Zayo Found Some Growth in Fiscal Q2, Expanded EBITDA

With the Electric Lightwave acquisition still pending (a familiar state of affairs), Zayo posted its fiscal Q2 numbers yesterday after the market closed.  They saw a return to growth on the top line despite ongoing work on the Zayo Canada business, and expanded EBITDA as well.  Here’s a quick summary of Zayo’s numbers in some context:

$ in millions	Fiscal Q2/16	Fiscal Q3/16	Fiscal Q4/16	Fiscal Q1/17	Fiscal Q2/17
– Dark Fiber	137.7	144.3	146.9	148.4	150.4
– Network Connectivity	168.7	172.5	175.3	175.6	177.6
– Colo & Cloud	58.5	60.3	63.6	64.1	66.7
– Other+Canada	4.7	100.9	121.5	116.8	112.0
Total Revenue	369.6	478.0	507.3	504.9	506.7
Adjusted EBITDA	218.9	242.8	257.8	260.6	263.4
Adj. EBITDA Margin	59.2%	50.8%	50.8%	51.6%	52.0%
Capex	172.4	185.1	187.4	208.3	213.6
Buildings on-net	19,341	23,418	24,282	25,263	25,886

Zayo saw steady growth across all three of its main infrastructure business.  Only with Zayo Canada did they see headwinds, and those are expected as the company continues integrate and restructures that business.  That being said, composite analyst estimates were expecting something slightly higher.  Meanwhile, earnings per share of $0.08 was right in line with estimates.

Zayo’s purchase of Electric Lightwave will shift these numbers somewhat, and it should be interesting to see what they do with the less-infrastructure-intensive piece of that business in relation to the similar piece over at Zayo Canada.  Do they combine the two, then spin it off a la Onvoy?  Or does it have enough mass and EBITDA potential to develop into another consolidation platform that could bring more revenue onto the vast base of infrastructure Zayo has created in its rollup of fiber and colo?  After all, they may have spun off Onvoy, but it’s still out there and now is doing consolidation of its own.

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Categories: Fiber Networks · Financials · Mergers and Acquisitions · Metro fiber