Global Crossing Limited (GLBC)
Q2 2010 Earnings Call Transcript
July 27, 2010 9:00 am ET
Mark Gottlieb – SVP, Finance and IR
John Legere – CEO
John Kritzmacher – EVP and CFO
– EVP and Chief Marketing Officer
Gary Breauninger – CFO, North America and Worldwide Carrier Services
– CFO, UK and Europe
Michael Rollins – Citi
Donna Jaegers – D.A. Davidson
Romeo Reyes – Jefferies & Company
Jason Armstrong – Goldman Sachs
Previous Statements by GLBC
» Global Crossing Q1 2010 Earnings Call Transcript
» Global Crossing Q4 2009 (Qtr End 12/31/2009) Earnings Call Transcript
» Global Crossing Limited Q4 2009 Earnings Call Transcript
Ladies and gentlemen, thank you for standing by, and welcome to the Global Crossing second quarter 2010 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer-session. (Operator Instructions) As a reminder, this conference is being recorded today, Tuesday, July 27th, 2010. I would now like to turn the conference over to Mr. Mark Gottlieb, Senior Vice President, Finance and Investor Relations. Please go ahead, sir.
Thank you, Tamika. Good morning, everyone, and thank for joining us today for our second quarter 2010 earnings call. John Legere, our chief executive officer; and, John Kritzmacher, our chief financial officer are here with us today. They'll each share their comments, after which we'll open the call for some questions. Presentation slides can be viewed to help follow our prepared remarks. They're available via webcast, which you can access through our Investor Relations Web site at
, access the Investor site and follow the links to the webcast.
Before we begin, we'd like to remind everyone that statements made herein that are not historical financial results are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934. Our actual results could differ materially from those projected in these forward-looking statements. And factors that could cause the actual results to differ materially from those in the forward-looking statements are contained in our reports filed or furnished with the Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly reports on Form 10-Q.
We're not obligated to publicly update or revise these forward-looking statements to reflect future events or developments except as required by law. Information contained herein is in summary format only and is qualified in its entirety by reference to the financial statements and other information contained in our Forms 10-K and 10-Q.
We refer you to our financial press releases posted at www.globalcrossing.com, which include explanations of, and reconciliations with, the closest GAAP financial measures for our non-GAAP measures, such as operating income before depreciation and amortization or OIBDA free cash flow and constant currency measures.
With that I'll turn the call over to John Legere.
Okay. Thank you, Mark. Good morning, and thank you everyone for joining. Before I turn to John Kritzmacher for a detailed review of our financial performance, I'm going to briefly provide you with a high level review of our second quarter results, and then follow with a brief update of our view of the market and our progress on executing our strategy.
I'm pleased to report that on an operational or constant currency basis in the second quarter, we delivered profitable sequential improvement in our core invest and grow revenue, with strong improvement in OIBDA and free cash flow. We made important progress towards our annual objectives. And we remain positioned to meet the full year guidance ranges that we provided to all of you at February.
However, I will acknowledge that on our invest and grow revenue, we expect to trend towards the lower end of that guidance range. This is due to the timing of certain shorter cycle carrier deals, which has led into the second half of 2010; and the fact that although we returned to constant currency growth in the UK, our progress in enterprise revenue growth there has been somewhat slower than expected. Now, we continue to be optimistic regarding our business in the UK. And with the UK government's emphasis on cost reduction and our ability to deliver savings, we actually see this as much of an opportunity as we do see it as a threat.
Now, our business is experiencing positive momentum from continued strength in demand as well as strong order volumes. During the second quarter, average monthly order volumes reached a new high of $4.6 million, surpassing our prior peaks achieved last quarter and also achieved in the third quarter of 2008. In fact, our first half 2010 order volumes reflect significant improvement over any period since the end of 2008. And we expect to see this momentum translate into accelerated revenue growth in the second half of this year.
Our momentum reflects an underlying trend, which we previously discussed. Customers are increasingly using more powerful networking resources like Global Crossing to support critical business applications. In many cases, they're deploying IP resources in new ways that use secure, reliable, high performance networks in a manner that would previously have been impractical or uneconomical with legacy network operators.
This trend has also been observed in a number of places. For instance, there was an article on the Wall Street Journal last week that described increased business spending on Internet infrastructure. While this article focused largely on demand for servers, hosting, and cloud services, it underscored several of the fundamental drivers we have discussed regarding our business. These include the value of reaching customers, business partners, and employees over private IP-based networks or on the Internet as well as the increased use of video streams and hosting facilities. We are seeing enterprise customers convert more of their applications and infrastructures to IP, employ IP VPN and Ethernet networks with higher bandwidth and speed, and look to solution providers who can provide transport hosting and cloud-based solutions.