Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today
announced its results for the second quarter 2024.
“Uniti reported another quarter of solid results
fueled by strong demand for its mission critical fiber
infrastructure. Approximately 40% of our consolidated bookings
during the quarter, the highest level since 2022, was driven by
Hyperscalers and Generative AI demand, and we expect that growth to
continue. Our core recurring strategic fiber business grew 3% in
the second quarter of 2024 when compared to the second quarter of
2023, while net success-based capital intensity at Uniti Fiber
during the quarter declined to 27% from 44% in the second quarter
of 2023,” commented President and Chief Executive Officer, Kenny
Gunderman.
Mr. Gunderman continued, “We continue to make
significant progress on our recently announced transformational
merger with Windstream, and remain on track to close the
transaction by the second half of 2025. As a combined company, we
will continue our disciplined growth trajectory while expanding our
fiber network into Tier II and III markets, and significantly
improving our overall financial profile. The demand for both
commercial and residential fiber has never been greater and Uniti
is well positioned to capture this growth potential going
forward.”
QUARTERLY RESULTS
Consolidated revenues for the second quarter of
2024 were $294.9 million. Net income and Adjusted EBITDA were $18.3
million and $236.7 million, respectively, for the same period,
achieving Adjusted EBITDA margins of approximately 80%. Net income
attributable to common shares was $17.6 million for the period.
AFFO attributable to common shareholders was $92.3 million, or
$0.34 per diluted common share.
Uniti Fiber contributed $76.7 million of
revenues and $31.1 million of Adjusted EBITDA for the second
quarter of 2024, achieving Adjusted EBITDA margins of approximately
40%. Uniti Fiber’s net success-based capital expenditures during
the quarter were $20.8 million.
Uniti Leasing contributed revenues of $218.3
million and Adjusted EBITDA of $210.9 million for the second
quarter. During the quarter, Uniti Leasing deployed capital
expenditures of $69.6 million, including $65.3 million of GCI
capex.
FINANCING TRANSACTIONS
On May 17, 2024, Uniti closed on the issuance of
$300 million of additional senior secured notes due February 2028
(the “Additional 2028 Notes”). The Additional 2028 Notes bear
interest of 10.50% and were issued at 103.00% of their principal
amount. The proceeds from the offering are expected to be used for
general corporate purposes, including funding a portion of the cash
consideration payable in connection with the previously announced
merger with Windstream.
LIQUIDITY
At quarter-end, the Company had approximately
$618.8 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 5.97x
based on net debt to second quarter 2024 annualized Adjusted
EBITDA, excluding the debt and Adjusted EBITDA impact from the ABS
loan facility.
UPDATED FULL YEAR 2024 OUTLOOK
The Company is updating its 2024 outlook
primarily for business unit level revisions, recent financing
transactions, 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 |
|
98 |
|
to |
|
|
118 |
|
Adjusted EBITDA (1) |
|
930 |
|
to |
|
|
950 |
|
Interest expense, net (2) |
|
514 |
|
to |
|
|
514 |
|
|
|
|
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
|
|
|
FFO (1) |
|
301 |
|
to |
|
|
321 |
|
AFFO (1) |
|
353 |
|
to |
|
|
373 |
|
|
|
|
|
|
|
|
|
|
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
also be made available on the Investor Relations website.
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 June 30, 2024, Uniti owns
approximately 142,000 fiber route miles, 8.6 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 (“Windstream”)
or Windstream Parent, Inc., the proposed combined company following
the closing of the Merger (as defined below) (“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
In connection with the contemplated merger (the
“Merger”), New Uniti has filed a registration statement on Form S-4
with the SEC that contains a proxy statement/prospectus and other
documents, which has not yet become effective. Once effective,
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 Merger.
THE PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER CONTAINS
IMPORTANT INFORMATION ABOUT UNITI, WINDSTREAM, NEW UNITI, THE
MERGER 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 MERGER. The proxy
statement/prospectus, any amendments or supplements thereto and all
other documents filed with the SEC in connection with the Merger
will be available 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 Merger. 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 Merger, including a
description of their direct or indirect interests, by security
holdings or otherwise, is set forth in the proxy
statement/prospectus and other relevant materials filed by New
Uniti with the SEC. These documents can be obtained free of charge
from the sources indicated above.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking
statements, including within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements can often
be identified by terms such as “may,” “will,” “appears,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential,” or “continue,” or the negative of these words or other
similar terms or expressions that concern expectations, strategy,
plans, or intentions. However, the absence of these words or
similar terms does not mean that a statement is not
forward-looking. All forward-looking statements are based on
information and estimates available to Uniti and Windstream at the
time of this communication and are not guarantees of future
performance.
Examples of forward-looking statements in this
communication (made at the date of this communication unless
otherwise indicated) include, among others, statements regarding
the Merger and the future performance of Uniti, Windstream and New
Uniti (the “Merged Group”), the perceived and potential synergies
and other benefits of the Merger, and expectations around the
financial impact of the Merger on the Merged Group’s financials. 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 Merger
(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.
These statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results to be materially different from any results, levels of
activity, performance or achievements expressed or implied by any
forward-looking statement and may include statements regarding the
expected timing and structure of the Merger; the ability of the
parties to complete the Merger considering the various closing
conditions; the expected benefits of the Merger, such as improved
operations, enhanced revenues and cash flow, synergies, growth
potential, market profile, business plans, expanded portfolio and
financial strength; the competitive ability and position of New
Uniti following completion of the Merger; and anticipated growth
strategies and anticipated trends in Uniti’s, Windstream’s and,
following the expected completion of the Merger, New Uniti’s
business.
In addition, other factors related to the Merger
that contribute to the uncertain nature of the forward-looking
statements and that could cause actual results and financial
condition to differ materially from those expressed or implied
include, but are not limited to: the satisfaction of the conditions
precedent to the consummation of the Merger, including, without
limitation, the receipt of shareholder and regulatory approvals on
the terms desired or anticipated; unanticipated difficulties or
expenditures relating to the Merger, including, without limitation,
difficulties that result in the failure to realize expected
synergies, efficiencies and cost savings from the Merger 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 Merger; risks relating to the
value of New Uniti’s securities to be issued in the Merger;
disruptions of Uniti’s and Windstream’s current plans, operations
and relationships with customers caused by the announcement and
pendency of the Merger; legal proceedings that may be instituted
against Uniti or Windstream following announcement of the Merger;
funding requirements; regulatory restrictions (including changes in
regulatory restrictions or regulatory policy) and risks associated
with general economic conditions.
Additional factors that could cause actual
results, level of activity, performance or achievements to differ
materially from the results, level of activity, performance or
achievements expressed or implied by the forward-looking statements
are detailed in the filings with the SEC, including Uniti’s annual
report on Form 10-K, periodic quarterly reports on Form 10-Q,
periodic current reports on Form 8-K and other documents filed with
the SEC.
There can be no assurance that the Merger 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).
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) |
|
|
|
June 30, 2024 |
|
December 31, 2023 |
Assets: |
|
|
|
|
Property, plant and equipment, net |
|
$ |
4,092,799 |
|
|
$ |
3,982,069 |
|
Cash and cash equivalents |
|
|
118,763 |
|
|
|
62,264 |
|
Restricted cash and cash equivalents |
|
|
12,728 |
|
|
|
- |
|
Accounts receivable, net |
|
|
56,654 |
|
|
|
46,358 |
|
Goodwill |
|
|
157,380 |
|
|
|
157,380 |
|
Intangible assets, net |
|
|
290,264 |
|
|
|
305,115 |
|
Straight-line revenue receivable |
|
|
101,710 |
|
|
|
90,988 |
|
Operating lease right-of-use assets, net |
|
|
128,837 |
|
|
|
125,105 |
|
Other assets |
|
|
40,699 |
|
|
|
118,117 |
|
Deferred income tax assets, net |
|
|
117,780 |
|
|
|
109,128 |
|
Assets held for sale |
|
|
- |
|
|
|
28,605 |
|
Derivative asset |
|
|
1,616 |
|
|
|
- |
|
Total Assets |
|
$ |
5,119,230 |
|
|
$ |
5,025,129 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Deficit |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
|
$ |
87,105 |
|
|
$ |
119,340 |
|
Settlement payable |
|
|
118,232 |
|
|
|
163,583 |
|
Intangible liabilities, net |
|
|
151,050 |
|
|
|
156,397 |
|
Accrued interest payable |
|
|
142,227 |
|
|
|
133,683 |
|
Deferred revenue |
|
|
1,242,165 |
|
|
|
1,273,661 |
|
Dividends payable |
|
|
1,134 |
|
|
|
36,162 |
|
Operating lease liabilities |
|
|
79,812 |
|
|
|
84,404 |
|
Finance lease obligations |
|
|
18,110 |
|
|
|
18,110 |
|
Notes and other debt, net |
|
|
5,771,809 |
|
|
|
5,523,579 |
|
Liabilities held for sale |
|
|
- |
|
|
|
331 |
|
Total Liabilities |
|
|
7,611,644 |
|
|
|
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: 237,353 shares at June 30, 2024 and 236,559 shares
at December 31, 2023 |
|
|
24 |
|
|
|
24 |
|
Additional paid-in capital |
|
|
1,228,527 |
|
|
|
1,221,824 |
|
Accumulated other comprehensive income |
|
|
136 |
|
|
|
- |
|
Distributions in excess of accumulated earnings |
|
|
(3,722,066 |
) |
|
|
(3,708,240 |
) |
Total Uniti shareholders’ deficit |
|
|
(2,493,379 |
) |
|
|
(2,486,392 |
) |
Noncontrolling interests – operating partnership units and
non-voting convertible preferred stock |
|
|
965 |
|
|
|
2,271 |
|
Total shareholders’ deficit |
|
|
(2,492,414 |
) |
|
|
(2,484,121 |
) |
Total Liabilities and Shareholders’ Deficit |
|
$ |
5,119,230 |
|
|
$ |
5,025,129 |
|
Uniti Group Inc.Consolidated Statements of
Operations(In thousands, except per share
data) |
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Uniti Leasing |
$ |
218,286 |
|
|
$ |
212,453 |
|
|
$ |
435,907 |
|
|
$ |
423,261 |
|
Uniti Fiber |
|
76,661 |
|
|
|
71,245 |
|
|
|
145,458 |
|
|
|
150,259 |
|
Total revenues |
|
294,947 |
|
|
|
283,698 |
|
|
|
581,365 |
|
|
|
573,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
127,475 |
|
|
|
119,689 |
|
|
|
250,686 |
|
|
|
268,552 |
|
Depreciation and amortization |
|
78,052 |
|
|
|
77,267 |
|
|
|
155,537 |
|
|
|
154,042 |
|
General and administrative expense |
|
25,716 |
|
|
|
23,417 |
|
|
|
53,849 |
|
|
|
51,850 |
|
Operating expense (exclusive of depreciation and amortization) |
|
37,036 |
|
|
|
37,418 |
|
|
|
72,234 |
|
|
|
72,486 |
|
Transaction related and other costs |
|
10,977 |
|
|
|
5,576 |
|
|
|
16,664 |
|
|
|
8,364 |
|
Gain on sale of real estate |
|
- |
|
|
|
- |
|
|
|
(18,999 |
) |
|
|
- |
|
Other (income) expense, net |
|
(19 |
) |
|
|
(291 |
) |
|
|
(301 |
) |
|
|
19,888 |
|
Total costs and expenses |
|
279,237 |
|
|
|
263,076 |
|
|
|
529,670 |
|
|
|
575,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and equity in earnings from
unconsolidated entities |
|
15,710 |
|
|
|
20,622 |
|
|
|
51,695 |
|
|
|
(1,662 |
) |
Income tax benefit |
|
(2,571 |
) |
|
|
(4,357 |
) |
|
|
(7,934 |
) |
|
|
(6,769 |
) |
Equity in earnings from unconsolidated entities |
|
- |
|
|
|
(659 |
) |
|
|
- |
|
|
|
(1,320 |
) |
Net income |
|
18,281 |
|
|
|
25,638 |
|
|
|
59,629 |
|
|
|
6,427 |
|
Net
income attributable to noncontrolling interests |
|
3 |
|
|
|
12 |
|
|
|
22 |
|
|
|
3 |
|
Net income attributable to shareholders |
|
18,278 |
|
|
|
25,626 |
|
|
|
59,607 |
|
|
|
6,424 |
|
Participating securities’ share in earnings |
|
(723 |
) |
|
|
(322 |
) |
|
|
(1,159 |
) |
|
|
(569 |
) |
Dividends declared on convertible preferred stock |
|
(5 |
) |
|
|
(5 |
) |
|
|
(10 |
) |
|
|
(10 |
) |
Net income attributable to common
shareholders |
$ |
17,550 |
|
|
$ |
25,299 |
|
|
$ |
58,438 |
|
|
$ |
5,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to common shareholders – Basic |
$ |
17,550 |
|
|
$ |
25,299 |
|
|
$ |
58,438 |
|
|
$ |
5,845 |
|
Impact of if-converted securities |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
income attributable to common shareholders – Diluted |
$ |
17,550 |
|
|
$ |
25,299 |
|
|
$ |
58,438 |
|
|
$ |
5,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
237,347 |
|
|
|
236,429 |
|
|
|
237,121 |
|
|
|
236,260 |
|
Diluted |
|
237,347 |
|
|
|
236,429 |
|
|
|
237,121 |
|
|
|
236,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.25 |
|
|
$ |
0.02 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.25 |
|
|
$ |
0.02 |
|
Uniti Group Inc.Consolidated Statements of
Cash Flows(In thousands) |
|
|
|
Six Months Ended June 30, |
|
|
2024 |
|
2023 |
Cash flow from operating activities: |
|
|
|
|
Net income |
|
$ |
59,629 |
|
|
$ |
6,427 |
|
Adjustments to reconcile net income to net cash provided
by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
155,537 |
|
|
|
154,042 |
|
Amortization of deferred financing costs and debt discount |
|
|
10,950 |
|
|
|
9,454 |
|
Loss on debt extinguishment, net |
|
|
- |
|
|
|
31,187 |
|
Interest rate cap amortization |
|
|
720 |
|
|
|
- |
|
Deferred income taxes |
|
|
(8,652 |
) |
|
|
(8,046 |
) |
Equity in earnings of unconsolidated entities |
|
|
- |
|
|
|
(1,320 |
) |
Distributions of cumulative earnings from unconsolidated
entities |
|
|
- |
|
|
|
1,969 |
|
Cash paid for interest rate cap |
|
|
(2,200 |
) |
|
|
- |
|
Straight-line revenues and amortization of below-market lease
intangibles |
|
|
(17,038 |
) |
|
|
(19,216 |
) |
Stock-based compensation |
|
|
6,745 |
|
|
|
6,260 |
|
Loss (gain) on asset disposals |
|
|
294 |
|
|
|
(172 |
) |
Gain on sale of real estate |
|
|
(18,999 |
) |
|
|
- |
|
Accretion of settlement obligation |
|
|
3,660 |
|
|
|
5,776 |
|
Other |
|
|
(48 |
) |
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(10,296 |
) |
|
|
(391 |
) |
Other assets |
|
|
7,264 |
|
|
|
967 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
(13,228 |
) |
|
|
12,894 |
|
Net cash provided by operating activities |
|
|
174,338 |
|
|
|
199,831 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(262,758 |
) |
|
|
(247,269 |
) |
Proceeds from sale of other equipment |
|
|
435 |
|
|
|
1,169 |
|
Proceeds from sale of real estate |
|
|
40,039 |
|
|
|
- |
|
Proceeds from sale of unconsolidated entity |
|
|
40,000 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(182,284 |
) |
|
|
(246,100 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Repayment of debt |
|
|
(122,942 |
) |
|
|
(2,263,662 |
) |
Proceeds from issuance of notes |
|
|
309,000 |
|
|
|
2,600,000 |
|
Dividends paid |
|
|
(108,445 |
) |
|
|
(71,594 |
) |
Payments of settlement payable |
|
|
(49,011 |
) |
|
|
(49,011 |
) |
Borrowings under revolving credit facility |
|
|
125,000 |
|
|
|
245,000 |
|
Payments under revolving credit facility |
|
|
(333,000 |
) |
|
|
(347,000 |
) |
Proceeds from ABS Loan Facility |
|
|
275,000 |
|
|
|
- |
|
Finance lease payments |
|
|
(1,265 |
) |
|
|
(799 |
) |
Payments for financing costs |
|
|
(15,778 |
) |
|
|
(26,955 |
) |
Payment of 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 interests |
|
|
(37 |
) |
|
|
(32 |
) |
Payment for exchange of noncontrolling interest |
|
|
(92 |
) |
|
|
- |
|
Employee stock purchase program |
|
|
326 |
|
|
|
314 |
|
Payments related to tax withholding for stock-based
compensation |
|
|
(1,583 |
) |
|
|
(1,350 |
) |
Net cash provided by financing activities |
|
|
77,173 |
|
|
|
40,611 |
|
Net increase (decrease) in cash and cash
equivalents |
|
|
69,227 |
|
|
|
(5,658 |
) |
Cash, restricted cash and cash equivalents at beginning of
period |
|
|
62,264 |
|
|
|
43,803 |
|
Cash, restricted cash and cash equivalents at end of period |
|
$ |
131,491 |
|
|
$ |
38,145 |
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Property and equipment acquired but not yet paid |
|
$ |
7,074 |
|
|
$ |
14,708 |
|
Tenant capital improvements |
|
|
94,049 |
|
|
|
78,473 |
|
Uniti Group Inc.Reconciliation of Net
Income to FFO and AFFO (In thousands, except per
share data) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
|
2023 |
|
2024 |
|
2023 |
Net income attributable to common
shareholders |
|
$ |
17,550 |
|
|
$ |
25,299 |
|
|
$ |
58,438 |
|
|
$ |
5,845 |
|
Real estate depreciation and amortization |
|
|
55,615 |
|
|
|
55,062 |
|
|
|
111,545 |
|
|
|
109,578 |
|
Gain on sale of real estate, assets, net of tax |
|
|
- |
|
|
|
- |
|
|
|
(18,951 |
) |
|
|
- |
|
Participating securities share in earnings |
|
|
723 |
|
|
|
322 |
|
|
|
1,159 |
|
|
|
569 |
|
Participating securities share in FFO |
|
|
(1,470 |
) |
|
|
(730 |
) |
|
|
(2,295 |
) |
|
|
(977 |
) |
Real estate depreciation and amortization from unconsolidated
entities |
|
|
- |
|
|
|
435 |
|
|
|
- |
|
|
|
870 |
|
Adjustments for noncontrolling interests |
|
|
(9 |
) |
|
|
(25 |
) |
|
|
(25 |
) |
|
|
(50 |
) |
FFO attributable to common shareholders |
|
|
72,409 |
|
|
|
80,363 |
|
|
|
149,871 |
|
|
|
115,835 |
|
Transaction related and other costs |
|
|
10,977 |
|
|
|
5,576 |
|
|
|
16,664 |
|
|
|
8,364 |
|
Amortization of deferred financing costs and debt discount |
|
|
5,915 |
|
|
|
4,491 |
|
|
|
10,950 |
|
|
|
9,454 |
|
Write off of deferred financing costs and debt discount |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,412 |
|
Costs related to the early repayment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
51,997 |
|
Stock based compensation |
|
|
3,397 |
|
|
|
3,130 |
|
|
|
6,745 |
|
|
|
6,260 |
|
Non-real estate depreciation and amortization |
|
|
22,437 |
|
|
|
22,205 |
|
|
|
43,992 |
|
|
|
44,464 |
|
Straight-line revenues and amortization of below-market lease
intangibles |
|
|
(8,216 |
) |
|
|
(9,789 |
) |
|
|
(17,038 |
) |
|
|
(19,216 |
) |
Maintenance capital expenditures |
|
|
(1,909 |
) |
|
|
(1,916 |
) |
|
|
(3,998 |
) |
|
|
(3,744 |
) |
Other, net |
|
|
(12,753 |
) |
|
|
(13,417 |
) |
|
|
(27,298 |
) |
|
|
(26,078 |
) |
Adjustments for equity in earnings from unconsolidated
entities |
|
|
- |
|
|
|
320 |
|
|
|
- |
|
|
|
640 |
|
Adjustments for noncontrolling interests |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
|
|
(37 |
) |
AFFO attributable to common shareholders |
|
$ |
92,254 |
|
|
$ |
90,958 |
|
|
$ |
179,880 |
|
|
$ |
198,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted FFO and AFFO: |
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Attributable to common shareholders – Basic |
|
$ |
72,409 |
|
|
$ |
80,363 |
|
|
$ |
149,871 |
|
|
$ |
115,835 |
|
Impact of if-converted dilutive securities |
|
|
6,878 |
|
|
|
6,991 |
|
|
|
13,900 |
|
|
|
13,258 |
|
FFO
Attributable to common shareholders – Diluted |
|
$ |
79,287 |
|
|
$ |
87,354 |
|
|
$ |
163,771 |
|
|
$ |
129,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO Attributable to common shareholders – Basic |
|
$ |
92,254 |
|
|
$ |
90,958 |
|
|
$ |
179,880 |
|
|
$ |
198,351 |
|
Impact of if-converted dilutive securities |
|
|
6,807 |
|
|
|
6,976 |
|
|
|
13,783 |
|
|
|
14,085 |
|
AFFO Attributable to common shareholders – Diluted |
|
$ |
99,061 |
|
|
$ |
97,934 |
|
|
$ |
193,663 |
|
|
$ |
212,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used to calculate basic earnings per
common share (1) |
|
|
237,347 |
|
|
|
236,429 |
|
|
|
237,121 |
|
|
|
236,260 |
|
Impact of dilutive non-participating securities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Impact of if-converted dilutive securities |
|
|
52,911 |
|
|
|
53,455 |
|
|
|
54,070 |
|
|
|
54,082 |
|
Weighted average common shares used to calculate diluted FFO and
AFFO per common share (1) |
|
|
290,258 |
|
|
|
289,884 |
|
|
|
291,191 |
|
|
|
290,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted common share: |
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.25 |
|
|
$ |
0.02 |
|
FFO |
|
$ |
0.27 |
|
|
$ |
0.30 |
|
|
$ |
0.56 |
|
|
$ |
0.44 |
|
AFFO |
|
$ |
0.34 |
|
|
$ |
0.34 |
|
|
$ |
0.67 |
|
|
$ |
0.73 |
|
(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 per
share. |
Uniti Group Inc.Reconciliation of EBITDA
and Adjusted EBITDA(In thousands) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
|
$ |
18,281 |
|
|
$ |
25,638 |
|
|
$ |
59,629 |
|
|
$ |
6,427 |
|
Depreciation and amortization |
|
|
78,052 |
|
|
|
77,267 |
|
|
|
155,537 |
|
|
|
154,042 |
|
Interest expense, net |
|
|
127,475 |
|
|
|
119,689 |
|
|
|
250,686 |
|
|
|
268,552 |
|
Income tax benefit |
|
|
(2,571 |
) |
|
|
(4,357 |
) |
|
|
(7,934 |
) |
|
|
(6,769 |
) |
EBITDA |
|
$ |
221,237 |
|
|
$ |
218,237 |
|
|
$ |
457,918 |
|
|
$ |
422,252 |
|
Stock-based compensation |
|
|
3,397 |
|
|
|
3,130 |
|
|
|
6,745 |
|
|
|
6,260 |
|
Transaction related and other costs |
|
|
10,977 |
|
|
|
5,576 |
|
|
|
16,664 |
|
|
|
8,364 |
|
Gain on sale of real estate |
|
|
- |
|
|
|
- |
|
|
|
(18,999 |
) |
|
|
- |
|
Other, net |
|
|
1,048 |
|
|
|
469 |
|
|
|
2,959 |
|
|
|
20,982 |
|
Adjustments for equity in earnings from unconsolidated
entities |
|
|
- |
|
|
|
755 |
|
|
|
- |
|
|
|
1,510 |
|
Adjusted EBITDA |
|
$ |
236,659 |
|
|
$ |
228,167 |
|
|
$ |
465,287 |
|
|
$ |
459,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Leasing |
|
$ |
210,853 |
|
|
$ |
206,552 |
|
|
$ |
421,530 |
|
|
$ |
411,518 |
|
Uniti Fiber |
|
|
31,091 |
|
|
|
25,181 |
|
|
|
54,929 |
|
|
|
58,855 |
|
Corporate |
|
|
(5,285 |
) |
|
|
(3,566 |
) |
|
|
(11,172 |
) |
|
|
(11,005 |
) |
|
|
$ |
236,659 |
|
|
$ |
228,167 |
|
|
$ |
465,287 |
|
|
$ |
459,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted EBITDA (1) |
|
$ |
918,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt (2) |
|
$ |
5,604,610 |
|
|
|
|
|
|
|
|
|
|
Unrestricted cash and cash equivalents |
|
|
118,763 |
|
|
|
|
|
|
|
|
|
|
Net Debt |
|
$ |
5,485,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt/Annualized Adjusted EBITDA |
|
|
5.97x |
|
|
|
|
|
|
|
|
|
________________________
(1)
Calculated as Adjusted EBITDA for the most recently reported
three-month period, excluding the Adjusted EBITDA of $7.0 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 $18.1 million of finance leases, but excludes
$89.7 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 |
|
$ 98 to $ 118 |
Participating securities’ share in earnings |
|
2 |
Net income (2) |
|
100 to 120 |
Interest expense, net (3) |
|
514 |
Depreciation and amortization |
|
313 |
Income tax benefit |
|
(11) |
EBITDA (2) |
|
916 to 936 |
Stock-based compensation |
|
13 |
Gain on sale of real estate |
|
(19) |
Transaction related and other costs (4) |
|
20 |
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 |
|
$ 0.41 to $ 0.50 |
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) |
|
$ 1.27 to $ 1.35 |
Impact of if-converted securities |
|
(0.14) |
FFO attributable to common shareholders – Diluted
(2) |
|
$ 1.14 to $ 1.21 |
|
|
|
FFO attributable to common shareholders – Basic
(2) |
|
$ 1.27 to $ 1.35 |
Transaction related and other costs (3) |
|
0.07 |
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 |
|
0.38 |
Straight-line revenues |
|
(0.13) |
Maintenance capital expenditures |
|
(0.03) |
Other, net |
|
(0.26) |
AFFO attributable to common shareholders – Basic
(2) |
|
$ 1.49 to $ 1.57 |
Impact of if-converted securities |
|
(0.17) |
AFFO attributable to common shareholders – Diluted
(2) |
$ 1.33 to $ 1.40 |
_______________________
(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 |
|
$ |
484 |
Accretion of Windstream settlement payable |
|
|
6 |
Amortization of deferred financing cost and debt discounts |
|
|
24 |
Interest expense, net (2) |
|
$ |
514 |
________________________
(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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