After being spun off from Windstream in late April of this year, CS&L became the industry’s first publicly traded network REIT. The markets haven’t been terribly kind since, but this morning we got our first look at the actual books as the company posted its results for the part of Q2 since becoming independent.
With only one customer and a contract of known value, there were few surprises to be had of course, although the street is still putting together its models so expectations are still in flux. Revenues came in at $128.7M, which for the full quarter would therefore have been something like $172M. EBITDA was $122.2M, putting EBITDA margins at 95% — a number that of course reflects the lack of opex beyond administration under the arrangement with Windstream. Funds from operations was $0.48 per share, while EPS checked in at $0.05 per share.
But those numbers were not really what the sector is waiting to hear about. Rather, we are all waiting (impatiently) to see if CS&L follows its debut with additional acquisitions, and of what type they might be. Indeed, CEO Kenny Gunderman is quoted in the release saying they have a strong pipeline of acquisition possibilities, as well as funding opportunities to match.
Additionally, on a panel at the Cowen Infrastructure Summit yesterday, Gunderman indicated a willingness on the part of CS&L to buy operating businesses, not limiting its appetite to exclusive sale/leaseback arrangements like the inaugural Windstream contract. He suggested the company is actively looking at a wide range of infrastructure targets, with fiber at the forefront but also data center, tower, and even (gasp) copper.
What sort of actual deals get done over the next year or so will definitely be fascinating to watch. I honestly don’t know what to expect out of CS&L.
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