Earnings Preview: Steady Progress for tw telecom, Cogent

August 6th, 2013 by · Leave a Comment

Two very different competitive fiber operators will report earnings later this week.  Both tw telecom and Cogent have scheduled their conference calls for Thursday morning, although usually that means tw telecom will have their release out the night before.  Both seem to have cracked the code of profitability in this space, although from very different approaches.

tw telecom: tw telecom has been busy for the last several quarters spending money and resources on its next generation Constellation platform, dragging back the bottom line a bit in preparation for the next wave.  That trend will surely continue to impact their Q2 numbers, but within expectations.  My guesses:

($ in millions) Q2/12 Q3/12 Q4/12 Q1/13

Q2/13
(my guess)

- Data & Internet Services 182.5 189.2 197.8 202.1 208
- Network Services 83.0 81.3 81.0 78.9 79.5
- Voice Services 91.0 91.1 92.1 92.3 92
- Intercarrier Compensation 8.0 7.5 7.0 7.9 7.5
Total Revenue 364.5 368.9 377.9 381.2 387
M-EBITDA  134.0 136.5 138.3 136.0 140
M-EBITDA Margin 36.8% 37.0% 36.6% 35.7% 36%
Earnings per share  0.13 0.14 0.11 0.09 0.12
Revenue Churn 0.9% 0.8% 0.9% 0.8% 0.9%
Capital Expenditures 80.8 83.9 99.6 90.9  90-100
On-net buildings added 462 552 497 498 450-500 
Free Cash Flow 37.7  37.2 17.5 23.9  ~20

.

Cogent Communications:  Analysts are predicting Dave Schaeffer and his team will move the company's profitability further across the break even line to a nickel per share.  I'm going to be very slightly less optimistic than that, although I'm not expecting any trends to break.  Cogent recently poached XO's Ernie Ortega as its new Chief Revenue Officer so I'll be curious to hear what they've got in mind for Q3.  In the meantime, my guesses for Q2:

$ in millions Q2/12 Q3/12 Q4/12 Q1/13 Q2/13
(my guess)
 - On-net 57.3 58.1 60.4 61.7 63.0
 - Off-net 19.9 20.9 21.6 22.3 23.0
 - Other 0.6 0.6 0.6 0.6 0.6
Revenue 77.8 79.7 82.6 84.6 86.6
EBITDA 25.3 26.2 28.5 28.3 29.2
Earnings per share -0.04 0.00 -0.01 0.01 0.04
Gross Margin 55.0% 54.3% 54.6% 56.1% 55%
Adj. EBITDA Margin 32.6% 32.9% 34.6% 33.5% 33.7%
On-net Buildings 1799 1832 1867 1890 ~1910

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Categories: Fiber Networks · Financials · Metro fiber

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