Shaw Communications Beats on Q2 Earnings, Revs - Analyst Blog

Shaw Communications Inc. SJR declared second-quarter fiscal 2014 financial results where both the top and the bottom line surpassed the respective Zacks Consensus Estimate.

Reported net income from continuing operations was $204.5 million, up 22% year over year. Earnings per share came in at 42 cents in the reported quarter as against 35 cents in the year-earlier quarter.

Moreover, earnings easily outpaced the Zacks Consensus Estimate of 38 cents. Quarterly total revenue rose 1.8% year over year to approximately $1,173.7 million and also above the Zacks Consensus Estimate of $1,169 million.

Quarterly operating income before amortization was around $486.4 million, down 1.9% from the year-ago quarter. Quarterly operating margin stood at 41.4% against 43% in the prior-year quarter. In the second quarter of fiscal 2014, Shaw Communications generated around $328.9 million of cash from operations, down 7.5% year over year. Free cash flow was $145.6 million, down 1.9% year over year.

At the end of second-quarter fiscal 2014, Shaw Communications had cash and marketable securities of $406.3 million and outstanding debt of $4,318.1 million compared with $388.8 million and $3,563.6 million, respectively, at the end of fiscal 2013. The debt-to-capitalization ratio at the end of second quarter of fiscal 2014 was 0.49 compared with 0.46 at the end of fiscal 2013.

Subscribers Statistics

As of Feb 28, 2014, the video customer base totaled 1,989,870, reflecting a net reduction of 20,758 customers in the reported quarter. With the addition of 12,767 customers in this quarter, the company's Internet customer base stands at 1,906,019. Digital phone lines were 1,369,386, reflecting a year-over-year net addition of 8,075 lines. The DTH customer base was 892,837, representing a quarterly net reduction of 1,405 customers.

Cable Segment

Quarterly revenues were $773 million, up 3.1% year over year. Quarterly operating income before amortization was $366.7 million, up 1.3% year over year.

Satellite Segment

Quarterly total revenue of $202.7 million was up 5.3% year over year.  The segment's quarterly operating income before amortization was $63.6 million, down 5.5% from the year-ago quarter.

Media Segment

Quarterly total revenue stood at $220.2 million, down 4% year over year. Operating income before amortization was $56.2 million, up 15.3% from the prior-year quarter.  

Financial Outlook

Management affirms its guidance for fiscal 2014 and expects both total revenue and operating income before amortization to grow 2–4% year over year. Free cash flow is projected in the range of $625–$650 million.

The company currently has a Zacks Rank #3 (Hold) and aggressively competes with Canadian telecom and cable MSOs, such as Rogers Communications Inc. RCI, Telus Corp. TU and BCE Inc. BCE.