When it comes to fiber-based telecom, there are ups and there are downs - and then there is TW Telecom (NASDAQ:TWTC, news, filings). In their earnings report after the bell, the company reported revenues of $304.8M, EBITDA of $109.6M, and earnings per share of $0.05. Those results are essentially in-line with expectations, except perhaps the earnings per share which beat by $0.01. Additionally, TW Telecom doesn't offer much in the way of guidance but who needs it? You could set your watch by these numbers, here is a summary table of the last 4 quarters ($ in millions):
|Cost of Revenue||126.2||123.7||123.2||127.2|
|Earnings per share||0.01||0.02||0.04||0.05|
|Free Cash Flow||12.7||14.5||23.6||33.8|
Rarely do we get trends so easily discerned. Data and Internet revenues continued their 4-5% growth each quarter, network revenues and intercarrier compensation drifted slightly downward, and voice revenues slightly upward. M-EBITDA, FCF, and EPS continued to steadily increase, with M-EBITDA margins holding in the 36% range. Revenue churn remained 'high' relative to historical levels at 1.2%, but quite low compared to the rest of telecom.
Capital Expenditures have trended downward a bit, they had been up due to several colocation projects and opportunistic fiber purchases. Total capex for the year is forecasted at $250-270, which implies Q4 will be roughly similar to Q3. With falling capex has of course come higher free cash flow and a fatter wallet. With $432M in cash on hand, positive cash flow, no debt maturities for more than 3 years, and no financial covenants to worry about - they can probably raise money on pretty good terms in this market. Hence, the company remains in a very favorable position if the opportunity arises.
TW Telecom continued its on-net building dominance, adding 236 more to its total of 10,170 enterprise buildings - they also connect more than a thousand wholesale sites such as large data centers and wireless switching centers, etc.
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