MONROE, La., May 4, 2016 /PRNewswire/ — CenturyLink, Inc. (NYSE:CTL, news, filings) today reported results for first quarter 2016.
“CenturyLink achieved another solid quarter, with core revenues, operating cash flow and adjusted diluted earnings per share in-line with our previous guidance,” said Glen F. Post III, chief executive officer and president. “Additionally, since the first of the year, we have completed two debt issuances totaling more than $1.2 billion, which strengthens our ability to invest in our business while returning cash to shareholders.
“We remain on track with our data centers and colocation business strategic alternatives process and are pleased with the level of interest and progress to date. We continue to focus on leveraging our strategic asset portfolio and financial strength to execute on our operational initiatives and better serve our customers,” Post concluded.
First Quarter 2016 Highlights
- Achieved core revenues of approximately $4.0 billion.
- Grew revenue from high-bandwidth data services provided to Business customers, including MPLS(4) and Ethernet, by more than 7% year-over-year and revenue from Consumer strategic(5) services by approximately 5% year-over-year.
- Generated free cash flow of $824 million, excluding special items.
- Added more than 16,900 CenturyLink® PrismTM TV customers during first quarter 2016, ending the period with approximately 302,000 customers.
- Ended the quarter with approximately 6.1 million high-speed Internet customers, an increase of approximately 7,800 customers in first quarter 2016.
- Announced placement of approximately $1.2 billion of debt to refinance substantially all 2016 debt maturities.
Consolidated Financial Results
Operating revenues for first quarter 2016 were $4.40 billion compared to $4.45 billion in first quarter 2015. Declines in voice and long distance revenues, low-bandwidth data services revenues and data integration revenues were partially offset by the increases in Business high-bandwidth data services revenues, Consumer high-speed Internet and PrismTM TV revenues and high-cost support revenues related to Connect America Fund Phase 2 (CAF Phase 2) support in first quarter 2016.
Operating expenses, excluding special items, decreased to $3.69 billion from $3.76 billion in first quarter 2015. The year-over-year decrease was primarily driven by lower depreciation and amortization expenses and employee-related expenses.
Operating cash flow (as defined in our attached supplemental schedules), excluding special items, decreased to $1.69 billion from$1.74 billion in first quarter 2015. For first quarter 2016, CenturyLink achieved an operating cash flow margin, excluding special items, of 38.4% versus 39.0% in first quarter 2015.
Adjusted Net Income and Adjusted Diluted Earnings Per Share (EPS) exclude the after-tax impact of special items, the non-cash after-tax impact of the amortization of certain intangible assets related to major acquisitions since mid-2009, and the non-cash after-tax impact to interest expense relating to the assignment of fair value to the outstanding debt assumed in connection with those acquisitions. Excluding these items, CenturyLink’s Adjusted Net Income for first quarter 2016 was $386 million compared to Adjusted Net Income of $375 million in first quarter 2015. First quarter 2016 Adjusted Diluted EPS was $0.71 compared to $0.67 in the year-ago period due to the higher Adjusted Net Income and the impact of the lower number of shares outstanding due to share repurchases in 2015. See the attached schedules for additional information.
GAAP Results – First Quarter
Under generally accepted accounting principles (GAAP), net income for first quarter 2016 was $236 million compared to a net income of $192 million for first quarter 2015, and diluted earnings per share was $0.44 for first quarter 2016 compared to $0.34 for first quarter 2015.
Additional details regarding the company’s special items for the three months ended March 31, 2016 and 2015 are provided in the accompanying financial schedules.
Segment Financial Results6
Business
The Business segment continued to experience solid demand for high-bandwidth data services in first quarter 2016.
- High-bandwidth data services revenues from Business customers grew more than 7% year-over-year.
- Strategic revenues were $1.58 billion in the quarter, flat from first quarter 2015, primarily due to increased high-bandwidth data services revenues offset by continued declines in low-bandwidth data services and hosting revenues.
- Total segment revenues were $2.60 billion, a decrease of 3.4% from first quarter 2015, primarily due to declines in legacy services, low-bandwidth data services and data integration revenues, which were partially offset by growth in high-bandwidth data services revenues.
Consumer
The Consumer segment achieved solid year-over-year strategic revenue growth driven primarily by increased high-speed Internet and CenturyLink® PrismTM TV revenues.
- Total segment revenues were $1.49 billion for first quarter 2016, a slight decrease of 0.5% from first quarter 2015.
- Strategic revenues were $774 million in the quarter, a 4.9% increase over first quarter 2015.
- Approximately 16,900 CenturyLink® PrismTM TV customers were added during first quarter 2016; added nearly 150,000 addressable homes in new and existing service areas, ending the quarter with more than 3.3 million addressable homes.
Guidance – Second Quarter 2016
CenturyLink expects second quarter 2016 operating revenues to be in-line with first quarter 2016 operating revenues primarily due to anticipated growth in data integration, high-bandwidth data services, high-speed Internet and Prism TV revenues being offset by expected declines in legacy and low-bandwidth data services revenues. The company expects second quarter 2016 operating cash flow to decrease compared to first quarter 2016 primarily due to expected higher seasonal cash expenses.
Second Quarter 2016 (excluding special items)
|
Operating Revenues |
$4.38 to $4.43 billion |
|
|
Core Revenues |
$3.94 to $3.99 billion |
|
|
Operating Cash Flow |
$1.59 to $1.64 billion |
|
|
Adjusted Diluted EPS |
$0.57 to $0.62 |
During first quarter 2016, CenturyLink revised its free cash flow calculation to include the cash impact of pension/other post-employment benefit costs as well as stock-based compensation. The company believes this calculation provides additional detail and insight into CenturyLink’s ongoing cash requirements. Although the inclusion of these items in the free cash flow calculation is anticipated to result in a slightly lower level of free cash flow for 2016, CenturyLink still expects to generate full-year 2016 free cash flow within the previously provided guidance range of $1.8 billion to $2.0 billion.
All 2016 guidance figures and 2016 outlook statements included in this release (i) speak as of May 4, 2016 only, (ii) exclude the impact of any share repurchases made after March 31, 2016 and (iii) exclude the effects of special items, future impairment charges, future changes in regulation (including changes in the CAF Phase 2 program), future changes in tax laws, accounting rules or our accounting policies, unforeseen litigation or contingencies, integration expenses associated with major acquisitions, any changes in our expected pension fundings, any changes in operating or capital plans or other unforeseen events or circumstances that impact our financial performance, and any future mergers, acquisitions, divestitures, joint ventures or other similar business transactions. See “Forward Looking Statements” below. For additional information on how we define certain of the terms used above, see the attached schedules.
Investor Call
As previously announced, CenturyLink’s management will host a conference call at 4:00 p.m. Central Time today, May 4, 2016. Interested parties can access the call by dialing 866-814-1933. The call will be accessible for replay through May 12, 2016, by dialing 888-266-2081 and entering the access code 1670691. Investors can also listen to CenturyLink’s earnings conference call and webcast replay by accessing the Investor Relations portion of the company’s website at http://www.centurylink.com through May 27, 2016. Financial, statistical and other information related to the call will also be posted to our website.
Reconciliation to GAAP
This release includes certain non-GAAP financial measures, including but not limited to operating cash flow, free cash flow, core revenues, Adjusted Net Income, Adjusted Diluted EPS and adjustments to GAAP measures to exclude the effect of special items. In addition to providing key metrics for management to evaluate the company’s performance, we believe these measurements assist investors in their understanding of period-to-period operating performance and in identifying historical and prospective trends. Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the attached financial schedules. Reconciliation of additional non-GAAP financial measures that may be discussed during the earnings call described above will be available in the Investor Relations portion of the company’s website at www.centurylink.com. Investors are urged to consider these non-GAAP measures in addition to, and not in substitution for, measures prepared in accordance with GAAP.
About CenturyLink
CenturyLink (NYSE: CTL) is a global communications, hosting, cloud and IT services company enabling millions of customers to transform their businesses and their lives through innovative technology solutions. CenturyLink offers network and data systems management, Big Data analytics and IT consulting, and operates more than 55 data centers in North America, Europe and Asia. The company provides broadband, voice, video, data and managed services over a robust 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network. Visit www.centurylink.com for more information.
Forward Looking Statements
Except for historical and factual information, the matters set forth in this release and other of our oral or written statements identified by words such as “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends,” and similar expressions are forward-looking statements as defined by the federal securities laws, and are subject to the “safe harbor” protections thereunder. These forward-looking statements are not guarantees of future results and are based on current expectations only, are inherently speculative, and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected, or implied by us if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the effects of competition from a wide variety of competitive providers, including lower demand for our legacy offerings; the effects of new, emerging or competing technologies, including those that could make our products less desirable or obsolete; the effects of ongoing changes in the regulation of the communications industry, including the outcome of regulatory or judicial proceedings relating to intercarrier compensation, interconnection obligations, access charges, universal service, broadband deployment, data protection and net neutrality; our ability to effectively adjust to changes in the communications industry and changes in the composition of our markets and product mix; possible changes in the demand for, or pricing of, our products and services, including our ability to effectively respond to increased demand for high-speed broadband service; our ability to successfully maintain the quality and profitability of our existing product and service offerings and to introduce new offerings on a timely and cost-effective basis; the adverse impact on our business and network from possible equipment failures, service outages, security breaches or similar events impacting our network; our ability to generate cash flows sufficient to fund our financial commitments and objectives, including our capital expenditures, operating costs, share repurchases, dividends, pension contributions and debt payments; changes in our operating plans, corporate strategies, dividend payment plans or other capital allocation plans, whether based upon changes in our cash flows, cash requirements, financial performance, financial position, or otherwise; our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; increases in the costs of our pension, health, post-employment or other benefits, including those caused by changes in markets, interest rates, mortality rates, demographics or regulations; adverse changes in our access to credit markets on favorable terms, whether caused by changes in our financial position, lower debt credit ratings, unstable markets or otherwise; our ability to maintain favorable relations with our key business partners, suppliers, vendors, landlords and financial institutions; our ability to effectively manage our expansion opportunities; our ability to collect our receivables from financially troubled customers; any adverse developments in legal or regulatory proceedings involving us; changes in tax, communications, pension, healthcare or other laws or regulations, in governmental support programs, or in general government funding levels; the effects of changes in accounting policies or practices, including potential future impairment charges; the effects of adverse weather or other natural or man-made disasters; the effects of more general factors such as changes in interest rates, in operating costs, in general market, labor, economic or geo-political conditions, or in public policy; and other risks referenced from time to time in our filings with the U.S. Securities and Exchange Commission (the “SEC”). For all the reasons set forth above and in our SEC filings, you are cautioned not to place undue reliance upon any of our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any of our forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, existing regulatory, technological, industry, competitive, economic and market conditions, and our assumptions as of such date. We may change our intentions, strategies or plans without notice at any time and for any reason.
(1) Core revenues defined as strategic revenues plus legacy revenues (excludes data integration and other revenues), as described further in the attached schedules.
(2) See attachments for non-GAAP reconciliations.
(3) Starting 1Q16, CenturyLink has revised its Free Cash Flow calculation for the reasons noted below. See attachments for non-GAAP reconciliations.
(4) Multi-Protocol Label Switching
(5) Beginning first quarter 2015, certain revenues were reclassified between strategic services and legacy services. All historical periods have been restated to reflect this change.
(6) All references to segment data herein reflect certain adjustments described in the attached schedules.
|
CenturyLink, Inc. |
|||||||||||||||||||||||||
|
CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||||||||||||
|
THREE MONTHS ENDED MARCH 31, 2016 AND 2015 |
|||||||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||||||
|
(Dollars in millions, except per share amounts; shares in thousands) |
|||||||||||||||||||||||||
|
Three months ended March 31, 2016 |
Three months ended March 31, 2015 |
||||||||||||||||||||||||
|
As adjusted |
As adjusted |
Increase |
|||||||||||||||||||||||
|
excluding |
excluding |
(decrease) |
|||||||||||||||||||||||
|
Less |
special |
Less |
special |
Increase |
excluding |
||||||||||||||||||||
|
As |
special |
items |
As |
special |
items |
(decrease) |
special |
||||||||||||||||||
|
reported |
items |
(Non-GAAP) |
reported |
items |
(Non-GAAP) |
as reported |
items |
||||||||||||||||||
|
OPERATING REVENUES |
|||||||||||||||||||||||||
|
Strategic |
$ |
2,354 |
— |
2,354 |
2,320 |
— |
2,320 |
1.5 |
% |
1.5 |
% |
||||||||||||||
|
Legacy |
1,623 |
— |
1,623 |
1,734 |
— |
1,734 |
(6.4) |
% |
(6.4) |
% |
|||||||||||||||
|
Data integration |
116 |
— |
116 |
140 |
— |
140 |
(17.1) |
% |
(17.1) |
% |
|||||||||||||||
|
Other |
308 |
— |
308 |
257 |
— |
257 |
19.8 |
% |
19.8 |
% |
|||||||||||||||
|
Total operating revenues |
4,401 |
— |
4,401 |
4,451 |
— |
4,451 |
(1.1) |
% |
(1.1)% |
||||||||||||||||
|
OPERATING EXPENSES |
|||||||||||||||||||||||||
|
Cost of services and products |
1,900 |
2 |
(1) |
1,898 |
1,911 |
3 |
(3) |
1,908 |
(0.6) |
% |
(0.5) |
% |
|||||||||||||
|
Selling, general and administrative |
831 |
18 |
(1) |
813 |
851 |
43 |
(3) |
808 |
(2.4) |
% |
0.6 |
% |
|||||||||||||
|
Depreciation and amortization |
976 |
— |
976 |
1,040 |
— |
1,040 |
(6.2) |
% |
(6.2) |
% |
|||||||||||||||
|
Total operating expenses |
3,707 |
20 |
3,687 |
3,802 |
46 |
3,756 |
(2.5) |
% |
(1.8) |
% |
|||||||||||||||
|
OPERATING INCOME |
694 |
(20) |
714 |
649 |
(46) |
695 |
6.9 |
% |
2.7 |
% |
|||||||||||||||
|
OTHER INCOME (EXPENSE) |
|||||||||||||||||||||||||
|
Interest expense |
(331) |
— |
(331) |
(328) |
(328) |
0.9 |
% |
0.9 |
% |
||||||||||||||||
|
Other income, net |
17 |
— |
17 |
2 |
— |
2 |
750.0 |
% |
750.0 |
% |
|||||||||||||||
|
Income tax expense |
(144) |
8 |
(2) |
(152) |
(131) |
12 |
(4) |
(143) |
9.9 |
% |
6.3 |
% |
|||||||||||||
|
NET INCOME |
$ |
236 |
(12) |
248 |
192 |
(34) |
226 |
22.9 |
% |
9.7 |
% |
||||||||||||||
|
BASIC EARNINGS PER SHARE |
$ |
0.44 |
(0.02) |
0.46 |
0.34 |
(0.06) |
0.40 |
29.4 |
% |
15.0 |
% |
||||||||||||||
|
DILUTED EARNINGS PER SHARE |
$ |
0.44 |
(0.02) |
0.46 |
0.34 |
(0.06) |
0.40 |
29.4 |
% |
15.0 |
% |
||||||||||||||
|
AVERAGE SHARES OUTSTANDING |
|||||||||||||||||||||||||
|
Basic |
538,799 |
538,799 |
561,969 |
561,969 |
(4.1) |
% |
(4.1) |
% |
|||||||||||||||||
|
Diluted |
540,187 |
540,187 |
563,505 |
563,505 |
(4.1) |
% |
(4.1) |
% |
|||||||||||||||||
|
DIVIDENDS PER COMMON SHARE |
$ |
0.54 |
0.54 |
0.54 |
0.54 |
— |
% |
— |
% |
||||||||||||||||
|
SPECIAL ITEMS |
|||||||||||||||||||||||||
|
(1) – |
Includes severance costs associated with recent headcount reductions ($14 million), integration costs associated with our acquisition of Qwest ($4 million) and a large billing system integration ($2 million). |
||||||||||||||||||||||||
|
(2) – |
Income tax benefit of Item (1). |
||||||||||||||||||||||||
|
(3) – |
Includes severance costs associated with reduction in force initiatives ($13 million), integration costs associated with our acquisition of Qwest ($10 million), the impairment of office buildings ($8 million) and regulatory fines associated with a 911 system outage ($15 million). |
||||||||||||||||||||||||
|
(4) – |
Income tax benefit of Item (3). |
||||||||||||||||||||||||
|
CenturyLink, Inc. |
||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
|
MARCH 31, 2016 AND DECEMBER 31, 2015 |
||||||
|
(UNAUDITED) |
||||||
|
(Dollars in millions) |
||||||
|
March 31, |
December 31, |
|||||
|
2016 |
2015 |
|||||
|
ASSETS |
||||||
|
CURRENT ASSETS |
||||||
|
Cash and cash equivalents |
$ |
438 |
126 |
|||
|
Other current assets |
2,488 |
2,524 |
||||
|
Total current assets |
2,926 |
2,650 |
||||
|
NET PROPERTY, PLANT AND EQUIPMENT |
||||||
|
Property, plant and equipment |
39,229 |
38,785 |
||||
|
Accumulated depreciation |
(21,266) |
(20,716) |
||||
|
Net property, plant and equipment |
17,963 |
18,069 |
||||
|
GOODWILL AND OTHER ASSETS |
||||||
|
Goodwill |
20,743 |
20,742 |
||||
|
Other, net |
5,885 |
6,143 |
||||
|
Total goodwill and other assets |
26,628 |
26,885 |
||||
|
TOTAL ASSETS |
$ |
47,517 |
47,604 |
|||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
|
CURRENT LIABILITIES |
||||||
|
Current maturities of long-term debt |
$ |
517 |
1,503 |
|||
|
Other current liabilities |
3,309 |
3,101 |
||||
|
Total current liabilities |
3,826 |
4,604 |
||||
|
LONG-TERM DEBT |
19,508 |
18,722 |
||||
|
DEFERRED CREDITS AND OTHER LIABILITIES |
10,147 |
10,218 |
||||
|
STOCKHOLDERS’ EQUITY |
14,036 |
14,060 |
||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
47,517 |
47,604 |
|||
|
CenturyLink, Inc. |
||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
|
THREE MONTHS ENDED MARCH 31, 2016 AND 2015 |
||||||
|
(UNAUDITED) |
||||||
|
(Dollars in millions) |
||||||
|
Three months ended |
Three months ended |
|||||
|
March 31, 2016 |
March 31, 2015 |
|||||
|
OPERATING ACTIVITIES |
||||||
|
Net income |
$ |
236 |
192 |
|||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
|
Depreciation and amortization |
976 |
1,040 |
||||
|
Impairment of assets |
— |
8 |
||||
|
Deferred income taxes |
11 |
37 |
||||
|
Provision for uncollectible accounts |
46 |
42 |
||||
|
Share-based compensation |
18 |
18 |
||||
|
Changes in current assets and liabilities, net |
192 |
13 |
||||
|
Retirement benefits |
(21) |
(9) |
||||
|
Changes in other noncurrent assets and liabilities, net |
(35) |
(10) |
||||
|
Other, net |
— |
5 |
||||
|
Net cash provided by operating activities |
1,423 |
1,336 |
||||
|
INVESTING ACTIVITIES |
||||||
|
Payments for property, plant and equipment and capitalized software |
(611) |
(616) |
||||
|
Proceeds from sale of property |
7 |
14 |
||||
|
Other, net |
(1) |
(8) |
||||
|
Net cash used in investing activities |
(605) |
(610) |
||||
|
FINANCING ACTIVITIES |
||||||
|
Net proceeds from issuance of long-term debt |
227 |
594 |
||||
|
Payments of long-term debt |
(25) |
(386) |
||||
|
Net payments on credit facility and revolving line of credit |
(410) |
(425) |
||||
|
Dividends paid |
(290) |
(304) |
||||
|
Net proceeds from issuance of common stock |
4 |
8 |
||||
|
Repurchase of common stock |
(12) |
(185) |
||||
|
Other, net |
— |
(1) |
||||
|
Net cash used in financing activities |
(506) |
(699) |
||||
|
Net increase in cash and cash equivalents |
312 |
27 |
||||
|
Cash and cash equivalents at beginning of period |
126 |
128 |
||||
|
Cash and cash equivalents at end of period |
$ |
438 |
155 |
|||
|
CenturyLink, Inc. |
|||||||
|
SELECTED SEGMENT FINANCIAL INFORMATION |
|||||||
|
THREE MONTHS ENDED MARCH 31, 2016 AND 2015 |
|||||||
|
(UNAUDITED) |
|||||||
|
(Dollars in millions) |
|||||||
|
Three months ended March 31,* |
|||||||
|
2016 |
2015 |
||||||
|
Total segment revenues |
$ |
4,093 |
4,194 |
||||
|
Total segment expenses |
2,051 |
2,071 |
|||||
|
Total segment income |
$ |
2,042 |
2,123 |
||||
|
Total segment income margin (segment income divided by segment revenues) |
49.9 |
% |
50.6 |
% |
|||
|
Business |
|||||||
|
Revenues |
|||||||
|
Strategic services |
$ |
1,580 |
1,582 |
||||
|
Legacy services |
909 |
976 |
|||||
|
Data integration |
115 |
139 |
|||||
|
Total revenues |
2,604 |
2,697 |
|||||
|
Expenses |
|||||||
|
Total expenses |
1,427 |
1,463 |
|||||
|
Segment income |
$ |
1,177 |
1,234 |
||||
|
Segment income margin |
45.2 |
% |
45.8 |
% |
|||
|
Consumer |
|||||||
|
Revenues |
|||||||
|
Strategic services |
$ |
774 |
738 |
||||
|
Legacy services |
714 |
758 |
|||||
|
Data integration |
1 |
1 |
|||||
|
Total revenues |
1,489 |
1,497 |
|||||
|
Expenses |
|||||||
|
Total expenses |
624 |
608 |
|||||
|
Segment income |
$ |
865 |
889 |
||||
|
Segment income margin |
58.1 |
% |
59.4 |
% |
|||
|
* |
During the first quarter of 2016, we implemented several changes with respect to the assignment of certain expenses to our reportable segments. We have recast our previously-reported segment results for the three months ended March 31, 2015, to conform to the current presentation. For the three months ended March 31, 2015, the segment expense recast resulted in an increase in consumer expenses of $19 million and a decrease in business expenses of $21 million. |
||||||
|
CenturyLink, Inc. |
||||||||||||||||||||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
||||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||||
|
(Dollars in millions) |
||||||||||||||||||||
|
Three months ended March 31, 2016 |
Three months ended March 31, 2015 |
|||||||||||||||||||
|
As adjusted |
As adjusted |
|||||||||||||||||||
|
Less |
excluding |
Less |
excluding |
|||||||||||||||||
|
As |
special |
special |
As |
special |
special |
|||||||||||||||
|
reported |
items |
items |
reported |
items |
items |
|||||||||||||||
|
Operating cash flow and cash flow margin |
||||||||||||||||||||
|
Operating income |
$ |
694 |
(20) |
(1) |
714 |
649 |
(46) |
(2) |
695 |
|||||||||||
|
Add: Depreciation and amortization |
976 |
— |
976 |
1,040 |
— |
1,040 |
||||||||||||||
|
Operating cash flow |
$ |
1,670 |
(20) |
1,690 |
1,689 |
(46) |
1,735 |
|||||||||||||
|
Revenues |
$ |
4,401 |
— |
4,401 |
4,451 |
— |
4,451 |
|||||||||||||
|
Operating income margin (operating income divided by revenues) |
15.8 |
% |
16.2 |
% |
14.6 |
% |
15.6 |
% |
||||||||||||
|
Operating cash flow margin (operating cash flow divided by revenues) |
37.9 |
% |
38.4 |
% |
37.9 |
% |
39.0 |
% |
||||||||||||
|
Free cash flow |
||||||||||||||||||||
|
Operating cash flow |
$ |
1,690 |
1,735 |
|||||||||||||||||
|
Less: Capital expenditures (3) |
(607) |
(613) |
||||||||||||||||||
|
Less: Cash paid for interest, net of amounts capitalized |
(262) |
(270) |
||||||||||||||||||
|
Less: Pension and post-retirement impacts (4) |
(21) |
(10) |
||||||||||||||||||
|
Less: Cash paid for income taxes, net of refunds |
(11) |
(5) |
||||||||||||||||||
|
Add: Stock-based Compensation |
18 |
18 |
||||||||||||||||||
|
Add: Other income |
17 |
2 |
||||||||||||||||||
|
Free cash flow (5) |
$ |
824 |
857 |
|||||||||||||||||
|
SPECIAL ITEMS |
||||||||||||||||||||
|
(1) – |
Includes severance costs associated with recent headcount reductions ($14 million), integration costs associated with our acquisition of Qwest ($4 million) and a large billing system integration ($2 million). |
|||||||||||||||||||
|
(2) – |
Includes severance costs associated with reduction in force initiatives ($13 million), integration costs associated with our acquisition of Qwest ($10 million), the impairment of office buildings ($8 million) and regulatory fines associated with a 911 system outage ($15 million). |
|||||||||||||||||||
|
FREE CASH FLOW |
||||||||||||||||||||
|
(3) – |
Excludes $4 million in first quarter 2016 and $3 million in first quarter 2015 of capital expenditures related to the integration of Qwest and Savvis. |
|||||||||||||||||||
|
(4) – |
2016 includes net periodic pension benefit income of ($20 million), net periodic post-retirement benefit expense of $36 million and ($2 million) of benefits paid to participants of our non-qualified pension plans. Post-retirement contributions included benefits paid by company ($51 million) offset by participant contributions $15 million and direct subsidy receipts $1 million. |
|||||||||||||||||||
|
– |
2015 includes net periodic pension benefit income of ($24 million), net periodic post-retirement benefit expense of $41 million and ($1 million) of benefits paid to participants of our non-qualified pension plans. Post-retirement contributions included benefits paid by company ($42 million) offset by participant contributions $15 million and direct subsidy receipts $1 million. |
|||||||||||||||||||
|
(5) – |
Excludes special items identified in items (1) and (2). |
|||||||||||||||||||
|
CenturyLink, Inc. |
|||||||||||
|
REVENUES |
|||||||||||
|
(UNAUDITED) |
|||||||||||
|
(Dollars in millions) |
|||||||||||
|
Three months ended |
|||||||||||
|
March 31, 2016 |
March 31, 2015 |
||||||||||
|
Strategic services |
|||||||||||
|
Business high-bandwidth data services (1) |
$ |
738 |
687 |
||||||||
|
Business low-bandwidth data services (2) |
481 |
532 |
|||||||||
|
Business hosting services (3) |
307 |
318 |
|||||||||
|
Other business strategic services (4) |
54 |
45 |
|||||||||
|
Consumer high-speed Internet services (5) |
667 |
635 |
|||||||||
|
Other consumer strategic services (6) |
107 |
103 |
|||||||||
|
Total strategic services revenues |
2,354 |
2,320 |
|||||||||
|
Legacy services |
|||||||||||
|
Business legacy voice services (7) |
622 |
670 |
|||||||||
|
Other business legacy services (8) |
287 |
306 |
|||||||||
|
Consumer legacy voice services (7) |
634 |
688 |
|||||||||
|
Other consumer legacy services (9) |
80 |
70 |
|||||||||
|
Total legacy services revenues |
1,623 |
1,734 |
|||||||||
|
Data integration |
|||||||||||
|
Business data integration |
115 |
139 |
|||||||||
|
Consumer data integration |
1 |
1 |
|||||||||
|
Total data integration revenues |
116 |
140 |
|||||||||
|
Other revenues |
|||||||||||
|
High-cost support revenue (10) |
174 |
134 |
|||||||||
|
Other revenue (11) |
134 |
123 |
|||||||||
|
Total other revenues |
308 |
257 |
|||||||||
|
Total revenues |
$ |
4,401 |
4,451 |
||||||||
|
(1) |
Includes MPLS and Ethernet revenue |
||||||||||
|
(2) |
Includes private line and high-speed Internet revenue |
||||||||||
|
(3) |
Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue |
||||||||||
|
(4) |
Includes primarily VoIP, video, IT services and deferred revenue recognition |
||||||||||
|
(5) |
Includes high-speed Internet and related services revenue |
||||||||||
|
(6) |
Includes video and Verizon wireless revenue |
||||||||||
|
(7) |
Includes local and long-distance voice revenue |
||||||||||
|
(8) |
Includes UNEs, public access, switched access and other ancillary revenue |
||||||||||
|
(9) |
Includes other ancillary revenue |
||||||||||
|
(10) |
Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue |
||||||||||
|
(11) |
Includes USF surcharges |
||||||||||
|
CenturyLink, Inc. |
|||||||||||
|
HOSTING REVENUES AND OPERATING METRICS |
|||||||||||
|
(UNAUDITED) |
|||||||||||
|
Three months ended |
|||||||||||
|
March 31, |
March 31, |
||||||||||
|
Hosting Revenue Detail (1) |
(In millions) |
||||||||||
|
Colocation |
$ |
155 |
156 |
||||||||
|
Managed Hosting / Cloud |
131 |
140 |
|||||||||
|
Hosting Area Network |
21 |
22 |
|||||||||
|
Total Hosting Revenue |
$ |
307 |
318 |
||||||||
|
(1) |
Excludes Wide-Area Network (WAN) revenue previously reported in total Hosting revenue. |
||||||||||
|
As of |
As of |
As of |
|||||||||
|
March 31, |
December 31, |
March 31, |
|||||||||
|
Hosting Data Center Metrics |
|||||||||||
|
Number of data centers (2) |
59 |
59 |
58 |
||||||||
|
Sellable square feet, million sq ft |
1.57 |
1.58 |
1.53 |
||||||||
|
Billed square feet, million sq ft |
1.01 |
0.99 |
0.93 |
||||||||
|
Utilization |
65 |
% |
63 |
% |
61 |
% |
|||||
|
(2) |
We define a data center as any facility where we market, sell and deliver colocation services, managed hosting (including cloud hosting) services, multi-tenant managed services, or any combination thereof. |
||||||||||
|
As of |
As of |
As of |
|||||||||
|
March 31, |
December 31, |
March 31, |
|||||||||
|
Operating Metrics |
(In thousands) |
||||||||||
|
High-speed Internet subscribers |
6,056 |
6,048 |
6,117 |
||||||||
|
Access lines |
11,611 |
11,748 |
12,270 |
||||||||
|
Prism TV subscribers |
302 |
285 |
249 |
||||||||
|
Our methodology for counting high-speed Internet subscribers, access lines and Prism TV subscribers may not be comparable to those of other companies. |
|||||||||||
|
CenturyLink, Inc. |
||||||||
|
SUPPLEMENTAL NON-GAAP INFORMATION – ADJUSTED DILUTED EPS |
||||||||
|
THREE MONTHS ENDED MARCH 31, 2016 AND 2015 |
||||||||
|
(UNAUDITED) |
||||||||
|
(Dollars and shares in millions, except per share amounts) |
||||||||
|
Three months ended |
||||||||
|
March 31, 2016 |
March 31, 2015 |
|||||||
|
Net income * |
$ |
248 |
226 |
|||||
|
Add back: |
||||||||
|
Amortization of customer base intangibles: |
||||||||
|
Qwest |
191 |
205 |
||||||
|
Embarq |
20 |
25 |
||||||
|
Savvis |
15 |
15 |
||||||
|
Amortization of trademark intangibles |
— |
1 |
||||||
|
Amortization of fair value adjustment of long-term debt: |
||||||||
|
Embarq |
2 |
1 |
||||||
|
Qwest |
(5) |
(6) |
||||||
|
Subtotal |
223 |
241 |
||||||
|
Tax effect of above items |
(85) |
(92) |
||||||
|
Net adjustment, after taxes |
138 |
149 |
||||||
|
Net income, as adjusted for above items |
$ |
386 |
375 |
|||||
|
Weighted average diluted shares outstanding |
540.2 |
563.5 |
||||||
|
Diluted EPS (excluding special items) |
$ |
0.46 |
0.40 |
|||||
|
Adjusted diluted EPS as adjusted for the above-listed purchase accounting intangible and interest amortizations (excluding special items) |
$ |
0.71 |
0.67 |
|||||
|
The above non-GAAP schedule presents adjusted net income and adjusted diluted earnings per share (both excluding special items) by adding back to net income and diluted earnings per share certain non-cash expense items that arise as a result of the application of business combination accounting rules to our major acquisitions since mid-2009. Such presentation is not in accordance with generally accepted accounting principles but management believes the presentation is useful to analysts and investors to understand the impacts of growing our business through acquisitions. |
||||||||
|
*See preceding schedules for a summary description of special items. |
Logo – http://photos.prnewswire.com/prnh/20140806/134213
SOURCE CenturyLink, Inc.
PR Archives: Latest, By Company, By Date