Level 3 Communications (LVLT) 2Q05 Financial Results Preview

Level 3 Communications (LVLT -- $2.21) intends to report 2Q05 results before the market opens tomorrow, July 21.  A conference call is scheduled for 8:00 AM MST (10:00 AM EST) at 612-288-0329 (and by Internet).

Before reading further to review our 2Q05 forecasts for the company, please make a note of our disclaimer.   

These forecasts are based on an uncompleted draft forecasting model located at Maverick Society of Investment Research.

Revenue forecasts represent a best guess, not derived from any detailed analysis of revenue drivers or correlation with market research data.  Interest expense and depreciation forecasts, however, are based on rigorous analysis.  The various DCF models are drafts only.  No other sources but the company's SEC filings and press releases were consulted in developing these forecasts. 

Forecast summary overview:
Our communications revenue forecast for Level 3  is $370m, versus company guidance of $350 to $370m and below the $381m ($510m less non cash revenue of $126m) reported in 4Q00.  We expect there may be some slight upside to this forecast.  We are estimating total 2Q05 revenue for the company at $1010m.

For comparison reasons only, we are forecasting non-GAAP "OIBDA" at $111m versus company guidance of $75 to $95m.  The upside is based primarily on our estimate for an operating loss  (as defined by the company) of $75m versus high-end guidance of $85m, and our $175m estimate for depreciation and amortization versus company guidance for $170m.

For comparison purposes, we are forecasting 2Q05 "unlevered cash flow" at positive $54m and 2Q05 "consolidated cash flow" at negative $42m.

We estimate 2Q05 total debt at $6,090m and total cash of $1,470m, which was boosted by an $880m convertible offering in April.   

Please see the LVLT forecast worksheet for additional information. 

Also note:  The next stage of development for the forecast model will include the analysis of true economic drivers of the company in comparison to company-defined non -GAAP metrics. 

Update:
Level 3 Communications reports 2Q05 results in line with our forecasts.