Author Topic: CTL - CenturyLink  (Read 75808 times)

Valuehalla

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Re: CTL - CenturyLink
« Reply #210 on: August 08, 2018, 01:21:39 PM »
2Q 2018 Earnings are out:

http://ir.centurylink.com/file/Index?KeyFile=394566856

- Positive surprise: Great Cash Flow figures!
- Full year 2018 outlook raised EBITDA & FCF !
- MarketCap was 20,02 B on 18,56 $ closing price today,
- After hour the share price is up
- Revenue was 5,902 B in Q2 (5,945 B in Q1) = disapointing aspect
- Expenses down
- Imporved EBITDA margins
- Free Cash Flow: 811 M in Q2 (852 M in Q1); expected outlook for FCF 2018 increased to 3,6 to 3,8B (till now 3,15 to 3,35 B)
- For the dividend (2,3 B per year) that means the payout ratio will be in a range of app 64 % to 60,5% in 2018
- net debt to adj EBITDA ratio down to 4.2 x; (4.3 x in previose quarter)
- Long-Term Debt & Credit Facilities down from 36,94 B at end of Q1 to 36,878 B  (37,238 B end Q4 17)

Conference call:
- Intergration Level 3 is going well
- Expect further increasing EBITDA margins in the future
- Expect further increasing FCF in the future
- no revenue guidance
- no questions or comments on the dividend, according to the outlook dividend will stay at 0.54$ per quarter (2.16$ per year)

Transcript:
https://seekingalpha.com/article/4196789-centurylink-ctl-q2-2018-results-earnings-call-transcript?source=email_rt_article_readmore&dr=1
« Last Edit: August 08, 2018, 06:32:10 PM by Valuehalla »
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petec

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Re: CTL - CenturyLink
« Reply #211 on: August 08, 2018, 03:32:46 PM »
Did they clarify how much of the fcf is one-offs (tax etc)?

longinvestor

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Re: CTL - CenturyLink
« Reply #212 on: August 08, 2018, 03:40:21 PM »
Did they clarify how much of the fcf is one-offs (tax etc)?

Yes, they did. Someone asked a question about this. It's mostly synergy driven and Sunit pointed to the increased guidance on FCF.

Valuehalla

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Re: CTL - CenturyLink
« Reply #213 on: August 08, 2018, 04:37:01 PM »
They said that the taxrefund of Q2 was mentioned already in the outlook given in Q1.
The taxrefund in Q3 is spended in the pensionplan, so neutral.
So I understand that clearly, like Longinvestor does as well, the increased given outlook for FCF is not based in taxrefunds, but in increased EBITDA, syernergies and business. Its a fundamental increase of the guidance, driven by synergies.
« Last Edit: August 08, 2018, 04:47:28 PM by Valuehalla »
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petec

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Re: CTL - CenturyLink
« Reply #214 on: August 09, 2018, 03:15:14 AM »
I wasn't suggesting the increase was due to tax refunds - I'm just trying to figure out what recurring FCF is.

Here's my take on the results:

All the commentary about how they are transforming the business is very positive and hopefully we start to see the results over the next few quarters.

The EBITDA guidance increase is nice but ultimately meaningless. They are extracting synergies faster, which boosts 2018 ebitda, but they're not guiding to higher final synergies, so recurring earnings power is not higher than previously expected.

I'm more interested in (and confused by) recurring FCF. New guidance for 2018 is $3.6-3.8bn, but on the Q1 call they disclosed $550m worth of one-off boosts to 2018 FCF including the q1 tax refund, early bonuses, and working capital gains. That suggests recurring FCF is $3-3.25bn. That's a very good number vs a $20bn market cap, especially given that they are still talking about 40-42% ebitda margins eventually which in round numbers is another $500-1bn in ebitda and, if you tax that at 20%, another $400-800m in FCF. That's great - anything around the $3.5bn mark in recurring FCF makes this stock insanely cheap IMHO.

What I find confusing is that the FCF guidance increase is $450m, much larger than the EBITDA guidance increase of $200m. Why? The capex guide is down a touch in absolute terms but not enough to explain the difference. It's not clear to me why recurring FCF should be higher if recurring ebitda hasn't increased (see above) and if capex guidance hasn't fallen (still 16% of revenues). I wonder if there is another one off in there, in which case recurring FCF might be in the high $2bn range rather than the low $3bn range.




longinvestor

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Re: CTL - CenturyLink
« Reply #215 on: August 15, 2018, 05:49:20 PM »
Early days of cheery consensus? Analysts have moved away from a “Don’t touch it” to a lovefest stock in less than a year.

petec

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Re: CTL - CenturyLink
« Reply #216 on: August 15, 2018, 05:57:20 PM »
Hope so!

walkie518

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Re: CTL - CenturyLink
« Reply #217 on: August 21, 2018, 09:06:22 PM »
it's likely still fairly cheap here?

should revs stabilize further we might have ourselves a fair amount of room to run?

petec

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Re: CTL - CenturyLink
« Reply #218 on: August 22, 2018, 11:03:11 AM »
it's likely still fairly cheap here?

should revs stabilize further we might have ourselves a fair amount of room to run?

Likely, yes, especially today, and especially if you assume >$3bn in recurring FCF (see my post above). But MN (who downgraded today) are right that there is no certainty that revenues will stabilise. My bet is that the transformation and simplification of the company will enable the new management to grow the combined business, but that has not yet been proven.

Valuehalla

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Re: CTL - CenturyLink
« Reply #219 on: August 22, 2018, 12:42:03 PM »
I agree that the revenue was the weak point in the Q1 figures. I expected more than 6 B which came not true.
In case of LVLT Storey and Patel stabilized the revenue and than it started to grow slightly in the end.
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