Announces Acquisitions of Information
Transport Solutions, Inc.Completes Sale-Leaseback
and Fiber Acquisitions with CableSouth Media, LLC and U.S.
TelePacific Holdings Corp.
Uniti Group Inc. ("Uniti" or the “Company”) (Nasdaq: UNIT) today
announced its results for the third quarter 2018.
“We are pleased to announce the acquisition of
Information Transport Solutions, Inc., a full service provider of
technology solutions for educational institutions in the Southeast.
This acquisition expands Uniti Fiber’s product offerings and
strengthens relationships with many new and existing E-Rate
customers,” commented Kenny Gunderman, President and Chief
Executive Officer.
Mr. Gunderman continued “I also want to
especially commend our Uniti Fiber team for their tremendous
efforts managing through Hurricane Michael. Their advanced
preparation and joint planning with our customers has been critical
to limiting disruptions and restoring service as expeditiously as
possible in affected areas. This was a very destructive storm in
parts of Florida and restoration efforts by our Uniti Fiber team
are ongoing.”
QUARTERLY RESULTS
Consolidated revenues for the third quarter of
2018 were $252.6 million. Net income and Adjusted EBITDA was $4.2
million and $199.2 million, respectively, for the same period. Net
income attributable to common shares was $2.1 million for the
period, and included $2.3 million of transaction and integration
related costs, and an $0.8 million gain on the settlement of escrow
balances related to prior acquisitions. Adjusted Funds From
Operations (“AFFO”) attributable to common shares was $110.0
million, or $0.62 per diluted common share.
Uniti Fiber contributed $70.1 million of
revenues and $28.5 million of Adjusted EBITDA for the third quarter
of 2018, reporting Adjusted EBITDA margins of approximately 41%.
Uniti Fiber’s net success-based capital expenditures during the
quarter were $33.6 million, and maintenance capital expenditures
were $1.0 million. At September 30, 2018, Uniti Fiber had over $1.3
billion of revenues under contract, a 3% increase over pro-forma
year-ago levels.
Uniti Towers contributed $4.3 million of
revenues and reported Adjusted EBITDA of $1.2 million for the
quarter, which included $0.4 million of development costs
reimbursed in connection with sites canceled by our customers.
Uniti Tower’s total capital expenditures for the third quarter were
$24.5 million and included the completion of construction of 47
towers in the U.S., 10 towers in Mexico, and closing on the
acquisition of 23 NMS development towers. At quarter end, Uniti
Towers had 847 towers in service and approximately 252 towers in
varying stages of development.
Uniti Leasing had revenues of $174.8 million and
Adjusted EBITDA of $174.1 million for the third quarter. The
Consumer CLEC business had revenues of $3.4 million for the third
quarter, achieving Adjusted EBITDA margins of approximately
23%.
INVESTMENT TRANSACTIONS
On October 19, 2018, the Company acquired
Information Transport Solutions, Inc. (“ITS”) for all cash
consideration of $54.0 million. ITS is a full-service provider of
technology solutions, primarily to educational institutions in
Alabama and Florida. Over 30% of ITS’s total revenue is on Unit
Fiber’s network, which is expected to increase under Uniti Fiber’s
ownership. ITS reported revenues of over $45 million in
2017.
On October 9, 2018, the Company closed on its
previously announced sale-leaseback and fiber acquisition
with CableSouth Media, LLC (“CableSouth”). At closing, the
Company acquired approximately 43,000 fiber strand miles located
in Arkansas, Louisiana, and Mississippi, of which
34,000 fiber strand miles have been leased back to CableSouth on a
triple net basis. Uniti obtained exclusive use of 9,000 fiber
strand miles, which are adjacent to Uniti Fiber’s southern network
footprint. Total consideration was $31 million.
On September 19, 2018, the Company closed on the
second tranche of its previously announced sale-leaseback and fiber
acquisition with U.S. TelePacific Holdings Corp. (“TPx”). At
closing, the Company acquired 32,000 fiber strand miles located in
California, which have been leased back to TPx on a triple net
basis. Total consideration for the second tranche was $70
million.
The Company is also announcing the acquisition
of JKM Consulting, Inc. d/b/a M2 Connections (“M2”), a local fiber
provider in Eastern Alabama. M2 owns approximately 200 route miles
of fiber spanning five counties. Total consideration for this
transaction will be $6 million. The acquisition is expected to
close in the first quarter of 2019 and is subject to customary
closing conditions.
LIQUIDITY AND FINANCING
TRANSACTIONS
At quarter-end, the Company had approximately
$118.5 million of unrestricted cash and cash equivalents, and $210
million of undrawn borrowing availability under its revolving
credit agreement. The Company’s leverage ratio at quarter end was
6.0x based on Net Debt to Annualized Adjusted EBITDA.
During the quarter, the Company issued an
aggregate of 3.2 million shares of common stock under its
“at-the-market” (“ATM”) equity offering program at prices ranging
from $20.14 to $21.04 per share. Net proceeds were principally used
to manage leverage levels by reducing borrowings under our
revolving credit facility.
As previously reported, on October 31, 2018, the
Company’s Board of Directors declared a quarterly cash dividend of
$0.60 per common share, payable on January 15, 2018 to stockholders
of record on December 31, 2018.
UPDATED FULL YEAR 2018
OUTLOOK
The Company is updating its current 2018 outlook
for the aforementioned ITS transaction from its close date, and the
impacts of the timing of the actual close dates of the previously
announced TPx California and CableSouth fiber acquisitions and
sale-lease backs. In addition, the outlook has been adjusted for
the impact of assumptions regarding the timing of lease-up on
certain fiber assets, delays in the deployment of fiber solutions
at Uniti Fiber, the impact of shares issued under our ATM program,
and other factors. Our current outlook excludes any future
acquisitions, capital market transactions, adverse cost impacts of
Hurricane Michael, and future transaction costs. 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 |
$ |
1,012 |
to |
|
$ |
1,017 |
Adjusted EBITDA (1) |
|
796 |
to |
|
|
801 |
Interest expense (2) |
|
319 |
to |
|
|
319 |
|
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
|
Net
income |
|
3 |
to |
|
|
8 |
FFO
(1) |
|
369 |
to |
|
|
374 |
AFFO
(1) |
|
438 |
to |
|
|
443 |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – diluted |
|
177 |
to |
|
|
177 |
________________________ |
|
|
|
|
|
|
(1) See “Non-GAAP Financial Measures” below. |
|
|
|
|
|
|
(2) Includes amortization of deferred financing costs and
debt discounts. |
|
|
|
|
|
|
The following table provides a reconciliation of
the Company’s midpoint outlook for AFFO from its previous guidance
to its current guidance.
|
|
Full Year 2018 Midpoint Outlook |
Prior 2018 Outlook
– AFFO |
$ |
2.52 |
|
ITS
transaction (1) |
|
0.01 |
|
Deployment delays, primarily dark fiber and small cells (2) |
|
(0.01 |
) |
Customer
service credits and other |
|
(0.02 |
) |
Change in
weighted average common shares outstanding |
|
(0.01 |
) |
Current 2018 Outlook – AFFO |
$ |
2.49 |
|
________________________ |
|
|
(1) Based on closing date noted herein (2) Primarily
permitting delays |
|
|
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 is 8448617. 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 September 30, 2018, Uniti owns 5.4
million fiber strand miles, approximately 850 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, additional
lease-up of our fiber assets, anticipated benefits of the ITS and
M2 transactions 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 agreements relating to our pending transactions
may be modified or terminated prior to closing; the risks related
to satisfying the conditions to our pending transactions; 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)
|
|
|
|
|
September 30,
2018 |
|
December 31,2017 |
Assets: |
|
|
|
Property, plant and
equipment, net |
$ |
3,155,206 |
|
|
$ |
3,053,889 |
|
Cash and cash
equivalents |
|
118,493 |
|
|
|
59,765 |
|
Accounts receivable,
net |
|
58,661 |
|
|
|
43,652 |
|
Goodwill |
|
681,175 |
|
|
|
673,729 |
|
Intangible assets,
net |
|
411,449 |
|
|
|
429,357 |
|
Straight-line revenue
receivable |
|
58,212 |
|
|
|
47,041 |
|
Derivative asset |
|
64,410 |
|
|
|
6,793 |
|
Other assets |
|
23,218 |
|
|
|
15,856 |
|
Total Assets |
$ |
4,570,824 |
|
|
$ |
4,330,082 |
|
|
|
|
|
|
|
Liabilities,
Convertible Preferred Stock and Shareholders’ Deficit |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Accounts payable,
accrued expenses and other liabilities |
$ |
81,556 |
|
|
$ |
77,634 |
|
Accrued interest
payable |
|
70,613 |
|
|
|
28,684 |
|
Deferred revenue |
|
682,481 |
|
|
|
537,553 |
|
Dividends payable |
|
112,277 |
|
|
|
109,557 |
|
Deferred income
taxes |
|
54,539 |
|
|
|
55,478 |
|
Capital lease
obligations |
|
57,104 |
|
|
|
56,329 |
|
Contingent
consideration |
|
86,435 |
|
|
|
105,762 |
|
Notes and other debt,
net |
|
4,745,227 |
|
|
|
4,482,697 |
|
Total Liabilities |
|
5,890,232 |
|
|
|
5,453,694 |
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
Convertible
preferred stock, Series A, $0.0001 par value, 88 shares
authorized, issued and outstanding, $87,500 liquidation value |
|
85,763 |
|
|
|
83,530 |
|
|
|
|
|
|
|
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: 178,210 shares at September 30, 2018 and 174,852
shares at December 31, 2017 |
|
18 |
|
|
|
17 |
|
Additional paid-in
capital |
|
711,271 |
|
|
|
644,328 |
|
Accumulated other
comprehensive loss |
|
66,291 |
|
|
|
7,821 |
|
Distributions in excess
of accumulated earnings |
|
(2,278,124 |
) |
|
|
(1,960,715 |
) |
Total Uniti
shareholders’ deficit |
|
(1,500,544 |
) |
|
|
(1,308,549 |
) |
Noncontrolling
interests – operating partnership units |
|
95,373 |
|
|
|
101,407 |
|
Total
shareholders’ deficit |
|
(1,405,171 |
) |
|
|
(1,207,142 |
) |
Total
Liabilities, Convertible Preferred Stock and Shareholders’
Deficit |
$ |
4,570,824 |
|
|
$ |
4,330,082 |
|
|
|
|
|
|
|
|
|
Uniti Group
Inc.Consolidated Statements of
Operations(In thousands, except per share
data)
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leasing |
$ |
174,822 |
|
|
$ |
171,673 |
|
|
$ |
521,481 |
|
|
$ |
512,893 |
|
Fiber
Infrastructure |
|
70,130 |
|
|
|
66,363 |
|
|
|
204,486 |
|
|
|
136,158 |
|
Towers |
|
4,319 |
|
|
|
2,796 |
|
|
|
10,161 |
|
|
|
6,679 |
|
Consumer CLEC |
|
3,365 |
|
|
|
4,378 |
|
|
|
10,752 |
|
|
|
13,966 |
|
Total
revenues |
|
252,636 |
|
|
|
245,210 |
|
|
|
746,880 |
|
|
|
669,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
80,406 |
|
|
|
78,784 |
|
|
|
237,398 |
|
|
|
227,235 |
|
Depreciation and
amortization |
|
112,748 |
|
|
|
113,444 |
|
|
|
342,311 |
|
|
|
317,404 |
|
General and
administrative expense |
|
20,666 |
|
|
|
22,068 |
|
|
|
63,867 |
|
|
|
49,549 |
|
Operating expense
(exclusive of depreciation and amortization) |
|
34,773 |
|
|
|
30,172 |
|
|
|
96,199 |
|
|
|
74,258 |
|
Transaction related
costs |
|
2,323 |
|
|
|
8,512 |
|
|
|
12,025 |
|
|
|
32,213 |
|
Other (income)
expense |
|
(1,038 |
) |
|
|
(3,933 |
) |
|
|
(1,574 |
) |
|
|
9,638 |
|
Total
costs and expenses |
|
249,878 |
|
|
|
249,047 |
|
|
|
750,226 |
|
|
|
710,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
2,758 |
|
|
|
(3,837 |
) |
|
|
(3,346 |
) |
|
|
(40,601 |
) |
Income
tax benefit |
|
(1,466 |
) |
|
|
(8,672 |
) |
|
|
(5,208 |
) |
|
|
(8,976 |
) |
Net income
(loss) |
|
4,224 |
|
|
|
4,835 |
|
|
|
1,862 |
|
|
|
(31,625 |
) |
Net income attributable
to noncontrolling interests |
|
93 |
|
|
|
107 |
|
|
|
24 |
|
|
|
107 |
|
Net income
(loss) attributable to shareholders |
|
4,131 |
|
|
|
4,728 |
|
|
|
1,838 |
|
|
|
(31,732 |
) |
Participating
securities’ share in earnings |
|
(655 |
) |
|
|
(388 |
) |
|
|
(1,992 |
) |
|
|
(1,156 |
) |
Dividends declared on
convertible preferred stock |
|
(656 |
) |
|
|
(656 |
) |
|
|
(1,968 |
) |
|
|
(1,968 |
) |
Amortization of
discount on convertible preferred stock |
|
(745 |
) |
|
|
(745 |
) |
|
|
(2,235 |
) |
|
|
(2,235 |
) |
Net income
(loss) attributable to common shareholders |
$ |
2,075 |
|
|
$ |
2,939 |
|
|
$ |
(4,357 |
) |
|
$ |
(37,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders – Basic |
$ |
2,075 |
|
|
$ |
2,939 |
|
|
$ |
(4,357 |
) |
|
$ |
(37,091 |
) |
Mark-to-market gains on
share settled contingent consideration arrangements |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss attributable
to common shareholders - Diluted |
$ |
2,075 |
|
|
$ |
2,939 |
|
|
$ |
(4,357 |
) |
|
$ |
(37,091 |
) |
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
175,396 |
|
|
|
174,818 |
|
|
|
175,101 |
|
|
|
166,624 |
|
Diluted |
|
175,653 |
|
|
|
175,399 |
|
|
|
175,101 |
|
|
|
166,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.22 |
) |
Diluted |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.60 |
|
|
$ |
0.60 |
|
|
$ |
1.80 |
|
|
$ |
1.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group
Inc.Consolidated Statements of Cash
Flows(In thousands)
|
|
|
Nine Months Ended
September 30, |
|
2018 |
|
|
2017 |
|
Cash flow from
operating activities: |
|
|
|
Net income (loss) |
$ |
1,862 |
|
|
$ |
(31,625 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
342,311 |
|
|
|
317,404 |
|
Amortization of deferred financing costs and debt discount |
|
18,340 |
|
|
|
17,091 |
|
Deferred
income taxes |
|
(6,081 |
) |
|
|
(12,281 |
) |
Straight-line revenues |
|
(10,932 |
) |
|
|
(10,857 |
) |
Stock
based compensation |
|
6,058 |
|
|
|
5,621 |
|
Change in
fair value of contingent consideration |
|
(687 |
) |
|
|
9,091 |
|
Other |
|
2,721 |
|
|
|
810 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
|
Accounts
receivable |
|
(14,848 |
) |
|
|
532 |
|
Other
assets |
|
(4,899 |
) |
|
|
(4,307 |
) |
Accounts
payable, accrued expenses and other liabilities |
|
66,090 |
|
|
|
46,275 |
|
Net cash
provided by operating activities |
|
399,935 |
|
|
|
337,754 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
|
- |
|
|
|
(763,665 |
) |
Acquisition of ground lease investments |
|
- |
|
|
|
(13,869 |
) |
NMS asset
acquisitions |
|
(3,299 |
) |
|
|
(68,557 |
) |
Other
capital expenditures |
|
(297,108 |
) |
|
|
(111,101 |
) |
Net cash
used in investing activities |
|
(300,407 |
) |
|
|
(957,192 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Principal
payments on debt |
|
(15,810 |
) |
|
|
(15,810 |
) |
Dividends
paid |
|
(318,116 |
) |
|
|
(294,272 |
) |
Payments
of contingent consideration |
|
(18,640 |
) |
|
|
(19,999 |
) |
Proceeds
from issuance of Notes |
|
- |
|
|
|
201,000 |
|
Borrowings under revolving credit facility |
|
350,000 |
|
|
|
360,000 |
|
Payments
under revolving credit facility |
|
(90,000 |
) |
|
|
(200,000 |
) |
Capital
lease payments |
|
(3,819 |
) |
|
|
(2,348 |
) |
Deferred
financing costs |
|
- |
|
|
|
(28,533 |
) |
Common
stock issuance, net of costs |
|
64,423 |
|
|
|
498,924 |
|
Distributions paid to noncontrolling interest |
|
(7,438 |
) |
|
|
- |
|
Net share
settlement |
|
(1,575 |
) |
|
|
(1,752 |
) |
Net cash
(used in) provided by financing activities |
|
(40,975 |
) |
|
|
497,210 |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
175 |
|
|
|
397 |
|
Net increase (decrease) in cash and cash
equivalents |
|
58,728 |
|
|
|
(121,831 |
) |
Cash
and cash equivalents at beginning of period |
|
59,765 |
|
|
|
171,754 |
|
Cash
and cash equivalents at end of period |
$ |
118,493 |
|
|
$ |
49,923 |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
Property
and equipment acquired but not yet paid |
$ |
11,446 |
|
|
$ |
3,602 |
|
Tenant
capital improvements |
|
124,036 |
|
|
|
166,298 |
|
Acquisition of businesses through non-cash consideration |
|
- |
|
|
|
122,395 |
|
|
|
|
|
|
|
|
|
Uniti Group
Inc.Reconciliation of Net Income to FFO and
AFFO (In thousands, except per share
data)
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net income
(loss) attributable to common shareholders |
$ |
2,075 |
|
|
$ |
2,939 |
|
|
$ |
(4,357 |
) |
|
$ |
(37,091 |
) |
Real estate
depreciation and amortization |
|
93,295 |
|
|
|
95,519 |
|
|
|
284,271 |
|
|
|
278,714 |
|
Participating
securities’ share in earnings |
|
655 |
|
|
|
388 |
|
|
|
1,992 |
|
|
|
1,156 |
|
Participating
securities’ share in FFO |
|
(655 |
) |
|
|
(388 |
) |
|
|
(1,992 |
) |
|
|
(1,156 |
) |
Adjustments for
noncontrolling interests |
|
(2,152 |
) |
|
|
(2,222 |
) |
|
|
(6,556 |
) |
|
|
(2,222 |
) |
FFO
attributable to common shareholders |
|
93,218 |
|
|
|
96,236 |
|
|
|
273,358 |
|
|
|
239,401 |
|
Transaction related
costs |
|
2,323 |
|
|
|
8,512 |
|
|
|
12,025 |
|
|
|
32,213 |
|
Change in fair value of
contingent consideration |
|
(199 |
) |
|
|
(3,933 |
) |
|
|
(687 |
) |
|
|
9,091 |
|
Amortization of
deferred financing costs and debt discount |
|
6,193 |
|
|
|
6,110 |
|
|
|
18,340 |
|
|
|
17,091 |
|
Stock based
compensation |
|
1,963 |
|
|
|
1,968 |
|
|
|
6,058 |
|
|
|
5,621 |
|
Non-real estate
depreciation and amortization |
|
19,453 |
|
|
|
17,925 |
|
|
|
58,040 |
|
|
|
38,690 |
|
Straight-line
revenues |
|
(3,532 |
) |
|
|
(3,609 |
) |
|
|
(10,932 |
) |
|
|
(10,857 |
) |
Maintenance capital
expenditures |
|
(1,015 |
) |
|
|
(1,476 |
) |
|
|
(3,165 |
) |
|
|
(3,454 |
) |
Amortization of
discount on convertible preferred stock |
|
745 |
|
|
|
745 |
|
|
|
2,235 |
|
|
|
2,235 |
|
Adjustment to deferred
tax valuation allowance |
|
- |
|
|
|
(7,992 |
) |
|
|
- |
|
|
|
(7,992 |
) |
Other non-cash
(revenue) expense, net |
|
(8,738 |
) |
|
|
(3,509 |
) |
|
|
(25,998 |
) |
|
|
(9,304 |
) |
Adjustments for
noncontrolling interests |
|
(368 |
) |
|
|
(310 |
) |
|
|
(1,203 |
) |
|
|
(310 |
) |
Adjusted FFO
attributable to common shareholders |
$ |
110,043 |
|
|
$ |
110,667 |
|
|
$ |
328,071 |
|
|
$ |
312,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
common share: |
|
|
|
|
|
|
|
|
|
|
|
EPS |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.03 |
|
|
$ |
(0.26 |
) |
FFO |
$ |
0.53 |
|
|
$ |
0.55 |
|
|
$ |
1.55 |
|
|
$ |
1.44 |
|
AFFO |
$ |
0.62 |
|
|
$ |
0.63 |
|
|
$ |
1.86 |
|
|
$ |
1.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares used to calculate basic (loss) earnings per common
share |
|
175,396 |
|
|
|
174,818 |
|
|
|
175,101 |
|
|
|
166,624 |
|
Effect of dilutive
securities |
|
889 |
|
|
|
581 |
|
|
|
873 |
|
|
|
192 |
|
Weighted average common
shares used to calculate diluted FFO and AFFO per common share |
|
176,285 |
|
|
|
175,399 |
|
|
|
175,974 |
|
|
|
166,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uniti Group
Inc.Reconciliation of EBITDA and Adjusted
EBITDA(In thousands)
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net income
(loss) |
$ |
4,224 |
|
|
$ |
4,835 |
|
|
$ |
1,862 |
|
|
$ |
(31,625 |
) |
Depreciation and
amortization |
|
112,748 |
|
|
|
113,444 |
|
|
|
342,311 |
|
|
|
317,404 |
|
Interest expense |
|
80,406 |
|
|
|
78,784 |
|
|
|
237,398 |
|
|
|
227,235 |
|
Income tax benefit |
|
(1,466 |
) |
|
|
(8,672 |
) |
|
|
(5,208 |
) |
|
|
(8,976 |
) |
EBITDA |
|
195,912 |
|
|
|
188,391 |
|
|
|
576,363 |
|
|
|
504,038 |
|
Stock based
compensation |
|
1,963 |
|
|
|
1,968 |
|
|
|
6,058 |
|
|
|
5,621 |
|
Transaction related
costs |
|
2,323 |
|
|
|
8,512 |
|
|
|
12,025 |
|
|
|
32,213 |
|
Other (income)
expense |
|
(1,038 |
) |
|
|
(3,933 |
) |
|
|
(1,574 |
) |
|
|
9,638 |
|
Adjusted EBITDA |
$ |
199,160 |
|
|
$ |
194,938 |
|
|
$ |
592,872 |
|
|
$ |
551,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Leasing |
$ |
174,123 |
|
|
$ |
171,215 |
|
|
$ |
519,848 |
|
|
$ |
511,803 |
|
Fiber
Infrastructure |
|
28,480 |
|
|
|
28,348 |
|
|
|
87,080 |
|
|
|
52,533 |
|
Towers |
|
1,213 |
|
|
|
(98 |
) |
|
|
(417 |
) |
|
|
(1,075 |
) |
Consumer
CLEC |
|
765 |
|
|
|
1,025 |
|
|
|
2,606 |
|
|
|
3,514 |
|
Corporate |
|
(5,421 |
) |
|
|
(5,552 |
) |
|
|
(16,245 |
) |
|
|
(15,265 |
) |
|
$ |
199,160 |
|
|
$ |
194,938 |
|
|
$ |
592,872 |
|
|
$ |
551,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized
Adjusted EBITDA (1) |
$ |
796,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September
30, 2018: |
|
|
|
|
|
|
|
|
|
|
|
Total
Debt (2) |
$ |
4,928,181 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
(118,493 |
) |
|
|
|
|
|
|
|
|
|
Net Debt |
$ |
4,809,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Debt/Annualized Adjusted EBITDA |
|
6.2x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt/Annualized Adjusted EBITDA |
|
6.0x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $57.1 million of capital leases, but excludes $125.9
million of unamortized discounts and deferred financing costs. |
|
Uniti Group
Inc.Projected Future Results
(1)(In
millions)
|
|
|
Year Ended December 31, 2018 |
Net income
attributable to common shareholders |
$3 to
$8 |
Noncontrolling interest
share in earnings |
- |
Participating
securities’ share in earnings |
3 |
Dividends declared on
convertible preferred stock |
3 |
Amortization of
discount on convertible preferred stock |
3 |
Net income
(2) |
$11 to $16 |
Interest expense |
319 |
Depreciation and
amortization |
453 |
Income tax benefit |
(6) |
EBITDA
(2) |
$777
to $782 |
Stock based
compensation |
8 |
Transaction related
costs and other |
12 |
Adjusted EBITDA
(2) |
$796 to $801 |
|
|
(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 |
$0.02
to $0.04 |
Real estate
depreciation and amortization |
2.12 |
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) |
$2.09
to $2.12 |
Transaction related
costs |
0.07 |
Change in fair value of
contingent consideration |
(0.00) |
Amortization of
deferred financing costs and debt discount |
0.14 |
Stock based
compensation |
0.05 |
Non-real estate
depreciation and amortization |
0.44 |
Straight-line
revenues |
(0.08) |
Maintenance capital
expenditures |
(0.03) |
Amortization of
discount on convertible preferred stock |
0.02 |
Other non-cash revenue,
net |
(0.20) |
Adjustments for
noncontrolling interests |
(0.01) |
AFFO attributable to common shareholders (2) |
$2.48 to $2.51 |
|
|
(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 Ended December 31,
2018 |
Interest expense on debt
obligations |
$ |
295 |
Amortization of
deferred financing cost and debt discounts |
|
25 |
Interest
expense (2) |
$ |
319 |
|
|
|
(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
Bill DiTullio, 501-850-0872Director, Finance and
Investor Relationsbill.ditullio@uniti.com
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