Shaw Communications Q3 Profit Declines, Results Miss View

(RTTNews) - Diversified Canadian communications company Shaw Communications, Inc. (SJR, SJR.B.TO) on Thursday reported an 8 percent decline in profit for the third quarter from last year, as higher revenues were more than offset by restructuring expenses.

Both revenues and earnings per share for the quarter missed analysts' expectations. However, the company raised its outlook for fiscal 2014 free cash flow.

The Calgary-based company reported net income attributable to equity shareholders for the third quarter of C$219 million or C$0.47 per share, down from C$239 million or C$0.52 per share in the prior-year quarter.

On average, analysts polled by Thomson Reuters expected the company to report earnings of C$0.49 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results reflect lower amortization and interest expense partly offset by restructuring expenses, while lower income taxes was more than offset by the gain on sale of certain cable assets in the year-ago quarter.

However, consolidated revenue for the quarter increased 1 percent to C$1.34 billion from C$1.33 billion in the same quarter last year. Analysts had a consensus revenue estimate of C$1.36 billion for the quarter.

Revenues for the cable division for the quarter increased 2 percent to C$845 million, driven by pricing adjustments and growth in the Business unit, including the Envision acquisition. These were partly offset by lower video subscribers and the divestiture of Mountain Cable.

Satellite division revenues edged up less than 1 percent from last year to C$220 million, primarily due to rate increases, partially offset by customer declines, higher expenses including operating costs related to the new Anik G1 satellite and programming expenses.

However, revenue for the media division declined 2 percent to C$301 million, primarily due to the impact of the disposition of French-language channels Historia and Series+ effective January 1, 2014 and lower advertising revenues. These were partially offset by increased subscriber revenues.

The company's total operating income before restructuring costs and amortization for the quarter rose 3 percent from the year-ago quarter to C$601 million, while operating margin expanded 70 basis points to 44.8 percent from last year.

Funds flow from operations declined 10 percent from the year-ago period to C$393 million.

During the third quarter, video subscribers decreased 12,075 or 0.6 percent to 1.98 million. However, Internet customers grew 12,399 or 0.7 percent to 1.92 million, and digital phone lines increased 4,834 or 0.4 percent to 1.37 million. Meanwhile, DTH customers decreased 5,608 or 0.6 percent to 0.89 million.

Looking ahead to fiscal 2014, Shaw Communications reiterated its outlook for 2 to 4 percent growth in consolidated revenue and operating income before amortization, after adjusting for the net impact of fiscal 2013 acquisition and disposition activity.

The company now expects free cash flow to exceed C$650 million, compared to the prior range of C$625 million to C$650 million.

Shaw continues to expect a marginal decline in capital investment, excluding capital investment funded through the accelerated capital fund, and an increase in cash taxes.

SJR closed Wednesday's regular trading session at $24.60, up $0.15 or 0.61 percent on a volume of 759,925 shares.

On the Toronto Stock Exchange, SJR.B.TO closed Wednesday's trading at C$26.35, up C$0.10 or 0.38 percent on a volume of 1.10 million shares.