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DIRECTV Announces Fourth-Quarter and Full-Year 2014 Results
Last update: 19/02/2015 7:30:01 am
DIRECTV Announces Fourth Quarter and Full Year 2014 Results
DIRECTV Fourth Quarter Revenue Growth of 4% Drives Full Year Revenues Up 5% to $33.3 billion.
-- DIRECTV Latin America full year revenues increase 3% to $7.1 billion principally related to the addition of approximately 903,000 net new subscribers during the year.
-- Full year DIRECTV U.S. revenue growth of 5% to $26.0 billion driven by ARPU growth of 4.7% and annual subscriber growth of 99,000.
DIRECTV Full Year 2014 Adjusted Diluted Earnings Per Share Increase 12% to $6.08. -- EPS growth driven by a 3% increase in consolidated adjusted operating profit before depreciation and amortization as well as $1.4 billion of share repurchases in 2014.
DIRECTV Full Year Free Cash Flow Increases 21% to $3.1 billion. EL SEGUNDO, Calif.--(BUSINESS WIRE)--February 19, 2015--
DIRECTV (NASDAQ:DTV) today reported that fourth quarter 2014 revenues increased 4% to $8.92 billion, operating profit before depreciation and amortization(1) (OPBDA) and operating profit decreased to $2.00 billion and $1.26 billion, respectively, and diluted earnings per share was unchanged at $1.53 compared to last year's fourth quarter.
"Our fourth quarter results, although marked by challenging macroeconomic conditions in Latin America and a conscious decision to reinvest in our U.S. business, capped off another strong year of operations for DIRECTV. In Latin America, despite the macroeconomic headwinds, our DIRECTV and Sky brands attracted over 1.4 million net new customers - surpassing the 19 million cumulative subscriber mark by year-end. More importantly, even excluding Venezuela, DTVLA improved cash flow by over $400 million and generated positive cash flow for the year - easily surpassing our internal plans for the business," said Mike White, President and CEO of DIRECTV.
"And in the U.S., despite operating in a mature, hyper-competitive market with significant cost pressures, we were able to improve our OPBDA margins for the third consecutive year and surpass all of our 2014 plans for subscriber, revenue, OPBDA and cash flow growth, while also making significant headway on improving both the customer service and entertainment experience," White added. "The focused performance of our two primary segments resulted in a 21% increase in our consolidated free cash flow, topping $3.1 billion for the year - and leaving us with $4.6 billion of cash on the balance sheet at year end."
White finished, "2015 will bring additional challenges to our businesses, but given our solid continued operating momentum and the pending merger with AT&T, I am confident that we will continue to drive value for our shareholders for the foreseeable future."
DIRECTV'S Operational Review
DIRECTV Consolidated Dollars in Millions except Earnings per Three Months Ended Twelve Months Ended Common Share December 31, December 31, ---------------- ---------------------- ------------------------ 2014 2013 2014 2013 ---------------- ---------- ---------- ----------- ----------- Reported Financial Results ---------------- ------ ------ ------- ------- Revenues $8,922 $8,594 $33,260 $31,754 ------------------- ----- ----- ------ ------ Reported Operating Profit Before Depreciation and Amortization(1) 2,000 2,044 8,071 7,978 Reported OPBDA Margin(1) 22.4% 23.8% 24.3% 25.1% ------------------- ------ ------ ------- ------- Reported Operating Profit 1,255 1,333 5,128 5,150 Reported Operating Profit Margin 14.1% 15.5% 15.4% 16.2% ------------------- ------ ------ ------- ------- Reported Net Income Attributable to DIRECTV 778 810 2,756 2,859 ------------------- ------ ------ ------- ------- Reported Diluted Earnings Per Common Share $ 1.53 $ 1.53 $ 5.40 $ 5.17 ------------------- ----- ----- ------ ------ Capital Expenditures and Cash Flow ---------------- ------ ------ ------- ------- Cash Paid for Property and Equipment 269 310 979 873 ------------------- ------ ------ ------- ------- Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions 301 399 1,173 1,589 ------------------- ------ ------ ------- ------- Cash Paid for Subscriber Leased Equipment - Upgrade and Retention 163 229 788 947 ------------------- ------ ------ ------- ------- Cash Paid for Satellites 96 101 285 377 ------------------- ------ ------ ------- ------- Cash Flow Before Interest and Taxes(2) 1,268 1,484 5,475 4,855 ------------------- ------ ------ ------- ------- Free Cash Flow(3) 814 1,000 3,144 2,608 ------------------- ------ ------ ------- ------- Venezuela Currency Charge Impact On(4) : ---------------- ------ ------ ------- ------- Operating Profit Before Depreciation and Amortization (346) (166) ------------------- ------- ------- Operating Profit (346) (166) ------------------- ------- ------- Net Income Attributable to DIRECTV (346) (136) ------------------- ------- ------- Diluted Earnings Per Common Share $ (0.68) $ (0.25) ------------------- ----- ----- ------ ------ Adjusted Financial Results ---------------- ------ ------ ------- ------- Adjusted Operating Profit Before Depreciation and Amortization(1) 8,417 8,144 Adjusted OPBDA Margin(1) 25.3% 25.6% ------------------- ------- ------- Adjusted Operating Profit 5,474 5,316 Adjusted Operating Profit Margin 16.5% 16.7% ------------------- ------- ------- Adjusted Net Income Attributable to DIRECTV 3,102 2,995 ------------------- ------- ------- Adjusted Diluted Earnings Per Common Share $ 6.08 $ 5.42 ------------------- ------ ------ ------ ------
"Adjusted financial results" exclude the impact of the gains and charges outlined above associated with the remeasurement of the net monetary assets of the company's subsidiary in Venezuela. See footnote 4 for additional information.
Fourth Quarter Review
DIRECTV's fourth quarter revenues increased 4% to $8.92 billion principally due to strong ARPU growth at DIRECTV U.S.
Fourth quarter OPBDA and operating profit decreased to $2.00 billion and $1.26 billion, respectively, compared to the prior year period. OPBDA margin and operating profit margin declined to 22.4% and 14.1%, respectively, due to lower margins at DIRECTV Latin America (DTVLA), as well as a slight decline at DIRECTV U.S. The results of our Sports Networks, Eliminations and Other segment also impacted the comparison in the quarter with merger related costs of $33 million in 2014. This was offset by lower consulting costs in the fourth quarter 2014, as well as a pension settlement charge in the same period of 2013.
Fourth quarter net income attributable to DIRECTV decreased to $778 million primarily due to the lower operating profit and unfavorable comparisons in the "Other, net" line of the Consolidated Statements of Operations, partially offset by a decrease in income tax expense mostly due to lower earnings before taxes and a lower effective tax rate in the fourth quarter of 2014 related to the settlement and resolution of state income tax issues. "Other, net" was impacted by a $78 million decrease in equity earnings from Sky Mexico primarily related to Sky Mexico's recognition of certain one-time tax benefits in 2013, which was partially offset by a $39 million gain on interest rate swap contracts at DIRECTV. Diluted earnings per share was unchanged at $1.53 as the favorable impact of share repurchases made prior to the announcement of the pending transaction with AT&T offset the decline in net income.
Cash flow before interest and taxes(2) declined to $1.27 billion compared to the fourth quarter of 2013 primarily due to a reduction in cash generated from working capital, partially offset by lower capital expenditures. The decrease in cash generated from working capital was mostly due to the timing of customer receivables at DIRECTV U.S. and the timing of vendor payments at DTVLA, partially offset by $90 million in proceeds from the settlement of certain swap contracts at DIRECTV U.S. The lower capital expenditures were principally due to a reduction in cash paid for leased equipment at DIRECTV U.S. and DTVLA mostly due to declining set-top box costs, higher usage of refurbished set-top boxes at DIRECTV U.S. and the timing of set-top box purchases at DTVLA. Fourth quarter free cash flow(3) decreased to $814 million due to the lower cash flow before interest and taxes, partially offset by lower tax payments due to the timing of such payments.
Also during the quarter, but not included in free cash flow, was a December 2014 debt issuance by DIRECTV U.S. of $1,200 million principal amount of 3.950% senior notes due in 2025.
Because $28.50 per share will be paid in cash. Therefor $95 minus $28.50 = $66.50 share value once the deal is completed in about one year, payable in AT&T stock. For each share of DTV stock you will receive between 1.905 shares and 1.724 shares of AT&T, depending on the stock price at closing. That's if the Feds approve the deal, as expected. No rush here.
So I hear Comcast is buying Time Warner...perhaps a catalyst for DTV. I already hated Time Warner, and it's widely known Comcast has awful customer service. Everyone hates them. I think DTV comes out the winner here
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