Level 3’s earnings in 4Q15
Level 3 Communications (LVLT) reported its 4Q15 results on February 4, 2016. In this series, we’ll take a broad look at the company’s performance during the quarter. Level 3 reported GAAP (generally accepted accounting principles) earnings of ~$3.3 billion for 4Q15. The company also recorded a ~$3.2 billion income tax benefit.
During the quarter, Level 3’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was ~$0.68 billion compared with the pro forma figure of ~$0.47 billion in 4Q14. Note that according to the company, the figures for TW Telecom’s acquisition-related expenses of $4 million and $156 million in 4Q15 and 4Q14, respectively, are included in the adjusted EBITDA figures.
The market received Level 3’s 4Q15 results and guidance for 2016 positively. The company’s stock rose ~6.9% from the previous day’s closing price on the day the results were announced.
Level 3’s guidance for 2016
According to Level 3, its free cash flows are expected to increase from ~$0.66 billion in 2015 to $1–$1.1 billion in 2016.
According to Level 3, its adjusted EBITDA is expected to grow 9%–12% YoY (year-over-year) in 2016. The company is taking into account 2015 adjusted EBITDA of ~$2.6 billion, which doesn’t have the contribution from Level 3’s Venezuela subsidiary for three quarters, according to the company.
For a diversified exposure to select telecommunications players in the United States, you may consider investing in the iShares Russell 1000 Value ETF (IWD). IWD had a total of ~2.3% in AT&T (T), CenturyLink (CTL), Level 3 Communications, Verizon (VZ), and T-Mobile (TMUS) at the end of December 2015.