Uniti Group Inc. Reports Third Quarter 2024 Results

Third Quarter Consolidated Bookings Monthly Recurring Revenue of $0.9 Million Increased Over 20% From Prior Year

Updates 2024 Outlook

Net Income of $12.2 Million for the Third Quarter

Net Income of $0.05 Per Diluted Common Share for the Third Quarter

AFFO of $0.33 Per Diluted Common Share for the Third Quarter

LITTLE ROCK, Ark., Oct. 31, 2024 (GLOBE NEWSWIRE) -- Uniti Group Inc. ("Uniti" or the "Company") (NASDAQ:UNIT) today announced its results for the third quarter 2024.

"We continue to see solid demand for our mission critical fiber infrastructure at Uniti with consolidated bookings of nearly $1 million in monthly recurring revenue during the quarter. Demand from our Hyperscaler customers also remains strong as we recently announced a long-term award in Montgomery, AL that will add fiber in a strategic market for Uniti that will be available for lease-up," commented President and Chief Executive Officer, Kenny Gunderman.

Mr. Gunderman continued, "Turning to our transformational merger with Windstream that we announced earlier this year, we continue to make significant progress and remain on track to close the merger by the second half of 2025. Through the recent credit agreement amendments and successful refinancing activity at Windstream, we now have a clear path to collapsing the dual debt silos of Uniti and Windstream upon closing of the merger, thus greatly simplifying the capital structure of the combined company. Finally, Windstream now has the capital on-hand to accelerate Kinetic's fiber-to-the-home buildout, further strengthening its position within the residential fiber market."

QUARTERLY RESULTS

Consolidated revenues for the third quarter of 2024 were $292.2 million. Net income and Adjusted EBITDA were $12.2 million and $235.3 million, respectively, for the same period, achieving Adjusted EBITDA margins of approximately 81%. Net income attributable to common shares was $11.9 million for the period. AFFO attributable to common shareholders was $87.1 million, or $0.33 per diluted common share.

Uniti Fiber contributed $69.3 million of revenues and $25.6 million of Adjusted EBITDA for the third quarter of 2024. Uniti Fiber's net success-based capital expenditures during the quarter were $26.2 million.

Uniti Leasing contributed revenues of $222.9 million and Adjusted EBITDA of $215.2 million for the third quarter. During the quarter, Uniti Leasing deployed capital expenditures of $35.5 million, including $34.2 million of GCI capex.

LIQUIDITY

At quarter-end, the Company had approximately $529.1 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 6.05x based on net debt to third quarter 2024 annualized Adjusted EBITDA, excluding the debt and the net contributions from the ABS loan facility.

UPDATED FULL YEAR 2024 OUTLOOK

The Company is updating its 2024 outlook primarily for business unit level revisions, and transaction related and other costs incurred to date. Our outlook excludes any impact from the expected merger with Windstream, 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

$

1,157

 

to

$

1,177

 

Net income attributable to common shareholders

 

88

 

to

 

108

 

Adjusted EBITDA (1)

 

930

 

to

 

950

 

Interest expense, net (2)

 

514

 

to

 

514

 

 

 

 

 

 

 

 

 

Attributable to common shareholders:

 

 

 

 

 

 

 

FFO (1)

 

290

 

to

 

310

 

AFFO (1)

 

351

 

to

 

371

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, diluted

 

285

 

to

 

285

 

________________________

 

 

 

 

 

 

 

(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 also be made available on the Investor Relations website.

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 September 30, 2024, Uniti owns approximately 144,000 fiber route miles, 8.7 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.

NO OFFER OR SOLICITATION

This communication and the information contained in it are provided for information purposes only and are not intended to be and shall not constitute a solicitation of any vote or approval, or an offer to sell or solicitation of an offer to buy, or an invitation or recommendation to subscribe for, acquire or buy securities of Uniti, Windstream Holdings II ("Windstream") or Windstream Parent, Inc., the proposed combined company following the closing of the Merger (as defined below) ("New Uniti") or any other financial products or securities, in any place or jurisdiction, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made in the United States absent registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the contemplated merger (the "Merger"), New Uniti has filed a registration statement on Form S-4 with the SEC that contains a proxy statement/prospectus and other documents, which has not yet become effective. Once effective, Uniti will mail the proxy statement/prospectus contained in the Form S-4 to its stockholders. This communication is not a substitute for any registration statement, proxy statement/prospectus or other documents that may be filed with the SEC in connection with the Merger.

THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER CONTAINS IMPORTANT INFORMATION ABOUT UNITI, WINDSTREAM, NEW UNITI, THE MERGER AND RELATED MATTERS. INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THE PROXY STATEMENT/PROSPECTUS AND SUCH DOCUMENTS, BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE MERGER. The proxy statement/prospectus, any amendments or supplements thereto and all other documents filed with the SEC in connection with the Merger will be available free of charge on the SEC's website (at www.sec.gov). Copies of documents filed with the SEC by Uniti will be made available free of charge on Uniti's investor relations website (at https://investor.uniti.com/financial-information/sec-filings).

PARTICIPANTS IN THE SOLICITATION

Uniti, Windstream and their respective directors and certain of their executive officers and other employees may be deemed to be participants in the solicitation of proxies from Uniti's stockholders in connection with the Merger. Information about Uniti's directors and executive officers is set forth in the sections titled "Proposal No. 1 Election of Directors" and "Security Ownership of Certain Beneficial Owners and Management" included in Uniti's proxy statement for its 2024 annual meeting of stockholders, which was filed with the SEC on April 11, 2024 (and which is available at https://www.sec.gov/Archives/edgar/data/1620280/000110465924046100/0001104659-24-046100-index.htm), the section titled "Directors, Executive Officers and Corporate Governance" included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 29, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1620280/000162828024008054/unit-20231231.htm), and subsequent statements of beneficial ownership on file with the SEC and other filings made from time to time with the SEC. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Uniti stockholders in connection with the Merger, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the proxy statement/prospectus and other relevant materials filed by New Uniti with the SEC. These documents can be obtained free of charge from the sources indicated above.

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 lease-up of our network, strong demand trends, business strategies, growth prospects, and statements regarding our merger with Windstream and potential synergies, cost savings and the future performance of New Uniti (together with Windstream and Uniti, the "Merged Group"). In addition, this communication contains statements concerning the intentions, beliefs and expectations, plans, strategies and objectives of the directors and management of Uniti and Windstream for Uniti and Windstream, respectively, and the Merged Group, the anticipated timing for and outcome and effects of the Merger (including expected benefits to shareholders of Uniti), expectations for the final capital structure, ongoing development and growth potential of the Merged Group and the future operation of Uniti, Windstream and the Merged Group.

Words such as "anticipate(s)," "expect(s)," "intend(s)," "estimate(s)," "foresee(s)," "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)," "appear(s)," "target(s)," "project(s)," "contemplate(s)," "predict(s)," "potential," "continue(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; the satisfaction of the conditions precedent to the consummation of the Merger, including, without limitation, the receipt of shareholder and regulatory approvals on the terms desired or anticipated; unanticipated difficulties or expenditures relating to the Merger, including, without limitation, difficulties that result in the failure to realize expected synergies, efficiencies and cost savings from the Merger within the expected time period (if at all); potential difficulties in Uniti's and Windstream's ability to retain employees as a result of the announcement and pendency of the Merger; risks relating to the value of New Uniti's securities to be issued in connection with the Merger; disruptions of Uniti's and Windstream's current plans, operations and relationships with customers caused by the announcement and pendency of the Merger; legal proceedings that may be instituted against Uniti or Windstream following announcement of the Merger; funding requirements; regulatory restrictions (including changes in regulatory restrictions or regulatory policy); and additional factors described in our reports filed with the SEC.

There can be no assurance that the Merger will be implemented or that plans of the respective directors and management of Uniti and Windstream for the Merged Group will proceed as currently expected or will ultimately be successful. Investors are strongly cautioned not to place undue reliance on forward-looking statements, including in respect of the financial or operating outlook for Uniti, Windstream or the Merged Group (including the realization of any cost savings or expected synergies). See also "Additional Information and Where to Find it."

All forward-looking statements are based on information and estimates available at the time of this communication and are not guarantees of future performance.

Except as required by applicable law, Uniti does not assume any obligation to, and expressly disclaims any duty to, provide any additional or updated information or to update any forward-looking statements, whether as a result of new information, future events or results, or otherwise. Nothing in this communication will, under any circumstances (including by reason of this communication remaining available and not being superseded or replaced by any other presentation or publication with respect to Uniti, Windstream or the Merged Group, or the subject matter of this communication), create an implication that there has been no change in the affairs of Uniti or Windstream since the date of this communication.

NON-GAAP PRESENTATION

This release and today's conference call contain certain supplemental measures of performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP"). Such measures should not be considered as alternatives to GAAP. Further information with respect to and reconciliations of such measures to the nearest GAAP measure can be found herein.

Uniti Group Inc.Consolidated Balance Sheets(In thousands, except per share data)

 

 

September 30, 2024

 

December 31,2023

Assets:

 

 

 

Property, plant and equipment, net

$

4,156,542

 

 

$

3,982,069

 

Cash and cash equivalents

 

34,077

 

 

 

62,264

 

Restricted cash and cash equivalents

 

19,311

 

 

 

—

 

Accounts receivable, net

 

51,604

 

 

 

46,358

 

Goodwill

 

157,380

 

 

 

157,380

 

Intangible assets, net

 

282,839

 

 

 

305,115

 

Straight-line revenue receivable

 

105,823

 

 

 

90,988

 

Operating lease right-of-use assets, net

 

126,791

 

 

 

125,105

 

Other assets

 

39,996

 

 

 

118,117

 

Deferred income tax assets, net

 

124,077

 

 

 

109,128

 

Assets held for sale

 

—

 

 

 

28,605

 

Derivative asset

 

231

 

 

 

—

 

Total Assets

$

5,098,671

 

 

$

5,025,129

 

 

 

 

 

 

 

Liabilities and Shareholders' Deficit

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

$

95,844

 

 

$

119,340

 

Settlement payable

 

95,147

 

 

 

163,583

 

Intangible liabilities, net

 

148,377

 

 

 

156,397

 

Accrued interest payable

 

56,562

 

 

 

133,683

 

Deferred revenue

 

1,299,759

 

 

 

1,273,661

 

Dividends payable

 

2

 

 

 

36,162

 

Operating lease liabilities

 

78,785

 

 

 

84,404

 

Finance lease obligations

 

17,869

 

 

 

18,110

 

Notes and other debt, net

 

5,782,633

 

 

 

5,523,579

 

Liabilities held for sale

 

—

 

 

 

331

 

Total liabilities

 

7,574,978

 

 

 

7,509,250

 

 

 

 

 

 

 

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: 237,488 shares at September 30, 2024 and 236,559 shares at December 31, 2023

 

24

 

 

 

24

 

Additional paid-in capital

 

1,232,228

 

 

 

1,221,824

 

Accumulated other comprehensive loss

 

(820

)

 

 

—

 

Distributions in excess of accumulated earnings

 

(3,708,705

)

 

 

(3,708,240

)

Total Uniti shareholders' deficit

 

(2,477,273

)

 

 

(2,486,392

)

Noncontrolling interests, operating partnership units and non-voting convertible preferred stock

 

966

 

 

 

2,271

 

Total shareholders' deficit

 

(2,476,307

)

 

 

(2,484,121

)

Total Liabilities and Shareholders' Deficit

$

5,098,671

 

 

$

5,025,129

 

 

 

 

 

 

 

Uniti Group Inc.Consolidated Statements of Operations(In thousands, except per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Uniti Leasing

$

222,922

 

 

$

214,588

 

 

$

658,829

 

 

$

637,849

 

Uniti Fiber

 

69,325

 

 

 

76,067

 

 

 

214,783

 

 

 

226,326

 

Total revenues

 

292,247

 

 

 

290,655

 

 

 

873,612

 

 

 

864,175

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

131,007

 

 

 

120,691

 

 

 

381,693

 

 

 

389,243

 

Depreciation and amortization

 

79,325

 

 

 

77,337

 

 

 

234,862

 

 

 

231,379

 

General and administrative expense

 

26,697

 

 

 

25,481

 

 

 

80,546

 

 

 

77,331

 

Operating expense (exclusive of depreciation and amortization)

 

34,519

 

 

 

37,392

 

 

 

106,753

 

 

 

109,878

 

Transaction related and other costs

 

14,404

 

 

 

1,441

 

 

 

31,068

 

 

 

9,805

 

Gain on sale of real estate

 

—

 

 

 

(1,424

)

 

 

(18,999

)

 

 

(1,424

)

Goodwill impairment

 

—

 

 

 

203,998

 

 

 

—

 

 

 

203,998

 

Other expense (income), net

 

—

 

 

 

1,435

 

 

 

(301

)

 

 

21,323

 

Total costs and expenses

 

285,952

 

 

 

466,351

 

 

 

815,622

 

 

 

1,041,533

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes and equity in earnings from unconsolidated entities

 

6,295

 

 

 

(175,696

)

 

 

57,990

 

 

 

(177,358

)