Windstream Net Income Falls

Windstream Holdings first quarter financials reflected a rough start to the new fiscal year as the Little Rock-based telecom and network service company coped with adjustments for layoffs and continuing shifts in the telecommunications industry.

For the quarter ended March 31, 2014, revenue and sales topped $1.464 billion, down more than $31 million from the previous year when revenue stood at $1.496 billion. Net income dropped from $52.3 million one year ago to $16 million for the quarter.

Windstream had higher year-over-year costs in its sales and administrative expenses, depreciation and amortization, and merger and restructuring charges. It announced in February plans to downsize its workforce by 400, a move management said will eventually save the company about $20 million annually.

While business service revenue was flat, Windstream reported improving data service revenue. Data center and managed services revenue increased 23%, the company said.

“Total revenue trends improved both year-over-year and sequentially as wholesale pressures began to abate,” said Jeff Gardner, president and CEO. “We are very focused on improving business revenue trends and are taking many proactive steps to accelerate sales and strengthen our competitive position. In addition, we are investing in both the business and consumer network to drive growth opportunities and improve the customer experience.”

Other financial highlights for the quarter included:

• Carrier revenue was $162 million, down 3% from the same period a year ago;
• Consumer broadband service revenues in the first quarter were $120 million, up 2% from the same period in 2013; and
• Overall consumer service revenues in the first quarter were $313 million, a decrease of 4% from the same period a year ago.

Windstream said it deployed fiber to 95 wireless towers during the quarter, bringing the total number of towers completed to date to almost 4,600 with another 300 under construction. Fiber optic network construction has been a huge growth segment for Windstream.

Shares of Windstream Holdings (NASDAQ: WIN) closed trading on Wednesday (May 7) at $9.10. The company’s stock has traded between $7.18 and $9.23 per share during the past 52 weeks.

Windstream’s board of directors also declared a quarterly dividend of 25-cents per share on the company’s common stock. The dividend is payable July 15, 2014, to stockholders of record as of June 30, 2014.

Windstream also affirmed its previously provided financial guidance for 2014. Its guidance includes:

• Total revenue for the year within a range of a 2.5% decline to a 1% increase as compared to 2013 revenue;
• Adjusted capital expenditures ranging from $800 million to $850 million;
• Adjusted free cash flow of $775 million to $885 million; and
• An expected dividend payout ratio ranging from 68% to 78% for the year.