, With the bottom line missing the Zacks Consensus Estimate and the top line beating the same.

Net Income

Net loss in the third quarter was $182.09 million compared with a net loss of $172.55 million in the prior-year quarter. Adjusted loss was 8 cents per share, wider than the Zacks Consensus Estimate of a loss of a penny.

Revenue

Quarterly total revenues of $2,327.18 million increased 3.2 % year over year and surpassed the Zacks Consensus Estimate of $2,326 million. Residential segment revenues were $1,905.24 million compared with $1,846.79 million at the end of June 2016. Business services and wholesale segment revenues were $324.76 million compared with $309.37 million in the year-ago quarter.

Advertising segment revenues were $84.54 million compared with $88.76 million in the year-ago quarter. Other revenues were $12.64 million compared with $15.31 million a year earlier.

Suddenlink and Optimum Growth Rates

Revenue growth rate at the Optimum and Suddenlink segments were 3.4% and 2.8%, respectively, on a year-over-year basis. Their respective Adjusted EBITDA growth rate were 25.8% and 5.7%, on a year-over-year basis

Operating Metrics

Operating income was $134.86 million compared with $142.78 million in the year-ago quarter. Adjusted EBITDA for Altice USA grew 18.9% year over year in third-quarter 2017 to $1,027 million. Adjusted EBITDA margin grew 5.8% points to 44.1%.

Cash Flow

Operating free cash flow for Altice USA in the third quarter grew 13.9% year over year to $736 million. Operating free cash flow growth rate at the Optimum and Suddenlink segments were 18.7% and 4.1%, respectively, on a year-over-year basis.

Liquidity

Net debt for Altice USA at the end of the reported quarter was $21,140 million, a reduction of $196 million from the end of the second quarter 2017.

Subscriber Statistics

Total customer relationships in the second quarter were 4.898 million, including 4.529 million connections for the Residential segment and 369 connections for the SMB segment.

In the Residential segment, the subscriber count was 3.430 million for Pay TV, 4.021 million for Broadband and 2.547 million for Telephony business.

Average monthly revenue per user (ARPU) in the reported quarter was $140.1 compared with $139.25 and $136.50, at the end of Jun 2017 and Sep 2016, respectively.

Recent Events

Altice USA reached a comprehensive distribution agreement with The Walt Disney Company (NYSE:DIS) to deliver Disney’s lineup of sports, news and entertainment content to Optimum video customers across television and streaming devices. Notably, the companies are facing threats from cord cutting i.e., loss of pay-TV subscribers to online video streaming providers such as Netflix Inc. (NASDAQ:NFLX) , Time Warner Inc.’s (NYSE:TWX) HBO Now, Hulu.com, YouTube etc. because of cheap source of TV programming.

The company also inked a multi-year deal with Amdocs Ltd. (NASDAQ:DOX) to expand their key business and operational support systems. In the quarter under review, the company also launched its new home entertainment hub — Altice One — to support significantly improved video, broadband and phone experience for customers.

Altice USA currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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