Shaw Communications (SJR) Tops Q4 EPS by 10c, Revenues Beat

Shaw Communications (NYSE: SJR) reported Q4 EPS of $0.32, $0.10 better than the analyst estimate of $0.22. Revenue for the quarter came in at $1.35 billion versus the consensus estimate of $1.01 billion.

• Record Wireless net subscriber additions of 90,700 in the fourth quarter resulting in over 266,000 new customers during the year
• Wireless revenue exceeds $1 billion in fiscal 2019 and Wireless operating income before restructuring and amortization grows 45% year-over-year to over $205 million
• Continued growth in Broadband customers, including 11,400 Consumer Internet additions in the fourth quarter, and delivery of efficiency initiatives, lead to solid Wireline results for the year and a 90-basis point improvement in operating margin to 45.5%
• Adjusted fiscal 2019 results in line with guidance, including consolidated operating income before restructuring costs and amortization growth of 6.3% year-over-year and free cash flow of approximately $570 million
• Company releases fiscal 2020 guidance, including consolidated operating income before restructuring costs and amortization growth to range between 11% - 12%, capital investment of approximately $1.1 billion and free cash flow of approximately $700 million

“In all areas across our organization, we made significant progress in fiscal 2019. We have firmly established Freedom Mobile as the industry innovator and recognized champion of wireless affordability for Canadians. Through years of thoughtful and strategic capital investing, we have built a high quality, facilities-based wireless network that is capable of meeting the evolving needs of our customers and continuing to fuel Freedom’s momentum,” said Brad Shaw, Chief Executive Officer. “In our Wireline business, we have cemented our status as a technology leader with our BlueCurve and SmartSuite products. Throughout our digital transformation, we have made it easier to interact with our customers and to self-install our services. We also continue to work hard to streamline and simplify manual processes that improve the customer experience and day-to-day operations for our employees. This focus has played an instrumental role in executing our overall VDP program, which is approximately 70% complete as at the end of fiscal 2019.”

In the fourth quarter, Freedom Mobile delivered the strongest period of customer growth in company history, adding a record 90,700 new customers during the highly competitive back-to-school season. Subscriber momentum is attributable to the continued success of our Big Gig data plans, further complemented by the newly launched Big Gig Unlimited and Absolute Zero campaigns. Throughout the year, the Company continued to materially improve the customer network experience with the deployment of 700 MHz spectrum, with approximately 70% of the build complete in Western Canada, resulting in significant postpaid churn improvement of 22-basis points to 1.32% in fiscal 2019. In addition, Freedom Mobile launched 19 new wireless markets in Alberta, British Columbia and Ontario covering an additional population of 1.4 million Canadians.

In the Wireline segment, Consumer added approximately 35,000 Internet customers in fiscal 2019, including 11,400 net additions in the fourth quarter. The Company continues to expand its IPTV service, which is now available in approximately 70% of its footprint, and expects to complete the roll out over the next several months. Business segment revenue grew approximately 5% for the year to nearly $600 million primarily due to continued growth of SmartSuite services and the launch of new products in fiscal 2019. Effective August 1, 2019 Shaw Business sold its Calgary-1 data center and will continue to focus on growing its market share.

Mr. Shaw continued, “In an industry that remains competitive, with increasing regulatory uncertainty, we delivered solid fiscal 2019 results and improved execution. On an adjusted basis we achieved our targets for the year, including strong free cash flow, underpinning our overall strategy to deliver long term, sustainable growth.”

For earnings history and earnings-related data on Shaw Communications (SJR) click here.

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