Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today
announced its results for the first quarter 2023.
“Despite ongoing macroeconomic challenges,
including persistent inflationary and supply chain pressures, our
business remains predominantly resilient and the demand for our
product offerings and services has not waned. To ensure that we are
fully taking advantage of the current opportunity set within our
industry, we continue to densify our networks in order to maximize
our lease-up potential in existing markets, as well as evaluate new
markets for expansion within our Southeast footprint, ” commented
President and Chief Executive Officer, Kenny Gunderman.
Mr. Gunderman continued, “These industry
tailwinds, combined with the steps we have taken to strengthen our
balance sheet and push out maturities, with over 97% of our
outstanding debt maturing in 2027 or later, positions Uniti to be
successful now and in the long term.”
QUARTERLY RESULTS
Consolidated revenues for the first quarter of
2023 were $289.8 million. Net loss and Adjusted EBITDA were $19.2
million and $231.2 million, respectively, for the same period. Net
loss attributable to common shares was $19.5 million for the
period, and included the write-off of $10.4 million of deferred
financing costs and $52.0 million of costs related to the early
repayment of the 7.875% Senior Secured Notes due 2025. Adjusted
Funds From Operations (“AFFO”) attributable to common shareholders
was $107.4 million, or $0.39 per diluted common share.
Uniti Fiber contributed $79.0 million of
revenues and $33.7 million of Adjusted EBITDA for the first quarter
of 2023, achieving Adjusted EBITDA margins of approximately 43%.
Uniti Fiber’s net success-based capital expenditures during the
quarter were $36.1 million.
Uniti Leasing contributed revenues of $210.8
million and Adjusted EBITDA of $205.0 million for the first
quarter. During the quarter, Uniti Leasing deployed capital
expenditures of $71.7 million primarily related to the construction
of approximately 1,200 new route miles of valuable fiber
infrastructure.
FINANCING TRANSACTIONS
On March 24, 2023, Uniti entered into an
amendment to its credit agreement that, upon receipt of routine
regulatory approval, extends the maturity date of each lender’s
commitment under the Company’s senior secured revolving credit
facility to September 24, 2027. The amendment also transitions the
$500 million revolving credit facility from LIBOR to Term SOFR, and
in connection with that change, sets the credit spread adjustment
to ten basis points for all interest periods.
LIQUIDITY
At quarter-end, the Company had approximately
$495.3 million of unrestricted cash and cash equivalents, and
undrawn borrowing availability under its revolving credit
agreement. The Company’s leverage ratio at quarter-end was 5.87x
based on net debt to first quarter 2023 annualized Adjusted
EBITDA.
On May 2, 2023, the Company’s Board of Directors
declared a quarterly cash dividend of $0.15 per common share,
payable on June 30, 2023, to stockholders of record on June 16,
2023.
UPDATED FULL YEAR 2023 OUTLOOK
The Company is updating its 2023 outlook primarily for business
unit level revisions, and the impact from recent debt refinancings
and transaction related and other costs incurred to date. Our 2023
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 |
|
60 |
to |
|
80 |
Adjusted EBITDA (1) |
|
915 |
to |
|
935 |
Interest expense, net (2) |
|
517 |
to |
|
517 |
|
|
|
|
|
|
Attributable to common shareholders: |
|
|
|
|
|
FFO (1) |
|
280 |
to |
|
300 |
AFFO (1) |
|
373 |
to |
|
393 |
|
|
|
|
|
|
Weighted-average common shares outstanding – diluted |
|
290 |
to |
|
290 |
________________________ |
|
|
|
|
|
(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 March 31, 2023, Uniti owns
approximately 137,000 fiber route miles, 8.3 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) |
|
March 31,2023 |
|
December 31,2022 |
Assets: |
|
|
|
Property, plant and equipment,
net |
$ |
3,855,189 |
|
|
$ |
3,754,547 |
|
Cash and cash equivalents |
|
70,346 |
|
|
|
43,803 |
|
Accounts receivable, net |
|
53,594 |
|
|
|
42,631 |
|
Goodwill |
|
361,378 |
|
|
|
361,378 |
|
Intangible assets, net |
|
327,402 |
|
|
|
334,846 |
|
Straight-line revenue
receivable |
|
74,654 |
|
|
|
68,595 |
|
Operating lease right-of-use
assets, net |
|
85,551 |
|
|
|
88,545 |
|
Other assets |
|
78,364 |
|
|
|
77,597 |
|
Investment in unconsolidated
entities |
|
38,337 |
|
|
|
38,656 |
|
Deferred income tax assets,
net |
|
43,384 |
|
|
|
40,631 |
|
Total Assets |
$ |
4,988,199 |
|
|
$ |
4,851,229 |
|
|
|
|
|
Liabilities and
Shareholders' Deficit: |
|
|
|
Liabilities: |
|
|
|
Accounts payable, accrued
expenses and other liabilities |
$ |
125,832 |
|
|
$ |
122,195 |
|
Settlement payable |
|
229,610 |
|
|
|
251,098 |
|
Intangible liabilities,
net |
|
164,418 |
|
|
|
167,092 |
|
Accrued interest payable |
|
72,726 |
|
|
|
121,316 |
|
Deferred revenue |
|
1,226,389 |
|
|
|
1,190,041 |
|
Dividends payable |
|
35,855 |
|
|
|
2 |
|
Operating lease
liabilities |
|
64,045 |
|
|
|
66,356 |
|
Finance lease obligations |
|
16,186 |
|
|
|
15,520 |
|
Notes and other debt, net |
|
5,377,313 |
|
|
|
5,188,815 |
|
Total liabilities |
|
7,312,374 |
|
|
|
7,122,435 |
|
|
|
|
|
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: 236,427
shares at March 31, 2023 and 235,829 at December 31, 2022 |
|
24 |
|
|
|
24 |
|
Additional paid-in
capital |
|
1,212,137 |
|
|
|
1,210,033 |
|
Distributions in excess of
accumulated earnings |
|
(3,538,683 |
) |
|
|
(3,483,634 |
) |
Total Uniti
shareholders' deficit |
|
(2,326,522 |
) |
|
|
(2,273,577 |
) |
Noncontrolling interests -
operating partnership units and non-voting convertible preferred
stock |
|
2,347 |
|
|
|
2,371 |
|
Total shareholders'
deficit |
|
(2,324,175 |
) |
|
|
(2,271,206 |
) |
Total Liabilities and Shareholders' Deficit |
$ |
4,988,199 |
|
|
$ |
4,851,229 |
|
Uniti Group Inc.Consolidated Statements of
Operations(In thousands, except per share
data) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
Leasing |
$ |
210,808 |
|
|
$ |
204,641 |
|
Fiber Infrastructure |
|
79,014 |
|
|
|
73,393 |
|
Total revenues |
|
289,822 |
|
|
|
278,034 |
|
|
|
|
|
Costs and
Expenses: |
|
|
|
Interest expense, net |
|
148,863 |
|
|
|
96,172 |
|
Depreciation and
amortization |
|
76,775 |
|
|
|
71,457 |
|
General and administrative
expense |
|
28,433 |
|
|
|
23,870 |
|
Operating expense (exclusive
of depreciation and amortization) |
|
35,068 |
|
|
|
34,976 |
|
Transaction related and other
costs |
|
2,788 |
|
|
|
1,714 |
|
Other expense (income),
net |
|
20,179 |
|
|
|
(398 |
) |
Total costs and expenses |
|
312,106 |
|
|
|
227,791 |
|
|
|
|
|
(Loss) income before income
taxes and equity in earnings from unconsolidated entities |
|
(22,284 |
) |
|
|
50,243 |
|
Income tax benefit |
|
(2,412 |
) |
|
|
(2,071 |
) |
Equity in earnings from
unconsolidated entities |
|
(661 |
) |
|
|
(544 |
) |
Net (loss)
income |
|
(19,211 |
) |
|
|
52,858 |
|
Net (loss) income attributable
to noncontrolling interests |
|
(9 |
) |
|
|
128 |
|
Net (loss) income
attributable to shareholders |
|
(19,202 |
) |
|
|
52,730 |
|
Participating securities'
share in earnings |
|
(247 |
) |
|
|
(331 |
) |
Dividends declared on
convertible preferred stock |
|
(5 |
) |
|
|
(5 |
) |
Net (loss) income
attributable to common shareholders |
$ |
(19,454 |
) |
|
$ |
52,394 |
|
|
|
|
|
Net (loss) income attributable
to common shareholders - Basic |
|
(19,454 |
) |
|
|
52,394 |
|
Impact of if-converted
dilutive securities |
|
— |
|
|
|
2,994 |
|
Net (loss) income attributable
to common shareholders - Diluted |
$ |
(19,454 |
) |
|
$ |
55,388 |
|
|
|
|
|
Weighted-average
number of common shares outstanding: |
|
|
|
Basic |
|
236,090 |
|
|
|
235,046 |
|
Diluted |
|
236,090 |
|
|
|
267,304 |
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
Basic |
|
(0.08 |
) |
|
|
0.22 |
|
Diluted |
|
(0.08 |
) |
|
|
0.21 |
|
Uniti Group Inc.Consolidated Statements of
Cash Flows(In thousands) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
|
Cash flow from operating
activities |
|
|
Net (loss) income |
$ |
(19,211 |
) |
$ |
52,858 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
Depreciation and amortization |
|
76,775 |
|
|
71,457 |
|
Amortization of deferred financing costs and debt discount |
|
4,963 |
|
|
4,514 |
|
Loss on extinguishment of debt, net |
|
31,187 |
|
|
— |
|
Interest rate swap termination |
|
— |
|
|
2,830 |
|
Deferred income taxes |
|
(2,754 |
) |
|
(3,664 |
) |
Equity in earnings of unconsolidated entities |
|
(661 |
) |
|
(544 |
) |
Distributions of cumulative earnings from unconsolidated
entities |
|
980 |
|
|
980 |
|
Cash paid for interest rate swap settlement |
|
— |
|
|
(3,144 |
) |
Straight-line revenues and amortization of below-market lease
intangibles |
|
(9,427 |
) |
|
(11,022 |
) |
Stock-based compensation |
|
3,130 |
|
|
3,312 |
|
Loss (gain) on asset disposals |
|
(422 |
) |
|
663 |
|
Accretion of settlement obligation |
|
3,017 |
|
|
2,876 |
|
Other |
|
— |
|
|
(318 |
) |
Changes in assets and liabilities: |
|
|
Accounts receivable |
|
(10,963 |
) |
|
(2,814 |
) |
Other assets |
|
6,553 |
|
|
157 |
|
Accounts payable, accrued expenses and other liabilities |
|
(68,605 |
) |
|
(54,920 |
) |
Net cash provided by operating activities |
|
14,562 |
|
|
63,221 |
|
Cash flow from investing
activities |
|
|
Capital expenditures |
|
(114,981 |
) |
|
(94,728 |
) |
Proceeds from sale of other equipment |
|
607 |
|
|
379 |
|
Net cash used in investing activities |
|
(114,374 |
) |
|
(94,349 |
) |
Cash flow from financing
activities |
|
|
Repayment of debt |
|
(2,263,662 |
) |
|
— |
|
Proceeds from issuance of notes |
|
2,600,000 |
|
|
— |
|
Dividends paid |
|
(9 |
) |
|
(105 |
) |
Payments of settlement payable |
|
(24,505 |
) |
|
— |
|
Borrowings under revolving credit facility |
|
140,000 |
|
|
85,000 |
|
Payments under revolving credit facility |
|
(253,000 |
) |
|
(60,000 |
) |
Finance lease payments |
|
(452 |
) |
|
(280 |
) |
Payments for financing costs |
|
(26,688 |
) |
|
— |
|
Payment for settlement of common stock warrant |
|
(56 |
) |
|
— |
|
Termination of bond hedge option |
|
59 |
|
|
— |
|
Costs related to the early repayment of debt |
|
(44,303 |
) |
|
— |
|
Employee stock purchase program |
|
314 |
|
|
264 |
|
Payments related to tax withholding for stock-based
compensation |
|
(1,343 |
) |
|
(1,525 |
) |
Net cash provided by financing activities |
|
126,355 |
|
|
23,354 |
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
26,543 |
|
|
(7,774 |
) |
Cash and cash equivalents at
beginning of period |
|
43,803 |
|
|
58,903 |
|
Cash and cash equivalents at end
of period |
$ |
70,346 |
|
$ |
51,129 |
|
|
|
|
Non-cash investing and financing
activities: |
|
|
Property and equipment acquired
but not yet paid |
$ |
13,049 |
|
$ |
13,338 |
|
Tenant capital improvements |
|
81,592 |
|
|
38,669 |
|
Uniti Group Inc.Reconciliation of Net
Income to FFO and AFFO (In thousands, except per
share data) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net (loss) income
attributable to common shareholders |
$ |
(19,454 |
) |
|
$ |
52,394 |
|
Real estate depreciation and
amortization |
|
54,516 |
|
|
|
51,893 |
|
Participating securities share
in earnings |
|
247 |
|
|
|
331 |
|
Participating securities share
in FFO |
|
(247 |
) |
|
|
(658 |
) |
Real estate depreciation and
amortization from unconsolidated entities |
|
435 |
|
|
|
690 |
|
Adjustments for noncontrolling
interests |
|
(25 |
) |
|
|
(129 |
) |
FFO attributable to
common shareholders |
|
35,472 |
|
|
|
104,521 |
|
Transaction related and other
costs |
|
2,788 |
|
|
|
1,714 |
|
Amortization of deferred
financing costs and debt discount |
|
4,963 |
|
|
|
4,514 |
|
Write off of deferred
financing costs and debt discount |
|
10,412 |
|
|
|
Costs related to the early
repayment of debt |
|
51,997 |
|
|
|
Stock based compensation |
|
3,130 |
|
|
|
3,312 |
|
Non-real estate depreciation
and amortization |
|
22,259 |
|
|
|
19,564 |
|
Straight-line revenues and
amortization of below-market lease intangibles |
|
(9,427 |
) |
|
|
(11,022 |
) |
Maintenance capital
expenditures |
|
(1,828 |
) |
|
|
(2,366 |
) |
Other, net |
|
(12,661 |
) |
|
|
(8,170 |
) |
Adjustments for equity in
earnings from unconsolidated entities |
|
320 |
|
|
|
296 |
|
Adjustments for noncontrolling
interests |
|
(32 |
) |
|
|
(21 |
) |
AFFO attributable to
common shareholders |
$ |
107,393 |
|
|
$ |
112,342 |
|
|
|
|
|
Reconciliation of
Diluted FFO and AFFO: |
|
|
|
FFO Attributable to common
shareholders - Basic |
$ |
35,472 |
|
|
$ |
104,521 |
|
Impact of if-converted
dilutive securities |
|
— |
|
|
|
2,994 |
|
FFO Attributable to common
shareholders - Diluted |
$ |
35,472 |
|
|
$ |
107,515 |
|
|
|
|
|
AFFO Attributable to common
shareholders - Basic |
$ |
107,393 |
|
|
$ |
112,342 |
|
Impact of if-converted
dilutive securities |
|
7,109 |
|
|
|
3,450 |
|
AFFO Attributable to common
shareholders - Diluted |
$ |
114,502 |
|
|
$ |
115,792 |
|
|
|
|
|
Weighted average common shares
used to calculate basic earnings (loss) per common share
(1) |
|
236,090 |
|
|
|
235,046 |
|
Impact of dilutive
non-participating securities |
|
— |
|
|
|
1,226 |
|
Impact of if-converted
dilutive securities |
|
54,748 |
|
|
|
31,032 |
|
Weighted average common shares
used to calculate diluted FFO and AFFO per common share
(1) |
|
290,838 |
|
|
|
267,304 |
|
|
|
|
|
Per diluted common
share: |
|
|
|
EPS |
$ |
(0.08) |
|
|
$ |
0.21 |
|
FFO |
$ |
0.15 |
|
|
$ |
0.40 |
|
AFFO |
$ |
0.39 |
|
|
$ |
0.43 |
|
|
|
|
|
(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 Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net (loss)
income |
$ |
(19,211 |
) |
|
$ |
52,858 |
|
Depreciation and
amortization |
|
76,775 |
|
|
|
71,457 |
|
Interest expense, net |
|
148,863 |
|
|
|
96,172 |
|
Income tax (benefit)
expense |
|
(2,412 |
) |
|
|
(2,071 |
) |
EBITDA |
|
204,015 |
|
|
|
218,416 |
|
Stock based compensation |
|
3,130 |
|
|
|
3,312 |
|
Transaction related and other
costs |
|
2,788 |
|
|
|
1,714 |
|
Other, net |
|
20,513 |
|
|
|
361 |
|
Adjustments for equity in
earnings from unconsolidated entities |
|
755 |
|
|
|
986 |
|
Adjusted EBITDA |
$ |
231,201 |
|
|
$ |
224,789 |
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
Leasing |
$ |
204,966 |
|
|
$ |
198,973 |
|
Fiber Infrastructure |
|
33,674 |
|
|
|
31,459 |
|
Corporate |
|
(7,439 |
) |
|
|
(5,643 |
) |
|
$ |
231,201 |
|
|
$ |
224,789 |
|
|
|
|
|
Annualized Adjusted EBITDA
(1) |
$ |
924,804 |
|
|
|
|
|
|
|
As of
March 31, 2023: |
|
|
|
Total Debt (2) |
$ |
5,500,628 |
|
|
|
Cash and cash equivalents |
|
70,346 |
|
|
|
Net Debt |
$ |
5,430,282 |
|
|
|
|
|
|
|
Net Debt/Annualized
Adjusted EBITDA |
5.87x |
|
|
________________________
(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 $16.2 million of finance leases, but excludes $107.1
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 |
$ 60 to $ 80 |
Noncontrolling interest share
in earnings |
1 |
Participating securities’
share in earnings |
1 |
Net income
(2) |
62 to 82 |
Interest expense, net (3) |
517 |
Depreciation and
amortization |
308 |
Income tax benefit |
(10) |
EBITDA (2) |
876 to 896 |
Stock-based compensation |
13 |
Transaction related and other
costs (4) |
23 |
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) |
Includes $20 million of costs
associated with the early repayment of our 7.875% Senior Secured
Notes due 2025. 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 |
$ 0.26 to $ 0.34 |
Real estate depreciation and
amortization |
0.92 |
Adjustments for unconsolidated
entities |
0.01 |
FFO attributable to
common shareholders – Basic (2) |
$ 1.19 to $ 1.27 |
Impact of if-converted
securities |
(0.15) |
FFO attributable to
common shareholders – Diluted (2) |
$ 1.05 to $ 1.12 |
|
|
FFO attributable to
common shareholders – Basic (2) |
$ 1.19 to $ 1.27 |
Transaction related and other
costs (3) |
0.01 |
Amortization of deferred
financing costs and debt discount (4) |
0.12 |
Costs related to the early
retirement of debt (5) |
0.22 |
Accretion of settlement payable
(6) |
0.04 |
Stock-based compensation |
0.05 |
Non-real estate depreciation and
amortization |
0.37 |
Straight-line revenues |
(0.15) |
Maintenance capital
expenditures |
(0.04) |
Other, net |
(0.24) |
AFFO attributable to
common shareholders – Basic (2) |
$ 1.58 to $ 1.66 |
Impact of if-converted
securities |
(0.20) |
AFFO attributable to common shareholders – Diluted
(2) |
$ 1.38 to $ 1.45 |
________________________
(1) |
These ranges represent management’s best estimates based on the
underlying assumptions as of the date of this press release.
Future acquisitions, capital market transactions, changes in market
conditions, and other factors are excluded from our
projections. There can be no assurance that our actual
results will not differ materially from the estimates set forth
above. |
(2) |
The components of projected
future results may not add to FFO and AFFO attributable to common
shareholders due to rounding. |
(3) |
Future transaction related and
other costs are not included in our current outlook. |
(4) |
Includes the write-off of
approximately $10 million of deferred financing costs related to
the early repayment of our 7.875% Senior Secured Notes due
2025. |
(5) |
Represents the premium paid on and related costs associated with
the early repayment of our 7.875% Senior Secured Notes due
2025. |
(6) |
Represents the accretion of the
Windstream settlement payable to its stated value. At the
effective date of the settlement, we recorded the payable on the
balance sheet at its initial fair value, which will be accreted
based on an effective interest rate of 4.2% and reduced by the
scheduled quarterly payments. |
Uniti Group Inc.Components of Projected
Interest Expense (1)(In millions) |
|
Year Ended December 31, 2023 |
Interest expense on debt
obligations |
$ 446 |
Accretion of Windstream
settlement payable |
10 |
Amortization of deferred
financing cost and debt discounts (2) |
29 |
Premium on early repayment of
debt (3) |
32 |
Interest expense,
net (4) |
$ 517 |
________________________
(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 $10 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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