Competitive metro fiber operator TW Telecom (NASDAQ:TWTC, news, filings) easily beat my own guesses on most fronts yesterday with its first quarter earnings report. Revenues were a bit higher than expectations, while margins, EBITDA, and earnings per share all expanded. Free cash flow was above the usual range due to lower capex and a slight dip in on-net building additions. Here's a quick tabular summary.
|($ in millions)||Q1/11||Q2/11||Q3/11||Q4/11||Q1/12(actual)|
|- Data & Internet Services||152.2||158.2||164.7||171.6||176.8|
|- Network Services||89.5||88.9||86.9||85.4||84.8|
|- Voice Services||83.0||83.6||85.2||86.7||89.6|
|- Intercarrier Compensation||7.8||8.7||7.7||7.6||7.6|
|Earnings per share||0.08||0.09||0.10||0.11||0.13|
|On-net buildings added||512||569||561||566||467|
|Free Cash Flow||26.1||16.5||23.2||25.6||37.3|
The strongest bit of growth came, interestingly enough, from voice services - just a bit faster than the usual leader: data and internet. There's a bit of headwind ahead for total revenues, as intercarrier compensation reform will lead to a drop of $2M quarterly from that segment during the second half. But in general the growth trend remains in place, the only question being what it will take to boost it into double digits. Churn was a bit higher sequentially but within historical levels.
tw added less than 500 buildings to its network for the first time in a half dozen quarters, although 467 is nothing to sneeze at. This is also reflected in lower company capex for the quarter, which in turn led to a bigger free cash flow number. This is probably just a fluctuation, as the company overall seems to be following the same path forward that it has for some time now.
tw is also enhancing its product portfolio to include enhanced Ethernet and Intelligent Network capabilities over the next few quarters, improving its ability to serve as the link between the enterprise, the datacenter, and the cloud.
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