Altice USA, Inc. ATUS reported relatively modest second-quarter 2022 results, wherein the bottom line and top line beat the respective Zacks Consensus Estimate despite declining year over year. The company has been accelerating the pace of network rollouts and expects to better connect with customers with its rebranding campaign, thereby reporting improved performances in the long run.
Net income in the quarter declined to $106.2 million or 23 cents per share from $197.7 million or 43 cents per share in the prior-year quarter, primarily due to top-line contraction. Adjusted net income in the reported quarter was 35 cents per share, which beat the Zacks Consensus Estimate by a couple of cents.
Altice USA, Inc. Price, Consensus and EPS Surprise
Altice USA, Inc. price-consensus-eps-surprise-chart | Altice USA, Inc. Quote
Quarterly total revenues slipped to $2,463 million from $2,516 million in the prior year, owing to lower contribution from residential business due to a challenging macroeconomic environment. The top line, however, beat the consensus estimate of $2,450 million.
The company made progress in its growth strategies by accelerating network enhancement and customer experience. It plans to bring 100% fiber broadband to more than two-thirds of its footprint over the next four years to reach a total of 6.5 million FTTH (Fiber to the home) passings by the end of 2025. At quarter-end, Altice had 1.59 million FTTH passings, about 270,000 of which were added in the quarter. Broadband-only customer usage averaged 578 GB per month. FTTH broadband net additions were more than 23,000 in the quarter, led by increased migrations of existing customers. Total fiber broadband customers reached 104,000 by the end of the quarter, with 6.6% customer penetration of the FTTH network. Residential revenue per customer relationship declined 1.5% year over year to $140.13 due to the loss of higher ARPU video customers.
Residential revenues (which include Broadband, Video and Telephony) were $1,928.8 million, down 3% year over year due to a loss in customers of 48,000 residential customer relationships and a broadband net loss of 40,000. Business services and wholesale revenues remained relatively flat at $371.5 million. News and Advertising revenues were $133.2 million, up 1.1% driven by strength in the travel, entertainment and sports betting segments.
Other Quarterly Details
Operating income declined to $521.7 million from $626.8 million in the year-ago quarter. Adjusted EBITDA was $1,007.1 million compared with $1,104.6 million in the prior-year quarter. Altice rebranded its national mobile service dubbed Altice Mobile to Optimum Mobile, as part of its effort to align all the services under a single national Optimum brand. The rechristened Optimum Mobile witnessed healthy subscriber growth during the quarter, reaching 231,000 customers, representing 5.1% penetration of the residential customer base.
Cash Flow & Liquidity
Altice generated $676.3 million of cash from operating activities in the quarter compared with $729.5 million in the prior year, bringing the tallies for the first half of 2022 and 2021 to $1,276.6 million and $1,479.2 million, respectively. Free cash flow was $191.2 million, down 53% year over year. As of Jun 30, 2022, the company’s cash and cash equivalents totaled $233.2 million with net debt of $24,464 million.
Zacks Rank & Stocks to Consider
Altice currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Sell) stocks here.
TESSCO Technologies Incorporated TESS, sporting a Zacks Rank #1, delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 49.4% since August 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Ooma Inc. OOMA, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 34.7%, on average, in the trailing four quarters. Earnings estimates for Ooma for the current year have moved up 5.4% since March 2022.
Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.
Harmonic Inc. HLIT, carrying a Zacks Rank #2, delivered an earnings surprise of 79.8%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 17.1% since February 2022.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.
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