Faster Growth For tw telecom in Q4

In its results released after the close, TW Telecom (NASDAQ:TWTC, news, filings) posted its usual reliable results but with a bit extra to end 2011 on a powerful note.  Revenues, EBITDA, and EPS each outperformed both analyst expectations and for the most part my own as well.  Here’s a quick table with the numbers in some context:

($ in millions)	Q4/10	Q1/11	Q2/11	Q3/11	Q4/11
– Data & Internet Services	145.1	152.2	158.2	164.7	171.6
– Network Services	89.5	89.5	88.9	86.9	85.4
– Voice Services	81.9	83.0	83.6	85.2	86.7
– Intercarrier Compensation	8.3	7.8	8.7	7.7	7.6
Total Revenue	324.8	332.5	338.4	344.5	351.5
M-EBITDA	119.4	121.4	123.2	125.0	128.1
M-EBITDA Margin	36.7%	36.5%	36.4%	36.3%	36.3%
Earnings per share	0.11	0.08	0.09	0.10	0.11
Revenue Churn	1.0%	1.0%	0.9%	1.0%	0.8%
Capital Expenditures	78.1	79.3	90.9	86.0	86.6
On-net buildings added	537	512	569	561	566
Free Cash Flow	26.4	26.1	16.5	23.2	25.6

Revenues & Growth: Overall, revenues grew 2.0% sequentially, powered by a 4.2% surge from the data/internet revenues and an uptick in voice from converged services.  Going forward they did say that their intercarrier compensation would be cut in half over the next six years with the first downstep in the second half of 2012, but I’m actually surprised it will hold up that well.  Churn of $0.8% was the lowest its been in a long while.

EBITDA & EPS:  M-EBITDA of $128.1M and earnings per share of $0.11 were both above expectations due to the higher revenue number with margins falling in the usual range.

Cash & Spending: Free cash flow of $25.6M was entirely as usual.  Capex was flat sequentially, continuing the same level of investment that has seen them adding 500+ buildings to their network for the fifth straight quarter.  In all they added 2,208 buildings to their network in 2011 and appear ready to keep the pace going forward.

Conclusions: tw telecom’s business continues to hum along in an almost maddeningly consistent manner.  Of course, that’s a good thing for investors, which is why the stock has been getting more credit lately.

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Categories: Financials · Metro fiber