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Level 3 Communications (LVLT) Q1 Earnings Miss, Revenues Top
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Level 3 Communications Inc. reported mixed financial results for the first quarter of 2017 (ended Mar 31, 2017). While the top line beat the Zacks Consensus Estimate, the bottom line missed the same.
Net Income
On a GAAP basis, net income in the reported quarter was $95 million or 26 cents per share compared with $128 million or 36 cents per share in the year-ago quarter. However, quarterly adjusted earnings per share (EPS) of 34 cents missed the Zacks Consensus Estimate of 37 cents. There was no change in the company’s bottom line year over year.
Revenue
First-quarter 2017 total revenue was $2,048 million, down 15% year over year and above the Zacks Consensus Estimate of $2,046.9 million.
Segment-wise, Core Network Services’ (CNS) revenues came in at $1,946 million, flat year over year. Wholesale Voice Services and Other revenues totaled $102 million compared with $105 million in the year-ago quarter.
Geographically, North America generated $1,594 million in CNS revenues, down 0.44% year over year. Europe, the Middle East and Africa accounted for $175 million of revenues at CNS, down 8% while Latin America contributed $177 million, up 14%.
Operating Metrics
Total operating expenses in the reported quarter were $1,711 million compared with $1,689 million in the year-ago quarter. Operating income came in at $337 million compared with $362 million in the first quarter of 2016. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $725 million versus $710 million at the end of Mar 2016. Adjusted EBITDA margin expanded to 35.4% from 34.6% in the prior-year quarter.
Cash Flow
In the first quarter of 2017, Level 3 Communications generated $539 million of cash from operations compared with $510 million in the year-ago quarter. Free cash flow was $173 million compared with $213 million in the prior-year quarter.
Liquidity
At the end of Mar 2017, the company had $1,947 million of cash and cash equivalents and $10,581 million of outstanding debt compared with $1,004 million and $10,870 million, respectively, at the end of Mar 2016. Meanwhile, the debt-to-capitalization ratio was 0.42 compared with 0.43 at the end of Mar 2016.
Level 3 Communications, Inc. Price, Consensus and EPS Surprise
The full-year guidance was reiterated at $2.94–$3.00 billion for EBITDA, $1.10–$1.16 billion for free cash flow and 16% of total revenue for capital expenditure. Depreciation and amortization is projected at be $1.35 billion.
Recent Development
In Mar 2017, CenturyLink Inc. and Level 3 Communications moved a step closer to completing their proposed merger amid overwhelming approval of shareholders of both sides. The cash and stock deal is expected to close by the end of third quarter of 2017, subject to customary regulatory approvals. The merged entity will be able to compete with telecom giants like AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) . Level 3 Communications currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Level 3 Communications (LVLT) Q1 Earnings Miss, Revenues Top
Level 3 Communications Inc. reported mixed financial results for the first quarter of 2017 (ended Mar 31, 2017). While the top line beat the Zacks Consensus Estimate, the bottom line missed the same.
Net Income
On a GAAP basis, net income in the reported quarter was $95 million or 26 cents per share compared with $128 million or 36 cents per share in the year-ago quarter. However, quarterly adjusted earnings per share (EPS) of 34 cents missed the Zacks Consensus Estimate of 37 cents. There was no change in the company’s bottom line year over year.
Revenue
First-quarter 2017 total revenue was $2,048 million, down 15% year over year and above the Zacks Consensus Estimate of $2,046.9 million.
Segment-wise, Core Network Services’ (CNS) revenues came in at $1,946 million, flat year over year. Wholesale Voice Services and Other revenues totaled $102 million compared with $105 million in the year-ago quarter.
Geographically, North America generated $1,594 million in CNS revenues, down 0.44% year over year. Europe, the Middle East and Africa accounted for $175 million of revenues at CNS, down 8% while Latin America contributed $177 million, up 14%.
Operating Metrics
Total operating expenses in the reported quarter were $1,711 million compared with $1,689 million in the year-ago quarter. Operating income came in at $337 million compared with $362 million in the first quarter of 2016. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $725 million versus $710 million at the end of Mar 2016. Adjusted EBITDA margin expanded to 35.4% from 34.6% in the prior-year quarter.
Cash Flow
In the first quarter of 2017, Level 3 Communications generated $539 million of cash from operations compared with $510 million in the year-ago quarter. Free cash flow was $173 million compared with $213 million in the prior-year quarter.
Liquidity
At the end of Mar 2017, the company had $1,947 million of cash and cash equivalents and $10,581 million of outstanding debt compared with $1,004 million and $10,870 million, respectively, at the end of Mar 2016. Meanwhile, the debt-to-capitalization ratio was 0.42 compared with 0.43 at the end of Mar 2016.
Level 3 Communications, Inc. Price, Consensus and EPS Surprise
Level 3 Communications, Inc. Price, Consensus and EPS Surprise | Level 3 Communications, Inc. Quote
2017 Guidance
The full-year guidance was reiterated at $2.94–$3.00 billion for EBITDA, $1.10–$1.16 billion for free cash flow and 16% of total revenue for capital expenditure. Depreciation and amortization is projected at be $1.35 billion.
Recent Development
In Mar 2017, CenturyLink Inc. and Level 3 Communications moved a step closer to completing their proposed merger amid overwhelming approval of shareholders of both sides. The cash and stock deal is expected to close by the end of third quarter of 2017, subject to customary regulatory approvals. The merged entity will be able to compete with telecom giants like AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) . Level 3 Communications currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>