Global Crossing (GLBC)
Q1 2010 Earnings Conference Call
April 29, 2010 9:00 AM
Mark Gottlieb – SVP, Finance
John Legere – CEO
John Kritzmacher – CFO
Gary Breauninger – CFO, North America and Worldwide Carrier Services
Ted Higase – EVP, Worldwide Carrier Services
Michael Rollins – Citi Investments
Romeo Reyes – Jeffries and Company
Donna Jaegers – DA Davidson
Winston Len – Goldman Sachs
Previous Statements by GLBC
» Global Crossing Q4 2009 (Qtr End 12/31/2009) Earnings Call Transcript
» Global Crossing Limited Q4 2009 Earnings Call Transcript
» Global Crossing Ltd. Q2 2009 Earnings Call Transcript
Welcome to the Global Crossing first 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 Thursday April 29, 2010. I would now like to turn the conference over to Mr. Mark Gottlieb, Senior Vice President, Finance. Please go ahead sir.
Good morning everyone and thank you for joining us today for our first quarter 2010 earnings call. John Legere, our Chief Executive Officer and John Kritzmacher, our Chief Financial Officer, are here with us today. They will 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 today, they're available via webcast, which you can access through our investor relations website if you go to www.globalcrossing.com, access the investor site and follow the links of the webcast.
Before we begin, I’d like to remind everyone that statements made herein that are not historical financial results are forward-looking statements as defined in Section 21-E of the Securities Exchange Act of 1934. Our actual results could differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially from those in these 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 are 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. I'm pleased to report that based on the performance of the business during the first quarter, we're on track to deliver the guidance we provided in February. We continue to see healthy demand in the market and we're seeing some encouraging signs of improvement starting with strong order intake that took place this quarter. Order volumes for the quarter matched prior peak levels we experienced in the year 2008. This is an indicator of the solid demand we're seeing for our IP-based solutions and it's a result of the investments we've been making.
We continue to make targeted investments in network and product enhancements as well as sales force additions to capitalize on this opportunity we see. Our business is well positioned to take advantage of significant opportunities that will exist for our company this year and beyond. In addition, we continue to garner industry awards and customer satisfaction ratings that validate our differentiation in the marketplace and this differentiation positions us well for the next phase of IP adoption.
I'll discuss in more detail our financial performance for the quarter and follow with a brief discussion of operational highlights as well as an update of what we're seeing in the market. So let's get started.
During the first quarter, Global Crossing generated $648 million of revenue, a year-over-year improvement of 6%. This includes $554 million from our strategic investing growth services, a year-over-year increase of 9%. And while our year-over-year growth benefited from a slight tailwind from foreign currency this quarter compared to the first quarter of 2009, these results represent an increase in total revenue and investing grow revenue of 2% and 4% respectively while looked at in constant currency terms.
We generated OIBDA of $77 million in the first quarter, an improvement of 3% year-over-year. As we anticipated, free cash flow in the quarter was impacted by higher cash interest expense, typical seasonal spending, the planned reduction in cash from sales of IRU and prepaid service and from pressure on working capital. Trailing 12 months free cash flow has remained neutral to positive for seven consecutive quarters.
Our performance for the quarter is on track to achieve the guidance we provided in February. In fact we are reaffirming that guidance today. We're encouraged by certain indicators that the economic environment may be improving. We remain cautiously optimistic about the prospects for improving demand for our services and growth in our business this year.
We saw average monthly order volumes during the first quarter of $4.4 million of monthly recurring revenue, the second consecutive quarter of sequential improvement and matching our highest previous order number, which we saw in the third quarter of 2008. Of course, orders need to be viewed over time and are only one indicator of future revenue but we are certainly encouraged by the improvement we saw this quarter and we continue to be encouraged by the opportunities we see in the market. Attrition in the first quarter was consistent with historical averages and taken together with the improved order results for the quarter, we see these as good indicators of an improving market and our competitive position.