The largest U.S satellite TV operator DIRECTV (DTV) has posted solid fourth-quarter 2012 results, with both the top and the bottom line beating the Zacks Consensus Estimates. Its performance was mainly attributable to record subscriber growth across its Latin American markets. In synergy with such strong results, DIRECTV authorized a fresh share repurchase plan of $4 billion.
Total revenue in the reported quarter came in at $8,054 million, up 7.9% year over year, and slightly ahead of the Zacks Consensus Estimate of $8,022 million. Growth in revenue was mainly attributable to huge subscriber growth in both Latin America and U.S. region.
Quarterly GAAP net income was $942 million or $1.55 per share compared with $718 million or $1.02 per share in the year-ago quarter. Quarterly earnings per share of $1.55 topped the Zacks Consensus Estimate of $1.15. Quarterly operating profit before depreciation & amortization (OPBDA) was $1,924 million, up 8% year over year. Moreover, operating profit in the reported quarter stood at $1,298 million, up 6.9% year over year.
At the end of fiscal 2012, DIRECTV generated $5,634 million of cash from operations compared with $5,185 million in the prior-year quarter. Free cash flow (cash flow from operations less capital expenditures) was $2,674 million in the quarter compared with $2,261 million in the year-ago quarter.
At the end of the fourth quarter of 2012, DIRECTV had $1,902 million in cash & cash equivalents and $17,170 million of outstanding debt on its balance sheet compared with $873 million in cash & cash equivalents and $13,464 million of outstanding debt at the end of 2011.
DIRECTV U.S. Segment
Revenue from this segment was $6,320 million, up 4.8% year over year on the back of strong subscriber base and significant ARPU growth. Quarterly ARPU was $105.2 against $101.4 in the year-ago quarter. Growth in ARPU was mainly fueled by price increases on programming packages and leased boxes and higher advanced service fees.
Quarterly operating profit before depreciation & amortization increased 6.1% to $1,408 million primarily buoyed by reduced subscriber acquisition cost. Quarterly operating profit climbed 6% to $1,023 million.
Average monthly subscriber churn rate in the reported quarter was 1.43% compared with 1.52% in the prior-year quarter. Quarterly net subscriber growth was 103,000 compared with 125,000 subscriber additions in the year-ago quarter. At the end of 2012, DIRECTV U.S. had 20.08 million subscribers, up 1% on an annualized basis.
DIRECTV Latin America Segment
Segment revenue was $1,674 million, up 22% year over year, on account of massive subscriber growth, which was, however, dampened by reduced ARPU growth. Quarterly ARPU was $55.8 versus $60.4 in the prior-year quarter, primarily driven by foreign currency fluctuation. Quarterly operating profit before depreciation & amortization increased 17.1% to $494 million and operating profit rose 18.6% to $261 million.
Average monthly subscriber churn rate in the reported quarter was 1.75% compared with 1.65% in the prior-year quarter. Quarterly net subscriber addition was 658,000 compared with 590,000 in the year-ago quarter. DIRECTV Latin America exited fiscal 2012 with approximately 10.328 million subscribers, up 31% year over year.
Currently, DIRECTV has a Zacks Rank #3 (Hold)
Other Stocks to Consider
Meanwhile, one can look at some other companies like Comcast Corporation (CMCSA), Time Warner Cable Inc. (TWC) and DISH Network Corp. (DISH). While Comcast fell shy of the Zacks Consensus Estimate, Time Warner surpassed the Zacks Consensus Estimate. DISH Network is yet to release its fourth-quarter 2012 results on Feb 20.
Both Comcast and Dish Network are currently at Zacks Rank #3 (Hold), but Time Warner Cable has a Zacks Rank #5 (Strong Sell).