GTT Posts Sequential Growth, Integration Gains

With its integration of Interoute ongoing, GTT posted fourth quarter sequential growth in both revenue and EBITDA.  Here’s a quick table of the company’s results in some context:

$ in millions	Q4/17	Q1/18	Q2/18	Q3/18	Q4/18
Total Revenue	249.2	260.7	326.9	448.6	454.8
Sequential growth	25.3%	4.3%	25.3%	37.2%	1.4%
Adjusted EBITDA	60.8	62.7	74.9	108.4	117.2
Net Earnings (ex non-recurring)	-2.6	-22.9	-28.6	2.8	-1.4
Adj. EBITDA Margin	24.4%	24.0%	23.4%	24.1%	25.8%
Capex	15.2	13.2	19.3	28.9	16.3

Following the organic growth prospects of a company as acquisitive as GTT is somewhat difficult, and in Q4 they did acquire Access Point down in North Carolina.  Without negative effects from global exchange rates, revenues and net loss would have been $7.5M and $2.7M higher.

Most of the EBITDA growth will be coming from integration as usual, and the company says it is about halfway through the job with Interoute and should be complete with the first pass by the end of Q2/19.  The reported adjusted EBITDA numbers do not include integration SG&A, which for Q4 was $16M, with another $10M expected during the first half of this year.

The company’s latest aggressive target was announced last quarter: $3B in annual revenues and $900M in adjusted EBITDA by 2021, which would correspond to 30% EBITDA margins  If they can get there while holding capex as low as they have, I’ll have to start keeping track of free cash flows, for which the target is $5/share.

Most competitive network operators seem to be strategically at odds with the public markets these days in one form or another, but GTT seems to have kept out of the fray.  With the Interoute integration on track, the company may be ready for another substantial deal this spring or summer.

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Categories: Fiber Networks · Financials · Internet Backbones