Fiber Earnings Roundup: AboveNet, PAETEC, Cogent

May 5th, 2011 by · 3 Comments

As promised, three very different fiber network operators reported earnings today, and all three bested revenue estimates.  Here is a quick summary of each with some comments:

AboveNet: abvt turned in another quarter of strong growth with revenues of $114.4M.  While those were well above estimates, they did include higher than normal equipment sales and contract termination revenue of $2.4M and $2.1M.  Adjusted EBITDA of $51.5M and EBITDA margins of 45.0% reflected the higher revenue.    AboveNet left current guidance in place, which continues to look quite easy to achieve.  Capex didn’t stay high the way I thought it might, I’ll have to listen in on the call to see how spending is looking going forward.  Earnings per share came in below analyst estimates at $0.54 due to higher costs, but then the pendulum has to swing back the other way now and then.

$ in millions Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 




Revenue $97.2 $100.7 $103.7 $108.1 $114.4 $460-470 (13-15%)
Adj. EBITDA $42.6 $45.7 $47.2 $47.3 $51.5
EBITDA Margin 43.8% 45.4% 45.5% 43.8% 45.0% ~2010 (i.e. 44-45%)
Capex $27.4 $30.1 $30.5 $47.7 $31.1 $140-150
EPS (diluted) $0.52 $0.62 $0.66 $0.85 $0.54


PAETEC: PAETEC (news, filings) hit the ground running after closing the Cavalier deal, managing to improve its numbers across the board.  Revenues of $495.5M were ahead of expectations, both mine and the street’s, and adjusted EBITDA of $91.4M and margins of 18.4% were a pleasant surprise as they managed to generate some synergies right off the bat it seems.  Capex was higher mostly due to EoC investments, and the company spent just $1.5M on integration capex thus far.  Following further integration work later this year, I wonder if PAETEC will boost its EBITDA margins above the 20% barrier.

$ in millions Q1/10 Q2/10 Q3/10 Q4/10 Q1/11  




Revenue 390.1 396.1 408.4 429.2 495.5 $2,025-2,125
EBITDA 65.5 65.1 62.2 72.1 91.4 $375-395
Capex 29.5 31.4 34 30.2 46.8
Free Cash Flow 36.1 33.7 28.2 41.9 44.5
Gross Margin 50.6% 50.3% 49.5% 50.4% 52.8%
EBITDA Margin 16.8% 16.4% 15.2% 16.8% 18.4% ~18% (derived)


Cogent: I had thought there might be a seasonal drag on revenues and costs, but while SG&A did climb at Cogent Communications (NASDAQ:CCOI, news, filings) their revenue climbed faster and easily bested projections with $73.5M, or 5.8% sequentially.  That was almost yet not quite enough to keep Cogent’s earnings per share above zero despite the expected increased interest expense, although it was certainly enough to also beat projections.  Cogent added its usual 30 on-net buildings, and saw traffic growth if 18% over the fourth quarter.

$ in millions Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 


Revenue $62.8 $64.4 $66.8 $69.5 $73.5
EBITDA $17.5 $18.9 $20.3 $22.6 $24.2
Earnings per share -0.01 -0.02 -0.01 +0.06 -0.01
Gross Margin 55.3% 54.8% 54.3% 55.5% 56.9%
Adj. EBITDA Margin 27.9% 29.3% 30.4% 32.5% 32.9%

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Categories: Financials · Internet Backbones · Metro fiber

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