Windstream, Deltic Timber report income declines

by The City Wire staff ([email protected]) 121 views 

Windstream Corp. produced fourth quarter and full-year financials that resembled the Clint Eastwood classic — “The Good, The Bad & The Ugly.”

The results were only slightly better for El Dorado-based Deltic Timber.

Little Rock-based Windstream, which began as a traditional phone line company in a spin-off from the former Alltel, recorded another quarter of lower comparable profits, but improving revenues as it transitions into more broadband, data management and fiber optic offerings. It was the fourth straight quarter of revenue growth for the firm.

Windstream reported a fourth quarter loss of $31.9 million on revenue of $1.21 billion. One year ago, the company recorded a profit of $56.5 million on revenue of $980.6 million.

Several one-time items affected the company’s bottom line in the fourth quarter. Windstream took an after-tax non-cash pension charge of $103 million. It also incurred $30 million in after-tax losses related to its buyout of New York-based PAETEC.

For the full year, Windstream’s revenue jumped 15% to $4.286 billion with net income topping $172.3 million. Profits are down 45% from $312.7 million one year ago. Earnings per share for 2011 were 33 cents versus 66 cents per share in 2010.

Company CEO Jeff Gardner has consistently reminded investors that his firm is going through short-term pain for long-term gain. He likes where the telecom and data provider is positioned during its transformation.

Windstream has spent the better part of two years shifting its revenue model from declining home landline service to more lucrative home and business broadband connections. With company capital and hundreds of millions of dollars of stimulus broadband funding, Windstream has been building out networks in rural parts of its footprint to offer higher speed Internet access to underserved communities.

It has also rolled up several major acquisitions that have expanded its data hosting capabilities for business customers, now offering 21 data centers throughout the U.S. The data centers allow Windstream to offer business customers managed data and cloud computing services.

The company has beefed up its “fiber-to-tower” offerings. Fiber optic cabling is the infrastructure backbone that carries data from cell towers across regional and national networks.

“Together we are a much stronger company with an expansive fiber network, an attractive product portfolio and an outstanding business sales team, positioning Windstream for success in the enterprise space on a national level,” Gardner said.

The company expects to generate a one-time gain of $55 million in the first quarter of 2012 from the sale of two segments of spectrum related to the PAETEC merger.

Windstream shares (NYSE: WIN) closed Wednesday at $12.12, down 35 cents. In the last year, Windstream shares have floated between a $10.76 low and a $13.57 high.

Deltic Timber Corp. posted a $208,000 fourth quarter net loss, but pulled a full year profit of $2.66 million, down from $12.4 million one year ago.

The El Dorado-based timber and real estate firm blamed tough housing market conditions for its poor fourth quarter and declining year.

“Despite the continued weak markets for dimension lumber and residential real estate caused by the low level of housing starts and excess single family homes for sale in the United States, Deltic’s excellent portfolio of assets produced both positive net income and respectable cash flows for yet another year,” said CEO Ray Dillon. “We did not sell all of the hardwood bottomland acreage planned for 2011, as we kept this sales activity at the level the market would absorb, while maintaining the average sales price received per acre.”

“Having our Mills segment generate positive operating income in this lumber market environment was quite an accomplishment. The slight loss for the fourth quarter was largely the result of timing. Good logging conditions existed for much of the year and allowed us to complete a large percentage of our annual timber harvest in the first three quarters of the year, and we closed on the sale of a significant commercial real estate site back in the second quarter,” Dillon added.

Lightly-traded shares of Deltic Timber closed Wednesday down $3.20 to $66.35. The company’s shares have traded as low as $46.89 and as high as $76.03 in the last year.