TheJuice's Level 3 Model for Q3 2008

August 17th, 2008 by · 5 Comments

Ok, here is my guess for Q3 numbers.  I will tighten these down as we get closer to release date.  Please note I made some subtle changes to the layout, nothing major, but a few tweaks in terms of presentation. 

Here are the high points:
  1. Growth in CNS of 3% - we need this to appease Wall Street (BMG especially!)
  2. Growth in WVS of 25M over 150M base - i think the 'new' base should be 175M...
  3. T keeps about 40M on the network @ 50% gross margin (not sure how I will figure this out now that this will be baked into other) - total guess at the rev number here
  4. I see GM in CNS base inching up another percent - continuing to shut the legacy stuff down is key
  5. Also would be nice to see more reduction in SG&A ... I'm thinking down to 365
  6. EBITDA of 280, annualize that and we are at sustainable FCF
  7. I believe that interest is a bit higher this q due to when we payout then will fall in Q4
  8. 8. Working Cap - my favorite, and the area I have trainwrecked over the last 2 q's comes back and gives us 30M!
  9. 9. Capex is up sequentially due to revs growing and investment to bring up CNS gross margins.  Even with this dump I think we will come in around 11% for the year
Finally, I think we generate operating cash to the tune of around 35M.  At this point I want clarity on Unity implementation and what's going on in Content and BMG specifically.
Here is the spreadsheet:
Have a good weekend.

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5 Comments So Far


  • carlk says:

    Juice,

    Maybe some semantics here, but I believe when you imply 35M operating earnings, you really mean Positive Free Cash Flow (PFCF) after subtracting net interest on debt. Maybe I’m wrong, however.

    Otherwise, operating earnings would be 35M plus 148M in net interest expense or 183M in total.

    At this point in time, one realizes the importance of refinancing and/or converting debt on a “friendly basis” to equity owners, in order to reduce the interest cost burden against this 25B factory.

    On another note, I heard Jaegers opine on the current state of the CLEC industry, white mice and all, recently. I must say, if it weren’t for her blind love of TWTC-personal money tied up in that name she admitted-in addition to her missing the CDN bundle advantage, she’s seeing the LVLT business plan in motion as much, if not more than TWTC.

    Blind love may be attributed to these comments about LVLT, so tread lightly in weighing my comments against that bias.

  • jeremy drane says:

    carl;

    yes i meant PFCF. thx for correcting my error.

    thejuice.

  • carlk says:

    Juice,

    I think 183M (35+148) might be considered “unlevered” operating earnings with respect to your Q3 projection, do you agree?

    Thanks,

    Carl

  • jeremy drane says:

    yes

  • carlk says:

    thejuice,

    How does one rationalize the cash condition in conjunction with the 10Q?

    Specifically, would the 124M be in addition to the 666M, if it weren’t tied up as implied, or is it part of that cash balance?

    Moreover, how much cash is being tied up over coal reclamation matters?

    Finally, how has their short term treasury vehicle been holding up relative to par?

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