Frontier Communications (FTR) Q3 Loss Narrower Than Expected

Frontier Communications Corporation FTR reported mixed third-quarter 2019 financial results, wherein revenues declined year over year but net loss narrowed. Notably, the company’s focus on cost efficiency programs, prudent capital investments and enhanced R&D efforts has optimized its business model.

Net Loss

For the September quarter, the company incurred net loss of $345 million or loss of $3.31 per share compared with loss of $426 million or loss of $4.11 per share a year ago. The loss was primarily attributable to goodwill impairment charges of $276 million and an additional $30 million loss on the anticipated sale of operations in Washington, Oregon, Idaho and Montana.

Adjusted net loss came in at $16 million or loss of 15 cents per share compared with net loss of $7 million or loss of 7 cents per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 47 cents.

Frontier Communications Corporation Price, Consensus and EPS Surprise

Frontier Communications Corporation Price, Consensus and EPS Surprise

Frontier Communications Corporation price-consensus-eps-surprise-chart | Frontier Communications Corporation Quote

Revenues

Quarterly revenues were $1,997 million compared with $2,126 million in the year-ago quarter. The decline was primarily due to lower revenues at Consumer and Commercial units. The top line missed the consensus estimate of $2,015 million.

Revenues from the Customer segment declined to $1,906 million from $2,031 million. This was due to lower revenues at Consumer and Commercial units. Consumer revenues were $1,024 million (down from $1,069 million) owing to lower voice and video services with net broadband loss of 71,000 units. Commercial revenues totaled $882 million (down from $962 million) due to decline in wholesale revenues, legacy data products, Ethernet and lower voice services. Subsidy revenues fell to $91 million from $95 million.

Other Details

Total operating expenses were $1,971 million, down from $2,159 million due to lower network expenses and goodwill impairment charges. Operating income was $26 million against operating loss of $33 million recorded in the prior-year quarter.

Adjusted EBITDA totaled $804 million compared with $878 million a year ago, reflecting a margin of 40.3% and 41.3%, respectively. The decline was primarily due to lower revenues, and increase in accounts receivable reserves and adjusted operating expenses.

Cash Flow & Liquidity

During the first nine months of 2019, Frontier Communications generated $1,103 million of net cash from operating activities compared with $1,209 million in the prior-year period.

As of Sep 30, 2019, the company had $683 million in cash and equivalents with $16,305 million of long-term debt. At the quarter end, Frontier Communications’ leverage ratio was 4.81:1. It remains committed to reducing debt and improving its leverage position.

Zacks Rank & Other Stocks to Consider

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

Some other top-ranked stocks in the broader industry are AquaVenture Holdings Ltd. WAAS and Clean Energy Fuels Corp. CLNE, both sporting a Zacks Rank #1 (Strong Buy) and Atmos Energy Corporation ATO, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AquaVenture delivered average positive earnings surprise of 20% in the trailing four quarters, beating estimates thrice.

Clean Energy delivered average positive earnings surprise of 4.2% in the trailing four quarters, beating estimates twice.

Atmos Energy delivered average positive earnings surprise of 5.4% in the trailing four quarters, beating estimates thrice.

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