Investors

Uniti Group Inc. Provides 2022 Outlook and Reports Fourth Quarter and Full Year 2021 Results

News & Events

Back to
News & Events
02/25/22

Uniti Group Inc. Provides 2022 Outlook and Reports Fourth Quarter and Full Year 2021 Results

Third Consecutive Quarter of Consolidated Bookings of ~$1 Million in Monthly Recurring Revenue
  • Net Income of $0.15 and $0.51 Per Diluted Common Share for the Fourth Quarter and Full Year
  • Adjusted EBITDA and AFFO Grew 7% and 10% for the Full Year, Respectively, from the Prior Full Year
  • AFFO Per Diluted Common Share of $0.44 and $1.68 for the Fourth Quarter and Full Year
  • Introduces 2022 Outlook

LITTLE ROCK, Ark., Feb. 25, 2022 (GLOBE NEWSWIRE) -- Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today announced its results for the fourth quarter and full year 2021.

“Our national network of 128,000 route miles of fiber is one of the largest and most robust in the country. We added nearly 6,000 route miles of valuable fiber in 2021 and capped off a terrific year of performance by adding $3.5 million of new consolidated bookings, a 40% increase over 2020,” commented Kenny Gunderman, President and Chief Executive Officer.

Mr. Gunderman continued, “Trends in the communications infrastructure space have never been better, and Uniti remains uniquely positioned to benefit from the continued proliferation of broadband growth, fiber-to-the-home, small cells and national transport.”

QUARTERLY RESULTS

Consolidated revenues for the fourth quarter of 2021 were $293.0 million. Net income and Adjusted EBITDA were $35.9 million and $231.1 million, respectively, for the same period.   Net income attributable to common shares was $35.6 million for the period. Adjusted Funds From Operations (“AFFO”) attributable to common shareholders was $114.0 million, or $0.44 per diluted common share, an increase of 7% when compared to the fourth quarter of 2020.

Uniti Fiber contributed $82.0 million of revenues and $31.7 million of Adjusted EBITDA for the fourth quarter of 2021, achieving Adjusted EBITDA margins of approximately 39%. Uniti Fiber’s net success-based capital expenditures during the quarter were $33.8 million.

Uniti Leasing contributed revenues of $211.0 million and Adjusted EBITDA of $206.1 million for the fourth quarter, representing growth of 9% and 8%, respectively, when compared to the fourth quarter of 2020. Revenue and Adjusted EBITDA in the fourth quarter both include a one-time non-cash adjustment to straight-line revenue of $8 million.   During the quarter, Uniti Leasing deployed capital expenditures of $70.9 million primarily related to the construction of approximately 1,900 new route miles of valuable fiber infrastructure.

FULL YEAR RESULTS

Consolidated revenues for the year ended December 31, 2021 were $1.1 billion. Net income and Adjusted EBITDA were $124.7 million and $878.3 million, respectively, for the same period. Net income attributable to common shares was $122.6 million for the period. Adjusted Funds From Operations (“AFFO”) attributable to common shareholders was $430.3 million, or $1.68 per diluted common share.

Uniti Fiber contributed $299.0 million of revenues and $118.5 million of Adjusted EBITDA for the full year of 2021, achieving Adjusted EBITDA margins of approximately 40%, up from 36% Adjusted EBITDA margins for the full year of 2020. Uniti Fiber’s net success-based capital expenditures for the full year of 2021 were $136.1 million.

Uniti Leasing contributed revenues of $801.5 million and Adjusted EBITDA of $784.1 million for the full year of 2021, representing growth of 7% and 6%, respectively, when compared to the full year of 2020. For the full year of 2021, Uniti Leasing deployed capital expenditures of $225.7 million primarily related to the construction of approximately 5,500 new route miles of valuable fiber infrastructure.

LIQUIDITY

At year-end, the Company had approximately $419.4 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 5.55x based on net debt to fourth quarter 2021 annualized Adjusted EBITDA.

On February 24, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on April 15, 2022, to stockholders of record on April 1, 2022.

FULL YEAR 2022 OUTLOOK

Our 2022 outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not mentioned herein.

The Company’s consolidated outlook for 2022 is as follows (in millions):

  Full Year 2022    
Revenue $ 1,118 to $ 1,136    
Net income attributable to common shareholders   185 to   203    
Adjusted EBITDA (1)   881 to   899    
Interest expense, net (2)   388 to   388    
               
Attributable to common shareholders:              
FFO (1)   398 to   416    
AFFO (1)   439 to   457    
               
Weighted-average common shares outstanding – diluted   265 to   265    
________________________              
(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 dial-in number for the conference call is (844) 513-7153 (or (508) 637-5603 for international callers) and the conference ID is 3189561. The conference call will be webcast live and can be accessed on the Company’s website at www.uniti.com. A replay of the call will be available on the Company’s website or by telephone beginning today at approximately 12:00 PM Eastern Time. To access the telephone replay, which will be available for 14 days, please dial (855) 859-2056 and enter the conference ID number 3189561.

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, 2021, Uniti owns approximately 128,000 fiber route miles, 7.6 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 2022 financial outlook, expectations regarding strong demand trends, our business strategies, growth prospects, industry trends, sales opportunities, potential transformative corporate transactions, renewal rent, 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 meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements; the ability of our customers to comply with laws, rules and regulations in the operation of the assets we lease to them; 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 adverse impact of litigation affecting us or our customers; our ability to renew, extend or obtain contracts with significant customers (including customers of the businesses we acquire); 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; our ability to qualify or maintain our status as a real estate investment trust (“REIT”); changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; covenants in our debt agreements that may limit our operational flexibility; our expectations regarding the effect of the COVID-19 pandemic on our results of operations and financial condition; 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,
2021
  December 31,
2020
Assets:        
Property, plant and equipment, net   $ 3,508,939     $ 3,273,353  
Cash and cash equivalents     58,903       77,534  
Accounts receivable, net     38,455       62,952  
Goodwill     601,878       601,878  
Intangible assets, net     364,630       390,725  
Straight-line revenue receivable     41,323       13,107  
Other assets, net     119,171       152,883  
Investment in unconsolidated entities     64,223       66,043  
Deferred income tax assets, net     11,721       -  
Assets held for sale     -       93,343  
Total Assets   $ 4,809,243     $ 4,731,818  
             
Liabilities and Shareholders’ Deficit            
Liabilities:            
Accounts payable, accrued expenses and other liabilities, net   $ 144,223     $ 146,144  
Settlement payable     239,384       418,840  
Intangible liabilities, net     177,786       187,886  
Accrued interest payable     109,826       95,338  
Deferred revenue     1,134,236       995,123  
Derivative liability, net     10,413       22,897  
Dividends payable     1,264       36,725  
Deferred income tax liabilities, net     -       10,540  
Finance lease obligations     15,348       15,468  
Contingent consideration     -       2,957  
Notes and other debt, net     5,090,537       4,816,524  
Liabilities held for sale     -       55,752  
Total Liabilities     6,923,017       6,804,194  
             
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: 234,779 shares at December 31, 2021 and 231,262 shares at December 31, 2020
    23       23  
Additional paid-in capital     1,214,830       1,209,141  
Accumulated other comprehensive loss     (9,164 )     (20,367 )
Distributions in excess of accumulated earnings     (3,333,481 )     (3,330,455 )
Total Uniti shareholders’ deficit     (2,127,792 )     (2,141,658 )
Noncontrolling interests – operating partnership units and non-voting convertible preferred stock     14,018       69,282  
Total shareholders’ deficit     (2,113,774 )     (2,072,376 )
Total Liabilities and Shareholders’ Deficit   $ 4,809,243     $ 4,731,818  


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

  Three Months Ended December 31,     Year Ended December 31,
    2021       2020       2021       2020  
Revenues:                      
Leasing $ 211,019     $ 193,873     $ 801,497     $ 745,915  
Fiber Infrastructure   81,990       81,421       299,025       314,363  
Towers   -       -       -       6,112  
Consumer CLEC   -       -       -       651  
Total revenues   293,009       275,294       1,100,522       1,067,041  
                       
Costs and expenses:                      
Interest expense, net   104,534       108,701       446,296       497,128  
Depreciation and amortization   79,777       78,433       290,942       329,403  
General and administrative expense   25,376       23,289       101,176       104,975  
Operating expense (exclusive of depreciation and amortization)   41,433       41,029       146,869       159,337  
Settlement expense   -       -       -       650,000  
Goodwill impairment   -       71,000       -       71,000  
Transaction related and other costs   1,920       8,531       7,544       63,875  
Loss (gain) on sale of real estate   -       459       (442 )     (86,267 )
Gain on sale of operations   -       -       (28,143 )     -  
Other expense (income), net   9,795       (483 )     18,553       11,703  
Total costs and expenses   262,835       330,959       982,795       1,801,154  
                       
Income (loss) before income taxes and equity in earnings from unconsolidated entities   30,174       (55,665 )     117,727       (734,113 )
Income tax benefit   (5,199 )     (7,553 )     (4,916 )     (15,203 )
Equity in earnings from unconsolidated entities   (553 )     (440 )     (2,102 )     (98 )
Net income (loss)   35,926       (47,672 )     124,745       (718,812 )
Net income (loss) attributable to noncontrolling interests   101       (703 )     1,085       (12,511 )
Net income (loss) attributable to shareholders   35,825       (46,969 )     123,660       (706,301 )
Participating securities’ share in earnings   (213 )     (225 )     (1,077 )     (1,078 )
Dividends declared on convertible preferred stock   (2 )     (3 )     (10 )     (9 )
Net income (loss) attributable to common shareholders $ 35,610     $ (47,197 )   $ 122,573     $ (707,388 )
                       
Net income (loss) attributable to common shareholders – Basic $ 35,610     $ (47,197 )   $ 122,573     $ (707,388 )
Income allocated to participating securities   2,989       -       11,926       -  
Net income (loss) attributable to common shareholders – Diluted $ 38,599     $ (47,197 )   $ 134,499     $ (707,388 )
Weighted average number of common shares outstanding:                      
Basic   234,719       231,262       232,888       203,600  
Diluted   266,077       231,262       264,077       203,600  
                       
Earnings (loss) per common share:                      
Basic $ 0.15     $ (0.20 )   $ 0.53     $ (3.47 )
Diluted $ 0.15     $ (0.20 )   $ 0.51     $ (3.47 )
                       


Uniti Group Inc.
Consolidated Statements of Cash Flows
(In thousands)

   

Year Ended December 31,
    2021     2020  
Cash flow from operating activities:        
Net income (loss)   $ 124,745     $ (718,812 )
Adjustments to reconcile net loss to net cash provided by
operating activities:
           
Depreciation and amortization     290,942       329,403  
Amortization of deferred financing costs and debt discount     18,122       36,955  
Loss on extinguishment of debt     49,280       73,952  
Interest rate swap termination     11,317       10,155  
Deferred income taxes     (6,467 )     (13,891 )
Equity in earnings of unconsolidated entities     (2,102 )     (98 )
Distributions of cumulative earnings from unconsolidated entities     3,922       1,960  
Cash paid for interest rate swap settlement     (12,483 )     (7,818 )
Straight-line revenues     (41,239 )     (6,872 )
Stock-based compensation     13,847       13,721  
Change in fair value of contingent consideration     21       7,163  
Goodwill impairment     -       71,000  
Gain on prepayment of settlement payable     (5,432 )     -  
Gain on sale of real estate     (442 )     (86,267 )
Gain on sale of operations     (28,143 )     -  
(Gain) loss on asset disposals     (213 )     1,796  
Accretion of settlement payable     16,901       -  
Other     124       (297 )
Changes in assets and liabilities, net of acquisitions:            
Accounts receivable     24,497       12,634  
Other assets     14,161       (24,141 )
Accounts payable, accrued expenses and other liabilities     27,799       37,850  
Settlement payable     -       418,840  
Net cash provided by operating activities     499,157       157,233  
             
Cash flows from investing activities:            
Other capital expenditures     (385,855 )     (317,084 )
Proceeds from sale of real estate, net of cash     1,034       391,885  
Proceeds from sale of operations     62,113       -  
Proceeds from sale of other equipment     1,487       -  
Asset acquisitions     -       (73,407 )
Net cash (used in) provided by investing activities     (321,221 )     1,394  
             
Cash flows from financing activities:            
Repayment of debt     (2,260,000 )     (2,044,728 )
Proceeds from issuance of notes     2,380,000       2,250,000  
Dividends paid     (141,371 )     (135,676 )
Payments of settlement payable     (190,924 )     -  
Payments of contingent consideration     (2,979 )     (15,713 )
Distributions paid to noncontrolling interests     (1,700 )     (2,322 )
Borrowings under revolving credit facility     310,000       170,000  
Payments under revolving credit facility     (220,000 )     (635,019 )
Finance lease payments     (2,019 )     (3,702 )
Payments for financing costs     (27,660 )     (50,875 )
Costs related to the early repayment of debt     (36,486 )     -  
Settlement Common Stock issuance     -       244,550  
Employee stock purchase program     672       676  
Payments related to tax withholding for stock-based compensation     (4,100 )     (1,097 )
Net cash used in financing activities     (196,567 )     (223,906 )
Net (decrease) increase in cash and cash equivalents     (18,631 )     (65,279 )
Cash and cash equivalents at beginning of period     77,534       142,813  
Cash and cash equivalents at end of period   $ 58,903     $ 77,534  
             


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,
    2021       2020     2021     2020  
Net income (loss) attributable to common shareholders   $ 35,610     $ (47,197 )   $ 122,573     $ (707,388 )
Real estate depreciation and amortization     52,297       61,336       211,472       246,713  
Loss (gain) on sale of real estate assets, net of tax     -       459       (442 )     (85,860 )
Participating securities share in earnings     213       225       1,077       1,078  
Participating securities share in FFO     (528 )     (225 )     (2,188 )     (1,162 )
Real estate depreciation and amortization from unconsolidated entities     589       682       2,465       1,048  
Adjustments for noncontrolling interests     (175 )     (922 )     (2,154 )     (2,622 )
FFO attributable to common shareholders     88,006       14,358       332,803       (548,193 )
Transaction related and other costs     1,920       8,531       7,544       63,875  
Change in fair value of contingent consideration     -       (923 )     21       7,163  
Amortization of deferred financing costs and debt discount     4,399       9,252       18,122       36,955  
Costs related to the early repayment of debt     20,929       -       49,414       -  
Write off of deferred financing costs and debt discount     1,759       -       24,587       73,952  
Stock based compensation     2,884       3,275       13,847       13,721  
Gain on sale of operations     -       -       (28,143 )     -  
Non-real estate depreciation and amortization     27,480       17,097       79,470       82,690  
Settlement expense     -       -       -       650,000  
Goodwill impairment     -       71,000       -       71,000  
Straight-line revenues     (18,784 )     (5,836 )     (41,239 )     (6,872 )
Maintenance capital expenditures     (2,020 )     (2,171 )     (8,342 )     (7,149 )
Other, net     (12,736 )     (7,103 )     (17,694 )     (32,374 )
Adjustments for equity in earnings from unconsolidated entities     293       317       1,026       1,238  
Adjustments for noncontrolling interests     (100 )     (1,382 )     (1,090 )     (16,496 )
Adjusted FFO attributable to common shareholders   $ 114,030     $ 106,415     $ 430,326     $ 389,510  
                         
Reconciliation of Diluted FFO and AFFO:                        
FFO Attributable to common shareholders – Basic   $ 88,006     $ 14,358     $ 332,803     $ (548,193 )
Impact of if-converted dilutive securities     2,989       -       11,926       -  
FFO Attributable to common shareholders – Diluted   $ 90,995     $ 14358     $ 344,729     $ (548,193 )
                         
AFFO Attributable to common shareholders – Basic   $ 114,030     $ 106,415     $ 430,326     $ 389,510  
Impact of if-converted dilutive securities     3,450       3,450       13,800       13,800  
AFFO Attributable to common shareholders – Diluted   $ 117,480     $ 109,865     $ 444,126     $ 403,310  
                         
Weighted average common shares used to calculate basic earnings (loss) per common share (1)     234,719       231,262       232,888       203,600  
Impact of dilutive non-participating securities     549       611       380       427  
Impact of if-converted dilutive securities     30,809       29,777       30,809       29,777  
Weighted average common shares used to calculate diluted FFO and AFFO per common share (1)     266,077       261,650       264,077       233,804  
                         
Per diluted common share:                        
EPS   $ 0.15     $ (0.20 )   $ 0.51     $ (3.47 )
FFO   $ 0.34     $ 0.06     $ 1.31     $ (2.69 )
AFFO   $ 0.44     $ 0.42     $ 1.68     $ 1.72  
                         

________________________

  1. For periods in which FFO or AFFO attributable to common shareholders is a loss, the weighted average common shares used to calculate diluted FFO or AFFO 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,
      2021       2020       2021       2020  

Net income (loss)
  $ 35.926     $ (47,672 )   $ 124,745     $ (718,812 )
Depreciation and amortization     79,777       78,433       290,942       329,403  
Interest expense, net     104,534       108,701       446,296       497,128  
Income tax benefit     (5,199 )     (7,553 )     (4,916 )     (15,203 )
EBITDA     215,038       131,909       857,067       92,516  
Stock-based compensation     2,884       3,275       13,847       13,721  
Transaction related and other costs     1,920       8,531       7,544       63,875  
Settlement expense     -       -       -       650,000  
Goodwill impairment     -       71,000       -       71,000  
Gain on sale of operations     -       -       (28,143 )     -  
Loss (gain) on sale of real estate     -       459       (442 )     (86,267 )
Other, net     10,348       (483 )     24,917       11,703  
Adjustments for equity in earnings from unconsolidated entities     882       1,000       3,491       2,287  
Adjusted EBITDA   $ 231,072     $ 215,691     $ 878,281     $ 818,835  
                         
Adjusted EBITDA:                        
Leasing   $ 206,124     $ 191,545     $ 784,061     $ 737,337  
Fiber Infrastructure     31,736       30,836       118,452       112,289  
Towers     -       -       -       77  
Consumer CLEC     -       (84 )     -       (545 )
Corporate     (6,788 )     (6,606 )     (24,232 )     (30,323 )
    $ 231,072     $ 215,691     $ 878,281     $ 818,835  
                         
Annualized Adjusted EBITDA (1)   $ 924,288                    
                         
                         
As of December 31, 2021:                        
Total Debt (2)   $ 5,190,348                    
Cash and cash equivalents     58,903                    
Net Debt   $ 5,131,445                    
                         
Net Debt/Annualized Adjusted EBITDA     5.55x                    

________________________

  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 $15.3 million of finance leases, but excludes $84.5 million of unamortized discounts and deferred financing costs.

Uniti Group Inc.
Projected Future Results (1)
(In millions)

  Year Ended
December 31, 2022
Net income attributable to common shareholders – Basic $ 185 to $ 203
Noncontrolling interest share in earnings 1
Participating securities’ share in earnings 3
Net income (2) 188 to 206
Interest expense, net (3) 388
Depreciation and amortization 295
Income tax benefit (5)
EBITDA (2) 866 to 884
Stock-based compensation 12
Transaction related and other costs (4) -
Adjustment for unconsolidated entities 3
Adjusted EBITDA (2) $ 881 to $ 899

________________________

  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 Interest Expense” below.
  4. Future transaction related and other costs are not included in our current outlook.

Uniti Group Inc.
Projected Future Results (1)
(Per Diluted Share)  

  Year Ended
December 31, 2022
Net income attributable to common shareholders – Basic $ 0.79 to $ 0.87
Real estate depreciation and amortization 0.91
Participating securities share in earnings -
Participating securities share in FFO -
Adjustments for noncontrolling interests -
Adjustments for unconsolidated entities 0.01
FFO attributable to common shareholders – Basic (2) $ 1.71 to $ 1.79
Impact of if-converted securities (0.16)
FFO attributable to common shareholders – Diluted (2) $ 1.55 to $ 1.62
   
FFO attributable to common shareholders – Basic (2) $ 1.71 to $ 1.79
Transaction related and other costs (3) -
Amortization of deferred financing costs and debt discount 0.08
Accretion of settlement payable (4) 0.05
Stock-based compensation 0.05
Non-real estate depreciation and amortization 0.36
Straight-line revenues (0.16)
Maintenance capital expenditures (0.03)
Other, net (0.17)
Adjustments for noncontrolling interests -
AFFO attributable to common shareholders – Basic (2) $ 1.89 to $ 1.97
Impact of if-converted securities (0.18)
AFFO attributable to common shareholders – Diluted (2) $ 1.71 to $ 1.78
   

________________________

  1. These ranges represent management’s best estimates based on the underlying assumptions as of the date of this press release.  Future acquisitions, capital market transactions, changes in market conditions, and other factors are excluded from our projections.  There can be no assurance that our actual results will not differ materially from the estimates set forth above.
  2. The components of projected future results may not add to FFO and AFFO attributable to common shareholders due to rounding.
  3. Future transaction related and other costs are not included in our current outlook.
  4. 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 4.7% and reduced by the scheduled quarterly payments.

Components of Interest Expense (1)
(In millions)
                                       

  Year Ended
December 31, 2022
Interest expense on debt obligations $349
Capitalized interest -
Accretion of Windstream settlement payable 12
Amortization of deferred financing cost and debt discounts 18
Swap termination (2) 9
Interest expense, net (3) $388

________________________

  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. Represents recognition of deferred interest expense attributable to the discontinuance of hedge accounting on interest rate swaps.
  3. 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, Finance and Investor Relations
bill.ditullio@uniti.com


Primary Logo

Source: Uniti Group Inc.