TW Telecom Rolls On Through Q1

May 10th, 2010 by · 4 Comments

Competitive services provider TW Telecom (NASDAQ:TWTC, news, filings) has released its first quarter 2010 results, turning in yet another solid performance. Revenues and earnings per share (not including debt extinguishment charges) were both above estimates. Here is a quick table summarizing their results in the context of the prior four quarters:

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10
– Data/Internet 112.0 115.8 120.0 124.8 129.1
– Network 93.9 93.2 92.3 90.5 89.5
– Voice 83.1 83.5 83.8 82.9 84.1
– Intercarrier Compensation 8.6 8.4 7.8 9.8 8.5
Total Revenue 297.6 301.1 304.8 307.9 311.2
Cost of Revenue 123.7 123.2 127.2 129.9 128.9
SG&A 75.8 75.5 74.6 71.4 75.1
M-EBITDA 104.4 108.9 109.4 113.9 114.4
M-EBITDA Margin 35.1% 36.2% 35.9% 37.0% 36.7%
Earnings per share 0.02 0.04 0.05 0.07 0.08
Revenue Churn 1.3% 1.3% 1.2% 1.2% 0.9%
Capital Expenditures 73.4 69.2 59.9 72.3 80.9
Free Cash Flow 14.5 23.6 33.8 25.7 17.5

Revenue & Churn:  You can set a clock by TW Telecom’s revenue progression, and as always $311.2M was a solid number.  With an improving economy though, it’s time to start expecting a bit of an acceleration isn’t it?  They just might, actually, as churn fell rather sharply and the company mentioned a 5 month (Dec-Apr) surge in bookings.

M-EBITDA & Margins: The first quarter traditionally sees somewhat higher costs as salary increases kick in and other expenses tend to come due, and thus while modified EBITDA went up sequentially, it didn’t go up much and m-EBITDA margin fell slightly.  That was entirely expected, and margins were still solidly up from Q1/09’s 35.1%.

Free Cash Flow and Capex:  Cash flows also have some seasonality across the sector, and while TW Telecom feels it less than others like Level 3 and Global Crossing it is still there somewhat.  Capex was relatively high for the quarter, as the company saw both success-based sales increases and made investments in its product portfolio.  The company is now guiding capex to the high end of the $275-300M range they previously gave, and seems to be gearing up for those higher growth rates I’d like to see.

Lit Buildings:  As always, the company added another pile of  buildings to its on-net footprint, this time 240, giving them connectivity to 10,647 lit enterprise buildings.

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Categories: Financials · Metro fiber

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4 Comments So Far

  • fluids_only says:

    Do you think it might be possible to get Larissa and Jim to swap jobs for about 6 months … sort of like a flat swap on Craigslist? Just to see …?

  • carlk says:

    SG&A on a percentage basis seems a great deal more than just “salary increases.” It represents greater than five percent in just one quarter! Is it possible they’re paying a great deal more to indirect sales channels for capturing biz?

    Their # of lit enterprise buildings is quite impressive. Do they break out owned vs. leased buildings?

    They maintain greater than 25 percent more on net buildings than the bigger revenue dog in their emerging space who hardly hunts when raw numbers are digested.

    • Anonymous says:

      i don’t think tw has an indirect channel or much of it? if they do it is a small part of biz, if any.

  • carlk says:

    Hmm, maybe it’s reasonable considering reduced YOY percentage comparisons and the higher revenues for the same period. Thx. Nice work by the blog owner.

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