Uniti Group Inc. ("Uniti" or the “Company”) (Nasdaq:UNIT) today
announced its results for the fourth quarter and full-year 2017.
“We deployed over $1 billion of capital during
2017 with the acquisitions of Hunt, Southern Light, and NMS and
investments in our organic growth initiatives. We expanded
our customer relationships, successfully executed on our
integration strategies, converted to an UpREIT structure, and
favorably repriced our term loans. We continue to expect a
multi-year investment cycle for communication infrastructure.
Deployments of infrastructure for 5G technologies, the
FirstNet network in the U.S., and continuing expansion of the Red
Compartida wholesale network in Mexico provide tremendous
opportunities for our businesses,” commented Kenny Gunderman,
President and Chief Executive Officer.
Mr. Gunderman continued, “The announcement today
of our TPx sale-leaseback transactions demonstrate the momentum we
are gaining at Uniti Leasing, and the attractive economics of this
vertical. We expect Uniti Leasing will be an important
contributor to our future growth as shared communication
infrastructure is increasingly accepted within our industry.
With Uniti Leasing, Uniti Fiber and Uniti Towers, we now have three
established businesses with attractive organic growth to supplement
our acquisition strategy and further diversify our asset and
customer base.”
QUARTERLY RESULTS
Revenues for the fourth quarter of 2017 were
$246.3 million. Net income and Adjusted EBITDA was $22.8
million and $198.0 million, respectively, for the same
period. Net income attributable to common shares was $20.5
million for the period, and included a $28.2 million income tax
benefit related to the impact of tax reform under the Tax Cut and
Jobs Act of 2017, and the release of tax related valuation
allowances. Adjusted Funds From Operations (“AFFO”)
attributable to common shares was $112.4 million, or $0.64 per
diluted common share.
Uniti Fiber contributed $66.6 million of
revenues and $31.5 million of Adjusted EBITDA for the fourth
quarter of 2017. Uniti Fiber’s net success based capital
expenditures during the quarter were $39.0 million.
Maintenance capital expenditures were $1.0 million.
FULL YEAR 2017 RESULTS
Revenues for the year ended December 31, 2017
were $916.0 million. Net loss and Adjusted EBITDA was $8.8
million and $749.5 million, respectively, for the same
period. Net loss attributable to common shares was $16.6
million for the period, and included $38.0 million of transaction
and integration costs, a $10.7 million charge for changes in the
fair value of contingent consideration, partially offset by a $36.2
million income tax benefit related to the impact of tax reform and
the release of tax related valuation allowances. AFFO
attributable to common shares was $424.8 million, or $2.51 per
diluted common share.
Uniti Fiber contributed $202.8 million of
revenues and $84.0 million of Adjusted EBITDA for the year ended
December 31, 2017, and includes in the results of Hunt and Southern
Light from their July 3, 2017 closing date. Uniti Fiber’s net
success based capital expenditures during the year were $127.0
million. Maintenance capital expenditures were $4.4
million.
TPX SALE-LEASEBACK AND FIBER
ACQUISITION
The Company has entered into agreements to
acquire fiber assets from U.S. TelePacific Holding Corp. (“TPx”)
for all-cash consideration of $95 million. In the
transactions, Uniti will acquire and leaseback to TPx, on a
triple-net basis, 38,000 fiber strand miles located across
California, Nevada, Texas, and Massachusetts. In addition,
Uniti will acquire and have exclusive use of 7,000 fiber strand
miles located in Texas, which are adjacent to Uniti Fiber’s
southern network footprint. Uniti will also have
non-exclusive rights to market, on behalf of TPx, certain of the
fiber assets in California and Massachusetts.
The transactions are subject to customary
closing conditions and are expected to close in two tranches, with
the non-California assets expected to close in the second quarter
and the remaining California assets to close in the third quarter
of this year. The initial lease term will be 15 years with
five 5-year renewal options at TPx’s discretion. Upon closing of
both transactions, annual cash rent will initially be $8.8 million
with a fixed annual escalator of 1.5%. The Company expects to fund
the transactions through borrowings on its revolving credit
facility.
LIQUIDITY AND FINANCING TRANSACTIONS
At quarter-end, the Company had approximately
$59.8 million of unrestricted cash and cash equivalents, and $470
million of undrawn borrowing availability under its revolving
credit agreement. The Company’s leverage ratio at quarter end
was 5.8x based on Net Debt to Annualized Adjusted EBITDA.
As previously reported, on February 7, 2018, the
Company’s Board of Directors declared a quarterly cash dividend of
$0.60 per common share, payable on April 13, 2018 to stockholders
of record on March 30, 2018.
FULL YEAR 2018 OUTLOOK
Our current outlook excludes any future
acquisitions, capital market transactions, transaction costs, and
the impact of the TPx transaction. Furthermore, our outlook
is subject to adjustment based on the finalization of purchase
price allocations related to acquisitions and other factors.
Actual results could differ materially from these forward-looking
statements.
The Company’s consolidated outlook for 2018 is
as follows (in millions):
|
Full Year 2018 |
Revenue |
$ |
999.0 |
to |
$ |
1,010.0 |
|
Adjusted EBITDA (1) |
|
796.0 |
to |
|
805.0 |
|
Interest expense (2) |
|
320.0 |
to |
|
320.0 |
|
|
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
|
Net income |
|
10.1 |
to |
|
19.1 |
|
FFO (1) |
|
373.5 |
to |
|
382.5 |
|
AFFO (1) |
|
444.0 |
to |
|
453.0 |
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - diluted |
|
176.2 |
to |
|
176.2 |
|
________________________ |
|
|
|
|
|
|
(1) See “Non-GAAP Financial Measures” below. |
|
|
|
|
|
(2) Includes amortization of deferred financing costs and
debt discounts. |
|
|
|
|
|
|
|
|
|
|
|
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 4379417. 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 December 31, 2017, Uniti owns
4.9 million fiber strand miles, approximately 700 wireless towers,
and other communications real estate throughout the United States
and Latin America. 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, closing of the TPx transaction and our 2018
financial results.
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; the adverse impact of litigation affecting us or our
customers; 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;
the risk that the TPx transaction agreements may be modified or
terminated prior to expiration; risks related to satisfying the
conditions to the TPx transaction; 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) |
|
|
|
December 31,2017 |
|
December 31,2016 |
Assets: |
|
|
|
|
Property, plant and
equipment, net |
|
$ |
3,053,889 |
|
|
$ |
2,670,037 |
|
Cash and cash
equivalents |
|
|
59,765 |
|
|
|
171,754 |
|
Accounts receivable,
net |
|
|
43,652 |
|
|
|
15,281 |
|
Goodwill |
|
|
673,729 |
|
|
|
262,334 |
|
Intangible assets,
net |
|
|
429,357 |
|
|
|
160,584 |
|
Straight-line revenue
receivable |
|
|
47,041 |
|
|
|
29,088 |
|
Derivative asset |
|
|
6,793 |
|
|
|
- |
|
Other assets |
|
|
15,856 |
|
|
|
9,674 |
|
Total Assets |
|
$ |
4,330,082 |
|
|
$ |
3,318,752 |
|
|
|
|
|
|
|
|
Liabilities,
Convertible Preferred Stock and Shareholders’ Deficit |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts payable,
accrued expenses and other liabilities, net |
|
$ |
77,634 |
|
|
$ |
40,977 |
|
Accrued interest
payable |
|
|
28,684 |
|
|
|
27,812 |
|
Deferred revenue |
|
|
537,553 |
|
|
|
261,404 |
|
Derivative
liability |
|
|
- |
|
|
|
6,102 |
|
Dividends payable |
|
|
109,557 |
|
|
|
94,607 |
|
Deferred income
taxes |
|
|
55,478 |
|
|
|
28,394 |
|
Capital lease
obligations |
|
|
56,329 |
|
|
|
54,535 |
|
Contingent
consideration |
|
|
105,762 |
|
|
|
98,600 |
|
Notes and other debt,
net |
|
|
4,482,697 |
|
|
|
4,028,214 |
|
Total Liabilities |
|
|
5,453,694 |
|
|
|
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 |
|
|
83,530 |
|
|
|
80,552 |
|
|
|
|
|
|
|
|
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: 174,852 shares at December 31, 2017 and 155,139 at
December 31, 2016 |
|
|
17 |
|
|
|
15 |
|
Additional paid-in
capital |
|
|
644,328 |
|
|
|
141,092 |
|
Accumulated other
comprehensive income (loss) |
|
|
7,821 |
|
|
|
(6,369 |
) |
Distributions in excess
of accumulated earnings |
|
|
(1,960,715 |
) |
|
|
(1,537,183 |
) |
Total Uniti
shareholders’ deficit |
|
|
(1,308,549 |
) |
|
|
(1,402,445 |
) |
Noncontrolling
interests – operating partnership units |
|
|
101,407 |
|
|
|
- |
|
Total
shareholders’ deficit |
|
|
(1,207,142 |
) |
|
|
(1,402,445 |
) |
Total
Liabilities, Convertible Preferred Stock and Shareholders’
Deficit |
|
$ |
4,330,082 |
|
|
$ |
3,318,752 |
|
|
Uniti Group Inc. |
Consolidated Statements of
Operations |
(In thousands, except per share
data) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leasing |
$ |
172,206 |
|
|
$ |
169,923 |
|
|
$ |
685,099 |
|
|
$ |
676,868 |
|
Fiber
Infrastructure |
|
66,633 |
|
|
|
31,573 |
|
|
|
202,791 |
|
|
|
70,568 |
|
Towers |
|
3,376 |
|
|
|
229 |
|
|
|
10,055 |
|
|
|
500 |
|
Consumer CLEC |
|
4,121 |
|
|
|
5,195 |
|
|
|
18,087 |
|
|
|
22,472 |
|
Total
revenues |
|
246,336 |
|
|
|
206,920 |
|
|
|
916,032 |
|
|
|
770,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
78,759 |
|
|
|
70,787 |
|
|
|
305,994 |
|
|
|
275,394 |
|
Depreciation and
amortization |
|
116,801 |
|
|
|
100,522 |
|
|
|
434,205 |
|
|
|
375,970 |
|
General and
administrative expense |
|
22,496 |
|
|
|
11,783 |
|
|
|
72,045 |
|
|
|
35,402 |
|
Operating expense
(exclusive of depreciation and amortization) |
|
27,918 |
|
|
|
19,346 |
|
|
|
102,176 |
|
|
|
49,668 |
|
Transaction related
costs |
|
5,792 |
|
|
|
9,234 |
|
|
|
38,005 |
|
|
|
33,669 |
|
Other expense |
|
1,646 |
|
|
|
- |
|
|
|
11,284 |
|
|
|
- |
|
Total
costs and expenses |
|
253,412 |
|
|
|
211,672 |
|
|
|
963,709 |
|
|
|
770,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
(7,076 |
) |
|
|
(4,752 |
) |
|
|
(47,677 |
) |
|
|
305 |
|
Income
tax (benefit) expense |
|
(29,873 |
) |
|
|
(382 |
) |
|
|
(38,849 |
) |
|
|
517 |
|
Net income
(loss) |
|
22,797 |
|
|
|
(4,370 |
) |
|
|
(8,828 |
) |
|
|
(212 |
) |
Net income attributable
to noncontrolling interests |
|
504 |
|
|
|
- |
|
|
|
611 |
|
|
|
- |
|
Net income
(loss) attributable to shareholders |
|
22,293 |
|
|
|
(4,370 |
) |
|
|
(9,439 |
) |
|
|
(212 |
) |
Participating
securities’ share in earnings |
|
(353 |
) |
|
|
(393 |
) |
|
|
(1,509 |
) |
|
|
(1,557 |
) |
Dividends declared on
convertible preferred stock |
|
(656 |
) |
|
|
(656 |
) |
|
|
(2,624 |
) |
|
|
(1,743 |
) |
Amortization of
discount on convertible preferred stock |
|
(745 |
) |
|
|
(744 |
) |
|
|
(2,980 |
) |
|
|
(1,985 |
) |
Net income
(loss) attributable to common shareholders |
$ |
20,539 |
|
|
$ |
(6,163 |
) |
|
$ |
(16,552 |
) |
|
$ |
(5,497 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common shareholders – Basic |
$ |
20,539 |
|
|
$ |
(6,163 |
) |
|
$ |
(16,552 |
) |
|
$ |
(5,497 |
) |
Mark-to-market loss
(gain) on share settled contingent consideration arrangements |
|
- |
|
|
|
- |
|
|
|
(4,944 |
) |
|
|
- |
|
Net income (loss)
attributable to common shareholders - Diluted |
$ |
20,539 |
|
|
$ |
(6,163 |
) |
|
$ |
(21,496 |
) |
|
$ |
(5,497 |
) |
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
174,833 |
|
|
|
155,137 |
|
|
|
168,693 |
|
|
|
152,473 |
|
Diluted |
|
174,833 |
|
|
|
155,137 |
|
|
|
168,989 |
|
|
|
152,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.04 |
) |
Diluted |
$ |
0.12 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share |
$ |
0.60 |
|
|
$ |
0.60 |
|
|
$ |
2.40 |
|
|
$ |
2.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Consolidated Statements of Cash
Flows |
(In thousands) |
|
|
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
Cash flow from
operating activities: |
|
|
|
|
Net
(loss) |
|
$ |
(8,828 |
) |
|
$ |
(212 |
) |
Adjustments to reconcile net (loss) to net cash provided
by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
434,205 |
|
|
|
375,970 |
|
Amortization of deferred financing costs and debt discount |
|
|
23,102 |
|
|
|
16,002 |
|
Deferred
income taxes |
|
|
(41,171 |
) |
|
|
(2,186 |
) |
Straight-line revenues |
|
|
(15,136 |
) |
|
|
(17,293 |
) |
Stock
based compensation |
|
|
7,713 |
|
|
|
4,846 |
|
Change in
fair value of contingent consideration |
|
|
10,736 |
|
|
|
- |
|
Other |
|
|
872 |
|
|
|
936 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts
receivable |
|
|
(10,524 |
) |
|
|
(3,516 |
) |
Other
assets |
|
|
(1,560 |
) |
|
|
(1,365 |
) |
Accounts
payable, accrued expenses and other liabilities |
|
|
5,851 |
|
|
|
2,806 |
|
Net cash
provided by operating activities |
|
|
405,260 |
|
|
|
375,988 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
|
|
(761,887 |
) |
|
|
(488,788 |
) |
Acquisition of ground lease investments |
|
|
(21,764 |
) |
|
|
(11,543 |
) |
NMS asset
acquisitions |
|
|
(69,729 |
) |
|
|
- |
|
Capital
expenditures - other |
|
|
(166,028 |
) |
|
|
(34,900 |
) |
Net cash
used in investing activities |
|
|
(1,019,408 |
) |
|
|
(535,231 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Principal
payment on debt |
|
|
(21,080 |
) |
|
|
(22,027 |
) |
Dividends
paid |
|
|
(400,210 |
) |
|
|
(367,830 |
) |
Payments
of contingent consideration |
|
|
(19,999 |
) |
|
|
- |
|
Proceeds
from issuance of Notes |
|
|
201,000 |
|
|
|
548,875 |
|
Borrowings under revolving credit facility |
|
|
845,000 |
|
|
|
641,000 |
|
Payments
under revolving credit facility |
|
|
(565,000 |
) |
|
|
(641,000 |
) |
Capital
lease payments |
|
|
(3,237 |
) |
|
|
(1,549 |
) |
Deferred
financing costs |
|
|
(28,539 |
) |
|
|
(20,557 |
) |
Common
stock issuance, net of costs |
|
|
498,926 |
|
|
|
54,213 |
|
Purchase
of noncontrolling interest |
|
|
(560 |
) |
|
|
- |
|
Distributions paid to noncontrolling interest |
|
|
(2,498 |
) |
|
|
- |
|
Net share
settlement |
|
|
(1,836 |
) |
|
|
(2,359 |
) |
Net cash
provided by financing activities |
|
|
501,967 |
|
|
|
188,766 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
192 |
|
|
|
(267 |
) |
Net (decrease) increase in cash and cash
equivalents |
|
|
(111,989 |
) |
|
|
29,256 |
|
Cash
and cash equivalents at beginning of period |
|
|
171,754 |
|
|
|
142,498 |
|
Cash
and cash equivalents at end of period |
|
$ |
59,765 |
|
|
$ |
171,754 |
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Property
and equipment acquired but not yet paid |
|
$ |
15,285 |
|
|
$ |
5,752 |
|
Tenant
capital improvements |
|
|
227,969 |
|
|
|
156,972 |
|
Acquisition of businesses through non-cash consideration |
|
|
122,395 |
|
|
|
259,996 |
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Reconciliation of Net Income to FFO and
AFFO |
(In thousands, except per share
data) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) attributable to common shareholders |
|
$ |
20,539 |
|
|
$ |
(6,163 |
) |
|
$ |
(16,552 |
) |
|
$ |
(5,497 |
) |
Real estate
depreciation and amortization |
|
|
94,735 |
|
|
|
89,870 |
|
|
|
373,449 |
|
|
|
351,548 |
|
Participating
securities’ share in earnings |
|
|
353 |
|
|
|
393 |
|
|
|
1,509 |
|
|
|
1,557 |
|
Participating
securities’ share in FFO |
|
|
(383 |
) |
|
|
(393 |
) |
|
|
(1,509 |
) |
|
|
(1,557 |
) |
Adjustments for
noncontrolling interests |
|
|
(2,198 |
) |
|
|
- |
|
|
|
(4,420 |
) |
|
|
- |
|
FFO
attributable to common shareholders |
|
|
113,046 |
|
|
|
83,707 |
|
|
|
352,477 |
|
|
|
346,051 |
|
Transaction related
costs |
|
|
5,792 |
|
|
|
9,234 |
|
|
|
38,005 |
|
|
|
33,669 |
|
Change in fair value of
contingent consideration |
|
|
1,645 |
|
|
|
- |
|
|
|
10,736 |
|
|
|
- |
|
Amortization of
deferred financing costs and debt discount |
|
|
6,011 |
|
|
|
4,398 |
|
|
|
23,102 |
|
|
|
16,002 |
|
Stock based
compensation |
|
|
2,092 |
|
|
|
1,368 |
|
|
|
7,713 |
|
|
|
4,846 |
|
Non-real estate
depreciation and amortization |
|
|
22,066 |
|
|
|
10,652 |
|
|
|
60,756 |
|
|
|
24,422 |
|
Straight-line
revenues |
|
|
(4,281 |
) |
|
|
(4,119 |
) |
|
|
(15,136 |
) |
|
|
(17,293 |
) |
Maintenance capital
expenditures |
|
|
(980 |
) |
|
|
(1,232 |
) |
|
|
(4,434 |
) |
|
|
(3,327 |
) |
Amortization of
discount on convertible preferred stock |
|
|
745 |
|
|
|
744 |
|
|
|
2,980 |
|
|
|
1,985 |
|
Adjustment to deferred
tax valuation allowance and tax rate change |
|
|
(28,248 |
) |
|
|
- |
|
|
|
(36,240 |
) |
|
|
- |
|
Other non-cash
(revenue) expense, net |
|
|
(5,567 |
) |
|
|
(2,976 |
) |
|
|
(14,871 |
) |
|
|
(7,818 |
) |
Adjustments for
noncontrolling interests |
|
|
46 |
|
|
|
- |
|
|
|
(264 |
) |
|
|
- |
|
Adjusted FFO
attributable to common shareholders |
|
$ |
112,367 |
|
|
$ |
101,776 |
|
|
$ |
424,824 |
|
|
$ |
398,537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
0.12 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.04 |
) |
FFO |
|
$ |
0.64 |
|
|
$ |
0.54 |
|
|
$ |
2.09 |
|
|
$ |
2.27 |
|
AFFO |
|
$ |
0.64 |
|
|
$ |
0.66 |
|
|
$ |
2.51 |
|
|
$ |
2.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares used to calculate basic earnings (loss) per common
share |
|
|
174,833 |
|
|
|
155,137 |
|
|
|
168,693 |
|
|
|
152,473 |
|
Effect of dilutive
non-participating securities |
|
|
594 |
|
|
|
138 |
|
|
|
296 |
|
|
|
129 |
|
Weighted average common
shares used to calculate diluted FFO and AFFO per common share |
|
|
175,427 |
|
|
|
155,275 |
|
|
|
168,989 |
|
|
|
152,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group Inc. |
Reconciliation of EBITDA and Adjusted
EBITDA |
(In thousands) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss) |
|
$ |
22,797 |
|
|
$ |
(4,370 |
) |
|
$ |
(8,828 |
) |
|
$ |
(212 |
) |
Depreciation and
amortization |
|
|
116,801 |
|
|
|
100,522 |
|
|
|
434,205 |
|
|
|
375,970 |
|
Interest expense |
|
|
78,759 |
|
|
|
70,787 |
|
|
|
305,994 |
|
|
|
275,394 |
|
Income tax (benefit)
expense |
|
|
(29,873 |
) |
|
|
(382 |
) |
|
|
(38,849 |
) |
|
|
517 |
|
EBITDA |
|
|
188,484 |
|
|
|
166,557 |
|
|
|
692,522 |
|
|
|
651,669 |
|
Stock based
compensation |
|
|
2,092 |
|
|
|
1,368 |
|
|
|
7,713 |
|
|
|
4,846 |
|
Transaction related
costs |
|
|
5,792 |
|
|
|
9,234 |
|
|
|
38,005 |
|
|
|
33,669 |
|
Other expense |
|
|
1,646 |
|
|
|
- |
|
|
|
11,284 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
198,014 |
|
|
$ |
177,159 |
|
|
$ |
749,524 |
|
|
$ |
690,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing |
|
$ |
171,848 |
|
|
$ |
169,202 |
|
|
$ |
683,651 |
|
|
$ |
675,114 |
|
Fiber
Infrastructure |
|
|
31,454 |
|
|
|
11,139 |
|
|
|
83,987 |
|
|
|
25,912 |
|
Towers |
|
|
244 |
|
|
|
(266 |
) |
|
|
(831 |
) |
|
|
(1,123 |
) |
Consumer
CLEC |
|
|
1,042 |
|
|
|
1,199 |
|
|
|
4,556 |
|
|
|
5,074 |
|
Corporate |
|
|
(6,574 |
) |
|
|
(4,115 |
) |
|
|
(21,839 |
) |
|
|
(14,793 |
) |
|
|
$ |
198,014 |
|
|
$ |
177,159 |
|
|
$ |
749,524 |
|
|
$ |
690,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized
Adjusted EBITDA (1) |
|
$ |
792,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December
31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Debt (2) |
|
$ |
4,683,216 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
59,765 |
|
|
|
|
|
|
|
|
|
|
Net Debt |
|
$ |
4,623,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Debt/Annualized Adjusted EBITDA |
|
|
5.9x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt/Annualized Adjusted EBITDA |
|
|
5.8x |
|
|
|
|
|
|
|
|
|
|
_____________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
(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 $56.3 million of capital leases, but excludes
$144.2 million of unamortized discounts and deferred financing
costs. |
|
|
Uniti Group Inc. |
Projected Future Results (1) |
(In millions) |
|
|
|
Year EndedDecember 31, 2018 |
Net income
attributable to common shareholders |
|
$10.1
to $19.1 |
Noncontrolling interest
share in earnings |
|
0.5 |
Participating
securities’ share in earnings |
|
1.3 |
Dividends declared on
convertible preferred stock |
|
2.6 |
Amortization of
discount on convertible preferred stock |
|
3.0 |
Net income
(2) |
|
$17.5 to $26.5 |
Interest expense |
|
320.0 |
Depreciation and
amortization |
|
460.0 |
Income tax benefit |
|
(10.0) |
EBITDA
(2) |
|
$787.4
to $796.4 |
Stock based
compensation |
|
8.7 |
Adjusted EBITDA
(2) |
|
$796.0 to $805.0 |
_______________________ |
(1) These
ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Final purchase price allocations, 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. |
|
|
Uniti Group Inc. |
Projected Future Results (1) |
(Per Diluted Share) |
|
|
|
Year EndedDecember 31, 2018 |
Net income
attributable to common shareholders |
|
$0.06
to $0.11 |
Real estate
depreciation and amortization |
|
2.11 |
Participating
securities share in earnings |
|
0.01 |
Participating
securities share in FFO |
|
(0.01) |
Adjustments for
noncontrolling interests |
|
(0.05) |
FFO
attributable to common shareholders (2) |
|
$2.12
to $2.17 |
Amortization of
deferred financing costs and debt discount |
|
0.14 |
Stock based
compensation |
|
0.05 |
Non-real estate
depreciation and amortization |
|
0.50 |
Straight-line
revenues |
|
(0.09) |
Maintenance capital
expenditures |
|
(0.04) |
Amortization of
discount on convertible preferred stock |
|
0.02 |
Non-cash taxes |
|
(0.07) |
Other non-cash revenue,
net |
|
(0.10) |
Adjustments for
noncontrolling interests |
|
(0.01) |
AFFO attributable to common shareholders
(2) |
$2.52 to $2.57 |
________________________ |
|
|
(1)
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Final purchase price allocations, 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. |
|
|
|
|
|
|
Components of Interest Expense
(1) |
(In millions) |
|
|
|
Year EndedDecember 31, 2018 |
Interest expense on
debt obligations |
|
$295.0 |
Amortization of
deferred financing cost and debt discounts |
|
25.0 |
Interest
expense (2) |
|
$320.0 |
________________________ |
|
|
(1)
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Final purchase price allocations, 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,
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
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.
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, 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; (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, 501-850-0866Executive Vice President, Chief
Financial Officer & Treasurermark.wallace@uniti.com
Jim Volk, 501-850-0872Vice President, Finance & Investor
Relationsjim.volk@uniti.com
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