Frontier Communications (FTR) Incurs Q2 Loss, Revenues Lag

Frontier Communications Corporation FTR reported a narrower-than-expected loss in second-quarter 2018.

Top-Line and Bottom-Line Results

Frontier Communications reported an adjusted loss of 80 cents per share in the second quarter. Notably, the reported figure was narrower than the Zacks Consensus Estimate of a loss of 83 cents. Also, it was narrower than the loss of $1.10 per share incurred in the year-ago quarter.

In the reported quarter, revenues came in at $2,162 million, which lagged the Zacks Consensus Estimate of $2,171 million. Also, the top line was lower than the year-ago tally of $2,304 million.

Segmental Details

Revenues in the Customer segment were $2,065 million in the reported quarter, down 1.9% year over year.

Subsidy and other regulatory segments revenues came in at $97 million, down 51% year over year.

Frontier Communications Corporation Price, Consensus and EPS Surprise

 

Frontier Communications Corporation Price, Consensus and EPS Surprise | Frontier Communications Corporation Quote

Costs and Margins

Selling, general and administrative expenses came in at $460 million, down from $531 million recorded a year ago. Total operating expenses came in at $1,795 million, down from $2,679 million. Operating income was $367 million against an operating loss of $375 million in the prior-year quarter.

Operating margin was 17%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 110 basis points in the quarter to 40.9%.

Balance Sheet and Cash Flow

Exiting the second quarter, Frontier Communications had cash and cash equivalents of $384 million, up from $362 million as of Dec 31, 2017. Long-term debt summed $16,209 million, down from $16,970 million recorded at the end of 2017.

For the first six months of 2018, Frontier Communications generated $923 million cash from operating activities, higher than $829 million in the year-ago period. Total capital expenditure was $321 million compared with $263 million recorded in the prior-year quarter.

Outlook

For 2018, Frontier Communications continues to expect operating free cash flow to be around $800 million. Capital expenditures are expected to be in the range of $1,000-$1,150 million. Cash interest expenses are anticipated to be around $1.5 billion. The company expects to secure adjusted EBITDA of roughly $3.6 billion in 2018.

Zacks Rank & Other Key Picks

Frontier Communications currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same space are Ameren Corporation AEE, Atlantic Power Corporation AT and CenterPoint Energy, Inc. CNP. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren Corporation surpassed estimates thrice in the trailing four quarters with an average beat of 7.69%.

Atlantic Power exceeded estimates twice in the trailing four quarters with an average beat of 7.24%.

CenterPoint Energy surpassed estimates thrice in the trailing four quarters with an average beat of 17.06%.

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