Diversified Canadian communications company Shaw Communications Inc. (SJR ,SJR.B.TO), on Friday reported a 6.3% drop in profit for the fourth quarter, notwithstanding an 8.3% growth in revenues from last year benefitted from customer growth and rate increases. Further, Shaw said it received Canadian regulatory approval to acquire Hamilton-based Mountain Cablevision.
For the fourth quarter, the Calgary, Canada-based company's net income slipped to C$124.00 million from C$132.38 million in the same quarter last year. On a per share basis, earnings dropped to C$0.29 per share from C$0.31 per share in the year-ago quarter.
Excluding one-time items, net income for the current quarter would have been C$123 million, compared to C$133 million in the year-earlier period.
In the preceding third quarter, Shaw reported net income of C$131.95 million or C$0.31 per share, higher than C$128.11 million or C$0.30 per share in the same period last year. Excluding non-operating items, net income for the quarter would have been C$131 million, compared with C$117 million in the same period last. Results for the prior year benefitted from a customs duty recovery on equipment costs.
Consolidated service revenue for the recent third quarter rose to C$873.00 million from C$805.70 million in the year-earlier period. For the preceding third quarter, service revenue increased 8.7% to C$861.38 million from C$792.15 million a year ago.
On a divisional basis, service revenue in the Cable division for the quarter under review was C$682 million, up 10% from last year, primarily driven by customer growth and rate increases. Service operating income before amortization improved 9% year-over-year to C$328 million.
Service revenue in the Satellite division for the quarter increased 3% to C$190 million from last year, primarily due to rate increases and customer growth. Service operating income before amortization for the quarter was flat at C$67 million with last year.
Total service operating income before amortization for the quarter increased 7% to C$394.53 million from C$369.53 million in the same quarter last year. Operating margin contracted to 45.2% from 45.9% in the prior-year quarter.
During the quarter Basic cable subscribers increased 6,374 to 2.29 million Digital customers were up 110,501 to 1.30 million, and Internet and Digital Phone lines grew by 27,376 to 1.68 million . DTH customers increased 2,728 to 0.90 million.
Funds flow from operations for the quarter was C$321 million, compared to C$273 million last year. Free cash flow for the quarter declined to C$99 million from C$143 million, due to increased capital investment and the impact of cash taxes offsetting higher service operating income before amortization.
Jim Shaw, Chief Executive Officer and Vice Chair, Shaw Communications said, "Throughout 2009 subscriber growth was solid. Our focus on Digital deployment, combined with the consumers' increased demand for HDTV, drove record Digital growth during the year. We added over 388,000 new subscribers increasing our Digital penetration of Basic from 40% at August 31, 2008 to almost 57% at August 31, 2009."
On October 1, 2009, Shaw closed a $1.25 billion offering of 5.65% senior notes due October 1, 2019, the net proceeds of which are being used to repay near term maturing debt, potential acquisitions, working capital and general corporate purposes.
The company also indicated receiving Canadian Radio-television and Telecommunications Commission, or CRTC approval to buy Mountain Cablevision and will close the acquisition shortly. Mountain Cablevision, based in Hamilton, Ontario, is a relatively small, family-owned southern Ontario cable provider which had about 41,000 cable customers, 28,000 Internet subscribers and 27,000 telephone customers, as of July.
For the full-year, net income dropped 20.3% to C$535.24 million from C$671.56 million last year. On a per share basis, earnings declined to C$1.24 per share from C$1.55 per share in the year-ago period.Excluding one-time items, net income for the full year would have been C$504 million, compared to C$460 million in the same period last year.
Consolidated service revenue for the full year climbed 9.2% to C$3.39 billion from C$3.10 billion in the corresponding period last year.
Looking forward, the company anticipates steady growth in fiscal 2010. Including the impact of a one-time CRTC Part II fee recovery, preliminary view calls for consolidated service operating income before amortization is expected to increase by 14% or more. Considering the full year impact of cash taxes, the company forecasts free cash flow to be comparable to fiscal 2009. Shaw, however, cautions that the preliminary guidance may change in light of competitive market dynamics and other risk factors.
Shaw also declared monthly dividends of $0.07 on Shaw's Class B Non-Voting Participating Shares and C$0.069792 on Shaw's Class A Participating Shares, payable on each of December 30, 2009, January 28, 2010 and February 25, 2010, to stockholders of record as of the close of business on December 15, 2009, January 15, 2010 and February 15, 2010, respectively.
SJR is currently trading at US$19.23, down US$0.35 or 1.79% on the NYSE. In the past 52 weeks, the stock trended in a broad range of US$13.40 - US$19.75, with a three-month average volume of 0.22 million shares.
SJR.B.TO is trading at C$20.17, down C$0.40 or 1.94%, on a volume of 0.10 million shares on the TSX.
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