Uniti Group Inc. (NASDAQ:UNIT) Q4 2023 Earnings Conference Call February 29, 2024 8:30 AM ET Company Participants Kenny Gunderman - Chief Executive Officer Paul Bullington - Chief Financial Officer Conference Call Participants Greg Williams - TD Cowen Frank Louthan - Raymond James Michael Rollins - Citi David Barden - Bank of America Securities Simon Flannery - Morgan Stanley Operator Welcome to Uniti Group's Fourth Quarter 2023 Conference Call. My name is Gigi, and I will be your operator for today. A webc ...

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```markdown [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Uniti Group Inc.'s unaudited condensed consolidated financial statements and detailed notes for the period ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (Thousands, except par value) | | September 30, 2023 | December 31, 2022 | | :---------------------------- | :----------------- | :------------------ | | **Assets:** | | | | Property, plant and equipment, net | $3,962,436 | $3,754,547 | | Cash and cash equivalents | $34,119 | $43,803 | | Goodwill | $208,378 | $361,378 | | Total Assets | $4,981,325 | $4,851,229 | | **Liabilities:** | | | | Notes and other debt, net | $5,582,057 | $5,188,815 | | Total liabilities | $7,425,765 | $7,122,435 | | **Shareholders' Deficit:** | | | | Total shareholders' deficit | $(2,444,440) | $(2,271,206) | | Total Liabilities and Shareholders' Deficit | $4,981,325 | $4,851,229 | [Condensed Consolidated Statements of Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) Condensed Consolidated Statements of Loss (Thousands, except per share data) | Metric | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Total revenues | $290,655 | $283,103 | $864,175 | $845,112 | | Total costs and expenses | $415,353 | $452,580 | $990,535 | $906,108 | | Net loss | $(80,933) | $(155,749) | $(74,506) | $(49,117) | | Net loss attributable to common shareholders | $(81,223) | $(155,910) | $(75,378) | $(50,164) | | Basic loss per common share | $(0.34) | $(0.66) | $(0.32) | $(0.21) | | Diluted loss per common share | $(0.34) | $(0.66) | $(0.32) | $(0.21) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (Thousands) | | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :---------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net loss | $(80,933) | $(155,749) | $(74,506) | $(49,117) | | Other comprehensive income | — | $2,829 | — | $8,488 | | Comprehensive loss | $(80,933) | $(152,920) | $(74,506) | $(40,629) | | Comprehensive loss attributable to shareholders | $(80,897) | $(152,851) | $(74,473) | $(40,776) | [Condensed Consolidated Statements of Shareholders' Deficit](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Deficit) - **Total shareholders' deficit increased** from **$(2.27 billion)** at December 31, 2022, to **$(2.44 billion)** at September 30, 2023, primarily due to net loss and common stock dividends declared[15](index=15&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Thousands) | | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | | :---------- | :----------------------------------- | :----------------------------------- | | Net cash provided by operating activities | $190,575 | $285,107 | | Net cash used in investing activities | $(365,153) | $(258,685) | | Net cash provided by (used in) financing activities | $164,894 | $(41,931) | | Net decrease in cash and cash equivalents | $(9,684) | $(15,509) | | Cash and cash equivalents at end of period | $34,119 | $43,394 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) [Note 1. Organization and Description of Business](index=13&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) - **Uniti Group Inc. is an independent, internally managed REIT** focused on acquiring, constructing, and leasing mission-critical communications infrastructure, primarily **fiber optic, copper, and coaxial broadband networks and data centers**. The company operates through two main business lines: **Uniti Fiber** and **Uniti Leasing**[30](index=30&type=chunk) - Uniti operates an **'up-REIT' structure**, holding substantially all assets through Uniti Group LP, a Delaware limited partnership, which it controls as the sole general partner (owning approximately **99.96% of partnership interests** as of September 30, 2023). This structure facilitates **tax-efficient acquisitions** using common units of the Operating Partnership[31](index=31&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and **SEC rules**. The company consolidates its Operating Partnership as a **variable interest entity** where it is the primary beneficiary[32](index=32&type=chunk)[34](index=34&type=chunk) - A significant portion of revenue (**66.9%** for the nine months ended September 30, 2023) is derived from **Windstream Leases**, posing a **concentration of credit risk**. Windstream's credit quality is monitored through ratings (**B3 by Moody's, B- by S&P**, both stable outlook) and financial statements[36](index=36&type=chunk)[38](index=38&type=chunk) - **Goodwill**, entirely within the **Uniti Fiber** segment, was impaired by **$153.0 million** (**$113.9 million net of tax**) during **Q3 2023** due to **rising interest rates** impacting the discount rate, following a **$216.0 million impairment** in Q3 2022 for similar reasons[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 3. Revenues](index=15&type=section&id=Note%203.%20Revenues) Revenue Disaggregated by Stream (Thousands) | Revenue Stream | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Uniti Fiber (contracts with customers) | $59,154 | $57,340 | $173,576 | $172,805 | | Uniti Leasing (contracts with customers) | $1,868 | $1,201 | $5,142 | $3,553 | | Uniti Leasing (leasing guidance) | $212,720 | $207,422 | $632,707 | $615,325 | | Uniti Fiber (leasing guidance) | $16,913 | $17,140 | $52,750 | $53,429 | | **Total revenue** | **$290,655** | **$283,103** | **$864,175** | **$845,112** | - As of September 30, 2023, future revenues from remaining performance obligations under **ASC 606** totaled **$646.1 million**, with **$584.9 million** from currently invoiced contracts (average **3.4 years** remaining) and **$61.2 million** from backlog sales bookings (average **5.0 years** remaining)[51](index=51&type=chunk) [Note 4. Leases](index=16&type=section&id=Note%204.%20Leases) Lease Income - Operating Leases (Thousands) | Period | 2023 | 2022 | | :----- | :--- | :--- | | Three Months Ended September 30 | $229,633 | $224,562 | | Nine Months Ended September 30 | $685,457 | $668,754 | - **Total future minimum lease payments** to be received under non-cancellable operating leases as of September 30, 2023, amount to **$5.8 billion**, with **$4.9 billion** relating to the **Windstream Leases**[54](index=54&type=chunk) Future Lease Payments (Thousands) | Year | Operating Leases | Finance Leases | | :--- | :--------------- | :------------- | | 2023 | $4,169 | $928 | | 2024 | $17,941 | $3,521 | | 2025 | $15,090 | $3,468 | | 2026 | $11,701 | $3,335 | | 2027 | $9,060 | $2,960 | | Thereafter | $101,405 | $12,934 | | **Total undiscounted lease payments** | **$159,366** | **$27,146** | | Less: imputed interest | $(78,064) | $(8,758) | | **Total lease liabilities** | **$81,302** | **$18,388** | [Note 5. Investments in Unconsolidated Entities](index=18&type=section&id=Note%205.%20Investments%20in%20Unconsolidated%20Entities) - Uniti's investment in Fiber Holdings, an **equity method unconsolidated entity**, was approximately **$37.7 million** as of September 30, 2023, representing about a **20% economic interest** in the Propco that controls the Midwest fiber network assets[58](index=58&type=chunk) - **The company completed the sale of its investment** in Harmoni Towers LP on **June 21, 2022**, for **$32.5 million cash**, resulting in a pre-tax gain of **$7.9 million**[59](index=59&type=chunk) [Note 6. Fair Value of Financial Instruments](index=18&type=section&id=Note%206.%20Fair%20Value%20of%20Financial%20Instruments) Fair Value of Financial Instruments (Thousands) | | September 30, 2023 Total | December 31, 2022 Total | | :---------- | :----------------------- | :---------------------- | | **Liabilities** | | | | Senior secured notes - 10.50%, due February 15, 2028 | $2,530,476 | — | | Senior secured notes - 4.75%, due April 15, 2028 | $460,130 | $469,740 | | Senior unsecured notes - 6.00%, due January 15, 2030 | $441,809 | $467,401 | | Senior unsecured notes - 6.50%, due February 15, 2029 | $723,720 | $759,917 | | Exchangeable senior notes - 4.00%, due June 15, 2024 | $118,016 | $127,024 | | Convertible senior notes - 7.50% due December 1, 2027 | $263,535 | $297,765 | | Senior secured revolving credit facility, variable rate | $270,973 | $187,981 | | Settlement payable | $174,075 | $232,350 | | **Total** | **$4,982,734** | **$4,750,497** | - **The total principal balance of outstanding notes and other debt was $5.68 billion** at September 30, 2023, with a fair value of **$4.98 billion**. **The Settlement Payable to Windstream was $185.9 million** as of September 30, 2023[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 7. Property, Plant and Equipment](index=20&type=section&id=Note%207.%20Property,%20Plant%20and%20Equipment) Carrying Value of Property, Plant and Equipment (Thousands) | | September 30, 2023 | December 31, 2022 | | :---------- | :----------------- | :------------------ | | Land | $30,035 | $28,845 | | Fiber | $4,763,091 | $4,434,506 | | Copper | $3,978,336 | $3,964,439 | | Construction in progress | $57,597 | $46,508 | | Total | $10,127,906 | $9,728,177 | | Less accumulated depreciation | $(6,165,470) | $(5,973,630) | | **Net property, plant and equipment** | **$3,962,436** | **$3,754,547** | - **Depreciation expense** for the three and nine months ended September 30, 2023, was **$69.9 million** and **$209.1 million**, respectively, showing an increase from **$66.1 million** and **$194.9 million** in the prior year periods[65](index=65&type=chunk) [Note 8. Derivative Instruments and Hedging Activities](index=20&type=section&id=Note%208.%20Derivative%20Instruments%20and%20Hedging%20Activities) - **Uniti Fiber Holdings Inc. entered into Note Hedge Transactions** to reduce potential dilution from **Exchangeable Notes**, which are recorded in **additional paid-in capital** and not remeasured as derivatives[66](index=66&type=chunk)[67](index=67&type=chunk) - The company also entered into **Warrant transactions** to sell warrants to acquire common stock, which are also recorded in **additional paid-in capital** and not remeasured as derivatives. The maximum number of shares issuable under warrants has **decreased** due to partial unwind agreements[68](index=68&type=chunk)[69](index=69&type=chunk) [Note 9. Goodwill and Intangible Assets and Liabilities](index=21&type=section&id=Note%209.%20Goodwill%20and%20Intangible%20Assets%20and%20Liabilities) Changes in Goodwill Carrying Value (Thousands) | | Uniti Fiber | Total | | :---------- | :---------- | :---- | | Balance at December 31, 2022 | $361,378 | $361,378 | | Goodwill Impairment (Note 2) | $(153,000) | $(153,000) | | **Balance at September 30, 2023** | **$208,378** | **$208,378** | Intangible Assets and Liabilities, Net (Thousands) | | September 30, 2023 | December 31, 2022 | | :---------- | :----------------- | :------------------ | | Total intangible assets, net | $312,541 | $334,846 | | Total intangible liabilities, net | $159,071 | $167,092 | - **Amortization expense for intangible assets was $7.4 million** for Q3 2023 and **$22.3 million** for the nine months ended September 30, 2023. Estimated annual amortization expense is **$29.8 million** for 2023 and **$29.7 million** for 2024-2027[72](index=72&type=chunk) - **Revenue from amortization of below-market leases was $2.7 million** for Q3 2023 and **$8.0 million** for the nine months ended September 30, 2023. Estimated annual revenue from this source is **$10.7 million** for 2023-2027[73](index=73&type=chunk) [Note 10. Notes and Other Debt](index=22&type=section&id=Note%2010.%20Notes%20and%20Other%20Debt) Notes and Other Debt (Thousands) | | September 30, 2023 Principal | December 31, 2022 Principal | | :---------- | :--------------------------- | :-------------------------- | | Senior secured notes - 10.50% due Feb 15, 2028 | $2,600,000 | — | | Senior secured notes - 4.75% due Apr 15, 2028 | $570,000 | $570,000 | | Senior unsecured notes - 6.00% due Jan 15, 2030 | $700,000 | $700,000 | | Senior unsecured notes - 6.50% due Feb 15, 2029 | $1,110,000 | $1,110,000 | | Exchangeable senior notes - 4.00% due Jun 15, 2024 | $122,942 | $137,873 | | Convertible senior notes - 7.50% due Dec 1, 2027 | $306,500 | $306,500 | | Senior secured revolving credit facility | $271,000 | $188,000 | | **Total Principal Amount** | **$5,680,442** | **$5,262,373** | | Less unamortized discount, premium and debt issuance costs | $(98,385) | $(73,558) | | **Notes and other debt, net** | **$5,582,057** | **$5,188,815** | - On **February 14, 2023**, the company issued **$2.6 billion of 10.50% Senior Secured Notes** due February 15, 2028, using proceeds to redeem **$2.25 billion of 7.875% senior secured notes** due 2025 and repay revolving credit facility borrowings. This resulted in a **$32.3 million loss on extinguishment of debt**[82](index=82&type=chunk) - **The Revolving Credit Facility's maturity was extended** to **September 24, 2027**, and transitioned from **LIBOR to Term SOFR** with a **10 basis point credit spread adjustment**. The company was in **compliance with all debt covenants** as of September 30, 2023[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 11. Earnings Per Share](index=24&type=section&id=Note%2011.%20Earnings%20Per%20Share) Loss Per Common Share (Thousands, except per share data) | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss attributable to common shareholders | $(81,223) | $(155,910) | $(75,378) | $(50,164) | | Basic weighted-average common shares outstanding | 236,533 | 235,739 | 236,352 | 235,483 | | Basic loss per common share | $(0.34) | $(0.66) | $(0.32) | $(0.21) | | Diluted loss per common share | $(0.34) | $(0.66) | $(0.32) | $(0.21) | - For the three and nine months ended September 30, 2023, **1,053,189 non-participating securities** and **53,427,833** and **53,836,845 potential common shares** related to Exchangeable Notes and Convertible Notes, respectively, were excluded from EPS computation as their effect would have been **anti-dilutive**[96](index=96&type=chunk) [Note 12. Segment Information](index=28&type=section&id=Note%2012.%20Segment%20Information) - **Uniti Group Inc. manages its operations through two reportable segments**: **Uniti Leasing** (**REIT operations**, leasing mission-critical communications assets) and **Uniti Fiber** (infrastructure solutions, including **cell site backhaul and dark fiber**). Corporate operations include shared service functions[98](index=98&type=chunk)[99](index=99&type=chunk) - **Segment performance is evaluated using Adjusted EBITDA**. For the three months ended September 30, 2023, Uniti Leasing reported **$208.6 million** in **Adjusted EBITDA** and Uniti Fiber reported **$29.9 million**. For the nine months ended September 30, 2023, Uniti Leasing reported **$620.1 million** and Uniti Fiber reported **$88.7 million**[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Note 13. Commitments and Contingencies](index=31&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - **Uniti is obligated to make $490.1 million** in cash payments to Windstream in **20 quarterly installments**, having paid **$288.9 million** as of September 30, 2023[104](index=104&type=chunk) - **The company is committed to reimbursing Windstream up to $1.75 billion** for **Growth Capital Improvements (GCIs)** through 2029, with annual limits. During the nine months ended September 30, 2023, Uniti reimbursed **$233.5 million** for GCIs, bringing the total to **$794.2 million**[105](index=105&type=chunk) - **Rent payable by Windstream increases by 8.0%** of each GCI reimbursement installment, escalating by **100.5%** of the prior rate annually[106](index=106&type=chunk) - **A class action lawsuit was settled for $38.9 million**, fully funded by insurance carriers. Derivative actions were settled for **non-monetary damages** and **$0.8 million** in attorney's fees[109](index=109&type=chunk)[110](index=110&type=chunk) [Note 14. Accumulated Other Comprehensive Loss](index=33&type=section&id=Note%2014.%20Accumulated%20Other%20Comprehensive%20Loss) Changes in Accumulated Other Comprehensive Loss (Thousands) | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Balance at beginning of period attributable to shareholders (Cash flow hedge) | $(30,353) | $(30,353) | $(30,353) | $(30,353) | | Balance at end of period attributable to shareholders (Cash flow hedge) | $(30,353) | $(30,353) | $(30,353) | $(30,353) | | Balance at beginning of period attributable to shareholders (Interest rate swap termination) | $30,353 | $26,837 | $30,353 | $21,189 | | Amounts reclassified from accumulated other comprehensive income | — | $2,829 | — | $8,488 | | Balance at end of period attributable to shareholders (Interest rate swap termination) | $30,353 | $29,665 | $30,353 | $29,665 | | **Accumulated other comprehensive loss at end of period** | **$—** | **$(688)** | **$—** | **$(688)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Uniti Group Inc.'s financial condition and operations for Q3 2023, covering segment performance, non-GAAP measures, liquidity, and accounting estimates [1. Overview](index=33&type=section&id=1.%20Overview) - **Uniti Group Inc. is an independent, internally managed REIT** focused on acquiring and constructing mission-critical communications infrastructure, including **fiber optic, copper, and coaxial broadband networks and data centers**[115](index=115&type=chunk) - The company operates as a **REIT** for U.S. federal income tax purposes, with its fiber and certain leasing businesses operating through **Taxable REIT Subsidiaries (TRSs)** which are subject to corporate income taxes[117](index=117&type=chunk) - Uniti aims to grow and diversify its portfolio through various transaction structures, including **sale-leasebacks, dark fiber leasing, whole company acquisitions, capital investment financing, and M&A financing**[119](index=119&type=chunk) - **The company manages operations through two reportable segments**: **Uniti Leasing** (**REIT operations**, leasing communications assets) and **Uniti Fiber** (infrastructure solutions like **cell site backhaul and dark fiber**)[120](index=120&type=chunk)[121](index=121&type=chunk) [2. Results of Operations](index=35&type=section&id=2.%20Results%20of%20Operations) Consolidated Results of Operations (Thousands, % of Revenues) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $290,655 (100.0%) | $283,103 (100.0%) | $864,175 (100.0%) | $845,112 (100.0%) | | Interest expense, net | $120,691 (41.5%) | $97,731 (34.5%) | $389,243 (45.0%) | $290,280 (34.3%) | | Depreciation and amortization | $77,337 (26.6%) | $73,516 (26.1%) | $231,379 (26.8%) | $217,276 (25.7%) | | Goodwill impairment | $153,000 (52.6%) | $216,000 (76.3%) | $153,000 (17.7%) | $216,000 (25.6%) | | Net loss attributable to common shareholders | $(81,223) (27.9%) | $(155,910) (55.1%) | $(75,378) (8.7%) | $(50,164) (5.9%) | Operating Metrics | Operating Metrics | September 30, 2023 | September 30, 2022 | % Increase (Decrease) | | :---------------- | :----------------- | :----------------- | :-------------------- | | Uniti Leasing: Fiber strand miles | 5,460,000 | 5,140,000 | 6.2% | | Uniti Leasing: Copper strand miles | 230,000 | 230,000 | 0.0% | | Uniti Fiber: Fiber strand miles | 2,940,000 | 2,840,000 | 3.5% | | Uniti Fiber: Customer connections | 28,257 | 27,615 | 2.3% | - **Uniti Leasing revenues increased by $5.9 million (2.8%)** for the three months ended September 30, 2023, and by **$18.9 million (3.1%)** for the nine months ended September 30, 2023, primarily driven by **Growth Capital Improvement (GCI) revenue** and continued investment by Windstream in **Tenant Funded Capital Improvements (TCIs)**[127](index=127&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - **Uniti Fiber revenues increased by $1.6 million (2.1%)** for the three months ended September 30, 2023, mainly due to increased **Enterprise and wholesale revenues**, partially offset by a decrease in **Lit backhaul services**. For the nine months, Uniti Fiber revenues were relatively flat, with growth in Enterprise and wholesale offset by declines in **E-Rate and government** and Lit backhaul[137](index=137&type=chunk)[138](index=138&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - **Interest expense, net, increased significantly by $23.0 million** for the three months and **$99.0 million** for the nine months ended September 30, 2023, primarily due to **higher cash interest** on secured and unsecured notes and a **$32.3 million loss on extinguishment of debt** related to the 2025 Secured Notes redemption[139](index=139&type=chunk)[162](index=162&type=chunk) - **Depreciation expense increased** for both Uniti Leasing and Uniti Fiber segments due to **asset additions** since September 30, 2022[140](index=140&type=chunk)[141](index=141&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - **Goodwill impairment charges of $153.0 million** were recorded in the **Uniti Fiber** segment for both the three and nine months ended September 30, 2023, driven by **macroeconomic factors** and **increased interest rates** impacting the discount rate[149](index=149&type=chunk)[173](index=173&type=chunk) [3. Non-GAAP Financial Measures](index=48&type=section&id=3.%20Non-GAAP%20Financial%20Measures) - The company uses **non-GAAP financial measures** like **EBITDA, Adjusted EBITDA, FFO (NAREIT defined), and AFFO** to supplement GAAP net income, believing they provide additional information for evaluating operating performance and comparability among REITs[177](index=177&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Thousands) | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(80,933) | $(155,749) | $(74,506) | $(49,117) | | EBITDA | $74,000 | $2,442 | $496,252 | $448,256 | | Adjusted EBITDA | $233,010 | $225,053 | $692,378 | $677,006 | Reconciliation of Net Loss to FFO and AFFO (Thousands) | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss attributable to common shareholders | $(81,223) | $(155,910) | $(75,378) | $(50,164) | | FFO attributable to common shareholders | $(26,831) | $(102,474) | $89,004 | $107,733 | | AFFO attributable to common shareholders | $95,340 | $112,578 | $293,691 | $339,819 | [4. Liquidity and Capital Resources](index=51&type=section&id=4.%20Liquidity%20and%20Capital%20Resources) - **Principal liquidity needs include** funding operating expenses, debt service, investment activities (including capital expenditures), and dividend distributions. The company is obligated to make **$490.1 million** in cash payments to Windstream and reimburse up to **$1.75 billion** for Growth Capital Improvements through 2029[186](index=186&type=chunk) - **As of September 30, 2023, Uniti had $34.1 million** in cash and cash equivalents and **$229.0 million** in borrowing availability under its Revolving Credit Facility[188](index=188&type=chunk) - **Net cash provided by operating activities decreased to $190.6 million** for the nine months ended September 30, 2023, from **$285.1 million** in the prior year, primarily due to **increased cash interest expense** and changes in working capital[188](index=188&type=chunk) - **Net cash used in investing activities increased by $106.5 million to $365.2 million** for the nine months ended September 30, 2023, mainly driven by a **$75.4 million increase in Growth Capital Improvements**[189](index=189&type=chunk) - **Net cash provided by financing activities was $164.9 million** for the nine months ended September 30, 2023, a significant change from net cash used of **$41.9 million** in the prior year, primarily due to **proceeds from new secured notes** offset by debt repayments and related costs[190](index=190&type=chunk) Capital Expenditures (Thousands) | | Success Based | Maintenance | Non-Network | Total | | :---------- | :------------ | :---------- | :---------- | :---- | | Uniti Leasing, excluding growth capital improvements | $20,657 | — | — | $20,657 | | Growth capital improvements | $233,465 | — | — | $233,465 | | Uniti Fiber | $108,173 | $5,338 | $631 | $114,142 | | **Total capital expenditures** | **$362,295** | **$5,338** | **$631** | **$368,264** | - **The company intends to make dividend payments** of all or substantially all of its taxable income to maintain **REIT status**. **Quarterly cash dividends of $0.15 per share** were declared for the periods ended March 31, June 30, and September 30, 2023[203](index=203&type=chunk)[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported compared to the Annual Report - **No material changes to market risk disclosures** were reported compared to the Annual Report[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of September 30, 2023, with no material changes in internal control over financial reporting - Management, including the principal executive and financial officers, concluded that **disclosure controls and procedures were effective** as of September 30, 2023[215](index=215&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended September 30, 2023, that materially affected or are reasonably likely to materially affect internal control over financial reporting[216](index=216&type=chunk) [PART II. OTHER INFORMATION](index=58&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 13 of the financial statements - **Legal proceedings information is incorporated by reference** from Note 13 to the Condensed Consolidated Financial Statements[219](index=219&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to the Annual Report - **No material changes to risk factors** were reported compared to the Annual Report[220](index=220&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details shares withheld from employees for tax obligations related to restricted stock vesting Issuer Purchases of Equity Securities (Shares Withheld for Tax) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----- | :----------------------------- | :--------------------------- | | July 1, 2023 to July 31, 2023 | 644 | $5.07 | | August 1, 2023 to August 31, 2023 | 987 | $5.49 | | September 1, 2023 to September 30, 2023 | 67 | $4.58 | | **Total** | **1,698** | **$5.30** | [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - **No defaults upon senior securities** were reported[223](index=223&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - **Mine safety disclosures are not applicable**[223](index=223&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) The Board amended Bylaws for SEC Rule 14a-19 compliance; no Rule 10b5-1 trading arrangements were adopted or terminated - On **November 1, 2023**, the Board approved an amendment to the Bylaws to address **SEC Rule 14a-19** regarding universal proxy cards, requiring stockholders to comply with the rule for nominations and use a non-white proxy card[223](index=223&type=chunk) - **No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** during the three months ended September 30, 2023[225](index=225&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including amended Bylaws, officer certifications, and Inline XBRL documents - **Key exhibits include the Amended and Restated Bylaws** (as amended November 1, 2023), **certifications of the Principal Executive Officer and Principal Financial Officer** (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and **Inline XBRL documents**[226](index=226&type=chunk) ```

Uniti Group Inc. (NASDAQ:UNIT) Q3 2023 Earnings Conference Call November 2, 2023 8:30 AM ET Company Participants Kenny Gunderman - President and Chief Executive Officer Paul Bullington - Chief Financial Officer Conference Call Participants Frank Louthan - Raymond James & Associates, Inc. Gregory Williams - TD Cowen David Barden - Bank of America Merrill Lynch Bora Lee - RBC Capital Markets Alana Papa - Morgan Stanley Operator Welcome to Uniti Group's Third Quarter 2023 Conference Call. My name is Howard, an ...

数 Uniti | --- | --- | --- | --- | |-------|-------|--------------------------------------|-------------------------------| | | | | | | | | | | | | | | | | | | | | | | | Third Quarter 2023 Financial Results | | | | | | | | | | Conference Call Presentation | | | | | | | | | | | | | | | | | | | | | | | | | | Together, Building the Future | Safe Harbor Certain statements in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as ...

: Uniti | --- | --- | --- | --- | --- | --- | |-------|-------|-------|----------------|---------------------------------------|-------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Second Quarter 2023 Financial Results | | | | | | | | | | | | | | Conference Call Presentation | | | | | | | | | | | | | August 3, 2023 | | | | | | | | | | | | | | | | | | | | | | | Together, Building the Future | Safe Harbor Certain statements in this presentation may constitute forw ...

PART I. FINANCIAL INFORMATION This section covers unaudited financial statements, management's operational analysis, market risk, and internal controls [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Uniti Group Inc. for the quarterly period ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$5.03 billion** and total liabilities to **$7.37 billion** by June 30, 2023, widening the shareholders' deficit to **$2.33 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$5,034,570** | **$4,851,229** | | Property, plant and equipment, net | $3,895,206 | $3,754,547 | | Cash and cash equivalents | $38,145 | $43,803 | | **Total Liabilities** | **$7,365,814** | **$7,122,435** | | Notes and other debt, net | $5,392,536 | $5,188,815 | | **Total Shareholders' Deficit** | **($2,331,244)** | **($2,271,206)** | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2023 revenues remained flat at **$283.7 million**, while net income attributable to common shareholders significantly decreased to **$25.3 million** due to higher interest expense Income Statement Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $283,698 | $283,975 | $573,520 | $562,009 | | Interest Expense, net | $119,689 | $96,377 | $268,552 | $192,549 | | Net Income | $25,638 | $53,774 | $6,427 | $106,632 | | Net Income Attributable to Common Shareholders | $25,299 | $53,352 | $5,845 | $105,746 | | Diluted EPS | $0.11 | $0.21 | $0.02 | $0.42 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$199.8 million**, while cash used in investing increased to **$246.1 million**, and financing activities shifted to **$40.6 million** provided for the six months ended June 30, 2023 Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $199,831 | $234,608 | | Net cash used in investing activities | ($246,100) | ($150,756) | | Net cash provided by (used in) financing activities | $40,611 | ($81,350) | | **Net (decrease) increase in cash** | **($5,658)** | **$2,502** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, including business organization, revenue recognition, lease accounting, debt structure, segment information, and commitments - Uniti is an internally managed REIT focused on acquiring and constructing mission-critical communications infrastructure, operating through two primary business lines: Uniti Fiber and Uniti Leasing[31](index=31&type=chunk) - The company has a significant concentration of credit risk with Windstream, which accounted for **66.9% of revenue** for the six months ended June 30, 2023[37](index=37&type=chunk) - As of June 30, 2023, the company has future revenue (transaction price related to remaining performance obligations under ASC 606) of **$534.5 million**[48](index=48&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operational results, analyzing segment performance, income statement items, non-GAAP measures, liquidity, and capital expenditures [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Q2 2023 consolidated revenues were flat, with Uniti Leasing growth offset by a **9.1% decline** in Uniti Fiber revenue, leading to a **52% drop** in net income due to higher interest expense Uniti Leasing Revenue Breakdown - Q2 (in thousands) | Revenue Source | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total Windstream Revenue | $192,746 | $186,915 | | Other Services | $19,707 | $18,699 | | **Total Uniti Leasing Revenues** | **$212,453** | **$205,614** | Uniti Fiber Revenue Breakdown - Q2 (in thousands) | Revenue Source | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Lit backhaul services | $19,453 | $19,937 | | Enterprise and wholesale | $23,410 | $21,001 | | E-Rate and government | $14,145 | $18,505 | | Dark fiber and small cells | $13,507 | $18,206 | | **Total Uniti Fiber Revenues** | **$71,245** | **$78,361** | - Interest expense for Q2 2023 increased by **$23.3 million** year-over-year, primarily due to higher cash interest on secured and unsecured notes[137](index=137&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show Q2 2023 Adjusted EBITDA at **$228.2 million** (slight increase) and AFFO attributable to common shareholders at **$91.0 million** (decrease) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $25,638 | $53,774 | $6,427 | $106,632 | | **EBITDA** | **$218,237** | **$227,398** | **$422,252** | **$445,814** | | **Adjusted EBITDA** | **$228,167** | **$227,164** | **$459,368** | **$451,953** | Reconciliation to FFO and AFFO (in thousands) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common shareholders | $25,299 | $53,352 | $5,845 | $105,746 | | **FFO attributable to common shareholders** | **$80,363** | **$105,686** | **$115,835** | **$210,207** | | **AFFO attributable to common shareholders** | **$90,958** | **$114,897** | **$198,351** | **$227,239** | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity includes **$38.1 million** cash and **$414.0 million** credit facility availability, with significant commitments to Windstream and **$247.3 million** in capital expenditures - Primary sources of liquidity are cash from operations, borrowings under the credit facility, and proceeds from debt and equity issuances[179](index=179&type=chunk) - The company is obligated to make cash payments to Windstream as part of a settlement, with **$264.4 million** paid to date out of a total **$490.1 million**, and is committed to reimburse Windstream for up to **$1.75 billion** in Growth Capital Improvements (GCIs) through 2029[178](index=178&type=chunk) Capital Expenditures for Six Months Ended June 30, 2023 (in thousands) | Category | Amount | | :--- | :--- | | Success Based (excluding GCIs) | $84,367 | | Growth Capital Improvements (GCIs) | $158,756 | | Maintenance | $3,744 | | Non-Network | $402 | | **Total Capital Expenditures** | **$247,269** | [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes from the market risk information reported in the company's Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures since the last Annual Report[202](index=202&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[204](index=204&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[205](index=205&type=chunk) PART II. OTHER INFORMATION This section details legal proceedings, risk factors, equity sales, other disclosures, and filed exhibits [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the Condensed Consolidated Financial Statements for a description of the company's legal proceedings - Details regarding legal proceedings are incorporated by reference from Note 13 - Commitments and Contingencies in the financial statements[207](index=207&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors affecting the business since those disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the Annual Report[208](index=208&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Information on shares withheld from employees for tax obligations related to restricted stock vesting, totaling **1,831 shares** at **$3.73** average price Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased (shares) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2023 | 75 | $3.24 | | May 2023 | 1,756 | $3.75 | | June 2023 | 0 | N/A | | **Total** | **1,831** | **$3.73** | [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section reports that during the three months ended June 30, 2023, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of 2023[211](index=211&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - Exhibits filed include Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents[212](index=212&type=chunk)

Call Start: 08:30 January 1, 0000 9:14 AM ET Uniti Group, Inc. (NASDAQ:UNIT) Q2 2023 Earnings Conference Call August 03, 2023, 08:30 ET Company Participants Kenneth Gunderman - President, CEO & Director Paul Bullington - SVP, CFO & Treasurer Conference Call Participants Gregory Williams - TD Cowen David Barden - Bank of America Merrill Lynch Frank Louthan - Raymond James & Associates Operator Hello and welcome to Uniti Group's Second Quarter 2023 Conference Call. My name is [indiscernible] and I will be you ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited Q1 2023 financial statements show increased assets and liabilities, a $19.2 million net loss due to higher interest expense, and significant debt refinancing [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets rose to **$5.0 billion** and liabilities to **$7.3 billion** by March 31, 2023, increasing the shareholders' deficit to **$2.32 billion** | Balance Sheet Item | March 31, 2023 ($ thousands) | December 31, 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Assets** | **$4,988,199** | **$4,851,229** | | Property, plant and equipment, net | $3,855,189 | $3,754,547 | | Cash and cash equivalents | $70,346 | $43,803 | | **Total Liabilities** | **$7,312,374** | **$7,122,435** | | Notes and other debt, net | $5,377,313 | $5,188,815 | | **Total Shareholders' Deficit** | **($2,324,175)** | **($2,271,206)** | [Condensed Consolidated Statements of Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) For Q1 2023, Uniti reported a net loss, a significant shift from prior-year net income, primarily due to a substantial increase in interest expense | Income Statement Item | Q1 2023 ($ thousands) | Q1 2022 ($ thousands) | | :--- | :--- | :--- | | Total Revenues | $289,822 | $278,034 | | Interest Expense, net | $148,863 | $96,172 | | **Net (Loss) Income** | **($19,211)** | **$52,858** | | **Diluted (Loss) Income per Share** | **($0.08)** | **$0.21** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased in Q1 2023, while investing activities increased, and financing activities provided significant cash due to debt refinancing | Cash Flow Activity | Q1 2023 ($ thousands) | Q1 2022 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,562 | $63,221 | | Net cash used in investing activities | ($114,374) | ($94,349) | | Net cash provided by financing activities | $126,355 | $23,354 | | **Net increase (decrease) in cash** | **$26,543** | **($7,774)** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business structure, accounting policies, and financial components, highlighting revenue concentration from Windstream, major debt refinancing, and segment performance - Uniti is a REIT operating through two primary business lines: Uniti Fiber and Uniti Leasing[28](index=28&type=chunk) - A substantial portion of revenue (**66.0%** for Q1 2023) is derived from leases with Windstream, representing a significant concentration of credit risk[34](index=34&type=chunk) - In February 2023, the company issued **$2.6 billion** of 10.50% Senior Secured Notes due 2028 to redeem its 7.875% notes due 2025, resulting in a **$32.3 million** loss on extinguishment of debt[76](index=76&type=chunk) - The company has a commitment to reimburse Windstream for up to **$1.75 billion** in Growth Capital Improvements through 2029, with **$67.5 million** reimbursed in Q1 2023[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights revenue growth, a net loss driven by increased interest expense from debt refinancing, and maintained liquidity for operations and capital expenditures [1.Overview](index=30&type=section&id=1.Overview) Uniti operates as a REIT with Leasing and Fiber Infrastructure segments, with significant Windstream revenue, and completed a major debt refinancing and credit agreement amendment - Uniti operates as a REIT with two main segments: Leasing (acquiring and leasing assets) and Fiber Infrastructure (providing infrastructure solutions like backhaul and dark fiber)[115](index=115&type=chunk)[116](index=116&type=chunk) - In February 2023, the company issued **$2.6 billion** of 10.50% Senior Secured Notes due 2028 to redeem its 7.875% notes due 2025 and repay borrowings under its revolving credit facility[120](index=120&type=chunk) - In March 2023, the company amended its credit agreement, extending the maturity of its **$500 million** revolving credit facility to September 2027 and transitioning from LIBOR to Term SOFR[72](index=72&type=chunk)[129](index=129&type=chunk) [2.Results of Operations](index=34&type=section&id=2.Results%20of%20Operations) Q1 2023 saw total revenues increase, but the company reported a net loss primarily due to a significant rise in net interest expense, including a loss on debt extinguishment | Metric | Q1 2023 ($ thousands) | Q1 2022 ($ thousands) | | :--- | :--- | :--- | | Total Revenues | $289,822 | $278,034 | | Interest Expense, net | $148,863 | $96,172 | | **Net (Loss) Income** | **($19,211)** | **$52,858** | - Leasing revenues increased to **$210.8 million** in Q1 2023 from **$204.6 million** in Q1 2022, primarily due to higher cash revenue from Growth Capital Improvement (GCI) reimbursements and non-cash revenue from Tenant Funded Capital Improvements (TCIs)[135](index=135&type=chunk)[140](index=140&type=chunk) - Fiber Infrastructure revenues increased by **$5.6 million** year-over-year, driven by growth in dark fiber, small cells, and enterprise/wholesale services[147](index=147&type=chunk) - The increase in interest expense was primarily due to a **$32.3 million** loss on the extinguishment of the 2025 Secured Notes and higher cash interest payments[149](index=149&type=chunk) [3.Non-GAAP Financial Measures](index=41&type=section&id=3.Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA, FFO, and AFFO, with Adjusted EBITDA increasing in Q1 2023 while FFO and AFFO decreased due to higher interest expense | Non-GAAP Metric | Q1 2023 ($ thousands) | Q1 2022 ($ thousands) | | :--- | :--- | :--- | | Adjusted EBITDA | $231,201 | $224,789 | | FFO attributable to common shareholders | $35,472 | $104,521 | | AFFO attributable to common shareholders | $107,393 | $112,342 | [4.Liquidity and Capital Resources](index=43&type=section&id=4.Liquidity%20and%20Capital%20Resources) As of March 31, 2023, Uniti maintained liquidity through cash and a revolving credit facility, funding debt service, operations, capital expenditures, and dividends, including commitments to Windstream - As of March 31, 2023, the company had **$70.3 million** in cash and cash equivalents and **$425.0 million** of borrowing availability under its Revolving Credit Facility[171](index=171&type=chunk) - The company is obligated to make cash payments to Windstream and reimburse up to **$1.75 billion** for Growth Capital Improvements (GCIs) through 2029, with annual reimbursement caps (e.g., **$225 million** for 2023)[169](index=169&type=chunk) Capital Expenditures (Q1 2023) | Capital Expenditures (Q1 2023) | Amount ($ thousands) | | :--- | :--- | | Success Based (Leasing & Fiber) | $45,240 | | Growth Capital Improvements (GCIs) | $67,511 | | Maintenance & Non-Network | $2,230 | | **Total Capital Expenditures** | **$114,981** | - A cash dividend of **$0.15** per share for the first quarter of 2023 was paid on April 14, 2023[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported from the Annual Report on Form 10-K - There have been no material changes from the market risk information reported in the company's Annual Report[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2023[195](index=195&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[196](index=196&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings are detailed by reference in Note 13 of the Condensed Consolidated Financial Statements - Details regarding legal proceedings are provided in Note 13 - Commitments and Contingencies to the financial statements[199](index=199&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported from its Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's Annual Report[200](index=200&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, 218,673 common shares were withheld from employees at an average price of **$5.42** per share for tax withholding on vested restricted stock Shares Withheld for Tax Obligations | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Feb 2023 | 124,702 | $5.68 | | Mar 2023 | 93,971 | $5.07 | | **Total** | **218,673** | **$5.42** | - These share purchases represent shares withheld from employees to satisfy tax withholding obligations on vested restricted stock and are not part of a publicly announced buyback program[201](index=201&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[203](index=203&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[203](index=203&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No other information required under this item was reported by the company - None[203](index=203&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) Exhibits filed with Form 10-Q include the indenture for new secured notes, a credit agreement amendment, and officer certifications - Exhibits filed include the indenture for the 10.50% Senior Secured Notes due 2028 and Amendment No. 8 to the Credit Agreement[204](index=204&type=chunk)

Financial Data and Key Metrics Changes - Uniti Group reported consolidated revenues of $290 million and adjusted EBITDA of $231 million for Q1 2023, with an AFFO attributed to common shareholders of $107 million and an AFFO per diluted common share of $0.39 [12][20] - The net loss attributable to common shareholders for the quarter was approximately $19 million or $0.08 per diluted share, which included a write-off of $10 million of deferred financing costs and $52 million of costs related to early repayment of secured notes [12][20] - The company is slightly lowering its Uniti fiber adjusted EBITDA estimate while increasing its AFFO per share for the full year 2023 [11][20] Business Line Data and Key Metrics Changes - Uniti Leasing reported segment revenues of $211 million and adjusted EBITDA of $205 million, representing growth of 3% for each compared to the prior year [13] - Uniti Fiber reported revenues of $79 million and adjusted EBITDA of $34 million, achieving growth of 8% and 7% respectively from the prior year period [15] - Enterprise recurring revenue was up 15% during the quarter, while wholesale and enterprise recurring revenue increased by 10% and 15% respectively [4][10] Market Data and Key Metrics Changes - The majority of Uniti's revenue is wholesale in nature, which comes with longer-term contracts, lower churn, and less required overhead for execution [5] - The company has a strong presence in the fiber-to-the-home market, which remains highly attractive due to substantial investment from private capital sources [6] - Uniti's enterprise strategy is highly disciplined and regional, focusing on approximately 30 metros concentrated in the Southeast [9] Company Strategy and Development Direction - Uniti Group remains focused on buying and building mission-critical fiber infrastructure, aiming for disciplined growth and a balance between anchor and lease-up and wholesale and non-wholesale [3] - The company expects to become free cash flow positive by the end of 2025 and aims to generate cumulative free cash flow of over $1 billion during the five-year period ending in 2030 [24] - Uniti is actively considering M&A opportunities, particularly in the digital infrastructure space, and believes there is substantial value in its fiber business that is not currently reflected in its stock price [51][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of their sales funnel, indicating that any softness in bookings is due to customer-specific buying patterns rather than macroeconomic issues [31] - The company anticipates healthy core recurring revenue growth of 5% from the prior year, despite slight adjustments in adjusted EBITDA estimates [19] - Management believes maintaining REIT status is strategically valuable and provides a meaningful return of capital to investors [29] Other Important Information - Uniti has extended the maturity of its revolving credit facility to September 2027, ensuring it is well-positioned to execute its growth strategy during uncertain economic conditions [4][11] - The company has approximately $495 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity as of the quarter-end [22] Q&A Session Summary Question: Dividend distribution above minimum requirements - Management indicated that the total distribution over 90% is estimated to be between $100 million and $150 million additional based on forecasts [33] Question: Soft bookings and wholesale bookings delays - Management clarified that the sales funnel remains strong and that any delays in bookings are due to timing decisions by a few large customers, not macroeconomic conditions [31][32] Question: Relationship with DISH and its liquidity status - Management stated that DISH is a small but growing customer, and they have not seen any change in DISH's behavior or commitment to their network build [38] Question: Cash obligations with Windstream - Management explained that Windstream settlement payments are just shy of $100 million annually, with obligations ending in Q3 2025, and discussed the GCI program commitments through 2030 [45][46] Question: M&A market outlook and interest in distressed assets - Management expressed a focus on M&A as a catalyst to unlock value and indicated they are open to engaging in distressed asset situations if the underlying assets are of quality [51][56]