DirecTV Q1 Profit Up 30%, But Results Miss View

(RTTNews) - DirecTV Inc. (DTV), which is being acquired by AT&T Inc. (T), on Tuesday reported a 30 percent increase in profit for the first quarter from last year on higher revenues and subscriber additions at its U.S. segment. However, results for the quarter missed analysts' estimates.

DirecTV provides digital television entertainment to more than 39 million customers primarily in the U.S. and Latin America.

Mike White, president and CEO of DirecTV said, "Our U.S. business generated another strong quarter of results, further demonstrating our company's strong execution, as well as product and brand leadership. In the quarter, our focus on high-quality new customers combined with an improving economy to enable our lowest first quarter churn rate in six years."

El Segundo, California-based DirecTV reported net income for the first quarter of $730 million or $1.44 per share, up from $561 million or $1.09 per share in the year-ago period.

Adjusted earnings for the quarter were $1.44 per share, compared to $1.63 per share last year. On average, nineteen analysts polled by Thomson Reuters expected the company to report earnings of $1.53 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's adjusted earnings reflect lower adjusted operating profit as well as a $31 million pre-tax non-cash loss associated with the revaluation of U.S. dollar denominated net liabilities in Brazil. This compared to a $6 million gain in the prior year period. These declines were partially offset by the impact of lower tax expense.

Total revenues for the quarter increased 4 percent to $8.14 billion from $7.86 billion in the same quarter last year. Analysts were looking for revenue of $8.15 billion.

The increase in revenues for the quarter were due to strong ARPU growth at DirecTV U.S. The company said it added a total of 279,000 net new subscribers in the quarter.

DirecTV U.S. revenues grew 6 percent from a year ago to $6.46 billion, due to strong average monthly revenue per subscriber or ARPU growth of 5.5 percent to $105.62, and a larger subscriber base.

DirecTV U.S. ended the quarter with 20.41 million subscribers after net subscriber additions of 60,000 during the quarter, compared to 12,000 subscribers added in the year-ago quarter. The increase in customer additions in the latest quarter was driven by the lowest first-quarter average monthly churn rate in six years of 1.37 percent.

Revenues for DirecTV Latin America, which owns about 93 percent of Sky Brasil, 41 percent of Sky Mexico and 100 percent of PanAmericana, declined 5 percent from the year-ago period to $1.64 billion.

DirecTV Latin America ended the quarter with 12.69 million subscribers after net subscriber additions of 219,000 during the quarter that slowed from 361,000 subscribers added in the prior-year quarter.

DirecTV's operating profit margin for the quarter expanded 140 basis points from last year to 17 percent.

Total operating costs and expenses for the quarter increased 2 percent from last year to $6.76 billion.

Looking ahead, White said, "We remain confident that our transaction with AT&T will close in the second quarter, and we are excited to carry our strong operating momentum forward to help create a unique new market leading company."

DTV closed Monday's trading at $90.39. In Tuesday's pre-market, the stock is down $0.49 or 0.54 percent to $89.90.