Sprint Corp. (S) Offers Prelim. Q3 Results; Revenue Grew 3%, adj.-EBITDA Increased 17%

October 18, 2016 8:06 AM EDT

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Sprint Corp. (NYSE: S) disclosed the following on Tuesday:

Item 2.02 Results of Operations and Financial Condition.

Unaudited Preliminary Results for the Second Fiscal Quarter of 2016

Sprint Corporation (the “Company”) is currently in the process of finalizing its financial results for the three months ended September 30, 2016. Based on preliminary unaudited information and management estimates for the three months ended September 30, 2016, subject to the completion of its financial closing procedures and in conjunction with the pricing of the previously announced spectrum-backed notes offering, the Company is reporting the following preliminary financial results for the three months ended September 30, 2016:

Total net operating revenues of $8.25 billion grew 3 percent year-over-year and wireless net operating revenues of $7.85 billion grew nearly 5 percent year-over-year.

Net loss of $142 million in the quarter compared to a net loss of $585 million in the year-ago period. The current quarter included a non-cash after-tax gain of $218 million related to certain spectrum swaps with other carriers.

Operating income of $622 million in the quarter compared to an operating loss of $2 million in the year-ago quarter, an improvement of $624 million. The quarter included a pre-tax non-cash gain of $354 million related to certain spectrum swaps with other carriers.

Adjusted EBITDA of $2.35 billion in the quarter compared to $2.01 billion in the prior year quarter, an increase of approximately $340 million or 17 percent.

Net cash provided by operating activities was $1.71 billion in the quarter compared to $1.67 billion in the prior year.

Cash capital expenditures were $828 million, including $470 million for network and other and $358 million for leased devices.

Adjusted free cash flow was $707 million in the quarter compared to negative $100 million in the prior year.

Total Sprint platform net additions were 740,000 in the quarter, including postpaid net additions of 344,000, prepaid net losses of 427,000, and wholesale and affiliate net additions of 823,000.

Sprint platform postpaid results include 347,000 postpaid phone net additions, which doubled from the prior quarter and increased from 62,000 in the prior year – a more than 5x increase.

Total Sprint platform postpaid churn of 1.52 percent in the quarter improved by two basis points year-over-year, while postpaid phone churn of 1.37 percent was the lowest in company history and improved 12 basis points from the prior year quarter.

See “Non-GAAP Financial Information” below for a definition of adjusted EBITDA and adjusted free cash flow, a reconciliation of adjusted EBITDA and adjusted free cash flow to their nearest GAAP equivalents and information regarding the Company’s use of non-GAAP financial measures.

The Company is providing its preliminary results because its financial closing procedures for the three months ended September 30, 2016 are not yet complete. The above information was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to projected financial information, but, in the view of the Company’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the Company’s expectations for the three months ended September 30, 2016. Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the above information, nor have they expressed any opinion or any other form of assurance on such information, and assume no responsibility for, and disclaim any association with, the above information. In addition, the foregoing information is subject to revision as the Company completes its financial closing procedures for the three months ended September 30, 2016. The results and other disclosures for the three months ended September 30, 2016 may differ materially from the above information as a result of, among other things, the important factors discussed under “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2016 and amended on July 29, 2016, the Company’s other filings with the SEC and other public announcements that the Company may make, by press release or otherwise, from time to time.



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