RELEASE

Recently Announced ABS Bridge Financing & Asset Sales Further Strengthen Balance Sheet

Provides Initial 2024 Outlook

• Net Income (Loss) of $30.7 Million and ($81.7) Million for the Fourth Quarter and Full Year, Respectively
• Net Income (Loss) of $0.13 and ($0.35) Per Diluted Common Share for the Fourth Quarter and Full Year, Respectively
• AFFO Per Diluted Common Share of $0.34 and $1.42 for the Fourth Quarter and Full Year, Respectively
  

LITTLE ROCK, Ark., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today announced its results for the fourth quarter and full year 2023.

“2023 was another productive year for Uniti. Our core recurring strategic fiber business continues to demonstrate its resiliency with top line growth of 5% in 2023 when compared to 2022 and continued declining net success-based capital intensity. Non-recurring revenue was predictably lower in 2023 than in 2022 due to lower ETL fees and one-time low-margin equipment sales, which we have decided to largely exit in 2024. As a result, our full year 2023 Adjusted EBITDA and AFFO results were essentially in-line with our previous full year guidance,” commented President and Chief Executive Officer, Kenny Gunderman.

Mr. Gunderman continued, “Despite a challenging economic backdrop, Uniti successfully fully financed its current business plan by refinancing $3.1 billion of its outstanding debt in 2023, while also raising up to $437 million of additional capital through the ABS bridge financing and recent non-core asset sales at premium multiples. These initiatives result in our current business plan being fully funded, no material permanent debt maturities until 2027, and over 95% of our consolidated debt being fixed rate.”

QUARTERLY RESULTS

Consolidated revenues for the fourth quarter of 2023 were $285.7 million. Net income and Adjusted EBITDA were $30.7 million and $231.1 million, respectively, for the same period, achieving Adjusted EBITDA margins of approximately 81%. Net income attributable to common shares was $30.4 million for the period. AFFO attributable to common shareholders was $91.6 million, or $0.34 per diluted common share.

Uniti Fiber contributed $70.7 million of revenues and $27.0 million of Adjusted EBITDA for the fourth quarter of 2023, achieving Adjusted EBITDA margins of approximately 38%. Uniti Fiber’s net success-based capital expenditures during the quarter were $20.7 million.

Uniti Leasing contributed revenues of $214.9 million and Adjusted EBITDA of $209.5 million for the fourth quarter. During the quarter, Uniti Leasing deployed capital expenditures of $23.1 million.

FULL YEAR RESULTS

Consolidated revenues for the year ended December 31, 2023 were $1.1 billion. Net loss and Adjusted EBITDA were $81.7 million and $923.5 million, respectively, for the same period. Net loss attributable to common shares was $82.9 million for the period, and included a $204.0 million goodwill impairment charge related to our Uniti Fiber segment that was driven by an increase in the macro interest rate environment. AFFO attributable to common shareholders was $385.3 million, or $1.42 per diluted common share.

Uniti Fiber contributed $297.1 million of revenues and $115.7 million of Adjusted EBITDA for the full year of 2023, achieving Adjusted EBITDA margins of approximately 39%. Uniti Fiber’s net success-based capital expenditures for the full year of 2023 were $118.3 million.

Uniti Leasing contributed revenues of $852.8 million and Adjusted EBITDA of $829.6 million for the full year of 2023. For the full year of 2023, Uniti Leasing deployed capital expenditures of $277.2 million primarily related to the construction of approximately 4,100 new route miles of valuable fiber infrastructure.

FINANCING TRANSACTIONS

On February 26^th, Uniti announced that it had entered into an asset-backed Bridge Loan and Security Agreement for up to $350 million of borrowings pursuant to a multi-draw term loan facility (the “ABS Facility”) through an indirect, bankruptcy remote subsidiary of the Company. Borrowings under the ABS Facility will bear interest at an initial rate equal to Term SOFR for the applicable interest period plus an applicable margin of 3.75%, subject to customary step-ups in the applicable margin based on how long the ABS Facility remains outstanding. The ABS Facility will mature 18 months from the initial draw date and is subject to customary covenants.

INVESTMENT TRANSACTIONS

On February 26^th, Uniti also announced multiple asset sales that it recently completed. First, Uniti sold its remaining investment interest in the fiber network operated by Bluebird Network LLC. In addition, Uniti sold to CableSouth Media III, LLC (“SwyftFiber”) the fiber network assets previously leased to SwyftFiber since its 2018 sale leaseback transaction with Uniti. As part of the agreement, Uniti will continue to have access to certain strands within the SwyftFiber network at zero cost. Finally, Uniti recently completed the sale of essentially all of its remaining wireless towers to CTI Towers, Inc., a portfolio company of Palistar Capital LP. Total cash consideration for these transactions was approximately $87 million.

LIQUIDITY

At year-end, the Company had approximately $354.3 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 6.03x based on net debt to fourth quarter 2023 annualized Adjusted EBITDA.

On February 22, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on April 12, 2024, to stockholders of record on March 28, 2024.

FULL YEAR 2024 OUTLOOK

Our 2024 outlook includes the estimated impact from the recent ABS Facility, the planned exit of most one-time equipment sales, the recently completed asset sales, and the upcoming maturity of the remaining 4.00% exchangeable notes due June 2024. Our outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not mentioned herein.

The Company’s consolidated outlook for 2024 is as follows (in millions):

CONFERENCE CALL

Uniti will hold a conference call today to discuss this earnings release at 8:30 AM Eastern Time (7:30 AM Central Time). The conference call will be webcast live on Uniti’s Investor Relations website at investor.uniti.com. Those parties interested in participating via telephone may register on the Company’s Investor Relations website or by clicking here. A replay of the call will be available on the Investor Relations website beginning today at approximately 12:00 PM Eastern Time.

ABOUT UNITI

Uniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of fiber and other wireless solutions for the communications industry. As of December 31, 2023, Uniti owns approximately 140,000 fiber route miles, 8.5 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 2024 financial outlook, expectations regarding high-margin recurring revenue, lease-up of our network and strong demand trends, our business strategies, growth prospects, our ability to sustain difficult economic conditions, industry trends, sales opportunities, and operating and financial performance.

Words such as "anticipate(s)," "expect(s)," "intend(s)," “estimate(s),” “foresee(s),” "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could materially alter our expectations include, but are not limited to, the future prospects of Windstream, our largest customer; the ability and willingness of our customers to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant; the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms; the risk that we fail to fully realize the potential benefits of acquisitions or have difficulty integrating acquired companies; our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments; our ability to access debt and equity capital markets; the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates; our ability to retain our key management personnel; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to real estate investment trusts; covenants in our debt agreements that may limit our operational flexibility; the possibility that we may experience equipment failures, natural disasters, cyber-attacks or terrorist attacks for which our insurance may not provide adequate coverage; other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and additional factors described in our reports filed with the SEC.

Uniti expressly disclaims any obligation to release publicly any updates or revisions to any of the forward-looking statements set forth in this press release and today’s conference call to reflect any change in its expectations or any change in events, conditions or circumstances on which any statement is based.

NON-GAAP PRESENTATION

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

________________________

________________________

________________________

________________________

________________________

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, Investor Relations & Treasury
bill.ditullio@uniti.com

Source: Uniti Group Inc.