Hello everyone. I backed up the truck so to speak at .72 cents on Level 3 Communications (NYSE:LVLT, news, filings) equity on Friday so I thought I would take a minute to update a few spreadsheets and get my vision of the future out there for discussion.
First I did a quick and dirty ev/ebitdas calculation based on what I think is market price on the equity and debt which came out under 5. I've also included the calculation assuming face value of the debt, which came out under 7. I wanted an entry point under these numbers. Here's that spreadsheet. I posted something close to this on the IV board however after going back through the 2009 numbers I'm a bit more optimistic on the ebitdas number, which I'm projecting here at 1150 for FY09 (more on that below).
Second, here's my view of the 2009 results. As you can see I'm projecting pretty flat top-line numbers. I would like to think we can grow around 5% in CNS but being that we're on the threshold of eating cat food for Thanksgiving, I'm going to just stay pat. As far as gross margins go, well this has been a big disappointment to me. I thought we would have this number in the 70's by now. Regardless, I think we will see more improvement in 2009 as we shut down Broadwing and finish Unity. As to SGA and CAPEX, hopefully our newly acquired executive can cut more fat.
Assuming I'm in the right ballpark, under this scenario we generate around 150M in cash in 2009 to add to 768M at the end of 2008 for a total of 918M and then we spend 199M to payoff the 09 debt leaving us with 719M going into 2010 (we have app. 533M due in 2010). All this tells me that we are clear up to 2011 when we will have to refinance the app. 600M due that year, something I think we will be prepping the markets for over the next 24 months (enron has articulated this quite well on the IV board if you want more info on this subject). If we could just get some organic growth this factory would really start to mint money. Good luck out there and I look forward to your comments!
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