Zayo’s Train Kept Rolling Through Its Fiscal Q4

Zayo Group finished off its fiscal fourth quarter with its usual steady growth in revenue, EBITDA, and footprint expansion.  Zayo has had a very busy M&A year already.  During the quarter, Zayo closed the purchase of Arialink, and after the quarter ended they closed the purchases of AboveNet and FiberGate.  They still have the USCarrier deal to finish later this year as well, and they started off the year buying MarquisNet.  Here’s a quick table with the relevant data for the quarter ending June 30, 2012. 

$ in millions	Fiscal Q4/11	Fiscal Q1/12	Fiscal Q2/12	Fiscal Q3/12	Fiscal Q4/12
– Zayo Bandwidth	55.9	56.5	64.5	74.8	76.4
– Zayo Fiber Solutions	13.5	13.2	15.3	19.6	22.7
– zColo	9.5	9.7	10.2	11.8	11.7
Total Revenue	77.8	78.4	89.0	105.0	109.6
Adjusted EBITDA	37.2	38.0	45.1	53.9	57.5
Adj. EBITDA Margin	47.8%	48.4%	50.6%	51.3%	52.4%
Capex	24.9	28.6	31.4	42.7	21.4
Buildings on-net	4393	4542	5193	5431	6055

The Arialink acquisition contributed $0.8M to revenue during the quarter, meaning Zayo saw 3.5% organic growth, a very solid quarter.  EBITDA margins continued to rise, up another 1.1% sequentially to an amazing 52.4%.  The company spent less during the quarter on capital expenditures than it has in recent quarters, although they built out 121 route miles and connected 203 additional on-net buildings.

Zayo also filled in a few of the gaps on AboveNet by providing some Q2 numbers.  The deal closed on July 2, hence in Q3, so in its last quarter of operations AboveNet turned in a relatively muted amount of sequential revenue growth (following a big Q1), an impressively high EBITDA number, and a sequential drop in earnings per share.  Here’s another quick table:

$ in millions	Q2/11	Q3/11	Q4/11	Q1/12	Q2/12
Revenue	118.3	118.2	121.6	127.7	129.0
Adj. EBITDA	54.0	56.4	55.9	58.5	62.9
EBITDA Margin	45.6%	47.7%	46.0%	45.8%	48.7%
EPS (diluted)	0.60	0.67	0.90	0.68	0.45

Perhaps a slight tailing off there with acquisition expenses and all that, but still very solid as usual.

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Categories: Financials · Metro fiber