Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today
announced its results for the fourth quarter and full year 2022.
“2022 was an exceptional year for Uniti, with
$3.6 million of new consolidated bookings and $3.5 million of gross
install monthly recurring revenue added in 2022, resulting in the
highest level of annual bookings and installs in the Company’s
history. We expect to see continued strong levels of bookings and
install activity in 2023 as demand for our product offerings
remains robust and the need for higher bandwidth and dense fiber
networks continues to grow. This strong demand over the past 5
years has led to us adding approximately 20,800 new route miles to
our 135,000 route mile fiber network, the second largest
independent fiber network in the country,” commented Kenny
Gunderman, President and Chief Executive Officer.
Mr. Gunderman continued, “After our most recent
debt financings, we now have no significant debt maturities for
almost 5 years, essentially all of our outstanding debt is fixed
rate, and our current organic growth plan is effectively fully
funded, providing Uniti significant advantages during the current
uncertain economic and credit market conditions.”
QUARTERLY RESULTS
Consolidated revenues for the fourth quarter of
2022 were $283.7 million. Net income and Adjusted EBITDA were $41.0
million and $228.9 million, respectively, for the same period. Net
income attributable to common shareholders was $40.7 million for
the period, and included a $24.5 million goodwill impairment charge
related to our Uniti Fiber segment that was driven by an increase
in the macro interest rate environment. Adjusted Funds From
Operations (“AFFO”) attributable to common shareholders was $115.3
million, or $0.44 per diluted common share.
Uniti Fiber contributed $75.2 million of
revenues and $31.7 million of Adjusted EBITDA for the fourth
quarter of 2022, achieving Adjusted EBITDA margins of approximately
42%. Uniti Fiber’s net success-based capital expenditures during
the quarter were $40.6 million.
Uniti Leasing contributed revenues of $208.6
million and Adjusted EBITDA of $203.5 million for the fourth
quarter. During the quarter, Uniti Leasing deployed capital
expenditures of $85.5 million primarily related to the construction
of approximately 1,950 new route miles of valuable fiber
infrastructure.
FULL YEAR RESULTS
Consolidated revenues for the year ended
December 31, 2022 were $1.1 billion. Net loss and Adjusted EBITDA
were $8.1 million and $905.9 million, respectively, for the same
period. Net loss attributable to common shares was $9.4 million for
the period, and included a $240.5 million goodwill impairment
charge related to our Uniti Fiber segment that was driven by an
increase in the macro interest rate environment. AFFO attributable
to common shareholders was $455.1 million, or $1.75 per diluted
common share.
Uniti Fiber contributed $301.4 million of
revenues and $125.4 million of Adjusted EBITDA for the full year of
2022, achieving Adjusted EBITDA margins of approximately 42%, up
from 40% Adjusted EBITDA margins for the full year of 2021. Uniti
Fiber’s net success-based capital expenditures for the full year of
2022 were $133.8 million.
Uniti Leasing contributed revenues of $827.5
million and Adjusted EBITDA of $806.0 million for the full year of
2022. For the full year of 2022, Uniti Leasing deployed capital
expenditures of $263.3 million primarily related to the
construction of approximately 7,300 new route miles of valuable
fiber infrastructure.
FINANCING TRANSACTIONS
On December 12, 2022, Uniti closed on the
issuance of $300 million aggregate principal amount of 7.50%
convertible senior notes due December 2027 (the “Convertible
Notes”). The initial conversion price of the Convertible Notes is
approximately $7.29 per share, representing a premium of
approximately 20% to the $6.075 closing price of the common stock
of the Company on December 7, 2022. In connection with the
Convertible Notes offering, Uniti entered into privately negotiated
capped call transactions with certain financial institutions.
Concurrently with the Convertible Notes
offering, the Company entered into separate and individually
negotiated repurchase transactions with certain holders of its
4.00% exchangeable senior notes due 2024 (the “Exchangeable Notes”)
to repurchase approximately $207 million aggregate principal amount
of the Exchangeable Notes for a total purchase cost of
approximately $194 million in cash, plus accrued and unpaid
interest.
On December 23, 2022, Uniti issued an additional
$6.5 million aggregate principal amount of the Convertible Notes to
the initial purchasers pursuant to the terms in the indenture.
On February 14, 2023, Uniti closed on the
issuance of $2.6 billion of senior secured notes due February 2028
(the “2028 Notes”). The 2028 Notes bear interest of 10.50% and were
issued at par. The proceeds from the offering will be used to
redeem all of Uniti’s outstanding 7.875% senior secured notes due
2025 on March 4, 2023 at a redemption price of 101.969% of the
redeemed principal amount plus accrued and unpaid interest, and
repay outstanding borrowings under the Company’s revolving credit
facility.
LIQUIDITY
At year-end, the Company had approximately
$355.8 million of unrestricted cash and cash equivalents and
undrawn borrowing availability under its revolving credit
agreement. The Company’s leverage ratio at year-end was 5.72x based
on net debt to fourth quarter 2022 annualized Adjusted EBITDA.
On February 23, 2023, the Company’s Board of
Directors declared a quarterly cash dividend of $0.15 per common
share, payable on April 14, 2023, to stockholders of record on
March 31, 2023.
FULL YEAR 2023 OUTLOOK
Our 2023 outlook includes the estimated impact
from the Convertible Notes and 2028 Notes offerings and related
redemptions. Our outlook excludes future acquisitions, capital
market transactions, and future transaction-related and other costs
not mentioned herein.
The Company’s consolidated outlook for 2023 is as follows (in
millions):
|
Full Year 2023 |
|
|
Revenue |
$ |
1,154 |
to |
$ |
1,174 |
|
|
Net income attributable to common shareholders |
|
46 |
to |
|
66 |
|
|
Adjusted EBITDA(1) |
|
915 |
to |
|
935 |
|
|
Interest expense, net(2) |
|
550 |
to |
|
550 |
|
|
|
|
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
|
|
FFO(1) |
|
267 |
to |
|
287 |
|
|
AFFO(1) |
|
367 |
to |
|
387 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding – diluted |
|
291 |
to |
|
291 |
|
|
|
__________________(1) See “Non-GAAP Financial Measures”
below.(2) See “Components of Interest Expense” below.
CONFERENCE CALL
Uniti will hold a conference call today to
discuss this earnings release at 8:30 AM Eastern Time (7:30 AM
Central Time). The conference call will be webcast live on Uniti’s
Investor Relations website at investor.uniti.com. Those parties
interested in participating via telephone may register on the
Company’s Investor Relations website or by clicking here. A replay
of the call will be available on the Investor Relations website
beginning today at approximately 12:00 PM Eastern Time.
ABOUT UNITI
Uniti, an internally managed real estate
investment trust, is engaged in the acquisition and construction of
mission critical communications infrastructure, and is a leading
provider of fiber and other wireless solutions for the
communications industry. As of December 31, 2022, Uniti owns
approximately 135,000 fiber route miles, 8.0 million fiber strand
miles, and other communications real estate throughout the United
States. Additional information about Uniti can be found on its
website at www.uniti.com.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release and
today’s conference call may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended from time to time. Those forward-looking
statements include all statements that are not historical
statements of fact, including, without limitation, our 2023
financial outlook, expectations regarding bookings, installs and
strong demand trends, our business strategies, growth prospects,
our ability to sustain difficult economic conditions, industry
trends, sales opportunities, and operating and financial
performance.
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 future prospects of Windstream, our largest
customer; the ability and willingness of our customers to renew
their leases with us upon their expiration, and the ability to
reposition our properties on the same or better terms in the event
of nonrenewal or in the event we replace an existing tenant; the
availability of and our ability to identify suitable acquisition
opportunities and our ability to acquire and lease the respective
properties on favorable terms; the risk that we fail to fully
realize the potential benefits of acquisitions or have difficulty
integrating acquired companies; our ability to generate sufficient
cash flows to service our outstanding indebtedness and fund our
capital funding commitments; our ability to access debt and equity
capital markets; the impact on our business or the business of our
customers as a result of credit rating downgrades and fluctuating
interest rates; our ability to retain our key management personnel;
changes in the U.S. tax law and other state, federal or local laws,
whether or not specific to real estate investment trusts; covenants
in our debt agreements that may limit our operational flexibility;
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)
|
|
December 31,2022 |
|
December 31,2021 |
Assets: |
|
|
|
|
Property, plant and equipment, net |
|
$ |
3,754,547 |
|
|
$ |
3,508,939 |
|
Cash and cash equivalents |
|
|
43,803 |
|
|
|
58,903 |
|
Accounts receivable, net |
|
|
42,631 |
|
|
|
38,455 |
|
Goodwill |
|
|
361,378 |
|
|
|
601,878 |
|
Intangible assets, net |
|
|
334,846 |
|
|
|
364,630 |
|
Straight-line revenue
receivable |
|
|
68,595 |
|
|
|
41,323 |
|
Operating lease right-of-use
assets, net |
|
|
88,545 |
|
|
|
80,271 |
|
Other assets |
|
|
77,597 |
|
|
|
38,900 |
|
Investment in unconsolidated
entities |
|
|
38,656 |
|
|
|
64,223 |
|
Deferred income tax assets,
net |
|
|
40,631 |
|
|
|
11,721 |
|
Total
Assets |
|
$ |
4,851,229 |
|
|
$ |
4,809,243 |
|
|
|
|
|
|
|
|
Liabilities and
Shareholders’ Deficit |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts payable, accrued
expenses and other liabilities, net |
|
$ |
122,195 |
|
|
$ |
86,874 |
|
Settlement payable |
|
|
251,098 |
|
|
|
239,384 |
|
Intangible liabilities, net |
|
|
167,092 |
|
|
|
177,786 |
|
Accrued interest payable |
|
|
121,316 |
|
|
|
109,826 |
|
Deferred revenue |
|
|
1,190,041 |
|
|
|
1,134,236 |
|
Derivative liability, net |
|
|
- |
|
|
|
10,413 |
|
Dividends payable |
|
|
2 |
|
|
|
1,264 |
|
Operating lease liabilities |
|
|
66,356 |
|
|
|
57,349 |
|
Finance lease obligations |
|
|
15,520 |
|
|
|
15,348 |
|
Notes and other debt, net |
|
|
5,188,815 |
|
|
|
5,090,537 |
|
Total
Liabilities |
|
|
7,122,435 |
|
|
|
6,923,017 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Deficit: |
|
|
|
|
|
|
Preferred stock, $ 0.0001 par
value, 50,000 shares authorized, no shares issued and
outstanding |
|
|
- |
|
|
|
- |
|
Common stock, $ 0.0001 par value, 500,000 shares authorized, issued
and outstanding: 235,829 shares at December 31, 2022 and 234,779
shares at December 31, 2021 |
|
|
24 |
|
|
|
23 |
|
Additional paid-in capital |
|
|
1,210,033 |
|
|
|
1,214,830 |
|
Accumulated other comprehensive
income (loss) |
|
|
- |
|
|
|
(9,164 |
) |
Distributions in excess of accumulated earnings |
|
|
(3,483,634 |
) |
|
|
(3,333,481 |
) |
Total Uniti shareholders’
deficit |
|
|
(2,273,577 |
) |
|
|
(2,127,792 |
) |
Noncontrolling interests –
operating partnership units and non-voting convertible preferred
stock |
|
|
2,371 |
|
|
|
14,018 |
|
Total shareholders’ deficit |
|
|
(2,271,206 |
) |
|
|
(2,113,774 |
) |
Total Liabilities and
Shareholders’ Deficit |
|
$ |
4,851,229 |
|
|
$ |
4,809,243 |
|
Uniti Group
Inc.Consolidated Statements of
Operations(In thousands, except per share
data)
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leasing |
$ |
208,579 |
|
|
$ |
211,019 |
|
|
$ |
827,457 |
|
|
$ |
801,497 |
|
Fiber Infrastructure |
|
75,156 |
|
|
|
81,990 |
|
|
|
301,390 |
|
|
|
299,025 |
|
Total revenues |
|
283,735 |
|
|
|
293,009 |
|
|
|
1,128,847 |
|
|
|
1,100,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
86,552 |
|
|
|
104,534 |
|
|
|
376,832 |
|
|
|
446,296 |
|
Depreciation and
amortization |
|
75,512 |
|
|
|
79,777 |
|
|
|
292,788 |
|
|
|
290,942 |
|
General and administrative
expense |
|
25,174 |
|
|
|
25,376 |
|
|
|
100,992 |
|
|
|
101,176 |
|
Operating expense (exclusive of
depreciation and amortization) |
|
34,947 |
|
|
|
41,433 |
|
|
|
143,131 |
|
|
|
146,869 |
|
Goodwill impairment |
|
24,500 |
|
|
|
- |
|
|
|
240,500 |
|
|
|
- |
|
Transaction related and other
costs |
|
3,016 |
|
|
|
1,920 |
|
|
|
10,340 |
|
|
|
7,544 |
|
Gain on sale of real estate |
|
(89 |
) |
|
|
- |
|
|
|
(433 |
) |
|
|
(442 |
) |
Gain on sale of operations |
|
- |
|
|
|
- |
|
|
|
(176 |
) |
|
|
(28,143 |
) |
Other (income) expense, net |
|
985 |
|
|
|
9,795 |
|
|
|
(7,269 |
) |
|
|
18,553 |
|
Total costs and expenses |
|
250,597 |
|
|
|
262,835 |
|
|
|
1,156,705 |
|
|
|
982,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
and equity in earnings from unconsolidated entities |
|
33,138 |
|
|
|
30,174 |
|
|
|
(27,858 |
) |
|
|
117,727 |
|
Income tax benefit |
|
(7,182 |
) |
|
|
(5,199 |
) |
|
|
(17,365 |
) |
|
|
(4,916 |
) |
Equity in earnings from
unconsolidated entities |
|
(675 |
) |
|
|
(553 |
) |
|
|
(2,371 |
) |
|
|
(2,102 |
) |
Net income
(loss) |
|
40,995 |
|
|
|
35,926 |
|
|
|
(8,122 |
) |
|
|
124,745 |
|
Net income (loss) attributable to
noncontrolling interests |
|
18 |
|
|
|
101 |
|
|
|
153 |
|
|
|
1,085 |
|
Net income (loss)
attributable to shareholders |
|
40,977 |
|
|
|
35,825 |
|
|
|
(8,275 |
) |
|
|
123,660 |
|
Participating securities’ share
in earnings |
|
(238 |
) |
|
|
(213 |
) |
|
|
(1,135 |
) |
|
|
(1,077 |
) |
Dividends declared on convertible
preferred stock |
|
(5 |
) |
|
|
(2 |
) |
|
|
(20 |
) |
|
|
(10 |
) |
Net income (loss)
attributable to common shareholders |
$ |
40,734 |
|
|
$ |
35,610 |
|
|
$ |
(9,430 |
) |
|
$ |
122,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to common shareholders – Basic |
$ |
40,734 |
|
|
$ |
35,610 |
|
|
$ |
(9,430 |
) |
|
$ |
122,573 |
|
Impact of if-converted
securities |
|
(4,348 |
) |
|
|
2,989 |
|
|
|
- |
|
|
|
11,926 |
|
Net (loss) income attributable to
common shareholders – Diluted |
$ |
36,386 |
|
|
$ |
38,599 |
|
|
$ |
(9,430 |
) |
|
$ |
134,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
235,818 |
|
|
|
234,719 |
|
|
|
235,567 |
|
|
|
232,888 |
|
Diluted |
|
273,020 |
|
|
|
266,077 |
|
|
|
235,567 |
|
|
|
264,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
(0.04 |
) |
|
$ |
0.53 |
|
Diluted |
$ |
0.13 |
|
|
$ |
0.15 |
|
|
$ |
(0.04 |
) |
|
$ |
0.51 |
|
Uniti Group
Inc.Consolidated Statements of Cash
Flows(In thousands)
|
|
Year Ended December 31, |
|
|
2022 |
|
|
2021 |
|
Cash flow from
operating activities: |
|
|
|
|
Net (loss) income |
|
$ |
(8,122 |
) |
|
$ |
124,745 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
292,788 |
|
|
|
290,942 |
|
Amortization of deferred financing costs and debt discount |
|
|
18,147 |
|
|
|
18,122 |
|
Gain (loss) on debt extinguishment |
|
|
(10,754 |
) |
|
|
49,280 |
|
Interest rate swap termination |
|
|
9,243 |
|
|
|
11,317 |
|
Deferred income taxes |
|
|
(28,909 |
) |
|
|
(6,467 |
) |
Equity in earnings of unconsolidated entities |
|
|
(2,371 |
) |
|
|
(2,102 |
) |
Distributions of cumulative earnings from unconsolidated
entities |
|
|
3,969 |
|
|
|
3,922 |
|
Cash paid for interest rate swap settlement |
|
|
(10,413 |
) |
|
|
(12,483 |
) |
Straight-line revenues and amortization of below-market lease
intangibles |
|
|
(40,925 |
) |
|
|
(41,239 |
) |
Stock-based compensation |
|
|
12,751 |
|
|
|
13,847 |
|
Change in fair value of contingent consideration |
|
|
- |
|
|
|
21 |
|
Goodwill impairment |
|
|
240,500 |
|
|
|
- |
|
Gain on prepayment of settlement payable |
|
|
- |
|
|
|
(5,432 |
) |
Gain on sale of real estate |
|
|
(433 |
) |
|
|
(442 |
) |
Gain on sale of operations |
|
|
(176 |
) |
|
|
(28,143 |
) |
Gain on sale of unconsolidated entity |
|
|
(7,923 |
) |
|
|
- |
|
Loss (gain) on asset disposals |
|
|
898 |
|
|
|
(213 |
) |
Accretion of settlement obligation |
|
|
11,714 |
|
|
|
16,901 |
|
Other |
|
|
(72 |
) |
|
|
124 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(4,176 |
) |
|
|
24,497 |
|
Other assets |
|
|
15,148 |
|
|
|
14,161 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
(30,769 |
) |
|
|
27,799 |
|
Net cash provided by operating activities |
|
|
460,115 |
|
|
|
499,157 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(427,567 |
) |
|
|
(385,855 |
) |
Proceeds from sale of unconsolidated entity |
|
|
32,527 |
|
|
|
- |
|
Proceeds from sale of real estate, net of cash |
|
|
665 |
|
|
|
1,034 |
|
Proceeds from sale of operations |
|
|
541 |
|
|
|
62,113 |
|
Proceeds from sale of other equipment |
|
|
1,815 |
|
|
|
1,487 |
|
Net cash used in investing activities |
|
|
(392,019 |
) |
|
|
(321,221 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
Repayment of debt |
|
|
(194,043 |
) |
|
|
(2,260,000 |
) |
Proceeds from issuance of notes |
|
|
306,500 |
|
|
|
2,380,000 |
|
Dividends paid |
|
|
(142,950 |
) |
|
|
(141,371 |
) |
Payments of settlement payable |
|
|
- |
|
|
|
(190,924 |
) |
Payments of contingent consideration |
|
|
- |
|
|
|
(2,979 |
) |
Distributions paid to noncontrolling interests |
|
|
(233 |
) |
|
|
(1,700 |
) |
Payment for exchange of noncontrolling interest |
|
|
(4,620 |
) |
|
|
- |
|
Borrowings under revolving credit facility |
|
|
180,000 |
|
|
|
310,000 |
|
Payments under revolving credit facility |
|
|
(192,000 |
) |
|
|
(220,000 |
) |
Finance lease payments |
|
|
(1,193 |
) |
|
|
(2,019 |
) |
Payments for financing costs |
|
|
(9,852 |
) |
|
|
(27,660 |
) |
Costs related to the early repayment of debt |
|
|
- |
|
|
|
(36,486 |
) |
Payments for capped call option |
|
|
(21,149 |
) |
|
|
- |
|
Termination of bond hedge option
and settlement of common stock warrants, net |
|
|
668 |
|
|
|
- |
|
Employee stock purchase program |
|
|
589 |
|
|
|
672 |
|
Payments related to tax withholding for stock-based
compensation |
|
|
(4,913 |
) |
|
|
(4,100 |
) |
Net cash used in financing activities |
|
|
(83,196 |
) |
|
|
(196,567 |
) |
Net decrease in cash and cash equivalents |
|
|
(15,100 |
) |
|
|
(18,631 |
) |
Cash and cash equivalents at beginning of period |
|
|
58,903 |
|
|
|
77,534 |
|
Cash and cash equivalents at end of period |
|
$ |
43,803 |
|
|
$ |
58,903 |
|
|
|
|
|
|
|
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net income (loss) attributable to common
shareholders |
|
$ |
40,734 |
|
|
$ |
35,610 |
|
|
$ |
(9,430 |
) |
|
$ |
122,573 |
|
Real estate depreciation and
amortization |
|
|
54,456 |
|
|
|
52,297 |
|
|
|
211,892 |
|
|
|
211,472 |
|
Gain on sale of real estate,
assets, net of tax |
|
|
(89 |
) |
|
|
- |
|
|
|
(433 |
) |
|
|
(442 |
) |
Participating securities share in
earnings |
|
|
238 |
|
|
|
213 |
|
|
|
1,135 |
|
|
|
1,077 |
|
Participating securities share in
FFO |
|
|
(557 |
) |
|
|
(528 |
) |
|
|
(2,345 |
) |
|
|
(2,188 |
) |
Real estate depreciation and
amortization from unconsolidated entities |
|
|
435 |
|
|
|
589 |
|
|
|
2,366 |
|
|
|
2,465 |
|
Adjustments for noncontrolling
interests |
|
|
(25 |
) |
|
|
(175 |
) |
|
|
(260 |
) |
|
|
(2,154 |
) |
FFO attributable to
common shareholders |
|
|
95,192 |
|
|
|
88,006 |
|
|
|
202,925 |
|
|
|
332,803 |
|
Transaction related and other
costs |
|
|
3,016 |
|
|
|
1,920 |
|
|
|
10,340 |
|
|
|
7,544 |
|
Change in fair value of
contingent consideration |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21 |
|
Amortization of deferred
financing costs and debt discount |
|
|
4,637 |
|
|
|
4,399 |
|
|
|
18,147 |
|
|
|
18,122 |
|
Write off of deferred financing
costs and debt discount |
|
|
2,330 |
|
|
|
1,759 |
|
|
|
2,330 |
|
|
|
24,587 |
|
Gain on extinguishment of
debt |
|
|
(13,084 |
) |
|
|
- |
|
|
|
(13,084 |
) |
|
|
- |
|
Costs related to the early
repayment of debt |
|
|
- |
|
|
|
20,929 |
|
|
|
- |
|
|
|
49,414 |
|
Stock based compensation |
|
|
3,087 |
|
|
|
2,884 |
|
|
|
12,751 |
|
|
|
13,847 |
|
Gain on sale of unconsolidated
entity, net of tax |
|
|
- |
|
|
|
- |
|
|
|
(1,212 |
) |
|
|
- |
|
Gain on sale of operations |
|
|
- |
|
|
|
- |
|
|
|
(176 |
) |
|
|
(28,143 |
) |
Non-real estate depreciation and
amortization |
|
|
21,055 |
|
|
|
27,480 |
|
|
|
80,896 |
|
|
|
79,470 |
|
Goodwill impairment |
|
|
24,500 |
|
|
|
- |
|
|
|
240,500 |
|
|
|
- |
|
Straight-line revenues and
amortization of below-market lease intangibles |
|
|
(9,859 |
) |
|
|
(18,784 |
) |
|
|
(40,925 |
) |
|
|
(41,239 |
) |
Maintenance capital
expenditures |
|
|
(2,864 |
) |
|
|
(2,020 |
) |
|
|
(10,000 |
) |
|
|
(8,342 |
) |
Other, net |
|
|
(13,023 |
) |
|
|
(12,736 |
) |
|
|
(48,435 |
) |
|
|
(17,694 |
) |
Adjustments for equity in
earnings from unconsolidated entities |
|
|
320 |
|
|
|
293 |
|
|
|
1,207 |
|
|
|
1,026 |
|
Adjustments for noncontrolling
interests |
|
|
(9 |
) |
|
|
(100 |
) |
|
|
(146 |
) |
|
|
(1,090 |
) |
AFFO attributable to
common shareholders |
|
$ |
115,298 |
|
|
$ |
114,030 |
|
|
$ |
455,118 |
|
|
$ |
430,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted
FFO and AFFO: |
|
|
|
|
|
|
|
|
|
|
|
|
FFO Attributable to common
shareholders – Basic |
|
$ |
95,192 |
|
|
$ |
88,006 |
|
|
$ |
202,925 |
|
|
$ |
332,803 |
|
Impact of if-converted dilutive
securities |
|
|
(4,068 |
) |
|
|
2,989 |
|
|
|
4,932 |
|
|
|
11,926 |
|
FFO Attributable to common
shareholders – Diluted |
|
$ |
91,124 |
|
|
$ |
90,995 |
|
|
$ |
207,857 |
|
|
$ |
344,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO Attributable to common
shareholders – Basic |
|
$ |
115,298 |
|
|
$ |
114,030 |
|
|
$ |
455,118 |
|
|
$ |
430,326 |
|
Impact of if-converted dilutive
securities |
|
|
4,249 |
|
|
|
3,450 |
|
|
|
14,599 |
|
|
|
13,800 |
|
AFFO Attributable to common
shareholders – Diluted |
|
$ |
119,547 |
|
|
$ |
117,480 |
|
|
$ |
469,717 |
|
|
$ |
444,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
used to calculate basic earnings (loss) per common share (1) |
|
|
235,818 |
|
|
|
234,719 |
|
|
|
235,567 |
|
|
|
232,888 |
|
Impact of dilutive
non-participating securities |
|
|
39 |
|
|
|
549 |
|
|
|
- |
|
|
|
380 |
|
Impact of if-converted dilutive
securities |
|
|
37,163 |
|
|
|
30,809 |
|
|
|
33,473 |
|
|
|
30,809 |
|
Weighted average common shares
used to calculate diluted FFO and AFFO per common share (1) |
|
|
273,020 |
|
|
|
266,077 |
|
|
|
269,040 |
|
|
|
264,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
0.13 |
|
|
$ |
0.15 |
|
|
$ |
(0.04 |
) |
|
$ |
0.51 |
|
FFO |
|
$ |
0.33 |
|
|
$ |
0.34 |
|
|
$ |
0.77 |
|
|
$ |
1.31 |
|
AFFO |
|
$ |
0.44 |
|
|
$ |
0.44 |
|
|
$ |
1.75 |
|
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For periods in which FFO to common shareholders is a
loss, the weighted average common shares used to calculate diluted
FFO per common share is equal to the weighted average common shares
used to calculate basic earnings (loss) per share.
Uniti Group
Inc.Reconciliation of EBITDA and Adjusted
EBITDA(In thousands)
|
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
40,995 |
|
|
$ |
35,926 |
|
|
$ |
(8,122 |
) |
|
$ |
124,745 |
|
Depreciation and
amortization |
|
|
75,512 |
|
|
|
79,777 |
|
|
|
292,788 |
|
|
|
290,942 |
|
Interest expense, net |
|
|
86,552 |
|
|
|
104,534 |
|
|
|
376,832 |
|
|
|
446,296 |
|
Income tax benefit |
|
|
(7,182 |
) |
|
|
(5,199 |
) |
|
|
(17,365 |
) |
|
|
(4,916 |
) |
EBITDA |
|
|
195,877 |
|
|
|
215,038 |
|
|
|
644,133 |
|
|
|
857,067 |
|
Stock-based compensation |
|
|
3,087 |
|
|
|
2,884 |
|
|
|
12,751 |
|
|
|
13,847 |
|
Transaction related and other
costs |
|
|
3,016 |
|
|
|
1,920 |
|
|
|
10,340 |
|
|
|
7,544 |
|
Gain on sale of operations |
|
|
- |
|
|
|
- |
|
|
|
(176 |
) |
|
|
(28,143 |
) |
Gain on sale of real estate |
|
|
(89 |
) |
|
|
- |
|
|
|
(433 |
) |
|
|
(442 |
) |
Goodwill impairment |
|
|
24,500 |
|
|
|
- |
|
|
|
240,500 |
|
|
|
- |
|
Other, net |
|
|
1,744 |
|
|
|
10,348 |
|
|
|
(4,790 |
) |
|
|
24,917 |
|
Adjustments for equity in
earnings from unconsolidated entities |
|
|
755 |
|
|
|
882 |
|
|
|
3,571 |
|
|
|
3,491 |
|
Adjusted EBITDA |
|
$ |
228,890 |
|
|
$ |
231,072 |
|
|
$ |
905,896 |
|
|
$ |
878,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Leasing |
|
$ |
203,496 |
|
|
$ |
206,124 |
|
|
$ |
806,027 |
|
|
$ |
784,061 |
|
Fiber Infrastructure |
|
|
31,733 |
|
|
|
31,736 |
|
|
|
125,361 |
|
|
|
118,452 |
|
Corporate |
|
|
(6,339 |
) |
|
|
(6,788 |
) |
|
|
(25,492 |
) |
|
|
(24,232 |
) |
|
|
$ |
228,890 |
|
|
$ |
231,072 |
|
|
$ |
905,896 |
|
|
$ |
878,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted
EBITDA (1) |
|
$ |
915,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
2022: |
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt (2) |
|
$ |
5,277,893 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
43,803 |
|
|
|
|
|
|
|
|
|
|
Net Debt |
|
$ |
5,234,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt/Annualized
Adjusted EBITDA |
|
|
5.72x |
|
|
|
|
|
|
|
|
|
__________________________(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 $15.5 million of finance leases, but
excludes $73.6 million of unamortized discounts and deferred
financing costs.
Uniti Group
Inc.Projected Future Results
(1)(In
millions)
|
|
Year Ended December 31, 2023 |
Net income
attributable to common shareholders – Basic |
|
$ 46 to $ 66 |
Noncontrolling interest share
in earnings |
|
1 |
Participating securities’
share in earnings |
|
1 |
Net income
(2) |
|
48 to 68 |
Interest expense, net (3) |
|
550 |
Depreciation and
amortization |
|
308 |
Income tax benefit |
|
(10) |
EBITDA (2) |
|
896 to 916 |
Stock-based compensation |
|
13 |
Transaction related and other
costs (4) |
|
3 |
Adjustment for unconsolidated
entities |
|
3 |
Adjusted EBITDA
(2) |
|
$ 915 to $ 935 |
________________________(1) These ranges
represent management’s best estimates based on the underlying
assumptions as of the date of this press release. Future
acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above.(2) The components of projected future results may not add
due to rounding.(3) See “Components of Projected Interest Expense”
below.(4) Future transaction related costs are not included in our
current outlook.
Uniti Group
Inc.Projected Future Results
(1)(Per Diluted
Share)
|
|
Year Ended December 31, 2023 |
Net income
attributable to common shareholders – Basic |
|
$ 0.19 to $ 0.28 |
Real estate depreciation and
amortization |
|
0.92 |
Adjustments for unconsolidated
entities |
|
0.01 |
FFO attributable to
common shareholders – Basic (2) |
|
$ 1.13 to $ 1.21 |
Impact of if-converted
securities |
|
(0.14) |
FFO attributable to
common shareholders – Diluted (2) |
|
$ 1.00 to $ 1.06 |
|
|
|
FFO attributable to
common shareholders – Basic (2) |
|
$ 1.13 to $ 1.21 |
Amortization of deferred
financing costs and debt discount (3) |
|
0.17 |
Costs related to the early
retirement of debt (4) |
|
0.19 |
Accretion of settlement payable
(5) |
|
0.04 |
Stock-based compensation |
|
0.06 |
Non-real estate depreciation and
amortization |
|
0.38 |
Straight-line revenues |
|
(0.14) |
Maintenance capital
expenditures |
|
(0.04) |
Other, net |
|
(0.24) |
AFFO attributable to
common shareholders – Basic (2) |
|
$ 1.55 to $ 1.64 |
Impact of if-converted
securities |
|
(0.20) |
AFFO attributable to common shareholders – Diluted
(2) |
$ 1.36 to $ 1.43 |
|
|
|
________________________(1) These ranges
represent management’s best estimates based on the underlying
assumptions as of the date of this press release. Future
acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above.(2) The components of projected future results may not add to
FFO and AFFO attributable to common shareholders due to
rounding.(3) Includes the write-off of approximately $21 million of
deferred financing costs related to the early repayment of our
7.875% Senior Secured Notes due 2025.(4) Represents the premium
paid on and related costs associated with the early repayment of
our 7.875% Senior Secured Notes due 2025.(5) Represents the
accretion of the Windstream settlement payable to its stated
value. At the effective date of the settlement, we recorded
the payable on the balance sheet at its initial fair value, which
will be accreted based on an effective interest rate of 4.2% and
reduced by the scheduled quarterly payments.
Components of Projected Interest
Expense (1)(In
millions)
|
|
Year Ended December 31, 2023 |
Interest expense on debt
obligations |
|
$ 455 |
Accretion of Windstream
settlement payable |
|
10 |
Amortization of deferred
financing cost and debt discounts (2) |
|
41 |
Premium on early repayment of
debt (3) |
|
44 |
Interest expense,
net (4) |
|
$ 550 |
________________________(1) These ranges
represent management’s best estimates based on the underlying
assumptions as of the date of this press release. Future
acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above.(2) Includes the write-off of approximately $21 million of
deferred financing costs related to the early repayment of our
7.875% Senior Secured Notes due 2025.(3) Represents the premium
paid on and related costs associated with the early repayment of
our 7.875% Senior Secured Notes due 2025.(4) The components of
interest expense may not add to the total due to rounding.
NON-GAAP FINANCIAL MEASURES
We refer to EBITDA, Adjusted EBITDA, Funds From
Operations (“FFO”) (as defined by the National Association of Real
Estate Investment Trusts (“NAREIT”)) and Adjusted Funds From
Operations (“AFFO”) in our analysis of our results of operations,
which are not required by, or presented in accordance with,
accounting principles generally accepted in the United States
(“GAAP”). While we believe that net income, as defined by GAAP, is
the most appropriate earnings measure, we also believe that EBITDA,
Adjusted EBITDA, FFO and AFFO are important non-GAAP supplemental
measures of operating performance for a REIT.
We define “EBITDA” as net income, as defined by
GAAP, before interest expense, provision for income taxes and
depreciation and amortization. We define “Adjusted EBITDA” as
EBITDA before stock-based compensation expense and the impact,
which may be recurring in nature, of transaction and integration
related costs, costs associated with Windstream’s bankruptcy, costs
associated with litigation claims made against us, and costs
associated with the implementation of our enterprise resource
planning system, (collectively, “Transaction Related and Other
Costs”), costs related to the settlement with Windstream, goodwill
impairment charges, executive severance costs, amortization of
non-cash rights-of-use assets, the write off of unamortized
deferred financing costs, costs incurred as a result of the early
repayment of debt, including early tender and redemption premiums
and costs associated with the termination of related hedging
activities, gains or losses on dispositions, changes in the fair
value of contingent consideration and financial instruments, and
other similar or infrequent items (although we may not have had
such charges in the periods presented). Adjusted EBITDA includes
adjustments to reflect the Company’s share of Adjusted EBITDA from
unconsolidated entities. We believe EBITDA and Adjusted EBITDA are
important supplemental measures to net income because they provide
additional information to evaluate our operating performance on an
unleveraged basis. In addition, Adjusted EBITDA is calculated
similar to defined terms in our material debt agreements used to
determine compliance with specific financial covenants. Since
EBITDA and Adjusted EBITDA are not measures calculated in
accordance with GAAP, they should not be considered as alternatives
to net income determined in accordance with GAAP.
Because the historical cost accounting
convention used for real estate assets requires the recognition of
depreciation expense except on land, such accounting presentation
implies that the value of real estate assets diminishes predictably
over time. However, since real estate values have historically
risen or fallen with market and other conditions, presentations of
operating results for a REIT that uses historical cost accounting
for depreciation could be less informative. Thus, NAREIT created
FFO as a supplemental measure of operating performance for REITs
that excludes historical cost depreciation and amortization, among
other items, from net income, as defined by GAAP. FFO is defined by
NAREIT as net income attributable to common shareholders computed
in accordance with GAAP, excluding gains or losses from real estate
dispositions, plus real estate depreciation and amortization and
impairment charges, and includes adjustments to reflect the
Company’s share of FFO from unconsolidated entities. We compute FFO
in accordance with NAREIT’s definition.
The Company defines AFFO, as FFO excluding (i)
Transaction Related and Other Costs; (ii) costs related to the
litigation settlement with Windstream, accretion on our settlement
obligation, and gains on the prepayment of our settlement
obligation as these items are not reflective of ongoing operating
performance; (iii) goodwill impairment charges; (iv) certain
non-cash revenues and expenses such as stock-based compensation
expense, amortization of debt and equity discounts, amortization of
deferred financing costs, depreciation and amortization of non-real
estate assets, amortization of non-cash rights-of-use assets,
straight line revenues, non-cash income taxes, and the amortization
of other non-cash revenues to the extent that cash has not been
received, such as revenue associated with the amortization of
tenant capital improvements; and (v) the impact, which may be
recurring in nature, of the write-off of unamortized deferred
financing fees, additional costs incurred as a result of the early
repayment of debt, including early tender and redemption premiums
and costs associated with the termination of related hedging
activities, executive severance costs, taxes associated with tax
basis cancellation of debt, gains or losses on dispositions,
changes in the fair value of contingent consideration and financial
instruments and similar or infrequent items less maintenance
capital expenditures. AFFO includes adjustments to reflect the
Company’s share of AFFO from unconsolidated entities. We believe
that the use of FFO and AFFO, and their respective per share
amounts, combined with the required GAAP presentations, improves
the understanding of operating results of REITs among investors and
analysts, and makes comparisons of operating results among such
companies more meaningful. We consider FFO and AFFO to be useful
measures for reviewing comparative operating performance. In
particular, we believe AFFO, by excluding certain revenue and
expense items, can help investors compare our operating performance
between periods and to other REITs on a consistent basis without
having to account for differences caused by unanticipated items and
events, such as transaction and integration related costs. The
Company uses FFO and AFFO, and their respective per share amounts,
only as performance measures, and FFO and AFFO do not purport to be
indicative of cash available to fund our future cash requirements.
While FFO and AFFO are relevant and widely used measures of
operating performance of REITs, they do not represent cash flows
from operations or net income as defined by GAAP and should not be
considered an alternative to those measures in evaluating our
liquidity or operating performance.
Further, our computations of EBITDA, Adjusted
EBITDA, FFO and AFFO may not be comparable to that reported by
other REITs or companies that do not define FFO in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition or define EBITDA, Adjusted EBITDA and AFFO differently
than we do.
INVESTOR AND MEDIA CONTACTS:
Paul Bullington, 251-662-1512Senior Vice President, Chief
Financial Officer & Treasurerpaul.bullington@uniti.com
Bill DiTullio, 501-850-0872Vice President, Investor Relations
& Treasurybill.ditullio@uniti.com
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