Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today
announced its results for the first quarter 2024.
“Uniti is off to a solid start in 2024. Our core
recurring strategic fiber business grew 4% in the first quarter of
2024 when compared to the first quarter of 2023. Also, our net
success-based capital intensity at Uniti Fiber during the quarter
declined to 34% from 46% in the first quarter of 2023. These
metrics further reiterate that our lease-up strategy continues to
be successful. We also continue to see increasing demand from
bandwidth intensive applications like Generative AI further
reinforcing the mission critical nature of fiber,” commented
President and Chief Executive Officer, Kenny Gunderman.
Mr. Gunderman continued, “Our transformational
merger with Windstream that we announced earlier this morning will
expand Uniti's network reach even further to 1.5 million homes
passed with next-gen fiber. As a combined company, we will continue
our disciplined growth trajectory while expanding fiber-to-the-home
buildouts and significantly improving our overall financial
profile. The demand for fiber broadband has never been greater and
Uniti is well positioned for growth well into the future.”
QUARTERLY RESULTS
Consolidated revenues for the first quarter of
2024 were $286.4 million. Net income and Adjusted EBITDA were $41.3
million and $228.6 million, respectively, for the same period,
achieving Adjusted EBITDA margins of approximately 80%. Net income
attributable to common shares was $40.9 million for the period.
AFFO attributable to common shareholders was $87.6 million, or
$0.32 per diluted common share.
Uniti Fiber contributed $68.8 million of
revenues and $23.8 million of Adjusted EBITDA for the first quarter
of 2024. Uniti Fiber’s net success-based capital
expenditures during the quarter were $23.1 million.
Uniti Leasing contributed revenues of $217.6
million and Adjusted EBITDA of $210.7 million for the first
quarter. During the quarter, Uniti Leasing deployed capital
expenditures of $139.7 million, including $131.3 million of GCI
capex.
LIQUIDITY
At quarter-end, the Company had approximately
$470.1 million of unrestricted cash and cash equivalents, and
undrawn borrowing availability under its revolving credit
agreement. The Company’s leverage ratio at quarter-end was 6.07x
based on net debt to first quarter 2024 annualized Adjusted EBITDA,
excluding the debt and Adjusted EBITDA impact from the ABS loan
facility.
On May 2, 2024, the Company’s Board of Directors
declared a quarterly cash dividend of $0.15 per common share,
payable on June 28, 2024, to stockholders of record on June 14,
2024.
UPDATED FULL YEAR 2024 OUTLOOK
The Company is updating its 2024 outlook
primarily for business unit level revisions and transaction related
and other costs incurred to date. Our outlook excludes any impact
from the expected merger with Windstream, future acquisitions,
capital market transactions, and future transaction-related and
other costs not mentioned herein.
The Company’s consolidated outlook for 2024 is as follows (in
millions):
|
Full Year 2024 |
|
|
Revenue |
$ |
1,154 |
to |
$ |
1,174 |
|
|
Net income attributable to common shareholders |
|
116 |
to |
|
136 |
|
|
Adjusted EBITDA (1) |
|
930 |
to |
|
950 |
|
|
Interest expense, net (2) |
|
506 |
to |
|
506 |
|
|
|
|
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
|
|
FFO (1) |
|
319 |
to |
|
339 |
|
|
AFFO (1) |
|
362 |
to |
|
382 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding – diluted |
|
285 |
to |
|
285 |
|
|
________________________ |
|
|
|
|
|
|
|
(1) See “Non-GAAP Financial Measures”
below.(2) See “Components of Interest Expense”
below. |
|
CONFERENCE CALL
Uniti will hold a conference call today to
discuss the announced merger with Windstream and this earnings
release at 8:30 AM Eastern Time (7:30 AM Central Time). The
conference call will be webcast live on Uniti’s Investor Relations
website at investor.uniti.com. Those parties interested in
participating via telephone may register on the Company’s Investor
Relations website or by clicking here. A replay of the call will be
available on the Investor Relations website beginning today at
approximately 12:00 PM Eastern Time.
ABOUT UNITI
Uniti, an internally managed real estate
investment trust, is engaged in the acquisition and construction of
mission critical communications infrastructure, and is a leading
provider of fiber and other wireless solutions for the
communications industry. As of March 31, 2024, Uniti owns
approximately 141,000 fiber route miles, 8.5 million fiber strand
miles, and other communications real estate throughout the United
States. Additional information about Uniti can be found on its
website at www.uniti.com.
NO OFFER OR SOLICITATION
This communication and the information contained
in it are provided for information purposes only and are not
intended to be and shall not constitute a solicitation of any vote
or approval, or an offer to sell or solicitation of an offer to
buy, or an invitation or recommendation to subscribe for, acquire
or buy securities of Uniti, Windstream Holdings II, LLC
(“Windstream”) or the proposed combined company (“New Uniti”) or
any other financial products or securities, in any place or
jurisdiction, nor shall there be any offer, solicitation or sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of
securities shall be made in the United States absent registration
under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), or pursuant to an exemption from, or in a transaction not
subject to, such registration requirements.
ADDITIONAL INFORMATION AND WHERE TO FIND
IT
Uniti and Windstream plan to file relevant
materials with the Securities and Exchange Commission (the “SEC”)
in connection with the contemplated transaction (the
“Transaction”), including a registration statement on Form S-4 with
the SEC that contains a proxy statement/prospectus and other
documents. Uniti will mail the proxy statement/prospectus contained
in the Form S-4 to its stockholders. This communication is not a
substitute for any registration statement, proxy
statement/prospectus or other documents that may be filed with the
SEC in connection with the Transaction.
THE PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION
WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITI, WINDSTREAM, NEW
UNITI, THE TRANSACTION AND RELATED MATTERS. INVESTORS SHOULD READ
THE PROXY STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY, AS WELL AS ANY AMENDMENTS
OR SUPPLEMENTS TO THE PROXY STATEMENT/PROSPECTUS AND SUCH
DOCUMENTS, BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE
TRANSACTION. The proxy statement/prospectus, any amendments or
supplements thereto and all other documents filed with the SEC in
connection with the Transaction will be available when filed free
of charge on the SEC’s website (at www.sec.gov). Copies of
documents filed with the SEC by Uniti will be made available free
of charge on Uniti's investor relations website (at
https://investor.uniti.com/financial-information/sec-filings).
PARTICIPANTS IN THE
SOLICITATION
Uniti, Windstream and their respective directors
and certain of their executive officers and other employees may be
deemed to be participants in the solicitation of proxies from
Uniti’s stockholders in connection with the Transaction.
Information about Uniti’s directors and executive officers is set
forth in the sections titled “Proposal No. 1 Election of Directors”
and “Security Ownership of Certain Beneficial Owners and
Management” included in Uniti’s proxy statement for its 2024 annual
meeting of stockholders, which was filed with the SEC on April 11,
2024 (and which is available at
https://www.sec.gov/Archives/edgar/data/1620280/000110465924046100/0001104659-24-046100-index.htm),
the section titled “Directors, Executive Officers and Corporate
Governance” included in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2023, which was filed with the SEC
on February 29, 2024 (and which is available at
https://www.sec.gov/ix?doc=/Archives/edgar/data/1620280/000162828024008054/unit-20231231.htm),
and subsequent statements of beneficial ownership on file with the
SEC and other filings made from time to time with the SEC.
Additional information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of
Uniti stockholders in connection with the Transaction, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the proxy
statement/prospectus and other relevant materials when they are
filed with the SEC. These documents can be obtained free of charge
from the sources indicated above.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release and
today’s conference call may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended from time to time.
Those forward-looking statements include all
statements that are not historical statements of fact, including,
without limitation, our 2024 financial outlook, expectations
regarding lease-up of our network, strong demand trends, business
strategies, growth prospects, and statements regarding our merger
with Windstream and the future performance of New Uniti (together
with Windstream and Uniti, the “Merged Group”). In addition, this
communication contains statements concerning the intentions,
beliefs and expectations, plans, strategies and objectives of the
directors and management of Uniti and Windstream for Uniti and
Windstream, respectively, and the Merged Group, the anticipated
timing for and outcome and effects of the Transaction (including
expected benefits to shareholders of Uniti), expectations for the
ongoing development and growth potential of the Merged Group and
the future operation of Uniti, Windstream and the Merged Group.
Words such as "anticipate(s)," "expect(s),"
"intend(s)," “estimate(s),” “foresee(s),” "plan(s)," "believe(s),"
"may," "will," "would," "could," "should," "seek(s)," “appear(s),”
“target(s),” “project(s),” “contemplate(s),” “predict(s),”
“potential,” “continue(s)” and similar expressions, or the negative
of these terms, are intended to identify such forward-looking
statements. These statements are based on management's current
expectations and beliefs and are subject to a number of risks and
uncertainties that could lead to actual results differing
materially from those projected, forecasted or expected. Although
we believe that the assumptions underlying the forward-looking
statements are reasonable, we can give no assurance that our
expectations will be attained. Factors which could materially alter
our expectations include, but are not limited to, the future
prospects of Windstream, our largest customer; the ability and
willingness of our customers to renew their leases with us upon
their expiration, and the ability to reposition our properties on
the same or better terms in the event of nonrenewal or in the event
we replace an existing tenant; the availability of and our ability
to identify suitable acquisition opportunities and our ability to
acquire and lease the respective properties on favorable terms; the
risk that we fail to fully realize the potential benefits of
acquisitions or have difficulty integrating acquired companies; our
ability to generate sufficient cash flows to service our
outstanding indebtedness and fund our capital funding commitments;
our ability to access debt and equity capital markets; the impact
on our business or the business of our customers as a result of
credit rating downgrades and fluctuating interest rates; our
ability to retain our key management personnel; changes in the U.S.
tax law and other state, federal or local laws, whether or not
specific to real estate investment trusts; covenants in our debt
agreements that may limit our operational flexibility; the
possibility that we may experience equipment failures, natural
disasters, cyber-attacks or terrorist attacks for which our
insurance may not provide adequate coverage; other risks inherent
in the communications industry and in the ownership of
communications distribution systems, including potential liability
relating to environmental matters and illiquidity of real estate
investments; the satisfaction of the conditions precedent to the
consummation of the Transaction, including, without limitation, the
receipt of shareholder and regulatory approvals on the terms
desired or anticipated; unanticipated difficulties or expenditures
relating to the Transaction, including, without limitation,
difficulties that result in the failure to realize expected
synergies, efficiencies and cost savings from the Transaction
within the expected time period (if at all); potential difficulties
in Uniti’s and Windstream’s ability to retain employees as a result
of the announcement and pendency of the Transaction; risks relating
to the value of New Uniti’s securities to be issued in the
Transaction; disruptions of Uniti’s and Windstream’s current plans,
operations and relationships with customers caused by the
announcement and pendency of the Transaction; legal proceedings
that may be instituted against Uniti or Windstream following
announcement of the Transaction; funding requirements; regulatory
restrictions (including changes in regulatory restrictions or
regulatory policy); and additional factors described in our reports
filed with the SEC.
There can be no assurance that the Transaction
will be implemented or that plans of the respective directors and
management of Uniti and Windstream for the Merged Group will
proceed as currently expected or will ultimately be successful.
Investors are strongly cautioned not to place undue reliance on
forward-looking statements, including in respect of the financial
or operating outlook for Uniti, Windstream or the Merged Group
(including the realization of any expected synergies).
All forward-looking statements are based on
information and estimates available at the time of this
communication and are not guarantees of future performance.
Except as required by applicable law, Uniti does
not assume any obligation to, and expressly disclaims any duty to,
provide any additional or updated information or to update any
forward-looking statements, whether as a result of new information,
future events or results, or otherwise. Nothing in this
communication will, under any circumstances (including by reason of
this communication remaining available and not being superseded or
replaced by any other presentation or publication with respect to
Uniti, Windstream or the Merged Group, or the subject matter of
this communication), create an implication that there has been no
change in the affairs of Uniti or Windstream since the date of this
communication.
NON-GAAP PRESENTATION
This release and today’s conference call contain
certain supplemental measures of performance that are not required
by, or presented in accordance with, accounting principles
generally accepted in the United States (“GAAP”). Such measures
should not be considered as alternatives to GAAP. Further
information with respect to and reconciliations of such measures to
the nearest GAAP measure can be found herein.
Uniti Group Inc.Consolidated Balance
Sheets(In thousands, except per share
data) |
|
|
|
|
|
|
|
March 31, 2024 |
|
December 31, 2023 |
Assets: |
|
|
|
|
Property, plant and equipment, net |
|
$ |
4,042,485 |
|
|
$ |
3,982,069 |
|
Cash and
cash equivalents |
|
|
43,058 |
|
|
|
62,264 |
|
Restricted cash and cash equivalents |
|
|
7,684 |
|
|
|
- |
|
Accounts
receivable, net |
|
|
48,584 |
|
|
|
46,358 |
|
Goodwill |
|
|
157,380 |
|
|
|
157,380 |
|
Intangible assets, net |
|
|
297,689 |
|
|
|
305,115 |
|
Straight-line revenue receivable |
|
|
96,659 |
|
|
|
90,988 |
|
Operating lease right-of-use assets, net |
|
|
131,810 |
|
|
|
125,105 |
|
Derivative asset |
|
|
1,845 |
|
|
|
- |
|
Other
assets |
|
|
42,471 |
|
|
|
118,117 |
|
Deferred
income tax assets, net |
|
|
114,904 |
|
|
|
109,128 |
|
Assets
held for sale |
|
|
- |
|
|
|
28,605 |
|
Total Assets |
|
$ |
4,984,569 |
|
|
$ |
5,025,129 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Deficit |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts
payable, accrued expenses and other liabilities |
|
$ |
90,039 |
|
|
$ |
119,340 |
|
Settlement payable |
|
|
141,043 |
|
|
|
163,583 |
|
Intangible liabilities, net |
|
|
153,724 |
|
|
|
156,397 |
|
Accrued
interest payable |
|
|
51,797 |
|
|
|
133,683 |
|
Deferred
revenue |
|
|
1,227,454 |
|
|
|
1,273,661 |
|
Dividends payable |
|
|
37,048 |
|
|
|
36,162 |
|
Operating lease liabilities |
|
|
81,778 |
|
|
|
84,404 |
|
Finance
lease obligations |
|
|
18,473 |
|
|
|
18,110 |
|
Notes
and other debt, net |
|
|
5,660,696 |
|
|
|
5,523,579 |
|
Liabilities held for sale |
|
|
- |
|
|
|
331 |
|
Total Liabilities |
|
|
7,462,052 |
|
|
|
7,509,250 |
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Deficit: |
|
|
|
|
|
|
Preferred stock, $ 0.0001 par value, 50,000 shares authorized, no
shares issued and outstanding |
|
|
- |
|
|
|
- |
|
Common stock, $ 0.0001 par value, 500,000 shares authorized, issued
and outstanding: 237,309 shares at March 31, 2024 and 236,559
shares at December 31, 2023 |
|
|
24 |
|
|
|
24 |
|
Additional paid-in capital |
|
|
1,223,983 |
|
|
|
1,221,824 |
|
Accumulated other comprehensive loss |
|
|
(167 |
) |
|
|
- |
|
Distributions in excess of accumulated earnings |
|
|
(3,703,597 |
) |
|
|
(3,708,240 |
) |
Total
Uniti shareholders’ deficit |
|
|
(2,479,757 |
) |
|
|
(2,486,392 |
) |
Noncontrolling interests – operating partnership units and
non-voting convertible preferred stock |
|
|
2,274 |
|
|
|
2,271 |
|
Total
shareholders’ deficit |
|
|
(2,477,483 |
) |
|
|
(2,484,121 |
) |
Total Liabilities and Shareholders’ Deficit |
|
$ |
4,984,569 |
|
|
$ |
5,025,129 |
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc.Consolidated Statements of
Operations(In thousands, except per share
data) |
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
Revenues: |
|
|
|
|
|
|
Uniti
Leasing |
$ |
217,621 |
|
|
$ |
210,808 |
|
|
Uniti Fiber |
|
68,797 |
|
|
|
79,014 |
|
|
Total revenues |
|
286,418 |
|
|
|
289,822 |
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
Interest expense, net |
|
123,211 |
|
|
|
148,863 |
|
|
Depreciation and
amortization |
|
77,485 |
|
|
|
76,775 |
|
|
General and administrative
expense |
|
28,133 |
|
|
|
28,433 |
|
|
Operating expense (exclusive
of depreciation and amortization) |
|
35,198 |
|
|
|
35,068 |
|
|
Transaction related and other
costs |
|
5,687 |
|
|
|
2,788 |
|
|
Gain on sale of real
estate |
|
(18,999 |
) |
|
|
- |
|
|
Other (income) expense,
net |
|
(282 |
) |
|
|
20,179 |
|
|
Total costs and expenses |
|
250,433 |
|
|
|
312,106 |
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes and equity in earnings from unconsolidated entities |
|
35,985 |
|
|
|
(22,284 |
) |
|
Income tax benefit |
|
(5,363 |
) |
|
|
(2,412 |
) |
|
Equity in earnings from
unconsolidated entities |
|
- |
|
|
|
(661 |
) |
|
Net income
(loss) |
|
41,348 |
|
|
|
(19,211 |
) |
|
Net income (loss) attributable
to noncontrolling interests |
|
19 |
|
|
|
(9 |
) |
|
Net income (loss)
attributable to shareholders |
|
41,329 |
|
|
|
(19,202 |
) |
|
Participating securities’
share in earnings |
|
(436 |
) |
|
|
(247 |
) |
|
Dividends declared on
convertible preferred stock |
|
(5 |
) |
|
|
(5 |
) |
|
Net income (loss)
attributable to common shareholders |
$ |
40,888 |
|
|
$ |
(19,454 |
) |
|
|
|
|
|
|
|
|
Net
income (loss) attributable to common shareholders – Basic |
$ |
40,888 |
|
|
$ |
(19,454 |
) |
|
Impact of if-converted
dilutive securities |
|
7,022 |
|
|
|
- |
|
|
Net income (loss) attributable
to common shareholders – Diluted |
$ |
47,910 |
|
|
$ |
(19,454 |
) |
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
Basic |
|
236,901 |
|
|
|
236,090 |
|
|
Diluted |
|
292,407 |
|
|
|
236,090 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
(0.08 |
) |
|
Diluted |
$ |
0.16 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc.Consolidated Statements of
Cash Flows(In thousands) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2024 |
|
|
2023 |
|
Cash flow from operating activities: |
|
|
|
|
Net income (loss) |
|
$ |
41,348 |
|
|
$ |
(19,211 |
) |
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
77,485 |
|
|
|
76,775 |
|
Amortization of deferred financing costs and debt discount |
|
|
5,035 |
|
|
|
4,963 |
|
Loss on extinguishment of debt, net |
|
|
- |
|
|
|
31,187 |
|
Interest rate cap amortization |
|
|
188 |
|
|
|
- |
|
Deferred income taxes |
|
|
(5,776 |
) |
|
|
(2,754 |
) |
Equity in earnings of unconsolidated entities |
|
|
- |
|
|
|
(661 |
) |
Distributions of cumulative earnings from unconsolidated
entities |
|
|
- |
|
|
|
980 |
|
Cash paid for interest rate cap |
|
|
(2,200 |
) |
|
|
- |
|
Straight-line revenues and amortization of below-market lease
intangibles |
|
|
(8,822 |
) |
|
|
(9,427 |
) |
Stock-based compensation |
|
|
3,348 |
|
|
|
3,130 |
|
Loss (gain) on asset disposals |
|
|
228 |
|
|
|
(422 |
) |
Gain on sale of real estate |
|
|
(18,999 |
) |
|
|
- |
|
Accretion of settlement obligation |
|
|
1,965 |
|
|
|
3,017 |
|
Other |
|
|
20 |
|
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(2,226 |
) |
|
|
(10,963 |
) |
Other assets |
|
|
1,139 |
|
|
|
6,553 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
(86,543 |
) |
|
|
(68,605 |
) |
Net cash provided by operating activities |
|
|
6,190 |
|
|
|
14,562 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(167,939 |
) |
|
|
(114,981 |
) |
Proceeds from sale of other equipment |
|
|
341 |
|
|
|
607 |
|
Proceeds from sale of real estate |
|
|
40,011 |
|
|
|
- |
|
Proceeds from sale of unconsolidated entity |
|
|
40,000 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(87,587 |
) |
|
|
(114,374 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Repayment of debt |
|
|
- |
|
|
|
(2,263,662 |
) |
Proceeds from issuance of notes |
|
|
- |
|
|
|
2,600,000 |
|
Dividends paid |
|
|
(35,800 |
) |
|
|
(9 |
) |
Payments of settlement payable |
|
|
(24,505 |
) |
|
|
(24,505 |
) |
Borrowings under revolving credit facility |
|
|
80,000 |
|
|
|
140,000 |
|
Payments under revolving credit facility |
|
|
(215,000 |
) |
|
|
(253,000 |
) |
Proceeds from ABS loan facility |
|
|
275,000 |
|
|
|
- |
|
Finance lease payments |
|
|
(696 |
) |
|
|
(452 |
) |
Payments for financing costs |
|
|
(7,919 |
) |
|
|
(26,688 |
) |
Payment for settlement of common stock warrant |
|
|
- |
|
|
|
(56 |
) |
Termination of bond hedge option |
|
|
- |
|
|
|
59 |
|
Costs
related to the early repayment of debt |
|
|
- |
|
|
|
(44,303 |
) |
Distributions paid to noncontrolling interest |
|
|
(16 |
) |
|
|
- |
|
Employee stock purchase program |
|
|
326 |
|
|
|
314 |
|
Payments related to tax withholding for stock-based
compensation |
|
|
(1,515 |
) |
|
|
(1,343 |
) |
Net cash provided by financing activities |
|
|
69,875 |
|
|
|
126,355 |
|
Net (decrease) increase in cash, restricted cash and cash
equivalents |
|
|
(11,522 |
) |
|
|
26,543 |
|
Cash, restricted cash and cash equivalents at beginning of
period |
|
|
62,264 |
|
|
|
43,803 |
|
Cash, restricted cash and cash equivalents at end of period |
|
$ |
50,742 |
|
|
$ |
70,346 |
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Property and equipment acquired but not yet paid |
$ |
|
9,009 |
|
|
$ |
13,049 |
|
Tenant capital improvements |
|
|
66,082 |
|
|
|
81,592 |
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc.Reconciliation of Net
Income to FFO and AFFO (In thousands, except per
share data) |
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
Net income (loss) attributable to common
shareholders |
|
$ |
40,888 |
|
|
$ |
(19,454 |
) |
|
Real estate depreciation and
amortization |
|
|
55,930 |
|
|
|
54,516 |
|
|
Gain on sale of real estate,
net of tax |
|
|
(18,951 |
) |
|
|
- |
|
|
Participating securities share
in earnings |
|
|
436 |
|
|
|
247 |
|
|
Participating securities share
in FFO |
|
|
(825 |
) |
|
|
(247 |
) |
|
Real estate depreciation and
amortization from unconsolidated entities |
|
|
- |
|
|
|
435 |
|
|
Adjustments for noncontrolling
interests |
|
|
(16 |
) |
|
|
(25 |
) |
|
FFO attributable to
common shareholders |
|
|
77,462 |
|
|
|
35,472 |
|
|
Transaction related and other
costs |
|
|
5,687 |
|
|
|
2,788 |
|
|
Amortization of deferred
financing costs and debt discount |
|
|
5,035 |
|
|
|
4,963 |
|
|
Write off of deferred
financing costs and debt discount |
|
|
- |
|
|
|
10,412 |
|
|
Cost related to the early
repayment of debt |
|
|
- |
|
|
|
51,997 |
|
|
Stock based compensation |
|
|
3,348 |
|
|
|
3,130 |
|
|
Non-real estate depreciation
and amortization |
|
|
21,555 |
|
|
|
22,259 |
|
|
Straight-line revenues and
amortization of below-market lease intangibles |
|
|
(8,822 |
) |
|
|
(9,427 |
) |
|
Maintenance capital
expenditures |
|
|
(2,089 |
) |
|
|
(1,828 |
) |
|
Other, net |
|
|
(14,545 |
) |
|
|
(12,661 |
) |
|
Adjustments for equity in
earnings from unconsolidated entities |
|
|
- |
|
|
|
320 |
|
|
Adjustments for noncontrolling
interests |
|
|
(5 |
) |
|
|
(32 |
) |
|
AFFO attributable to
common shareholders |
|
$ |
87,626 |
|
|
$ |
107,393 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Diluted FFO and AFFO: |
|
|
|
|
|
|
|
FFO Attributable to common
shareholders – Basic |
|
$ |
77,462 |
|
|
$ |
35,472 |
|
|
Impact of if-converted
dilutive securities |
|
|
7,022 |
|
|
|
- |
|
|
FFO Attributable to common
shareholders – Diluted |
|
$ |
84,484 |
|
|
$ |
35,472 |
|
|
|
|
|
|
|
|
|
|
AFFO Attributable to common
shareholders – Basic |
|
$ |
87,626 |
|
|
$ |
107,393 |
|
|
Impact of if-converted
dilutive securities |
|
|
6,976 |
|
|
|
7,109 |
|
|
AFFO Attributable to common
shareholders – Diluted |
|
$ |
94,602 |
|
|
$ |
114,502 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
used to calculate basic earnings(loss) per common share (1) |
|
|
236,901 |
|
|
|
236,090 |
|
|
Impact of dilutive
non-participating securities |
|
|
708 |
|
|
|
- |
|
|
Impact of if-converted
dilutive securities |
|
|
54,798 |
|
|
|
54,748 |
|
|
Weighted average common shares
used to calculate diluted FFO and AFFO per common share
(1) |
|
|
292,407 |
|
|
|
290,838 |
|
|
|
|
|
|
|
|
|
|
Per diluted common
share: |
|
|
|
|
|
|
|
EPS |
|
$ |
0.16 |
|
|
$ |
(0.08 |
) |
|
FFO |
|
$ |
0.29 |
|
|
$ |
0.15 |
|
|
AFFO |
|
$ |
0.32 |
|
|
$ |
0.39 |
|
|
(1) |
For periods in which FFO to common shareholders is a loss, the
weighted average common shares used to calculate diluted FFO per
common share is equal to the weighted average common shares used to
calculate basic earnings (loss) per share. |
|
|
Uniti Group Inc.Reconciliation of EBITDA
and Adjusted EBITDA(In thousands) |
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
Net income
(loss) |
|
$ |
41,348 |
|
|
$ |
(19,211 |
) |
|
Depreciation and
amortization |
|
|
77,485 |
|
|
|
76,775 |
|
|
Interest expense, net |
|
|
123,211 |
|
|
|
148,863 |
|
|
Income tax benefit |
|
|
(5,363 |
) |
|
|
(2,412 |
) |
|
EBITDA |
|
$ |
236,681 |
|
|
$ |
204,015 |
|
|
Stock-based compensation |
|
|
3,348 |
|
|
|
3,130 |
|
|
Transaction related and other
costs |
|
|
5,687 |
|
|
|
2,788 |
|
|
Gain on sale of real estate |
|
|
(18,999 |
) |
|
|
- |
|
|
Other, net |
|
|
1,911 |
|
|
|
20,513 |
|
|
Adjustments for equity in
earnings from unconsolidated entities |
|
|
- |
|
|
|
755 |
|
|
Adjusted EBITDA |
|
$ |
228,628 |
|
|
$ |
231,201 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
Uniti Leasing |
|
$ |
210,677 |
|
|
$ |
204,966 |
|
|
Uniti Fiber |
|
|
23,838 |
|
|
|
33,674 |
|
|
Corporate |
|
|
(5,887 |
) |
|
|
(7,439 |
) |
|
|
|
$ |
228,628 |
|
|
$ |
231,201 |
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted
EBITDA (1) |
|
$ |
898,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
2024: |
|
|
|
|
|
|
|
Total Debt (2) |
|
$ |
5,500,915 |
|
|
|
|
|
Unrestricted cash and cash
equivalents |
|
|
43,058 |
|
|
|
|
|
Net Debt |
|
$ |
5,457,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt/Annualized
Adjusted EBITDA |
|
|
6.07x |
|
|
|
|
________________________
(1) |
Calculated as Adjusted EBITDA for the most recently reported
three-month period, excluding the Adjusted EBITDA of $3.9 million
contributed from the ABS Loan Facility subsidiaries, multiplied by
four. Annualized Adjusted EBITDA has not been prepared on a
pro forma basis in accordance with Article 11 of Regulation
S-X. |
(2) |
Includes $18.5 million of finance
leases, but excludes $96.7 million of unamortized discounts and
deferred financing costs and excludes the principal balance from
the $275.0 million ABS loan facility. |
Uniti Group Inc.Projected Future
Results (1)(In millions) |
|
|
|
|
|
Year Ended December 31, 2024 |
Net income
attributable to common shareholders – Basic |
|
$ 115 to $ 135 |
Participating securities’
share in earnings |
|
1 |
Net income
(2) |
|
116 to 136 |
Interest expense, net (3) |
|
506 |
Depreciation and
amortization |
|
317 |
Income tax benefit |
|
(12) |
EBITDA (2) |
|
927 to 947 |
Stock-based compensation |
|
13 |
Gain on sale of real estate |
|
(19) |
Transaction related and other
costs (4) |
|
9 |
Adjusted EBITDA
(2) |
|
$ 930 to $ 950 |
________________________
(1) |
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above. |
(2) |
The components of projected
future results may not add due to rounding. |
(3) |
See “Components of Projected
Interest Expense” below. |
(4) |
Future transaction related costs
not mentioned herein are not included in our current outlook. |
Uniti Group Inc.Projected Future
Results (1)(Per Diluted Share) |
|
|
|
|
|
Year Ended December 31, 2024 |
Net income attributable to common shareholders –
Basic |
|
$ 0.48 to $ 0.57 |
Real
estate depreciation and amortization |
|
0.94 |
Gain on
sale of real estate, net of tax |
|
(0.08) |
FFO attributable to common shareholders – Basic
(2) |
|
$ 1.35 to $ 1.43 |
Impact of if-converted securities |
|
(0.15) |
FFO attributable to common shareholders – Diluted
(2) |
|
$ 1.20 to $ 1.27 |
|
|
|
FFO attributable to common shareholders – Basic
(2) |
|
$ 1.35 to $ 1.43 |
Transaction related and other costs (3) |
|
0.03 |
Amortization of deferred financing costs and debt discount |
|
0.10 |
Accretion of settlement payable (4) |
|
0.03 |
Stock-based compensation |
|
0.06 |
Non-real
estate depreciation and amortization |
|
0.39 |
Straight-line revenues |
|
(0.13) |
Maintenance capital expenditures |
|
(0.03) |
Other,
net |
|
(0.26) |
AFFO attributable to common shareholders – Basic
(2) |
|
$ 1.53 to $ 1.61 |
Impact of if-converted securities |
|
(0.17) |
AFFO attributable to common shareholders – Diluted
(2) |
$ 1.36 to $ 1.43 |
________________________
(1) |
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above. |
(2) |
The components of projected
future results may not add to FFO and AFFO attributable to common
shareholders due to rounding. |
(3) |
Future transaction related and
other costs are not included in our current outlook. |
(4) |
Represents the accretion of the
Windstream settlement payable to its stated value. At the
effective date of the settlement, we recorded the payable on the
balance sheet at its initial fair value, which will be accreted
based on an effective interest rate of 4.2% and reduced by the
scheduled quarterly payments. |
Uniti Group Inc.Components of Projected
Interest Expense (1)(In
millions) |
|
|
|
|
|
Year Ended December 31, 2024 |
Interest expense on debt
obligations |
|
$477 |
Accretion of Windstream
settlement payable |
|
6 |
Amortization of deferred
financing cost and debt discounts |
|
23 |
Interest expense,
net (2) |
|
$506 |
________________________
(1) |
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above. |
(2) |
The components of interest
expense may not add to the total due to rounding. |
|
|
NON-GAAP FINANCIAL MEASURES
We refer to EBITDA, Adjusted EBITDA, Funds From
Operations (“FFO”) (as defined by the National Association of Real
Estate Investment Trusts (“NAREIT”)) and Adjusted Funds From
Operations (“AFFO”) in our analysis of our results of operations,
which are not required by, or presented in accordance with,
accounting principles generally accepted in the United States
(“GAAP”). While we believe that net income, as defined by GAAP, is
the most appropriate earnings measure, we also believe that EBITDA,
Adjusted EBITDA, FFO and AFFO are important non-GAAP supplemental
measures of operating performance for a REIT.
We define “EBITDA” as net income, as defined by
GAAP, before interest expense, provision for income taxes and
depreciation and amortization. We define “Adjusted EBITDA” as
EBITDA before stock-based compensation expense and the impact,
which may be recurring in nature, of transaction and integration
related costs, costs associated with Windstream’s bankruptcy, costs
associated with litigation claims made against us, and costs
associated with the implementation of our enterprise resource
planning system, (collectively, “Transaction Related and Other
Costs”), costs related to the settlement with Windstream, goodwill
impairment charges, severance costs, amortization of non-cash
rights-of-use assets, the write off of unamortized deferred
financing costs, costs incurred as a result of the early repayment
of debt, including early tender and redemption premiums and costs
associated with the termination of related hedging activities,
gains or losses on dispositions, changes in the fair value of
contingent consideration and financial instruments, and other
similar or infrequent items (although we may not have had such
charges in the periods presented). Adjusted EBITDA includes
adjustments to reflect the Company’s share of Adjusted EBITDA from
unconsolidated entities. We believe EBITDA and Adjusted EBITDA are
important supplemental measures to net income because they provide
additional information to evaluate our operating performance on an
unleveraged basis. In addition, Adjusted EBITDA is calculated
similar to defined terms in our material debt agreements used to
determine compliance with specific financial covenants. Since
EBITDA and Adjusted EBITDA are not measures calculated in
accordance with GAAP, they should not be considered as alternatives
to net income determined in accordance with GAAP.
Because the historical cost accounting
convention used for real estate assets requires the recognition of
depreciation expense except on land, such accounting presentation
implies that the value of real estate assets diminishes predictably
over time. However, since real estate values have historically
risen or fallen with market and other conditions, presentations of
operating results for a REIT that uses historical cost accounting
for depreciation could be less informative. Thus, NAREIT created
FFO as a supplemental measure of operating performance for REITs
that excludes historical cost depreciation and amortization, among
other items, from net income, as defined by GAAP. FFO is defined by
NAREIT as net income attributable to common shareholders computed
in accordance with GAAP, excluding gains or losses from real estate
dispositions, plus real estate depreciation and amortization and
impairment charges, and includes adjustments to reflect the
Company’s share of FFO from unconsolidated entities. We compute FFO
in accordance with NAREIT’s definition.
The Company defines AFFO, as FFO excluding (i)
Transaction Related and Other Costs; (ii) costs related to the
litigation settlement with Windstream, accretion on our settlement
obligation, and gains on the prepayment of our settlement
obligation as these items are not reflective of ongoing operating
performance; (iii) goodwill impairment charges; (iv) certain
non-cash revenues and expenses such as stock-based compensation
expense, amortization of debt and equity discounts, amortization of
deferred financing costs, depreciation and amortization of non-real
estate assets, amortization of non-cash rights-of-use assets,
straight line revenues, non-cash income taxes, and the amortization
of other non-cash revenues to the extent that cash has not been
received, such as revenue associated with the amortization of
tenant capital improvements; and (v) the impact, which may be
recurring in nature, of the write-off of unamortized deferred
financing fees, additional costs incurred as a result of the early
repayment of debt, including early tender and redemption premiums
and costs associated with the termination of related hedging
activities, severance costs, taxes associated with tax basis
cancellation of debt, gains or losses on dispositions, changes in
the fair value of contingent consideration and financial
instruments and similar or infrequent items less maintenance
capital expenditures. AFFO includes adjustments to reflect the
Company’s share of AFFO from unconsolidated entities. We believe
that the use of FFO and AFFO, and their respective per share
amounts, combined with the required GAAP presentations, improves
the understanding of operating results of REITs among investors and
analysts, and makes comparisons of operating results among such
companies more meaningful. We consider FFO and AFFO to be useful
measures for reviewing comparative operating performance. In
particular, we believe AFFO, by excluding certain revenue and
expense items, can help investors compare our operating performance
between periods and to other REITs on a consistent basis without
having to account for differences caused by unanticipated items and
events, such as transaction and integration related costs. The
Company uses FFO and AFFO, and their respective per share amounts,
only as performance measures, and FFO and AFFO do not purport to be
indicative of cash available to fund our future cash requirements.
While FFO and AFFO are relevant and widely used measures of
operating performance of REITs, they do not represent cash flows
from operations or net income as defined by GAAP and should not be
considered an alternative to those measures in evaluating our
liquidity or operating performance.
Further, our computations of EBITDA, Adjusted
EBITDA, FFO and AFFO may not be comparable to that reported by
other REITs or companies that do not define FFO in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition or define EBITDA, Adjusted EBITDA and AFFO differently
than we do.
INVESTOR AND MEDIA CONTACTS:
Paul Bullington, 251-662-1512Senior Vice President, Chief
Financial Officer & Treasurerpaul.bullington@uniti.com
Bill DiTullio, 501-850-0872Vice President, Investor Relations
& Treasurybill.ditullio@uniti.com
Uniti (NASDAQ:UNIT)
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Uniti (NASDAQ:UNIT)
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