April 28--Level 3 Communications' first-quarter earnings were below analysts' expectations, but that didn't keep company officials from making plans for its growing cash flows on Thursday morning during the Broomfield-based company's earnings report.
The telecommunication-services provider posted quarterly revenue of $2.05 billion, below analysts' expectations of $2.08 billion. Per-share profits were 35 cents, coming in lower than the expected 43 cents per share.
Level 3 (NYSE: LVLT) also expects to record a debt-refinancing related charge of $40 million, or 11 cents per share, in the second quarter.
"Looking at first quarter results, although we started a bit weaker than expected, we are maintaining our full year 2016 outlook," said Chief Financial Officer Sunit Patel.
First quarter adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $710 million, up nearly 15 percent from first quarter last year when it stood at $620 million.
Level 3 is anticipating adjusted EBITDA growth of 10 to 12 percent for the year and free cash flow of $1 billion to $1.1 billion. As of March 31, the company had cash and cash equivalents of $1.004 billion.
Free cash flow for the first quarter also grew substantially: $213 million, up from $42 million a year ago. The subject of what to do with the extra cash is currently being discussed with the board, said chief executive Jeff Storey.
Further mergers and acquisitions are the current preferred strategy, but the idea of a stock buyback is not off the table, Storey said.
"Our priorities are investing in the business through organic growth and disciplined (mergers and acquisitions). However, absent those opportunities, returning cash to stockholders makes perfect sense to us, so we will continue to look at that with a bias toward investing money and growing the business."
Storey declined to put a timeline on a potential buyback decision, saying only that the board would be discussing it "in the coming months."
The executive returned to work this month following a medical leave for heart surgery. Storey said he was "happy to be back" and thanked his employees for their kind thoughts and solid work performance in his absence.
Shares of Level 3 closed Thursday at $54.20, up just slightly from the previous close of $54.09.
Shay Castle: 303-473-1626, email@example.com or twitter.com/shayshinecastle
(c)2016 the Daily Camera (Boulder, Colo.)
Visit the Daily Camera (Boulder, Colo.) at www.dailycamera.com
Distributed by Tribune Content Agency, LLC.
© Tribune Content Agency, source Regional News