Zayo’s Fiscal Q1 Looks Pretty Solid

In its first quarterly report since going public two weeks ago, Zayo continued to push forward the way it did while private with a complex mix of both organic and inorganic growth.  I had wondered if the vast amounts of data Zayo has always offered might get compressed by the various requirements on a public company, but although they reduced the reportable segments to three their earnings supplement is as detailed as ever.  Here is a small subset of that data in context.

$ in millions	Fiscal Q1/14	Fiscal Q2/14	Fiscal Q3/14	Fiscal Q4/14	Fiscal Q1/14
– Physical Infrastructure	113.6	120.9	125.0	135.9	149.6
– Lit Services	149.4	151.3	151.7	153.8	156.1
– Other Services	6.8	6.5	6.4	8.4	14.9
Total Revenue	264.3	273.6	278.0	296.7	320.6
Adjusted EBITDA	155.4	161.5	165.0	171.7	183.3
Adj. EBITDA Margin	58.7%	59.0%	59.4%	55.9%	57.1%
Capex	86.7	88.3	90.9	94.9	115.3
Buildings on-net	13,242	14,196	14,490	15,027	16,151

Analyst expectations are not clear, as the company has only just gone public and that data if available is not yet being collected by the usual suspects like Yahoo! Finance.  Revenues of $320.6M were up Adjusted EBITDA margin started rising again despite the purchased EBITDA margins from both AtlantaNAP (49%) and Neo (19%) being lower.

Zayo built out its fiber network to 530 buildings during the quarter, while adding about the same amount through the acquisition of Neo over in France.  Capex burst through the $100M mark for the quarter, suggesting the company has plenty of projects going on.  Earlier this week they unveiled a new dark fiber build to Mahwah NJ.

In particular though, Zayo saw a particularly large surge in estimated capital and upfront expenditures during the quarter.  This was attributed to two large projects that will see some 1,800 route miles of network constructed in the US, with a longer than usual payback period.  No other specifics were given, but this sounds like a large dark fiber expansion somewhere, perhaps of the long-term, intercity variety.

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Categories: Fiber Networks · Financials · Metro fiber