Uniti Group Inc. ("Uniti" or the “Company”) (Nasdaq:UNIT) today
announced its results for the second quarter of 2017.
“The acquisitions of Hunt and Southern Light
strengthen Uniti Fiber’s standing as a leading provider of data
transport services with a network encompassing over 30,000 route
miles, 1.2 million fiber miles, and 3,000 route miles of dark fiber
presently under construction. Uniti Fiber now serves
customers across the wireless, military, E-Rate, wholesale and
enterprise sectors focusing on infrastructure solutions including
fiber-to-the-tower, small cell networks, and dark fiber
deployments.” commented Kenny Gunderman, President and Chief
Executive Officer.
Mr. Gunderman continued, “Wireless carriers
continue to densify their fiber networks, deploy new technologies
and architectures, and accelerate small cell deployment
initiatives. Uniti is increasingly well positioned to
capitalize on the substantial long-term investment required in
critical communication infrastructure assets to support the rapid
growth in data traffic.”
QUARTERLY RESULTS
Revenues for the second quarter of 2017 were
$213.0 million. Net loss and Adjusted EBITDA was $16.5
million and $179.6 million, respectively, for the same
period. Net loss attributable to common shares was $18.2
million, or $0.11 per diluted share, for the period, including a
$2.1 million non-cash charge for a change in the fair value of
contingent consideration related to the Tower Cloud acquisition and
achievement of certain small cell deployment milestones.
Adjusted Funds From Operations (“AFFO”)
attributable to common shares was $101.4 million, or $0.60 per
diluted common share. Excluding the impact of pre-funding capital
markets transactions related to our acquisitions of Southern Light,
LLC (“Southern Light”) and Hunt Telecommunications, LLC (“Hunt”),
AFFO per diluted common share was $0.66 for the quarter.
Uniti Fiber contributed $35.0 million of
revenues and $12.6 million of Adjusted EBITDA for the second
quarter of 2017. Uniti Fiber’s net success based capital
expenditures during the quarter were $25.0 million, principally
deployed towards dark fiber builds in Georgia and Florida.
Maintenance capital expenditures were $1.4 million.
INVESTMENT TRANSACTIONS
The Company closed the acquisitions of Southern
Light and Hunt on July 3, 2017 for aggregate initial
consideration of approximately $762 million of cash and
the issuance of 4.2 million operating partnership units.
LIQUIDITY AND FINANCING TRANSACTIONS
In April 2017, the Company completed two capital market
transactions to pre-fund the Hunt and Southern Light
acquisitions:
- The Company issued 19.5 million shares of common stock
at $26.50 per share in an underwritten public
offering. Net proceeds to the Company were
approximately $500 million, after underwriter discounts and
other transaction costs.
- The Company issued $200 million principal amount of
7.125% Senior Secured Notes (“Notes”) due 2024 at an issue price of
100.500% of par. Net proceeds to the Company, after
underwriter discounts and transaction costs, were
approximately $197 million.
During the second quarter, the Company amended
its revolving credit agreement to increase the borrowing
capacity to $750 million.
At quarter-end, the Company had approximately
$934 million of unrestricted cash and cash equivalents, a portion
of which was used to fund the Southern Light and Hunt acquisitions,
and $515 million undrawn on its revolving credit agreement.
The Company’s leverage ratio at quarter end was 5.2x based on Net
Debt to Annualized Adjusted EBITDA.
As previously reported, on August 2, 2017, the
Company’s Board of Directors declared a quarterly cash dividend of
$0.60 per common share, payable on October 13, 2017 to stockholders
of record on September 29, 2017.
FULL YEAR 2017 OUTLOOK
The Company’s 2017 outlook reflects the
consolidation of Hunt and Southern Light for the six-month period
following the closing of these acquisitions on July 3, 2017.
We expect these transactions to contribute aggregate revenues and
Adjusted EBITDA of approximately $64.0 million and $34.0 million,
respectively, during such period.
Our current outlook excludes the impact of any
other future acquisitions, capital market transactions, and
transaction costs. Furthermore, our outlook is subject to
adjustment based on the finalization of purchase price allocations
related to the acquisitions, and actual results could differ
materially from these forward-looking statements.
The Company’s consolidated outlook for 2017 is
as follows (in millions):
|
Full Year 2017 |
Revenue |
$ |
913 |
|
to |
$ |
918 |
|
|
Adjusted EBITDA (1) |
|
748 |
|
to |
|
753 |
|
|
Interest expense (2) |
|
306 |
|
to |
|
306 |
|
|
|
|
|
|
|
|
|
Applicable to common shareholders: |
|
|
|
|
|
|
Net loss |
|
(35) |
to |
|
(29) |
|
FFO (1) |
|
337 |
|
to |
|
342 |
|
|
AFFO (1) |
|
424 |
|
to |
|
430 |
|
|
Weighted-average common shares outstanding - diluted |
|
169 |
|
to |
|
169 |
|
|
________________________ |
|
|
|
|
|
|
(1) See “Non-GAAP Financial Measures”
below. |
(2) Includes amortization of deferred financing
costs and debt discounts. |
At the midpoint of its outlook, the Company
expects full year 2017 net loss attributable to common shares to be
approximately $(0.19) per diluted share and AFFO per diluted common
share to be $2.53. The following table provides a
reconciliation of the Company’s outlook for AFFO before the impact
of pre-funding transactions.
|
Full Year 2017Midpoint
Outlook |
Current
2017 outlook – AFFO (1) |
$ |
2.53 |
|
|
|
|
|
|
|
|
Pre-funding capital market transactions (2) |
|
0.07 |
|
|
|
|
|
|
|
|
Current
2017 outlook – AFFO before pre-funding transactions |
|
2.60 |
|
|
|
|
|
|
|
|
________________________ |
|
|
|
|
|
|
(1)
Includes $2.5 million of estimated post-closing cost savings
related to the Hunt and Southern Light acquisitions. |
(2) Represents the dilutive impact to AFFO per diluted common
share from the effective date of the aforementioned pre-funding
capital market transactions to the July 3, 2017 closing date
of the Hunt and Southern Light acquisitions. |
CONFERENCE CALL
Uniti will hold a conference call today to discuss this earnings
release at 4:15 PM Eastern Time (3:15 PM Central Time). The
dial-in number for the conference call is (844) 513-7153 (or (508)
637-5603 for international callers) and the conference ID
37446966. The conference call will be webcast live and can be
accessed on the Company’s website at www.uniti.com. A replay
of the webcast will be available following the call on the
Company’s website, beginning today at approximately 8:00 PM Eastern
Time and will remain available for 14 days.
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
wireless infrastructure solutions for the communications
industry. As of July 3, 2017, Uniti owns 4.8 million fiber
strand miles, 631 wireless towers, and other communications real
estate throughout the United States and Mexico. Additional
information about Uniti can be found on its website at
www.uniti.com.
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, those regarding our business strategies, growth
prospects, industry trends, sales opportunities, operating and
financial performance, 2017 financial results and the anticipated
benefits of the Hunt and Southern Light transactions.
Words such as "anticipate(s)," "expect(s)," "intend(s),"
“estimate(s),” “foresee(s),” "plan(s)," "believe(s)," "may,"
"will," "would," "could," \"should," "seek(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 ability and willingness of our customers to meet
and/or perform their obligations under any contractual arrangements
entered into with us; 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; our ability to renew, extend or obtain contracts with
significant customers (including customers of the businesses we
acquire); 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; 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; our ability to qualify or
maintain our status as a real estate investment trust (“REIT”);
changes in the U.S. tax law and other state, federal or local laws,
whether or not specific to REITs; covenants in our debt agreements
that may limit our operational flexibility; 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;
and additional factors described in our reports filed with the
SEC.
Uniti expressly disclaims any obligation to release publicly any
updates or revisions to any of the forward-looking statements set
forth in this press release and today’s conference call to reflect
any change in its expectations or any change in events, conditions
or circumstances on which any statement is based.
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, 2017 |
|
December 31, 2016 |
Assets: |
|
|
|
|
Property, plant and
equipment, net |
|
$ |
2,689,500 |
|
|
$ |
2,670,037 |
|
Cash and cash
equivalents |
|
|
934,096 |
|
|
|
171,754 |
|
Accounts receivable,
net |
|
|
12,737 |
|
|
|
15,281 |
|
Goodwill |
|
|
262,086 |
|
|
|
262,334 |
|
Intangible assets,
net |
|
|
211,155 |
|
|
|
160,584 |
|
Straight-line revenue
receivable |
|
|
37,728 |
|
|
|
29,088 |
|
Other assets |
|
|
13,859 |
|
|
|
9,674 |
|
Total Assets |
|
$ |
4,161,161 |
|
|
$ |
3,318,752 |
|
|
|
|
|
|
|
|
Liabilities,
Convertible Preferred Stock and Shareholders’ Deficit |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts payable,
accrued expenses and other liabilities |
|
$ |
68,222 |
|
|
$ |
40,977 |
|
Accrued interest
payable |
|
|
28,037 |
|
|
|
27,812 |
|
Deferred revenue |
|
|
371,707 |
|
|
|
261,404 |
|
Derivative
liability |
|
|
12,231 |
|
|
|
6,102 |
|
Dividends payable |
|
|
106,709 |
|
|
|
94,607 |
|
Deferred income
taxes |
|
|
46,405 |
|
|
|
28,394 |
|
Capital lease
obligations |
|
|
54,770 |
|
|
|
54,535 |
|
Contingent
consideration |
|
|
92,833 |
|
|
|
98,600 |
|
Notes and other debt,
net |
|
|
4,439,245 |
|
|
|
4,028,214 |
|
Total Liabilities |
|
|
5,220,159 |
|
|
|
4,640,645 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
preferred stock, Series A, $0.0001 par value, 88 shares
authorized, issued and outstanding, $87,500 liquidation value |
|
|
82,041 |
|
|
|
80,552 |
|
|
|
|
|
|
|
|
Shareholder’s
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: 174,813 shares at June 30, 2017 and 155,139 at
December 31, 2016 |
|
|
17 |
|
|
|
15 |
|
Additional paid-in
capital |
|
|
641,810 |
|
|
|
141,092 |
|
Accumulated other
comprehensive loss |
|
|
(7,500 |
) |
|
|
(6,369 |
) |
Distributions in excess
of accumulated earnings |
|
|
(1,775,366 |
) |
|
|
(1,537,183 |
) |
Total shareholders’ deficit |
|
|
(1,141,039 |
) |
|
|
(1,402,445 |
) |
Total
Liabilities, Convertible Preferred Stock and Shareholders’
Deficit |
|
$ |
4,161,161 |
|
|
$ |
3,318,752 |
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Consolidated Statements of
Operations |
(In thousands, except per share
data) |
|
|
|
|
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leasing |
$ |
170,914 |
|
|
$ |
168,966 |
|
|
$ |
341,220 |
|
|
$ |
337,579 |
|
Fiber
Infrastructure |
|
34,983 |
|
|
|
13,776 |
|
|
|
69,795 |
|
|
|
13,776 |
|
Towers |
|
2,455 |
|
|
|
84 |
|
|
|
3,883 |
|
|
|
112 |
|
Consumer CLEC |
|
4,661 |
|
|
|
5,747 |
|
|
|
9,588 |
|
|
|
11,781 |
|
Total
revenues |
|
213,013 |
|
|
|
188,573 |
|
|
|
424,486 |
|
|
|
363,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
75,086 |
|
|
|
68,036 |
|
|
|
148,451 |
|
|
|
134,085 |
|
Depreciation and
amortization |
|
102,599 |
|
|
|
92,385 |
|
|
|
203,960 |
|
|
|
178,725 |
|
General and
administrative expense |
|
13,503 |
|
|
|
8,239 |
|
|
|
27,481 |
|
|
|
13,428 |
|
Operating expense
(exclusive of depreciation and amortization) |
|
21,961 |
|
|
|
9,911 |
|
|
|
44,086 |
|
|
|
14,618 |
|
Transaction related
costs |
|
14,017 |
|
|
|
11,210 |
|
|
|
23,701 |
|
|
|
15,120 |
|
Other expenses |
|
2,232 |
|
|
|
- |
|
|
|
13,571 |
|
|
|
- |
|
Total costs and expenses |
|
229,398 |
|
|
|
189,781 |
|
|
|
461,250 |
|
|
|
355,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
(16,385 |
) |
|
|
(1,208 |
) |
|
|
(36,764 |
) |
|
|
7,272 |
|
Income tax
expense (benefit) |
|
75 |
|
|
|
327 |
|
|
|
(304 |
) |
|
|
771 |
|
Net (loss)
income |
|
(16,460 |
) |
|
|
(1,535 |
) |
|
|
(36,460 |
) |
|
|
6,501 |
|
Participating
securities’ share in earnings |
|
(381 |
) |
|
|
(402 |
) |
|
|
(768 |
) |
|
|
(757 |
) |
Dividends declared on
convertible preferred stock |
|
(656 |
) |
|
|
(438 |
) |
|
|
(1,312 |
) |
|
|
(438 |
) |
Amortization of
discount on convertible preferred stock |
|
(745 |
) |
|
|
(496 |
) |
|
|
(1,490 |
) |
|
|
(496 |
) |
Net (loss)
income applicable to common
shareholders |
$ |
(18,242 |
) |
|
$ |
(2,871 |
) |
|
$ |
(40,030 |
) |
|
$ |
4,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.25 |
) |
|
$ |
0.03 |
|
Diluted |
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.25 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
169,655 |
|
|
|
150,913 |
|
|
|
162,460 |
|
|
|
150,416 |
|
Diluted |
|
169,655 |
|
|
|
150,913 |
|
|
|
162,460 |
|
|
|
150,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share |
$ |
0.60 |
|
|
$ |
0.60 |
|
|
$ |
1.20 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Consolidated Statements of Cash
Flows |
(In thousands) |
|
|
|
|
|
Six Months EndedJune 30, |
|
|
2017 |
|
|
2016 |
|
Cash flow from
operating activities: |
|
|
|
|
Net
(loss) income |
|
$ |
(36,460 |
) |
|
$ |
6,501 |
|
Adjustments to reconcile net (loss) income to net cash provided
by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
203,960 |
|
|
|
178,725 |
|
Amortization of deferred financing costs |
|
|
5,075 |
|
|
|
3,681 |
|
Amortization of debt discount |
|
|
5,906 |
|
|
|
3,926 |
|
Deferred
income taxes |
|
|
(1,607 |
) |
|
|
(599 |
) |
Straight-line revenues |
|
|
(7,248 |
) |
|
|
(8,627 |
) |
Stock
based compensation |
|
|
3,653 |
|
|
|
2,147 |
|
Other |
|
|
590 |
|
|
|
(6 |
) |
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts
receivable |
|
|
4,468 |
|
|
|
485 |
|
Other
assets |
|
|
(2,671 |
) |
|
|
(2,104 |
) |
Change in
fair value of contingent consideration |
|
|
13,024 |
|
|
|
- |
|
Accounts
payable, accrued expenses and other liabilities |
|
|
7,712 |
|
|
|
(318 |
) |
Net cash
provided by operating activities |
|
|
196,402 |
|
|
|
183,811 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
|
|
248 |
|
|
|
(316,133 |
) |
Acquisition of ground lease investments |
|
|
(9,355 |
) |
|
|
(5,693 |
) |
NMS asset
acquisitions |
|
|
(67,924 |
) |
|
|
- |
|
Capital
expenditures - other |
|
|
(46,234 |
) |
|
|
(3,759 |
) |
Net cash
used in investing activities |
|
|
(123,265 |
) |
|
|
(325,585 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Principal
payment on debt |
|
|
(10,540 |
) |
|
|
(11,394 |
) |
Dividends
paid |
|
|
(188,347 |
) |
|
|
(180,694 |
) |
Payments
of contingent consideration |
|
|
(18,791 |
) |
|
|
- |
|
Proceeds
from issuance of Notes |
|
|
201,000 |
|
|
|
148,875 |
|
Borrowings under revolving credit facility |
|
|
360,000 |
|
|
|
321,000 |
|
Payments
under revolving credit facility |
|
|
(125,000 |
) |
|
|
(278,936 |
) |
Capital
lease payments |
|
|
(1,345 |
) |
|
|
(469 |
) |
Deferred
financing costs |
|
|
(25,411 |
) |
|
|
(2,998 |
) |
Common
stock issuance, net of costs |
|
|
498,977 |
|
|
|
54,836 |
|
Net share
settlement |
|
|
(1,694 |
) |
|
|
(2,055 |
) |
Net cash
provided by financing activities |
|
|
688,849 |
|
|
|
48,165 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
356 |
|
|
|
(76 |
) |
Net increase (decrease) in cash and cash
equivalents |
|
|
762,342 |
|
|
|
(93,685 |
) |
Cash
and cash equivalents at beginning of period |
|
|
171,754 |
|
|
|
142,498 |
|
Cash
and cash equivalents at end of period |
|
$ |
934,096 |
|
|
$ |
48,813 |
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Property
and equipment acquired but not yet paid |
|
$ |
2,892 |
|
|
$ |
1,188 |
|
Tenant
capital improvements |
|
|
113,785 |
|
|
|
70,603 |
|
Acquisition of businesses through non-cash consideration |
|
|
- |
|
|
|
102,881 |
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Reconciliation of Net Income to FFO and
AFFO |
(In thousands, except per share
data) |
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2017 |
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net (loss)
income applicable to common shareholders |
|
$ |
(18,242 |
) |
|
$ |
(2,871 |
) |
|
$ |
(40,030 |
) |
|
$ |
4,810 |
|
Real estate
depreciation and amortization |
|
|
92,181 |
|
|
|
87,331 |
|
|
|
183,195 |
|
|
|
172,832 |
|
Participating
securities’ share in earnings |
|
|
381 |
|
|
|
402 |
|
|
|
768 |
|
|
|
757 |
|
Participating
securities’ share in FFO |
|
|
(381 |
) |
|
|
(402 |
) |
|
|
(768 |
) |
|
|
(770 |
) |
FFO applicable
to common shareholders |
|
|
73,939 |
|
|
|
84,460 |
|
|
|
143,165 |
|
|
|
177,629 |
|
Transaction related
costs |
|
|
14,017 |
|
|
|
11,210 |
|
|
|
23,701 |
|
|
|
15,120 |
|
Change in fair value of
contingent consideration |
|
|
2,114 |
|
|
|
- |
|
|
|
13,024 |
|
|
|
- |
|
Amortization of
deferred financing costs |
|
|
2,588 |
|
|
|
1,863 |
|
|
|
5,075 |
|
|
|
3,681 |
|
Amortization of debt
discount |
|
|
3,128 |
|
|
|
1,980 |
|
|
|
5,906 |
|
|
|
3,926 |
|
Stock based
compensation |
|
|
2,021 |
|
|
|
1,217 |
|
|
|
3,653 |
|
|
|
2,147 |
|
Non-real estate
depreciation and amortization |
|
|
10,418 |
|
|
|
5,054 |
|
|
|
20,765 |
|
|
|
5,893 |
|
Straight-line
revenues |
|
|
(3,619 |
) |
|
|
(4,305 |
) |
|
|
(7,248 |
) |
|
|
(8,627 |
) |
Maintenance capital
expenditures |
|
|
(1,442 |
) |
|
|
(680 |
) |
|
|
(1,978 |
) |
|
|
(680 |
) |
Amortization of
discount on convertible preferred stock |
|
|
745 |
|
|
|
496 |
|
|
|
1,490 |
|
|
|
496 |
|
Other non-cash
(revenue) expense, net |
|
|
(2,467 |
) |
|
|
(1,692 |
) |
|
|
(5,795 |
) |
|
|
(2,509 |
) |
Adjusted FFO
applicable to common shareholders |
|
$ |
101,442 |
|
|
$ |
99,603 |
|
|
$ |
201,758 |
|
|
$ |
197,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.11 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.25 |
) |
|
$ |
0.03 |
|
FFO |
|
$ |
0.44 |
|
|
$ |
0.56 |
|
|
$ |
0.88 |
|
|
$ |
1.18 |
|
AFFO |
|
$ |
0.60 |
|
|
$ |
0.66 |
|
|
$ |
1.24 |
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares used to calculate basic (loss) earnings per common
share |
|
|
169,655 |
|
|
|
150,913 |
|
|
|
162,460 |
|
|
|
150,416 |
|
Effect of dilutive
non-participating securities |
|
|
121 |
|
|
|
283 |
|
|
|
153 |
|
|
|
245 |
|
Weighted average common
shares used to calculate diluted FFO and AFFO per common share |
|
|
169,776 |
|
|
|
151,196 |
|
|
|
162,613 |
|
|
|
150,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Reconciliation of EBITDA and Adjusted
EBITDA |
(In thousands) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net (loss)
income |
|
$ |
(16,460 |
) |
|
$ |
(1,535 |
) |
|
$ |
(36,460 |
) |
|
$ |
6,501 |
|
Depreciation and
amortization |
|
|
102,599 |
|
|
|
92,385 |
|
|
|
203,960 |
|
|
|
178,725 |
|
Interest expense |
|
|
75,086 |
|
|
|
68,036 |
|
|
|
148,451 |
|
|
|
134,085 |
|
Income tax expense
(benefit) |
|
|
75 |
|
|
|
327 |
|
|
|
(304 |
) |
|
|
771 |
|
EBITDA |
|
|
161,300 |
|
|
|
159,213 |
|
|
|
315,647 |
|
|
|
320,082 |
|
Stock based
compensation |
|
|
2,021 |
|
|
|
1,217 |
|
|
|
3,653 |
|
|
|
2,147 |
|
Transaction related
costs |
|
|
14,017 |
|
|
|
11,210 |
|
|
|
23,701 |
|
|
|
15,120 |
|
Other expenses |
|
|
2,232 |
|
|
|
- |
|
|
|
13,571 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
179,570 |
|
|
$ |
171,640 |
|
|
$ |
356,572 |
|
|
$ |
337,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing |
|
$ |
170,528 |
|
|
$ |
168,629 |
|
|
$ |
340,588 |
|
|
$ |
336,837 |
|
Fiber
Infrastructure |
|
|
12,618 |
|
|
|
5,500 |
|
|
|
24,185 |
|
|
|
5,500 |
|
Towers |
|
|
(242 |
) |
|
|
(297 |
) |
|
|
(977 |
) |
|
|
(599 |
) |
Consumer
CLEC |
|
|
1,323 |
|
|
|
1,330 |
|
|
|
2,489 |
|
|
|
2,662 |
|
Corporate |
|
|
(4,657 |
) |
|
|
(3,522 |
) |
|
|
(9,713 |
) |
|
|
(7,051 |
) |
|
|
$ |
179,570 |
|
|
$ |
171,640 |
|
|
$ |
356,572 |
|
|
$ |
337,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized
Adjusted EBITDA (1) |
|
$ |
718,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30,
2017: |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Debt (2) |
|
$ |
4,647,197 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
934,096 |
|
|
|
|
|
|
|
|
|
|
Net Debt |
|
$ |
3,713,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Debt/Annualized Adjusted EBITDA |
|
|
6.5x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt/Annualized Adjusted EBITDA |
|
|
5.2x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated as Adjusted EBITDA for the most recently reported
three-month period, 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 $54.8 million of capital leases, but excludes $153.2
million of unamortized discounts and deferred financing costs. |
Uniti Group Inc. |
Projected Future Results (1) |
(In millions) |
|
|
|
|
|
Year Ended December 31, 2017 |
Net loss
applicable to common shareholders |
|
($35) to ($29) |
Noncontrolling interest
share in earnings |
|
0 |
Participating
securities’ share in earnings |
|
1 |
Dividends declared on
convertible preferred stock |
|
3 |
Amortization of
discount on convertible preferred stock |
|
3 |
Net Loss
(2) |
|
($28) to ($22) |
Interest expense |
|
306 |
Depreciation and
amortization |
|
426 |
Income tax benefit |
|
(2) |
EBITDA
(2) |
|
$703 to $708 |
Stock based
compensation |
|
8 |
Transaction related
cost |
|
24 |
Other expenses |
|
13 |
Adjusted EBITDA
(2) |
|
$748 to $753 |
|
|
|
(1) The
foregoing projections reflect management’s outlook after the
impacts of the recent acquisitions of Hunt and Southern
Light. Final purchase price allocations,
future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. These ranges represent
management’s best estimates based on the underlying assumptions as
of the date of this press release. 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. |
|
|
|
Uniti Group Inc. |
Projected Future Results (1) |
(Per Diluted Share) |
|
|
|
|
|
Year Ended December 31, 2017 |
Net loss
applicable to common shareholders |
|
($0.21) to ($0.17) |
Real estate
depreciation and amortization |
|
2.22 |
Participating
securities share in earnings |
|
0.01 |
Participating
securities share in FFO |
|
(0.01) |
Adjustments for
noncontrolling interests |
|
(0.03) |
FFO applicable
to common shareholders (2) |
|
$1.99 to $2.02 |
Transaction related
costs |
|
0.14 |
Amortization of
deferred financing costs and debt discount |
|
0.14 |
Stock based
compensation |
|
0.05 |
Non-real estate
depreciation and amortization |
|
0.30 |
Change in fair value of
contingent consideration |
|
0.08 |
Straight-line
revenues |
|
(0.09) |
Maintenance capital
expenditures |
|
(0.04) |
Amortization of
discount on convertible preferred stock |
|
0.02 |
Other non-cash revenue,
net |
|
(0.07) |
Adjustments for
noncontrolling interests |
|
(0.00) |
AFFO applicable to common shareholders
(2) |
$2.51 to $2.55 |
|
|
|
(1) The
foregoing projections reflect management’s outlook after the
impacts of the recent acquisitions of Hunt and Southern
Light. Final purchase price allocations,
future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. These ranges represent
management’s best estimates based on the underlying assumptions as
of the date of this press release. 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
applicable to common shareholders due to rounding. |
|
|
|
Components of Interest Expense
(1) |
(In millions) |
|
|
|
Year Ended December 31, 2017 |
Interest expense on
debt obligations |
|
$ |
283 |
Amortization of
deferred financing cost and debt discounts |
|
|
23 |
Interest
expense (2) |
|
$ |
306 |
|
|
|
|
(1) The
foregoing projections reflect management’s outlook after the
impacts of the recent acquisitions of Hunt and Southern
Light. Final purchase price allocations,
future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. These ranges represent
management’s best estimates based on the underlying assumptions as
of the date of this press release. 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,
collectively “Transaction Related Costs”, the write off of
unamortized deferred financing costs, costs incurred as a result of
the early repayment of debt, changes in the fair value of
contingent consideration and financial instruments, and other
similar items. 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 use 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
applicable 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. We
compute FFO in accordance with NAREIT’s definition.
The Company defines AFFO, as FFO excluding (i) transaction and
integration costs; (ii) 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, straight
line revenues, 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;
(iii) the impact, which may be recurring in nature, of the
write-off of unamortized deferred financing fees, additional costs
incurred as a result of early repayment of debt, changes in the
fair value of contingent consideration and financial instruments
and similar items less maintenance capital expenditures. 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:
Mark A. Wallace, 501-850-0866
Executive Vice President, Chief Financial Officer & Treasurer
mark.wallace@uniti.com
Jim Volk, 501-850-0872
Vice President, Finance & Investor Relations
jim.volk@uniti.com
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