Shaw Communications (SJR) Misses Q4 Earnings, Beats Revenue

Shaw Communications Inc. SJR reported mixed financial results in the fourth quarter of fiscal 2016 (ended Aug 31, 2016), with the bottom line lagging the Zacks Consensus Estimate and the top line beating the same. This Zacks Rank #4 (Sell) company competes with cable multi-service operators like BCE Inc. (TO:BCE) , TELUS Corp. (NYSE:TU) and Rogers Communications Inc. (NYSE:RCI) in Canada.

Adjusted earnings per share came in at 22 cents in the quarter, down 21.4% year over year and also below the Zacks Consensus Estimate of 23 cents. GAAP net income from continuing operations was nearly $110 million, down 41.7% year over year.

Meanwhile, total revenue in the quarter declined 13.4% year over year to $1002 million. However, the figure beat the Zacks Consensus Estimate of $985 million.

Quarterly operating income before restructuring costs and amortization was around $421.9 million, up 4.6% from the year-ago quarter. Quarterly operating margin stood at 42% compared with 46.4% in the year-ago quarter. In the reported quarter, Shaw Communications generated around $359.8 million of cash from operations, up 6.1% year over year.

At the end of fourth-quarter fiscal 2016, Shaw Communications had cash and total outstanding debt of $310.7 million and $4,409 compared with $304.7 million and $5,357.7 million, respectively, at the end of fiscal 2015. The debt-to-equity ratio stood at 0.91, compared with 1.24 at the end of fiscal 2015.

Subscriber Statistics (As of Aug 31, 2016)

At the Consumer segment, the video cable customer base totaled 1,671,059 , reflecting a net reduction of 22,171 customers in the quarter under review. Video satellite customer count decreased by 6,332 to 790,574. Meanwhile, with the increase of 265 customers in the quarter, the company's Internet base now stands at 1,787,642. Digital phone lines grossed 956,763, reflecting a sequential reduction of 18,942 lines.

For the Business Network Service segment, the video cable customer base totaled 61,153, marking a net loss of 5,483 customers in the quarter. Video satellite customers decreased by 193 to 30,994. Meanwhile, the company gained 2,434 Internet customers in the reported quarter, taking the tally to 179,867. Digital phone lines grossed 301,328, reflecting a sequential addition of 4,832 lines.

Last year, Shaw Communications acquired a 100% interest in Mid-Bowline Group Corp., the parent company of WIND Mobile, for an enterprise value of approximately C$1.6 billion (around $1.16 billion). For the new Wireless segment, the total number of postpaid subscribers was 667,028 while the number of prepaid customers stood at 376,260.

Consumer Segment

Quarterly revenues grossed $720 million, flat year over year. Quarterly operating income before restructuring costs and amortization came in at $320.7 million, down 1.1% year over year.

Business Network Services Segment

Quarterly total revenue from the division was $106.4 million, up 5.4% year over year. Meanwhile, the segment’s quarterly operating income before restructuring costs and amortization was $70 million, up 3.5% year over year.

Business Infrastructure Services Segment

Quarterly total revenue stood at $66 million, up 35.8% year over year while operating income before restructuring costs and amortization was $24.6 million, up 29.5% year over year.

Wireless Service Segment

Quarterly revenues from the newly acquired wireless segment stood at $113.54 million while operating income before restructuring costs and amortization was $22 million.

Financial Outlook

For fiscal 2017, Shaw Communications expects operating income before restructuring costs and amortization for Consumer, Business Network Services Business Infrastructure Services and Wireless Services, combined, to range between $1.63 billion and $1.67 billion and free cash flow is likely to exceed $400 million. Meanwhile, consolidated capital investment for all divisions (including WIND) combined is projected at around $1 billion.

SHAW COMMS-CL B Price, Consensus and EPS Surprise

SHAW COMMS-CL B Price, Consensus and EPS Surprise | SHAW COMMS-CL B Quote

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