Uniti Group Inc. Reports Fourth Quarter and Full Year 2023 Results
- Uniti Group Inc. reported net income of $30.7 million for the fourth quarter of 2023, with consolidated revenues of $285.7 million.
- Full-year results for 2023 show a net loss of $81.7 million and consolidated revenues of $1.1 billion.
- Uniti successfully refinanced $3.1 billion of debt in 2023 and raised $437 million through ABS bridge financing and asset sales.
- Uniti's 2024 outlook includes estimated impacts from recent financing, planned equipment sales exit, completed asset sales, and upcoming maturity of exchangeable notes.
- The company's liquidity position at year-end included $354.3 million in unrestricted cash and cash equivalents.
- Uniti's Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on April 12, 2024.
- None.
Insights
The recent announcement by Uniti Group Inc. regarding their financial results for the fourth quarter and full year of 2023 presents a mixed financial picture that warrants a nuanced analysis from a financial perspective. The reported net income of $30.7 million for the fourth quarter, contrasted with a full-year net loss of $81.7 million, highlights a quarter of profitability amidst an annual loss. This discrepancy is largely explained by a $204 million goodwill impairment charge related to the Uniti Fiber segment, which was affected by macroeconomic factors such as rising interest rates.
Moreover, the company's Adjusted EBITDA of $923.5 million for the year, maintaining a margin of approximately 81%, indicates a strong operational performance. The AFFO (Adjusted Funds From Operations) per diluted common share of $1.42 for the full year suggests that the company is generating sufficient cash flows from its operations, which is a critical metric for investors assessing the company's ability to cover dividends and fund operations.
Uniti's strategic financial maneuvers, including the refinancing of $3.1 billion in outstanding debt and raising additional capital through ABS bridge financing and asset sales, have fortified its balance sheet. The focus on fixed-rate debt and the lack of material permanent debt maturities until 2027 provide a degree of financial stability in a volatile interest rate environment. However, the reported leverage ratio of 6.03x is relatively high, which could be a concern for debt investors and may impact the company's financial flexibility.
From a market perspective, Uniti's operational strategy of divesting non-core assets and exiting low-margin equipment sales aligns with the broader industry trend of telecom companies focusing on high-margin, strategic businesses. The sale of wireless towers and the exit from certain fiber network operations, for a total consideration of approximately $87 million, represent a shift towards a more streamlined and focused business model.
Uniti's 2024 outlook, which projects net income attributable to common shareholders to be between $108 million to $128 million and Adjusted EBITDA between $930 million to $950 million, is indicative of management's confidence in the company's strategic direction. The expected reduction in non-recurring revenue due to the planned exit from one-time equipment sales could lead to a more predictable and stable revenue stream, which is generally viewed favorably by investors.
Additionally, the company's emphasis on constructing new route miles of fiber infrastructure reflects an investment in the future growth of the business and the increasing demand for high-speed data services. This proactive approach to capital expenditure, particularly in the leasing segment, could enhance Uniti's competitive position in the fiber market and contribute to long-term shareholder value.
Uniti Group's focus on its core recurring strategic fiber business reflects a broader industry trend where telecommunications companies are increasingly investing in fiber infrastructure to support the growth of high-speed internet and 5G technologies. The reported top-line growth of 5% year-over-year in this segment demonstrates resilience and the potential for future growth as demand for data continues to rise.
Uniti's success-based capital expenditures, which refer to investments made in direct response to customer demand, indicate an operational strategy that prioritizes capital efficiency. The company's ability to maintain Adjusted EBITDA margins of approximately 38% for Uniti Fiber and a significant 81% for the consolidated company underscores effective cost management and the profitability of its leasing operations.
The ABS bridge financing, which provides a near-term liquidity solution with a relatively low initial interest rate of Term SOFR plus 3.75%, is a strategic financial tool that allows the company to navigate the current economic climate while planning for future refinancing or permanent financing solutions.
Recently Announced ABS Bridge Financing & Asset Sales Further Strengthen Balance Sheet
Provides Initial 2024 Outlook
- Net Income (Loss) of
$30.7 Million and ($81.7) Million for the Fourth Quarter and Full Year, Respectively - Net Income (Loss) of
$0.13 and ($0.35) Per Diluted Common Share for the Fourth Quarter and Full Year, Respectively - AFFO Per Diluted Common Share of
$0.34 and$1.42 for the Fourth Quarter and Full Year, Respectively
LITTLE ROCK, Ark., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today announced its results for the fourth quarter and full year 2023.
“2023 was another productive year for Uniti. Our core recurring strategic fiber business continues to demonstrate its resiliency with top line growth of
Mr. Gunderman continued, “Despite a challenging economic backdrop, Uniti successfully fully financed its current business plan by refinancing
QUARTERLY RESULTS
Consolidated revenues for the fourth quarter of 2023 were
Uniti Fiber contributed
Uniti Leasing contributed revenues of
FULL YEAR RESULTS
Consolidated revenues for the year ended December 31, 2023 were
Uniti Fiber contributed
Uniti Leasing contributed revenues of
FINANCING TRANSACTIONS
On February 26th, Uniti announced that it had entered into an asset-backed Bridge Loan and Security Agreement for up to
INVESTMENT TRANSACTIONS
On February 26th, Uniti also announced multiple asset sales that it recently completed. First, Uniti sold its remaining investment interest in the fiber network operated by Bluebird Network LLC. In addition, Uniti sold to CableSouth Media III, LLC (“SwyftFiber”) the fiber network assets previously leased to SwyftFiber since its 2018 sale leaseback transaction with Uniti. As part of the agreement, Uniti will continue to have access to certain strands within the SwyftFiber network at zero cost. Finally, Uniti recently completed the sale of essentially all of its remaining wireless towers to CTI Towers, Inc., a portfolio company of Palistar Capital LP. Total cash consideration for these transactions was approximately
LIQUIDITY
At year-end, the Company had approximately
On February 22, 2024, the Company’s Board of Directors declared a quarterly cash dividend of
FULL YEAR 2024 OUTLOOK
Our 2024 outlook includes the estimated impact from the recent ABS Facility, the planned exit of most one-time equipment sales, the recently completed asset sales, and the upcoming maturity of the remaining
The Company’s consolidated outlook for 2024 is as follows (in millions):
| Full Year 2024 | |||||||
| Revenue | $ | 1,154 | to | $ | 1,174 | ||
| Net income attributable to common shareholders | 108 | to | 128 | ||||
| Adjusted EBITDA (1) | 930 | to | 950 | ||||
| Interest expense, net (2) | 500 | to | 500 | ||||
| Attributable to common shareholders: | |||||||
| FFO (1) | 334 | to | 354 | ||||
| AFFO (1) | 365 | to | 385 | ||||
| Weighted-average common shares outstanding – diluted | 284 | to | 284 | ||||
| ________________________ | |||||||
| (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, 2023, Uniti owns approximately 140,000 fiber route miles, 8.5 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 2024 financial outlook, expectations regarding high-margin recurring revenue, lease-up of our network 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; the possibility that we may experience equipment failures, natural disasters, cyber-attacks or terrorist attacks for which our insurance may not provide adequate coverage; 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, 2023 | December 31, 2022 | |||||||
| Assets: | ||||||||
| Property, plant and equipment, net | $ | 3,982,069 | $ | 3,754,547 | ||||
| Cash and cash equivalents | 62,264 | 43,803 | ||||||
| Accounts receivable, net | 46,358 | 42,631 | ||||||
| Goodwill | 157,380 | 361,378 | ||||||
| Intangible assets, net | 305,115 | 334,846 | ||||||
| Straight-line revenue receivable | 90,988 | 68,595 | ||||||
| Operating lease right-of-use assets, net | 125,105 | 88,545 | ||||||
| Other assets | 118,117 | 77,597 | ||||||
| Investment in unconsolidated entities | - | 38,656 | ||||||
| Deferred income tax assets, net | 109,128 | 40,631 | ||||||
| Assets held for sale | 28,605 | - | ||||||
| Total Assets | $ | 5,025,129 | $ | 4,851,229 | ||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Liabilities: | ||||||||
| Accounts payable, accrued expenses and other liabilities | $ | 119,340 | $ | 122,195 | ||||
| Settlement payable | 163,583 | 251,098 | ||||||
| Intangible liabilities, net | 156,397 | 167,092 | ||||||
| Accrued interest payable | 133,683 | 121,316 | ||||||
| Deferred revenue | 1,273,661 | 1,190,041 | ||||||
| Dividends payable | 36,162 | 2 | ||||||
| Operating lease liabilities | 84,404 | 66,356 | ||||||
| Finance lease obligations | 18,110 | 15,520 | ||||||
| Notes and other debt, net | 5,523,579 | 5,188,815 | ||||||
| Liabilities held for sale | 331 | - | ||||||
| Total Liabilities | 7,509,250 | 7,122,435 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preferred stock, | - | - | ||||||
| Common stock, and outstanding: 236,559 shares at December 31, 2023 and 235,829 shares at December 31, 2022 | 24 | 24 | ||||||
| Additional paid-in capital | 1,221,824 | 1,210,033 | ||||||
| Distributions in excess of accumulated earnings | (3,708,240 | ) | (3,483,634 | ) | ||||
| Total Uniti shareholders’ deficit | (2,486,392 | ) | (2,273,577 | ) | ||||
| Noncontrolling interests – operating partnership units and non-voting convertible preferred stock | 2,271 | 2,371 | ||||||
| Total shareholders’ deficit | (2,484,121 | ) | (2,271,206 | ) | ||||
| Total Liabilities and Shareholders’ Deficit | $ | 5,025,129 | $ | 4,851,229 | ||||
| Uniti Group Inc. Consolidated Statements of Operations (In thousands, except per share data) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | |||||||||||||||
| Uniti Leasing | $ | 214,923 | $ | 208,579 | $ | 852,772 | $ | 827,457 | |||||||
| Uniti Fiber | 70,733 | 75,156 | 297,059 | 301,390 | |||||||||||
| Total revenues | 285,656 | 283,735 | 1,149,831 | 1,128,847 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Interest expense, net | 123,106 | 86,552 | 512,349 | 376,832 | |||||||||||
| Depreciation and amortization | 79,149 | 75,512 | 310,528 | 292,788 | |||||||||||
| General and administrative expense | 25,401 | 25,174 | 102,732 | 100,992 | |||||||||||
| Operating expense (exclusive of depreciation and amortization) | 34,398 | 34,947 | 144,276 | 143,131 | |||||||||||
| Goodwill impairment | - | 24,500 | 203,998 | 240,500 | |||||||||||
| Transaction related and other costs | 2,806 | 3,016 | 12,611 | 10,340 | |||||||||||
| Gain on sale of real estate | (740 | ) | (89 | ) | (2,164 | ) | (433 | ) | |||||||
| Gain on sale of operations | - | - | - | (176 | ) | ||||||||||
| Other expense (income), net | (2,937 | ) | 985 | 18,386 | (7,269 | ) | |||||||||
| Total costs and expenses | 261,183 | 250,597 | 1,302,716 | 1,156,705 | |||||||||||
| Income (loss) before income taxes and equity in earnings from unconsolidated entities | 24,473 | 33,138 | (152,885 | ) | (27,858 | ) | |||||||||
| Income tax benefit | (5,575 | ) | (7,182 | ) | (68,474 | ) | (17,365 | ) | |||||||
| Equity in earnings from unconsolidated entities | (672 | ) | (675 | ) | (2,662 | ) | (2,371 | ) | |||||||
| Net income (loss) | 30,720 | 40,995 | (81,749 | ) | (8,122 | ) | |||||||||
| Net income (loss) attributable to noncontrolling interests | 14 | 18 | (36 | ) | 153 | ||||||||||
| Net income (loss) attributable to shareholders | 30,706 | 40,977 | (81,713 | ) | (8,275 | ) | |||||||||
| Participating securities’ share in earnings | (317 | ) | (238 | ) | (1,207 | ) | (1,135 | ) | |||||||
| Dividends declared on convertible preferred stock | (5 | ) | (5 | ) | (20 | ) | (20 | ) | |||||||
| Net income (loss) attributable to common shareholders | $ | 30,384 | $ | 40,734 | $ | (82,940 | ) | $ | (9,430 | ) | |||||
| Net income (loss) attributable to common shareholders – Basic | $ | 30,384 | $ | 40,734 | $ | (82,940 | ) | $ | (9,430 | ) | |||||
| Impact of if-converted securities | - | (4,348 | ) | - | - | ||||||||||
| Net income (loss) attributable to common shareholders – Diluted | $ | 30,384 | $ | 36,386 | $ | (82,940 | ) | $ | (9,430 | ) | |||||
| Weighted average number of common shares outstanding: | |||||||||||||||
| Basic | 236,547 | 235,818 | 236,401 | 235,567 | |||||||||||
| Diluted | 236,547 | 273,020 | 236,401 | 235,567 | |||||||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.13 | $ | 0.17 | $ | (0.35 | ) | $ | (0.04 | ) | |||||
| Diluted | $ | 0.13 | $ | 0.13 | $ | (0.35 | ) | $ | (0.04 | ) | |||||
| Uniti Group Inc. Consolidated Statements of Cash Flows (In thousands) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (81,749 | ) | $ | (8,122 | ) | ||
| Adjustments to reconcile net (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 310,528 | 292,788 | ||||||
| Amortization of deferred financing costs and debt discount | 18,498 | 18,147 | ||||||
| Loss (gain) on debt extinguishment | 31,187 | (10,754 | ) | |||||
| Interest rate swap termination | - | 9,243 | ||||||
| Deferred income taxes | (68,497 | ) | (28,909 | ) | ||||
| Equity in earnings of unconsolidated entities | (2,662 | ) | (2,371 | ) | ||||
| Distributions of cumulative earnings from unconsolidated entities | 3,964 | 3,969 | ||||||
| Cash paid for interest rate swap settlement | - | (10,413 | ) | |||||
| Straight-line revenues and amortization of below-market lease intangibles | (37,944 | ) | (40,925 | ) | ||||
| Stock-based compensation | 12,491 | 12,751 | ||||||
| Goodwill impairment | 203,998 | 240,500 | ||||||
| Gain on sale of unconsolidated entity | (2,646 | ) | (7,923 | ) | ||||
| Gain on sale of real estate | (2,164 | ) | (433 | ) | ||||
| Gain on sale of operations | - | (176 | ) | |||||
| (Gain) loss on asset disposals | (573 | ) | 898 | |||||
| Accretion of settlement obligation | 10,506 | 11,714 | ||||||
| Other | 701 | (72 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (3,727 | ) | (4,176 | ) | ||||
| Other assets | 15,795 | 15,148 | ||||||
| Accounts payable, accrued expenses and other liabilities | (54,577 | ) | (30,769 | ) | ||||
| Net cash provided by operating activities | 353,129 | 460,115 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (417,002 | ) | (427,567 | ) | ||||
| Proceeds from sale of unconsolidated entity | - | 32,527 | ||||||
| Proceeds from sale of real estate, net of cash | 2,545 | 665 | ||||||
| Proceeds from sale of operations | - | 541 | ||||||
| Proceeds from sale of other equipment | 3,146 | 1,815 | ||||||
| Net cash used in investing activities | (411,311 | ) | (392,019 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of debt | (2,263,662 | ) | (194,043 | ) | ||||
| Proceeds from issuance of notes | 2,600,000 | 306,500 | ||||||
| Dividends paid | (107,405 | ) | (142,950 | ) | ||||
| Payments of settlement payable | (98,022 | ) | - | |||||
| Distributions paid to noncontrolling interests | (48 | ) | (233 | ) | ||||
| Payment for exchange of noncontrolling interest | - | (4,620 | ) | |||||
| Borrowings under revolving credit facility | 506,000 | 180,000 | ||||||
| Payments under revolving credit facility | (486,000 | ) | (192,000 | ) | ||||
| Finance lease payments | (2,262 | ) | (1,193 | ) | ||||
| Payments for financing costs | (26,955 | ) | (9,852 | ) | ||||
| Payments for capped call option | - | (21,149 | ) | |||||
| Payment of settlement of common stock warrant | (56 | ) | (522 | ) | ||||
| Termination of bond hedge | 59 | 1,190 | ||||||
| Costs related to the early repayment of debt | (44,303 | ) | - | |||||
| Employee stock purchase program | 730 | 589 | ||||||
| Payments related to tax withholding for stock-based compensation | (1,433 | ) | (4,913 | ) | ||||
| Net cash provided by (used in) financing activities | 76,643 | (83,196 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 18,461 | (15,100 | ) | |||||
| Cash and cash equivalents at beginning of period | 43,803 | 58,903 | ||||||
| Cash and cash equivalents at end of period | $ | 62,264 | $ | 43,803 | ||||
| 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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income (loss) attributable to common shareholders | $ | 30,384 | $ | 40,734 | $ | (82,940 | ) | $ | (9,430 | ) | ||||||
| Real estate depreciation and amortization | 56,132 | 54,456 | 221,115 | 211,892 | ||||||||||||
| Gain on sale of real estate | (740 | ) | (89 | ) | (2,164 | ) | (433 | ) | ||||||||
| Participating securities share in earnings | 317 | 238 | 1,207 | 1,135 | ||||||||||||
| Participating securities share in FFO | (766 | ) | (557 | ) | (2,064 | ) | (2,345 | ) | ||||||||
| Real estate depreciation and amortization from unconsolidated entities | 435 | 435 | 1,740 | 2,366 | ||||||||||||
| Adjustments for noncontrolling interests | (26 | ) | (25 | ) | (100 | ) | (260 | ) | ||||||||
| FFO attributable to common shareholders | 85,736 | 95,192 | 136,794 | 202,925 | ||||||||||||
| Transaction related and other costs | 2,806 | 3,016 | 12,611 | 10,340 | ||||||||||||
| Amortization of deferred financing costs and debt discount | 4,523 | 4,637 | 18,498 | 18,147 | ||||||||||||
| Write off of deferred financing costs and debt discount | - | 2,330 | 10,412 | 2,330 | ||||||||||||
| Gain on extinguishment of debt | - | (13,084 | ) | (1,269 | ) | (13,084 | ) | |||||||||
| Costs related to the early repayment of debt | - | - | 51,997 | - | ||||||||||||
| Stock based compensation | 3,083 | 3,087 | 12,491 | 12,751 | ||||||||||||
| Gain on sale of unconsolidated entity, net of tax | (2,476 | ) | - | (2,476 | ) | (1,212 | ) | |||||||||
| Gain on sale of operations | - | - | - | (176 | ) | |||||||||||
| Non-real estate depreciation and amortization | 23,016 | 21,055 | 89,413 | 80,896 | ||||||||||||
| Goodwill impairment, net of tax | - | 18,238 | 151,856 | 223,903 | ||||||||||||
| Straight-line revenues and amortization of below-market lease intangibles | (9,149 | ) | (9,859 | ) | (37,944 | ) | (40,925 | ) | ||||||||
| Maintenance capital expenditures | (1,624 | ) | (2,864 | ) | (6,962 | ) | (10,000 | ) | ||||||||
| Other, net | (14,671 | ) | (6,761 | ) | (51,337 | ) | (31,838 | ) | ||||||||
| Adjustments for equity in earnings from unconsolidated entities | 320 | 320 | 1,280 | 1,207 | ||||||||||||
| Adjustments for noncontrolling interests | (3 | ) | (9 | ) | (112 | ) | (146 | ) | ||||||||
| AFFO attributable to common shareholders | $ | 91,561 | $ | 115,298 | $ | 385,252 | $ | 455,118 | ||||||||
| Reconciliation of Diluted FFO and AFFO: | ||||||||||||||||
| FFO Attributable to common shareholders – Basic | $ | 85,736 | $ | 95,192 | $ | 136,794 | $ | 202,925 | ||||||||
| Impact of if-converted dilutive securities | 7,011 | (4,068 | ) | 27,269 | 4,932 | |||||||||||
| FFO Attributable to common shareholders – Diluted | $ | 92,747 | $ | 91,124 | $ | 164,063 | $ | 207,857 | ||||||||
| AFFO Attributable to common shareholders – Basic | $ | 91,561 | $ | 115,298 | $ | 385,252 | $ | 455,118 | ||||||||
| Impact of if-converted dilutive securities | 6,976 | 4,249 | 28,038 | 14,599 | ||||||||||||
| AFFO Attributable to common shareholders – Diluted | $ | 98,537 | $ | 119,547 | $ | 413,290 | $ | 469,717 | ||||||||
| Weighted average common shares used to calculate basic earnings per common share (1) | 236,547 | 235,818 | 236,401 | 236,567 | ||||||||||||
| Impact of dilutive non-participating securities | - | 39 | - | - | ||||||||||||
| Impact of if-converted dilutive securities | 53,401 | 37,163 | 53,701 | 33,473 | ||||||||||||
| Weighted average common shares used to calculate diluted FFO and AFFO per common share(1) | 289,948 | 273,020 | 290,102 | 269,040 | ||||||||||||
| Per diluted common share: | ||||||||||||||||
| EPS | $ | 0.13 | $ | 0.13 | $ | (0.35 | ) | $ | (0.04 | ) | ||||||
| FFO | $ | 0.32 | $ | 0.33 | $ | 0.57 | $ | 0.77 | ||||||||
| AFFO | $ | 0.34 | $ | 0.44 | $ | 1.42 | $ | 1.75 | ||||||||
________________________
| (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 December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) | $ | 30,720 | $ | 40,995 | $ | (81,749 | ) | $ | (8,122 | ) | ||||||
| Depreciation and amortization | 79,149 | 75,512 | 310,528 | 292,788 | ||||||||||||
| Interest expense, net | 123,106 | 86,552 | 512,349 | 376,832 | ||||||||||||
| Income tax benefit | (5,575 | ) | (7,182 | ) | (68,474 | ) | (17,365 | ) | ||||||||
| EBITDA | $ | 227,400 | $ | 195,877 | $ | 672,654 | $ | 644,133 | ||||||||
| Stock-based compensation | 3,083 | 3,087 | 12,491 | 12,751 | ||||||||||||
| Transaction related and other costs | 2,806 | 3,016 | 12,611 | 10,340 | ||||||||||||
| Goodwill impairment | - | 24,500 | 203,998 | 240,500 | ||||||||||||
| Gain on sale of operations | - | - | - | (176 | ) | |||||||||||
| Gain on sale of real estate | (740 | ) | (89 | ) | (2,164 | ) | (433 | ) | ||||||||
| Other, net | (2,180 | ) | 1,744 | 20,893 | (4,790 | ) | ||||||||||
| Adjustments for equity in earnings from unconsolidated entities | 755 | 755 | 3,019 | 3,571 | ||||||||||||
| Adjusted EBITDA | $ | 231,124 | $ | 228,890 | $ | 923,502 | $ | 905,896 | ||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Uniti Leasing | $ | 209,478 | $ | 203,496 | $ | 829,557 | $ | 806,027 | ||||||||
| Uniti Fiber | 27,011 | 31,733 | 115,723 | 125,361 | ||||||||||||
| Corporate | (5,365 | ) | (6,339 | ) | (21,778 | ) | (25,492 | ) | ||||||||
| $ | 231,124 | $ | 228,890 | $ | 923,502 | $ | 905,896 | |||||||||
| Annualized Adjusted EBITDA (1) | $ | 924,496 | ||||||||||||||
| As of December 31, 2023: | ||||||||||||||||
| Total Debt (2) | $ | 5,635,552 | ||||||||||||||
| Cash and cash equivalents | 62,264 | |||||||||||||||
| Net Debt | $ | 5,573,288 | ||||||||||||||
| Net Debt/Annualized Adjusted EBITDA | 6.03x | |||||||||||||||
________________________
| (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 |
| Uniti Group Inc. Projected Future Results (1) (In millions) | |||
| Year Ended December 31, 2024 | |||
| Net income attributable to common shareholders – Basic | |||
| Participating securities’ share in earnings | 1 | ||
| Net income (2) | 108 to 128 | ||
| Interest expense, net (3) | 500 | ||
| Depreciation and amortization | 315 | ||
| Income tax benefit | (9) | ||
| EBITDA (2) | 914 to 934 | ||
| Stock-based compensation | 13 | ||
| Transaction related and other costs (4) | 3 | ||
| Adjusted EBITDA (2) | |||
________________________
| (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 not mentioned herein are not included in our current outlook. |
| Uniti Group Inc. Projected Future Results (1) (Per Diluted Share) | ||
| Year Ended December 31, 2024 | ||
| Net income attributable to common shareholders – Basic | ||
| Real estate depreciation and amortization | 0.96 | |
| FFO attributable to common shareholders – Basic (2) | ||
| Impact of if-converted securities | (0.16) | |
| FFO attributable to common shareholders – Diluted (2) | ||
| FFO attributable to common shareholders – Basic (2) | ||
| Amortization of deferred financing costs and debt discount | 0.08 | |
| Accretion of settlement payable (3) | 0.03 | |
| Stock-based compensation | 0.06 | |
| Non-real estate depreciation and amortization | 0.37 | |
| Straight-line revenues | (0.13) | |
| Maintenance capital expenditures | (0.03) | |
| Other, net | (0.24) | |
| AFFO attributable to common shareholders – Basic (2) | ||
| Impact of if-converted securities | (0.16) | |
| AFFO attributable to common shareholders – Diluted (2) | ||
________________________
| (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) | 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 |
| Uniti Group Inc. Components of Projected Interest Expense (1) (In millions) | |||
| Year Ended December 31, 2024 | |||
| Interest expense on debt obligations | $ | 476 | |
| Accretion of Windstream settlement payable | 6 | ||
| Amortization of deferred financing cost and debt discounts | 18 | ||
| Interest expense, net (2) | $ | 500 | |
________________________
| (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 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, 251-662-1512
Senior Vice President, Chief Financial Officer & Treasurer
paul.bullington@uniti.com
Bill DiTullio, 501-850-0872
Vice President, Investor Relations & Treasury
bill.ditullio@uniti.com
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