Reiterates 2023 Outlook for Revenue, Adjusted EBITDA and AFFO
- Net Income of $25.6 Million or $0.11 Per Diluted Common Share for the Second Quarter
- AFFO Per Diluted Common Share of $0.34 for the Second Quarter
LITTLE ROCK, Ark., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Uniti Group Inc. (“Uniti” or the “Company”) ( UNIT) today announced its results for the second quarter 2023.
“We continue to see robust demand for our fiber infrastructure, highlighted by $0.75 million of consolidated bookings during the quarter, a 20% increase from the prior quarter. Our consolidated core recurring revenue also showed continued resiliency with 4% growth during the quarter when compared to the same quarter in the prior year,” commented President and Chief Executive Officer, Kenny Gunderman.
Mr. Gunderman continued, “As the second largest independent fiber provider in the country with a network spanning 138,000 route miles, Uniti is uniquely positioned to capitalize on all of the growing use cases of fiber, including mobile broadband, fixed wireless, fiber-to-the-home, small cells, fiber-to-the-tower, and hyperscaler connectivity. We see limited competitive threats to our infrastructure and a long runway of profitable growth.”
QUARTERLY RESULTS
Consolidated revenues for the second quarter of 2023 were $283.7 million. Net income and Adjusted EBITDA were $25.6 million and $228.2 million, respectively, for the same period, achieving Adjusted EBITDA margins of approximately 80%. Net income attributable to common shares was $25.3 million for the period. Adjusted Funds From Operations (“AFFO”) attributable to common shareholders was $91.0 million, or $0.34 per diluted common share.
Uniti Fiber contributed $71.2 million of revenues and $25.2 million of Adjusted EBITDA for the second quarter of 2023. Revenue during the quarter was impacted by lower than expected non-recurring revenue related to equipment sales and installs and ETL fees. However, core recurring revenue grew approximately 5% during the quarter compared to the second quarter in the prior year. Uniti Fiber’s net success-based capital expenditures during the quarter were $31.2 million.
Uniti Leasing contributed revenues of $212.5 million and Adjusted EBITDA of $206.6 million for the second quarter. During the quarter, Uniti Leasing deployed capital expenditures of $96.3 million primarily related to the construction of approximately 1,600 new route miles of valuable fiber infrastructure.
LIQUIDITY
At quarter-end, the Company had approximately $452.1 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 6.00x based on net debt to second quarter 2023 annualized Adjusted EBITDA.
On July 28, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on September 22, 2023, to stockholders of record on September 8, 2023.
UPDATED FULL YEAR 2023 OUTLOOK
The Company is updating its 2023 outlook primarily for transaction related and other costs incurred to date. Our 2023 outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not mentioned herein.
The Company’s consolidated outlook for 2023 is as follows (in millions):
| Full Year 2023 | |||||
| Revenue | $ | 1,154 | to | $ | 1,174 |
| Net income attributable to common shareholders | 56 | to | 76 | ||
| Adjusted EBITDA (1) | 915 | to | 935 | ||
| Interest expense, net (2) | 517 | to | 517 | ||
| Attributable to common shareholders: | |||||
| FFO (1) | 276 | to | 296 | ||
| AFFO (1) | 373 | to | 393 | ||
| Weighted-average common shares outstanding – diluted | 290 | to | 290 | ||
| ________________________ | |||||
| (1) See “Non-GAAP Financial Measures” below. (2) See “Components of Interest Expense” below. | |||||
CONFERENCE CALL
Uniti will hold a conference call today to discuss this earnings release at 8:30 AM Eastern Time (7:30 AM Central Time). The conference call will be webcast live on Uniti’s Investor Relations website at investor.uniti.com. Those parties interested in participating via telephone may register on the Company’s Investor Relations website or by clicking here. A replay of the call will be available on the Investor Relations website beginning today at approximately 12:00 PM Eastern Time.
ABOUT UNITI
Uniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of fiber and other wireless solutions for the communications industry. As of June 30, 2023, Uniti owns approximately 138,000 fiber route miles, 8.3 million fiber strand miles, and other communications real estate throughout the United States. Additional information about Uniti can be found on its website at www.uniti.com.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release and today’s conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended from time to time. Those forward-looking statements include all statements that are not historical statements of fact, including, without limitation, our 2023 financial outlook, expectations regarding bookings, installs and strong demand trends, our business strategies, growth prospects, our ability to sustain difficult economic conditions, industry trends, sales opportunities, and operating and financial performance.
Words such as "anticipate(s)," "expect(s)," "intend(s)," “estimate(s),” “foresee(s),” "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could materially alter our expectations include, but are not limited to, the future prospects of Windstream, our largest customer; the ability and willingness of our customers to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant; the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms; the risk that we fail to fully realize the potential benefits of acquisitions or have difficulty integrating acquired companies; our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments; our ability to access debt and equity capital markets; the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates; our ability to retain our key management personnel; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to real estate investment trusts; covenants in our debt agreements that may limit our operational flexibility; 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) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Assets: | ||||||||
| Property, plant and equipment, net | $ | 3,895,206 | $ | 3,754,547 | ||||
| Cash and cash equivalents | 38,145 | 43,803 | ||||||
| Accounts receivable, net | 43,021 | 42,631 | ||||||
| Goodwill | 361,378 | 361,378 | ||||||
| Intangible assets, net | 319,967 | 334,846 | ||||||
| Straight-line revenue receivable | 81,415 | 68,595 | ||||||
| Operating lease right-of-use assets, net | 124,060 | 88,545 | ||||||
| Other assets | 84,695 | 77,597 | ||||||
| Investment in unconsolidated entities | 38,006 | 38,656 | ||||||
| Deferred income tax assets, net | 48,677 | 40,631 | ||||||
| Total Assets | $ | 5,034,570 | $ | 4,851,229 | ||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Liabilities: | ||||||||
| Accounts payable, accrued expenses and other liabilities | $ | 135,378 | $ | 122,195 | ||||
| Settlement payable | 207,863 | 251,098 | ||||||
| Intangible liabilities, net | 161,745 | 167,092 | ||||||
| Accrued interest payable | 156,558 | 121,316 | ||||||
| Deferred revenue | 1,213,633 | 1,190,041 | ||||||
| Dividends payable | 69 | 2 | ||||||
| Operating lease liabilities | 82,151 | 66,356 | ||||||
| Finance lease obligations | 15,881 | 15,520 | ||||||
| Notes and other debt, net | 5,392,536 | 5,188,815 | ||||||
| Total Liabilities | 7,365,814 | 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: 236,431 shares at June 30, 2023 and 235,829 shares at December 31, 2022 | 24 | 24 | ||||||
| Additional paid-in capital | 1,215,260 | 1,210,033 | ||||||
| Distributions in excess of accumulated earnings | (3,548,870 | ) | (3,483,634 | ) | ||||
| Total Uniti shareholders’ deficit | (2,333,586 | ) | (2,273,577 | ) | ||||
| Noncontrolling interests – operating partnership units and non-voting convertible preferred stock | 2,342 | 2,371 | ||||||
| Total shareholders’ deficit | (2,331,244 | ) | (2,271,206 | ) | ||||
| Total Liabilities and Shareholders’ Deficit | $ | 5,034,570 | $ | 4,851,229 | ||||
| Uniti Group Inc. Consolidated Statements of Operations (In thousands, except per share data) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | |||||||||||||||
| Uniti Leasing | $ | 212,453 | $ | 205,614 | $ | 423,261 | $ | 410,255 | |||||||
| Uniti Fiber | 71,245 | 78,361 | 150,259 | 151,754 | |||||||||||
| Total revenues | 283,698 | 283,975 | 573,520 | 562,009 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Interest expense, net | 119,689 | 96,377 | 268,552 | 192,549 | |||||||||||
| Depreciation and amortization | 77,267 | 72,303 | 154,042 | 143,760 | |||||||||||
| General and administrative expense | 23,417 | 25,085 | 51,850 | 48,955 | |||||||||||
| Operating expense (exclusive of depreciation and amortization) | 37,418 | 36,917 | 72,486 | 71,893 | |||||||||||
| Transaction related and other costs | 5,576 | 3,235 | 8,364 | 4,949 | |||||||||||
| Gain on sale of real estate | - | (250 | ) | - | (250 | ) | |||||||||
| Other (income) expense, net | (291 | ) | (7,930 | ) | 19,888 | (8,328 | ) | ||||||||
| Total costs and expenses | 263,076 | 225,737 | 575,182 | 453,528 | |||||||||||
| Income (loss) before income taxes and equity in earnings from unconsolidated entities | 20,622 | 58,238 | (1,662 | ) | 108,481 | ||||||||||
| Income tax (benefit) expense | (4,357 | ) | 4,944 | (6,769 | ) | 2,873 | |||||||||
| Equity in earnings from unconsolidated entities | (659 | ) | (480 | ) | (1,320 | ) | (1,024 | ) | |||||||
| Net income | 25,638 | 53,774 | 6,427 | 106,632 | |||||||||||
| Net income attributable to noncontrolling interests | 12 | 77 | 3 | 205 | |||||||||||
| Net income attributable to shareholders | 25,626 | 53,697 | 6,424 | 106,427 | |||||||||||
| Participating securities’ share in earnings | (322 | ) | (340 | ) | (569 | ) | (671 | ) | |||||||
| Dividends declared on convertible preferred stock | (5 | ) | (5 | ) | (10 | ) | |||||||||
