Competitive fiber and data provider TW Telecom (NASDAQ:TWTC, news, filings) reported Q4 earnings today in the same way it seems to do every quarter - quietly yet powerfully, and with total disregard for the daily economic weather forecast. For the full year, revenues grew 5% despite the recession. Data and internet services rose some 16% on the year, while network services fell 5% and voice services were basically flat. Here is a quick table summarizing the company's Q4 performance:
|- Intercarrier Compensation||8.6||8.4||7.8||9.8|
|Cost of Revenue||123.7||123.2||127.2||129.9|
|Earnings per share||0.02||0.04||0.05||0.07|
|Free Cash Flow||14.5||23.6||33.8||25.7|
Revenues of $307.9M were up sequentially from $304.8M in the prior quarter, which was rock solid but not spectacular. Modified EBITDA of $113.9M rose more quickly, as modified EBITDA margins reached a new high of 37% for the quarter. Will they find their way to 38% or even 39% in 2010? Earnings per share of $0.07 were better than expected.
As for 2010, the company doesn't give much in the way of formal guidance but we barely need it. Churn is expected to continue at similar levels and pressure revenue somewhat, but the real question is whether sales across the sector pick up. If they do, I think we ought to expect TW Telecom to return to double digit revenue growth before long.
It has now been over 3 years since the company purchased Xspedius in one of the more successful fiber M&A events of the last consolidation phase. As I have mentioned, I suspect they are now ready for more - and with their stock price up and the credit markets open, the time seems ripe. All they need is a willing target, hmmm....
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