Level 3 Communications Q2 Earnings Top, Revenues Miss - Analyst Blog
Level 3 Communications Inc. LVLT reported mixed financial results in the second quarter of 2015 wherein the top line missed the Zacks Consensus Estimate while the bottom line outpaced.
On a GAAP basis, net loss in the reported quarter was $13 million, or a loss of 4 cents per share compared with net income of $45 million, or 13 cents per share in the second quarter of 2014. Meanwhile, adjusted quarterly earnings per share of 42 cents outpaced the Zacks Consensus Estimate of 40 cents.
Level 3 Communications Inc. - Earnings Surprise | FindTheBest
Quarterly total revenue improved 1.5% year over year to $2,061 million, falling short of the Zacks Consensus Estimate of $2,087 million.
Segment-wise, Core Network Services (CNS) revenues stood at $1,941 million, up 5% year over year and Wholesale Voice Services and Other revenues totaled $120 million, down 16.6% year over year.
Geographically, North America generated $1,551 million of CNS revenues, up 7% year over year. Europe, the Middle East and Africa accounted for $204 million of revenues at CNS, down 3% while Latin America contributed $186 million, up 6%.
Quarterly, total operating expenses were $1,711 million, up 25% year over year. Operating income came in at $350 million, up 10.8%. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) climbed 11.4% to $665 million. Adjusted EBITDA margin was 32.3% against 29.4% in the prior-year quarter.
In the second quarter of 2015, Level 3 Communications generated $321 million of unlevered cash from operations compared with $261 million in the year-ago quarter. Free cash flow, in the reported quarter, improved to $102 million from a negative $62 million in the prior-year quarter.
At the end of second-quarter 2015, the company had $549 million of cash and cash equivalents and $11,001 million of outstanding debt compared with $637 million and $7,855 million, respectively, at the end of Jun 30, 2014. Meanwhile, the debt-to-capitalization ratio stood at 0.61 in the quarter under review compared with 0.82 at the end of second-quarter 2014.
Guidance
Level 3 Communications reiterated its adjusted EBITDA growth outlook at 14% to 17% and free cash flow guidance at $600 million to $650 million.
Level 3 Communications currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other favorably-ranked stocks in this sector include AT&T, Inc. T, Inteliquent, Inc. IQNT and Ruckus Wireless, Inc. RKUS. All these stocks hold a Zacks Rank #2 (Buy).
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