Uniti(US:UNIT)2023-05-04 16:08Financial 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]