Shaw Communications Q4 Profit Surges

(RTTNews) - Canadian cable and media company Shaw Communications, Inc. (SJR ,SJR.B.TO) reported Thursday a profit for the fourth quarter that surged 64 percent from last year, reflecting improved operating margins and revenue growth.

The company noted that results benefited from higher operating income before amortization and restructuring costs, lower amortization and interest expense and improved net other costs and revenue, partially offset by higher income taxes.

"I'm pleased to report solid fourth quarter and full year financial and operational results reflecting the strength of our business as we grow and develop as a leading network and content experience company. Our investments in programming, technology and innovative products combined with our focus on exceptional customer experience and operational efficiencies continues to drive profitability and long term growth," CEO Brad Shaw said in a statement.

The Calgary, Canada-based company reported net income attributable to equity shareholders of C$192 million or C$0.40 per share for the fourth quarter, higher than C$117 million or C$0.24 per share in the prior-year quarter.

Consolidated revenue for the quarter increased 1.4 percent to C$1.26 billion from C$1.25 billion in the same quarter last year.

Revenues for the cable division for the quarter increased 2.3 percent to C$837 million, driven by pricing adjustments and growth in business. Satellite division revenues edged up 0.5 percent to C$220 million from last year, primarily due to pricing adjustment, partially offset by customer declines. Quarterly revenue for the media division remained flat with last year at C$231 million.

During the third quarter, the company announced changes to the structure of its operating divisions to improve overall efficiency while enhancing its ability to grow as the leading network and content experience company. The residential and enterprise services will be reorganized into new consumer and business units, respectively, with no changes to the media division.

Including the acquisition of ViaWest, the Company expects to commence reporting on the new divisions of consumer, Shaw business, ViaWest, and media in the first quarter of fiscal 2015.

On September 2, 2014, the Company closed the acquisition of ViaWest in early September for an enterprise value of $1.2 billion which was funded through a combination of cash on hand, assumption of ViaWest debt and a drawdown of $330 million on the company's credit facility.

In connection with the restructuring operations, the company recorded $58 million primarily in respect of the about 400 management and non-customer facing roles which were affected by the organizational changes. The anticipated annual savings, net of hires to support the new structure, is about $50 million.

Total operating income before amortization for the quarter increased 5.8 percent to C$525 million from the year-ago quarter, and operating margin expanded 180 basis points to 41.6 percent from last year.

Funds flow from operations declined 8.6 percent to C$392 million from C$429 million in the year-ago quarter.

During the quarter, video subscribers decreased 20,166 or 1.0 percent to 1.96 million. Internet lines grew 11,983 or 0.6 percent to 1.93 million, and digital phone lines increased only 1,114 or 0.1 percent to 1.38 million. Meanwhile, DTH customers decreased 6,606 or 0.7 percent to 0.88 million.

Looking ahead to fiscal 2015, the company expects growth in consolidated operating income before restructuring costs and amortization to range from 5 to 7 percent with the inclusion of ViaWest which is expected to contribute about $85 million.

The company also expects free cash flow to exceed C$650 million, due to higher interest related to the ViaWest acquisition and increased cash taxes. Further, it anticipates increased capital investment (excluding amounts funded through the accelerated capital fund) as it continues to enhance its network, provide innovative product offerings and expand the ViaWest footprint.

"We are never satisfied with the status quo. We continue to compete and win in a dynamic highly competitive environment through continuous improvement and capitalizing on opportunities as they arise, delivering value to our customers and our shareholders," Shaw added.

In Thursday's regular trading session, SJR is currently trading at $24.50, down $0.14 or 0.57% on a volume of 49,924 shares. In the past 52-week period, the stock has been trading in a range of $21.77 to $26.30.

SJR.B.TO is trading on the Toronto Stock Exchange at C$27.59, down C$0.11 or 0.40% on a volume of 0.16 million shares.