Global Crossing, LTD (
Q1 2011 Earnings Call
May 3, 2011 9:00 a.m. ET
Mark Gottlieb - Senior Vice President, Finance and Investor Relations
John Legere - Chief Executive Officer
John Kritzmacher - Chief Financial Officer
Gary Breauninger - CFO, North America & Worldwide Carrier Services
Donna Jaegers - DA Davidson
Previous Statements by GLBC
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Ladies and gentlemen, thank you for standing by. Welcome to the Global Crossing first quarter 2011 earnings conference call. During the presentation all participants will be in a listen only mode. Afterwards we will conduct a question and answer session.
At that time if you have a question please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator please press the star followed by the 0. As a reminder, this conference is being recorded Tuesday, May 3, 2011. 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, Tavana. Good morning everyone and thanks for joining us today for our first quarter 2011 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 will open the call for some questions.
Presentation slides can be viewed online to help follow our prepared remarks today. They are available via webcast, which you can access through our investor relations site if you go to www.globalcrossing.com, access the investor site and follow the links to the webcast. Please note that the financial results discussed on this call are unaudited results and are subject to adjustments in our final audited results to be included on our quarterly report on 10-Q.
Next I would 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. Factors that could cause actual results to differ materially from those in the forward-looking statements are contained in our reports filed or furnished to 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. Good morning, good afternoon or good evening to everyone. Thank you for joining us. Let me begin with a few comments on the definitive agreement with Level3 that was announced to all of you three weeks ago.
As I said at the time, we are very excited about the compelling strategic fit of the two companies, which creates value for our investors and for our customers. The combined company will have increased scale with more than $6 billion of combined 2010 revenue. The combination will produce significant cost synergies with an estimated annual run rate of $340 million when fully realized, resulting in a larger company that is more competitive with broader product capabilities and network reach to serve customers.
Level3 brings a formidable Internet backbone, numerous metro networks and collocation facilities and a strong content delivery network and transport services capability in the United States. Global Crossing brings a strong global enterprise business and product portfolio, which includes managed and Cloud based services with a deep market presence and data center footprint in Latin America and Europe as well as an expansive global network.
Once this transaction closes customers will have a stronger and more competitive alternative to the incumbents. Until then Global Crossing remains keenly focused on operating our business, executing our strategy of moving up the value chain and delivering a differentiated customer experience. During the first quarter we continued to successfully execute this strategy, capturing growth opportunities for advanced IP, Ethernet, data center and Cloud based solutions and the applications they enable.
Let’s move into a brief summary of our financial performance in the quarter. I’m pleased to report that in the first quarter our strategic invest and grow revenue, which consists of our business serving global enterprises and carrier customers excluding wholesale voice, increased 6% year over year and OIBDA increased 9% year over year. This year over year growth is consistent with the annual guidance we provided in February.
We expect invest and grow revenue to resume sequential growth in the second quarter. Our order volume for the quarter increased 9% year over year with average orders of $4.8 million in monthly recurring revenue. This order intake surpassed our prior highest volume of $4.6 million achieved in the second quarter of last year.
As the key leading indicator, it provides a solid foundation for future growth. The quality of our order book continues to be driven by VPNs over IP and Ethernet as well as hosting, managed and collaboration services. Revenue attrition, which includes repricing of contracts and disconnects, was slightly higher than normal but did remain below 2%. Attrition tends to be seasonally higher in the first quarter given the timing of contract anniversaries.