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Uniti Group Inc. Reports Fourth Quarter and Full Year 2023 Results
Источник: Nasdaq GlobeNewswire / 29 фев 2024 08:00:05 America/New_York
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 5% in 2023 when compared to 2022 and continued declining net success-based capital intensity. Non-recurring revenue was predictably lower in 2023 than in 2022 due to lower ETL fees and one-time low-margin equipment sales, which we have decided to largely exit in 2024. As a result, our full year 2023 Adjusted EBITDA and AFFO results were essentially in-line with our previous full year guidance,” commented President and Chief Executive Officer, Kenny Gunderman.
Mr. Gunderman continued, “Despite a challenging economic backdrop, Uniti successfully fully financed its current business plan by refinancing $3.1 billion of its outstanding debt in 2023, while also raising up to $437 million of additional capital through the ABS bridge financing and recent non-core asset sales at premium multiples. These initiatives result in our current business plan being fully funded, no material permanent debt maturities until 2027, and over 95% of our consolidated debt being fixed rate.”
QUARTERLY RESULTS
Consolidated revenues for the fourth quarter of 2023 were $285.7 million. Net income and Adjusted EBITDA were $30.7 million and $231.1 million, respectively, for the same period, achieving Adjusted EBITDA margins of approximately 81%. Net income attributable to common shares was $30.4 million for the period. AFFO attributable to common shareholders was $91.6 million, or $0.34 per diluted common share.
Uniti Fiber contributed $70.7 million of revenues and $27.0 million of Adjusted EBITDA for the fourth quarter of 2023, achieving Adjusted EBITDA margins of approximately 38%. Uniti Fiber’s net success-based capital expenditures during the quarter were $20.7 million.
Uniti Leasing contributed revenues of $214.9 million and Adjusted EBITDA of $209.5 million for the fourth quarter. During the quarter, Uniti Leasing deployed capital expenditures of $23.1 million.
FULL YEAR RESULTS
Consolidated revenues for the year ended December 31, 2023 were $1.1 billion. Net loss and Adjusted EBITDA were $81.7 million and $923.5 million, respectively, for the same period. Net loss attributable to common shares was $82.9 million for the period, and included a $204.0 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 $385.3 million, or $1.42 per diluted common share.
Uniti Fiber contributed $297.1 million of revenues and $115.7 million of Adjusted EBITDA for the full year of 2023, achieving Adjusted EBITDA margins of approximately 39%. Uniti Fiber’s net success-based capital expenditures for the full year of 2023 were $118.3 million.
Uniti Leasing contributed revenues of $852.8 million and Adjusted EBITDA of $829.6 million for the full year of 2023. For the full year of 2023, Uniti Leasing deployed capital expenditures of $277.2 million primarily related to the construction of approximately 4,100 new route miles of valuable fiber infrastructure.
FINANCING TRANSACTIONS
On February 26th, Uniti announced that it had entered into an asset-backed Bridge Loan and Security Agreement for up to $350 million of borrowings pursuant to a multi-draw term loan facility (the “ABS Facility”) through an indirect, bankruptcy remote subsidiary of the Company. Borrowings under the ABS Facility will bear interest at an initial rate equal to Term SOFR for the applicable interest period plus an applicable margin of 3.75%, subject to customary step-ups in the applicable margin based on how long the ABS Facility remains outstanding. The ABS Facility will mature 18 months from the initial draw date and is subject to customary covenants.
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 $87 million.
LIQUIDITY
At year-end, the Company had approximately $354.3 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 6.03x based on net debt to fourth quarter 2023 annualized Adjusted EBITDA.
On February 22, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on April 12, 2024, to stockholders of record on March 28, 2024.
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 4.00% exchangeable notes due June 2024. Our outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not mentioned herein.
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,
2023December 31,
2022Assets: 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, $ 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: 236,559 shares at December 31, 2023 and 235,829 shares at December 31, 202224 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 $18.1 million of finance leases, but excludes $93.9 million of unamortized discounts and deferred financing costs. Uniti Group Inc.
Projected Future Results (1)
(In millions)Year Ended
December 31, 2024Net income attributable to common shareholders – Basic $ 107 to $ 127 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) $ 930 to $ 950 ________________________
(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, 2024Net income attributable to common shareholders – Basic $ 0.45 to $ 0.53 Real estate depreciation and amortization 0.96 FFO attributable to common shareholders – Basic (2) $ 1.41 to $ 1.49 Impact of if-converted securities (0.16) FFO attributable to common shareholders – Diluted (2) $ 1.25 to $ 1.32 FFO attributable to common shareholders – Basic (2) $ 1.41 to $ 1.49 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) $ 1.54 to $ 1.62 Impact of if-converted securities (0.16) 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) 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, 2024Interest 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.comBill DiTullio, 501-850-0872
Vice President, Investor Relations & Treasury
bill.ditullio@uniti.com
