Cloud Sales Up, Broadband Down at CenturyLink
MONROE, La. -- CenturyLink, Inc. (NYSE: CTL) today reported solid operating revenues, operating cash flow and free cash flow for second quarter 2013.
“We generated strong financial results for the first half of 2013 as our operating revenues were in line with and operating cash flow exceeded our expectations. We have experienced higher than expected sales trends of recurring revenue services and continue to see a strong pipeline of sales opportunities. Our cross-selling initiatives in our managed hosting segment are gaining traction and driving results,” said Glen F. Post III, chief executive officer and president.
“We anticipate improvement in strategic revenue growth in the second half of this year; however, we expect the level of improvement to be slightly lower than the more aggressive growth originally anticipated,” said Post.
“We remain confident in our portfolio of communications and managed hosting products and services that position us as a leader in the industry. We expect to continue investing in our key growth initiatives which we believe will lead to strong financial results and enhanced shareholder value over time.
“As of August 6, 2013, we have repurchased a total of nearly 29 million shares of our outstanding common stock for approximately $1 billion, representing half of the $2 billion stock repurchase program we announced in mid-February. We expect to continue to opportunistically repurchase stock through the remainder of the authorized program,” Post concluded.
Second Quarter Highlights
Consolidated Second Quarter Financial Results
Operating revenues for second quarter 2013 were $4.53 billion compared to $4.61 billion in second quarter 2012. This decrease was driven by lower legacy services revenues primarily due to the impact of access line losses and lower access revenues, partially offset by increases in strategic revenues resulting primarily from increased business customer demand for high-bandwidth data services, colocation and managed hosting services and year-over-year growth in high-speed Internet and CenturyLink® PrismTM TV subscribers.
Operating expenses, excluding special items, decreased to $3.79 billion from $3.92 billion in second quarter 2012. The year-over-year decrease was primarily due to lower personnel-related costs, data integration and depreciation and amortization expenses, which were partially offset by higher colocation and managed hosting costs.
Operating cash flow (as defined in our attached supplemental schedules), excluding special items, decreased to $1.86 billion from $1.90 billion in second quarter 2012. This decrease was primarily the result of lower legacy revenues being partially offset by higher strategic revenues, higher data integration margins and lower personnel-related costs. For second quarter 2013, CenturyLink achieved an operating cash flow margin, excluding special items, of 41.1% versus 41.2% in second quarter 2012.
Adjusted Net Income and Adjusted Diluted Earnings Per Share (Adjusted Diluted EPS)
Adjusted Net Income and Adjusted Diluted EPS exclude the after-tax impact of special items, the non-cash after-tax impact of the amortization of intangibles related to the Embarq, Qwest and Savvis acquisitions, and the non-cash after-tax impact to interest expense of the assignment of fair value to the outstanding debt assumed in connection with those acquisitions.
Excluding the items outlined above, CenturyLink’s Adjusted Net Income for second quarter 2013 was $417 million compared to Adjusted Net Income of $403 million in second quarter 2012. Second quarter 2013 Adjusted Diluted EPS was $0.69 compared to Adjusted Diluted EPS of $0.65 in the year-ago period.