I have updated my financial model for Level 3 Communications (LVLT), and along with it come some basic projections for the Q3 and Q4. Along with those numbers comes the assumption that Level 3 will show sales growth in the third and fourth quarters and that SG&A will continue to drop as a percentage of revenue, both as indicated by management.
There are two versions:
- The Interactive Model [1] – for those with IE and the Office plugin (get it here [2]). The assumptions can be changed and the effects seen on each following sheet.
- The Noninteractive Model [3] – for those with Firefox or other browsers etc. This is read only, unfortunately.
For those less interested in playing with the numbers, and more interested in projections, here they are. Core Revenue should be about $975-980M in Q3, and jump to $1010-1030M in Q4. Total revenues should drop slightly to $1080-1090M in Q3, then finally exceed $1100M in Q4. Ebitda for Q3 should come in around $255M, and for Q4 should surge to around $280M. Free cashflow is relatively certain to be positive for both quarters, since working capital should swing back as it does every year. I do not expect substantial changes to gross margins, and while I expect SG&A to drop only slightly each quarter, as a percentage of revenue it drops more quickly due to revenue growth as we go forward.
4 Comments To "Updated Level 3 Model and Projections for Q3 2008"
#1 Comment By dklein On July 31, 2008 @ 10:39 pm
I show EBIDTA for Q3=253,Q4=281. Core Revenues Q3=977, Q4=1001.
We’re not too far apart. Could be a good thing or we are both completely wrong
#2 Comment By Alfred J. Beljan On July 31, 2008 @ 10:58 pm
every EBIDTA projection is shying away from topping the $1 Billion number for 2008 – with only a $4 Million increase, that magic number would have been reached by your SWAGs….
#3 Comment By Paolo Gorgo’ On August 3, 2008 @ 3:47 pm
Slightly Level 3 related, I do not know if you had a chance to follow this Nanog 3d…
[4]
#4 Comment By Rob Powell On August 4, 2008 @ 2:41 am
Yes, I do follow NANOG, although not religiously. I will say that every month or two someone complains about some carrier’s billing practices, so the thread doesn’t surprise me.