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Virgin Media: Improved Q1 revenue leads to free cash flow growth
By Jennifer Lanning Drey
Savannah, Ga., April 20 - Virgin Media Inc.'s first-quarter revenue growth drove a significant increase in free cash flow, which more than doubled year-over-year to £100 million, Eammon O'Hare, Virgin Media's chief financial officer, said Wednesday during the company's quarterly earnings conference call.
"Of course, free cash flow can be volatile from quarter to quarter due to cash capex timing, so don't expect it to double for the full year," he cautioned.
"I would expect that free cash flow growth would return to more normal levels as we move through the year."
Virgin Media's first-quarter revenues grew 5.7% year-over-year to £982.3 million, with the growth supported by all areas of the business, he said.
O'Hare also noted that the company was busy with debt activity during the first quarter, which he said confirmed its ongoing ability to reduce interest expense going forward.
During the period, Virgin Media successfully amended its senior credit facility to allow the company to have senior secured debt of up to 3 times operating cash flow.
Additionally, the company raised £1 billion through the issuance of new senior secured notes that allowed Virgin Media to lock in interest rates of less than 5.5% and increase its average maturity to six-and-a-half years. The company used the majority of the proceeds to repay existing bank debt.
Virgin Media also announced Wednesday that it intends to retire $550 million of its 2016 bonds, which have a 9% coupon.
Virgin Media is a U.K. entertainment and communications company with corporate headquarters in New York and operational headquarters in Hook, England.
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