AT&T aims to repay debt to improve its balance sheet position


AT&T Inc. T recently issued prepayment notices for three series of bonds valued at $ 1.2 billion in order to improve its liquidity position and reduce the growing debt burden through the early repayment of maturities. debt to come. This strategic move is likely to reduce the risks to its capital structure as the company prepares to weather the coronavirus-induced global turmoil.

With the announcement, AT&T has refinanced or repaid $ 19.4 billion in finance debt since the end of the second quarter of 2020, either through fund buybacks, takeover bids or repayment of scheduled maturities. This, in turn, will reduce its next debt maturities by $ 8.2 billion within a year, as the company aims to capitalize on low borrowing costs to deleverage its balance sheet.

As of June 30, 2020, AT&T had $ 16,941 million in cash and cash equivalents with long-term debt of $ 153,388 million, against respective accounts of $ 9,955 million and $ 147,202 million. dollars at the end of the first quarter of 2020. This shows that although the cash position has improved, the debt burden has increased. The company currently has a leverage ratio of 0.47 versus 0.52 for the sub-industry. Interest Time Earned has declined slightly in recent quarters to 3 currently from 3.7 for the sub-industry.

Notably, AT&T decided to cancel its share buyback program due to the severity of the coronavirus epidemic. The evolving nature of the contagious disease and its severe impact on the economy have forced the company to reconsider the buyout plan, as it has not yet understood the impact on its business due to lack of visibility. Management refrained from giving definitive outlook for the third quarter as well as for 2020.

AT&T is evolving its distribution channels based on changing customer demands and emphasizing self-installation and software platforms to redefine its business plans in the face of the virus outbreak. While optimizing operations, it aims to increase efficiency to reduce costs while supporting employees and customers with various financial packages. Its dividend payout rate is 58.9%. The rate has remained relatively stable over the past few quarters, indicating that the company shares its profits with shareholders. It remains to be seen how AT&T aims to reduce the enormous debt burden in the coming days and whether it faces a liquidity crunch due to the disruption caused by the COVID-19 pandemic.

Going forward, AT&T is committed to meeting its three-year financial framework, which is expected to result in significantly improved margins and earnings growth with sustained investments and reduced debt. For 2020 to 2022, AT&T continues to expect consolidated revenue growth of 1-2% per year. Adjusted earnings are expected to be $ 4.50 to $ 4.80 per share by 2022 with an adjusted EBITDA margin of 35%. While the Adjusted EBITDA margin is expected to be stable in 2020, it is expected to increase in 2021 and 2022, driven by extensive company-wide cost reduction plans, WarnerMedia synergies, continued growth of Mobility and AT&T Mexico EBITDA growth. Free cash flow is expected to be between $ 30 billion and $ 32 billion for 2022, with an adjusted net debt to EBITDA ratio of 2.0 times to 2.25 times, with 100% debt tied to the acquisition of Time Warner’s assets are subject to reimbursement.

We are impressed with this Zacks Rank # 3 (Hold) firm’s focused attempts to maintain a competitive advantage in these turbulent times.

Clearfield, Inc. CLFD, Nokia Corporation NOK, and Qualcomm Incorporated QCOM are top-ranked stocks across the industry, each carrying a Zacks Rank # 2 (Buy). You can see the full list of today’s Zacks # 1 stocks (strong buy) here.

Clearfield has achieved a surprise profit of 45.6%, on average, over the past four quarters.

Nokia has a forecast for long-term profit growth of 15.6%. It delivered a surprise profit of 37.5%, on average, over the past four quarters.

Qualcomm expects long-term profit growth of 19.8%. It delivered a surprise earnings of 14.3%, on average, over the past four quarters.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is expected to surpass $ 775 billion by 2024 as scientists develop treatments for thousands of diseases. They are also finding ways to modify the human genome to literally erase our vulnerability to these diseases.

Zacks just released Century of Biology: 7 Biotech Stocks To Buy Now To Help Investors Profit From 7 Stocks That Are Ready to Outperform. Our recent biotech recommendations have produced gains of + 50%, + 83% and + 164% in as little as 2 months. The actions in this report could perform even better.

See these 7 revolutionary actions now >>

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

ATT Inc. (T): Free Stock Analysis Report

Nokia Corporation (NOK): Free Stock Analysis Report

QUALCOMM Incorporated (QCOM): Free Stock Analysis Report

Clearfield, Inc. (CLFD): Free Stock Analysis Report

To read this article on, click here.

Source link


Leave A Reply