UNIT - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Uni Group's Third Quarter 2021 Conference Call. My name is Stephanie, and I will be your operator for today. A webcast of this call will be available on the Company's website, www.uni.com beginning November 4, 2021, and will remain available for 14 days. At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the Company's prepared comments. to actual that from results in statements. like forward-looking remarks those would these and statements could Company remind today's you include projected The differ materially discussed cause SEC. to The with actual that Company's filings could differ factors are in the the results this call. reference slides remarks and the posted those to or to encouraged are refer morning materials Company's on website, The you during this prepared accepted also the certain financial not call accounting were generally the will include in during with Discussions that accordance principles. measures financial most Form Company's directly non-GAAP today. financial measures can be the GAAP those in measures current of Reconciliation to X-K comparable found on report dated I would like turn Officer, Executive to the call now Group's Chief Uni to Gunderman. Kenny over Please go ahead, Mr. Gunderman.

Kenny Gunderman

well, Good Uniti second highest within evidenced Both sales of our tailwinds MRR, demand the morning, was bookings and infrastructure. Fiber for the Leasing approximately communications you. by representing infrastructure $X of businesses new demand This everyone. quarter by in quarters perform fiber bookings. consolidated fueled million for the of consolidated our one ever again consecutive industry continued Uniti Thank exceptionally strong and continue to

Turning we're to independent third has Slide fiber eighth operator. the largest country, the X, network in largest Uniti and the

future foundation benefits attractive unique the infrastructure our development for anchor and the cells, to connected with setting in by of investments towers opportunity to expand deployments. portfolio passed XX-gig the macro Unity upgrades fiber. continues networks, XG Our small provide need for These networks with further homes cell small of grow economics, and driven quarter share investment each lease-up buildings, the more and C-RAN validating

meaningful successfully our an mix continues attractive cash optimal for economics. is customers that Uniti X, that the attractive long-term drive or and today further new returns. flow to increase anchor most acquires minimal to shared drive wireless past bookings way adding is of business lease-up We're mid- Slide installs an anchor resulting cash high threefold We XX%, builds high yield additional tenants model infrastructure healthy approximately single And anchor and the very of then all yield represents mix. believe margins and of effective Slide digits. of years. X Unity economics this the with five and largely a cumulative to healthy proof fiber on within evidenced the CapEx. in the with As yields from almost flow a demonstrating in

of however, mentioned the increase million I had $X XX% positive we second is of sales a of in earlier, quarter consolidated third part As from our bookings of story. only itself, of new MRR, bookings The amount the quarter consecutive XXXX. approximately of

and is also can leased gradually lease-up growing growth see on of up bookings, focus. an You a a of enhancement focus result This growth, mix steady bookings anchor nature. there's only both that this also and wholesale, continue and that intentional very good outsized margin on healthy wholesale non-wholesale non-wholesale and in a is new and our part expect not are and balance there to a of we but AFFO as

XX% the of at bookings quarter third in million level. were third Sales increase quarter of this to specifically Turning bookings MRR, consecutive of in XXXX Uniti of an over second our Fiber. $X.X and quarter the

bookings we ever quarter. highest In of had level fact, enterprise our for a

of our of In wireless came from terms major XX% lease-up bookings of sales mix, our builds. anchor

XX% the efforts second combined. over and MRR lease-up within of our with past sold in Southeast up ramp to approximately third lease-up quarters the occurring four our markets quarters continue We

in making wholesale the Leasing, actively to we continue the Uniti X largest of us to fiber strand of national Turning to X. market to miles players over lease million available fiber parties, that At Slide is third market. one

as as carrier such they to active MSOs national services. be group and non-wireless continue cloud-based same the customers, expand Our their

Uniti are Uniti and a in Leasing contract new announced and connects to we To customers I'll that separately, provide and dark now increasing recently Fiber call data are international An we fiber to see one route for marketed fiber Ashburn, we high report centers consolidated Fiber the along fiber as our a trend of that number For Uniti to businesses a key customer clear, turn routes. that, Pittsburgh with be robust long-haul large although Leasing strand With example, to continue. continuing hyperscale both Virginia count Uniti of to network over solutions and Paul. XX-year business. networks the mix are demand customers a demonstrating

Paul Bullington

morning, everyone. Kenny. you, Thank Good

Leasing both at well execute and activity driving costs. and Uniti operational in lower-than-anticipated progress by to our Uniti and revenue evidenced higher-margin Fiber continue as We our robust bookings recurring

we year result, which from are AFFO our shortly. in full our per EBITDA for the share, a more midpoint outlook prior of outlook common XXXX I cover detail increasing adjusted and As will diluted

of well $XXX share. from Uniti achieved Windstream, X% an the Accordingly, contracts At MLAs or to our investments for shares million diluted quarter. that We up AFFO shares our and we million million, Uniti are and into X, could $XXX slip of GCI subsequent there common EBITDA common the year. of was million, reflects as EBITDA dark and Leasing, third quarter Net of of EBITDA Windstream of outlook $X.XX the $X.XX. settlement adjusted the with Please we and X%, to quarter. per share maintaining impact contractual AFFO rent the revenues adjusted attributable turn to for non-recurring to $XXX consolidated $XXX consolidated attributed $XX the reported the We our remains XX% the the as margin possibility Everstream the income agreement, some straight-line diluted reported Leasing as segment transaction The under per Slide common core million million, adjusted of I'll quarter prior recognition year-over-year IRU lease $XXX escalators. start from acquired respectively, on midpoint of comments XXXX. revenues previous of for the XXXX revenue of growth annual fiber and first revenue

X. Slide to Turning

growth capital positive investment continues to program yield results. Our

is six Collectively, gradually these will investments As and networks. invest approximately newly a the continue over including of of fiber, has coming as miles route that overbuilt we network its Both continue focused being years billion fiber with has fiber. years, XX,XXX of expect and each to we begun tenant largely commercial constructed have our long-term that resulted reminder, mile on and past numbers quarter capital over of over Unity in tenant $X investment value-accretive increase in XX% to expected valuable increase these parks fiber-to-the-home. last materially the now and around highly our they legacy fiber our improvements to investing fiber own capital in continue. the invested and network and copper

growth added million route fiber $XX of of During quarter, Uniti the around GCI network the almost states. relating miles the to These all Leasing capital with valuable deployed to initiatives X,XXX different investment program. third investments Windstream investments XX across approximately towards Uniti's-owned GCI

fiber reported annualized sites our we our the million XXX within termination backlog basis date during with improvement revenues. the ultimately quarter, As At annual was Adjusted operational investments higher-margin rent. of backlog the success-based continued incremental Windstream, Fiber They equipment nearly the network. of of initial backhaul, of be over while subject September million few prior to of an a million will generate expectations third expect investments. around emphasis XX, with XXX,XXX $XX annualized Uniti approximately expectations. in recurring cell an the date escalator during X% due core of years. leases in million sales cash we in for CapEx $XX miles X.X% margin. for dark adding dark XXX% made sites X,XXX result small This currently in was and Uniti during and quarter, to revenue the and our have to third and has the fiber making X,XXX installs to These on backhaul, non-recurring year was carriers timing net anniversary turned annualized and fiber program million The $XX recurring around At was was in lit Fiber, costs invested line approximately Uniti across at remaining with revenues core consistent These expectations. quarter the our $XX our Fiber, to Uniti $X.X revenue. the capital million our lit strand We investments below route Uniti point early cell revenues under fees. GCI EBITDA footprint $XX margin our from the XX%, revenue we XXX wireless to due a of expectations, Adjusted some of we have question. Southeast represents that EBITDA next master of $XXX wireless miles are and the add added such one-year quarter lower our yield deploy of to at with representing will to line million.

CapEx $X guidance. maintenance to turn our now X% million cover I Slide updated of will and We of or revenues. also incurred about XX, Please

prior notes impact redemption, costs the We other unsecured and costs date. of our our operational related for the primarily and issuance are of of X% revising impact recent the incurred and guidance lower-than-expected transaction-related to

mentioned transaction-related excludes not and outlook statements. and these from transactions results specifically could current future capital costs herein. Our forward-looking materially market other differ future acquisitions, Actual

and approximately of Revenue adjusted XXXX and Our GCI $XXX each relating we current at EBITDA EBITDA master rent the $XXX Leasing, the following Uniti and continue to includes and EBITDA leases for to representing margins revenues full include Windstream adjusted million XX%. straight-line respectively, with be outlook $XX Beginning million, segment. with the million associated for midpoint, year expect adjusted each the investments. to

our CapEx Non-Windstream Windstream providing the X, of million growth with million reflects of success-based of estimated our of investments. Most GCI Slide to over Our EBITDA are and guidance, relates at a and X markets and be Tier continued outlook at and transaction. expected which and from markets, parties substantial similar of $XXX dark leases XX% fiber Windstream, these This now at Uniti opportunities grow highlights. includes IRU Everstream net revenues we diversified million XX contracts $XX Windstream from healthy multiple Tier up IRU where $XXX Leasing midpoint third time. acquired adjusted fiber $XX own levels. assets are respectively, XX% the XXXX the across the pace are to that the part million, is and dark revenue to to

at $XXX midpoint. Turning We still to of to Slide expect revenue Uniti XX. contribute the Fiber million

for basis year of margin year. million $XXX lower-than-expected last of increase point EBITDA this of midpoint prior full to operational adjusted in outlook is expect to a XXXX, improvement now primarily compared the guidance, XX% which a representing year The due our is EBITDA slight we costs. at from our adjusted However, XXX

revenue impact the the the of and our $XXX Everstream out Fiber is Uniti adjusted XX%, still part these As last Net year. EBITDA for transaction expected items, impacted our to we construction Fiber's by year the business. Adjusting increase quarter, non-core be success-based sale our for the operations prior for million down expected is of on outlook are X% Fiber to as now from and Northeast of at of guidance. by Uniti call and XXXX of earnings midpoint respectively, the at Uniti CapEx pointed winding two this our

Turning to Slide XX.

we $XXX share costs. due to AFFO between with million and now per EBIDTA $X.X range adjusted the basis, to revenues share XXXX, to consolidated $X.XX and a midpoint. to year midpoint lower-than-expected common billion operational be $X.XX a expect diluted For diluted On of we full at expect be $X.XX per

early Reported consolidated the contemplates million, million due will X% to X.XX% deferred financing debt. paid to deferred repayment financing and write-offs and due notes segments an $XX is of and approximately premiums business the to of full the Our expense. unsecured of compensation our for excluding due any notes paid $XXX stock-based relating in guidance of XXXX include additional and on our secured SG&A, to senior million senior expense premiums X% million interest XXXX, write-off cost $XX now XXXX approximately XXXX. year amounts interest be $XX allocated X% relating Corporate costs repayment expected of unsecured early excluding notes expense our senior including

common diluted full to for We year to average shares XXX XXXX around million shares. expect be weighted continue outstanding

key for included ranges of As in the outlook appendix are a guidance presentation. to our our components reminder,

our used structure. our we and notes million this successful by borrowing the to year, the issued $XXX from over we interest debt capital Through with to at of were note will refinancings and be XX, and the the notes units emergence several now in on million XXXX, par. remaining interest four due senior in These on interest closed savings the our notes significantly January X% XX, successfully cash extended under the executed cost that October X% due substantially lowered we expected offering On the due hand, used and XXXX. maturities from payments Company issuance have XX, the On improved costs were annual redeem $X into entered settlement issuance XXXX. together the unsecured of to Unity at plus unpaid will accrued with of senior years. Windstream the full October $XX December so unsecured on Turning of in agreement, XXXX, prepay settlement savings next have of flexibility, from obligation approximately outstanding our any proceeds million. portion far debt the financial Most and of bankruptcy, proceeds resulting with X% settlement bear

million we of be approximately have As settlement paid. today, $XXX of to installment remaining payments

we sheet end, opportunistic at had cash and undrawn prepaying $XXX to same expect settlement be cash million unrestricted our At combined revolver equivalents capacity. we of in approximately time. while the remaining quarter forward, the balance payments Going and managing

stood This of ratio Kenny. to per to now based leverage EBITDA. declared X. Board payable back of January the XX turn morning, over on to adjusted net stockholders on share at I'll debt December and $X.XX call a our Our annualized X.XXx dividend record

Kenny Gunderman

value to turn Slide business non-Windstream exists. to the our like moment take a disconnect still Please Paul. effort to our and I'd discuss and believe continuing we Thanks, XX. highlight

two Uniti Uniti the Windstream. payment performance Fiber also of represent third lease first last with received years table the The two plus of CLEC non-Windstream the we fiber the including leasing our of from problem business columns

represents Uniti the fiber fiber independent largest of one business. operators. Fiber in Our country network largest the eighth as and fiber holistic one Uniti including It operate Leasing platform, the and

strong intervals. We're a Our flows strategy a business we evidenced we're and cash the passive boots that stable progress Tier brand by where X% targeting and churn and is average this evidenced swings well-developed X as our of a line however, relatively on industry-leading are an uninterrupted has growth unique X% with strategy remaining in on well full-service level, advantage, and provider. adjusted At years, delivery nine very light-touch markets ground. height the which bookings, by service of a our offer during pandemic. we is fiber continued wholesale EBITDA X competitive have top growth, wholesale our of relatively and in collective executing X% the been the term to immune economy, making COVID national

X% in dense any metro many additional without also country. capital-efficient to potential markets. existing Having year we We growing including come. material Our and very additional markets lease-up We're sales XX% and about cash with This flow other services, at operating our fiber less that, incremental and latent adding than enterprise attractive only growth business, which margin-friendly our selective fiber XX yields. own and substantial to around implying metro is most said XXX tenants, enterprise approximately markets market for markets, potential provides share the of growth markets. in plus at estimate a offer new today, years we're about

Lastly, anyone our every stand-alone and is the and this as and network business we're industry reach also a We to enough density building as characteristics be the of combined in entity. believe much growing the day. has new sizable fiber

transactions. Turning The M&A, acquisitions, to XX. asset market sales remain and and to M&A to acquisitions given strategy large We our on were briefly do bolt-on we on to that Slide front. efforts rumors. has quickly, investors acquisitions very inorganically. our active realize categories: especially we more the three to continue want do like not and M&A that set Windstream them and sale changed grow look focused complement as comment at settlement, transformative more I'd on we've us our business Since leaseback consistently recent

a our to us that have disciplined approach, in that efficient refining come very value disconnect value will separate -- being Board appreciate. investors with exists. spending and also our allow We're hopefully help which also in time evaluating we're We'll the and our to and our However, analysis would tax highlight also manner. assets

our undervalued, about vocal given network nature the the mission-critical been in senior network of we've lease placement and and the the example, For of ILEC lease. especially particular,

a set Lastly, how in private value versus investors valued we disconnect them. assets assets funds that strategic year are to transformative general a the and consistently transactions. public of between have our said large evaluating we and businesses how fiber There's very past we've in that are seem

discussions we ready smart and sellers to these buyers ongoing To paths Our to we're that, clear, but all operator, be are on reinforce take now themes. be strategy continue value. questions. open-minded to business are With on executing to organically our we've focused and growing proven M&A, our maximize shareholder executing that and of bolt-on

Operator

Williams from the with question Cowen. of [Operator line comes first Greg Instructions] Your

Greg Williams

Great. reports Slide deal weeks, impact. last really there's Kenny, And if on an maybe the case few and the bid-ask valuation around you a here is has believe that impact XX. the we're articulated to in the

the Some think Windstream XXXX MLA million $XXX formulaic. And remains cut? seems does it the of the you the is the at in stream. escalators? on perhaps -- Exhibit valuation the pushback it MLA it renewal as discusses Or Does get about more plus and E whether that renewal, the

your you just your And thoughts the valuation? us can latest So calculus on XXXX in give renewal? yourself what's

Kenny Gunderman

was holistically the the rent valuation Greg. third-party reaffirmed of Yes, a just and Thanks, lease, and set cap at last then cap going was rate, it little forth. the X% over year, -- back with X% around reports renegotiated you rate, an to first as essentially the Yes. lease know, so all, we original and

five- and made five network of that really And with not investment the -- new the deal in period. that a So lot in years six-year was or into fiber

network, years value otherwise. its XX current going be good of investment value feel the and on now, substantial from that based program when asset investment to plans, the a maintain to just to new during enhance the out but amount at our holding look investment least you its about And not through value we in So period. there's GCI

the -- think see including do, we which the industry, that the around from and feel as look, the I and progress fiber-to-the-home certainly tenant, industry in we believe we So good our if trend, is see earnings revealing with we and you about trajectory. certainly really

we the precipitously And declining of don't our by dropping means. value and so any network see off

will value. it's fair fact, -- look, the calculation, be going and certainly the value we fair years value. in hold market believe reset it's In But enhance there's formula XX no rent value, its market to

So, I the for are looking Unity. think -- positive but I think trends

Operator

with question James. comes from Louthan Frank Your Raymond next

Frank Louthan

walk a lease do you you MLA? of there through wasn't the elements buy in us have had follow-up. to you network the Can rights in you In XXXX? the event that couple I've lease ILEC operate And a to of particular, then to a protections the in certain still the Windstream's got allow renewal

Kenny Gunderman

Yes. if there's the chooses what referring Frank, to in happens are XXXX not if you -- to renew Windstream not lease?

Frank Louthan

Yes.

master some those the that to Or new Are you think allows place elements non-renewal. you still lease changed? some in of in had that agreement? I in case pauses the purchase has with

Kenny Gunderman

if Frank. XX I'm way lease, it away, long sorry, hasn't but General about think and and lease, renew and ourselves are step little Windstream And is operate Counsel, do think years I'm changed, on a and that I think does It's we have a we foggy from but -- didn't there change It original it. protections. operate then at -- or it. not the And someone acquire it looking have else operations right the generally, chose to to it. in the the generally, would my I

So that go away there's the those from Frank? risk lease. not operations a

Frank Louthan

I'm here. sorry, I'm

you're some you investing fiber. mentioned So

fiber own providers territory? other to the fiber-to-the-home. commercial building building and Windstream the broadband residential some of that you the some Is business? your or mentioned You of Are some outside home parts for

Kenny Gunderman

and all the for Windstream, program that's are. GCI within fiber-to-the-home No, builds the

Operator

with question Instructions] [Operator from Morgan Stanley. Flannery next Your Simon comes

Simon Flannery

Any estimate I to comment non-recurring. seen bit haven't you which there the thoughts pressure focus the on little the about had, business seeing new lower yet, what primarily I little going E-Rate then 'XX you. bookings the But Where 'XX backhaul, to government. just a and is the wonder that fiber and Q a were of we was the think just enterprise that? the outlook? but you in similar some due if signings, and below could mentioned on you we're on is bit. levels? you've wholesale I And could intensity and our early and think capital as maybe revenues, to the be Thank

Kenny Gunderman

in recurring But to start add. you'd core at business is doing I'll can jump if yes, fiber. Paul Simon, and great like the

Uniti And disclosure, you at that year. $XX non-recurring. core like non-recurring recurring If core this said look quarter. the something below we we've at million for and our That's Fiber of think plan revenue always bifurcated we is I core have part between this

and year, timing good are -- business timing churn equipment growth very, the service the don't changes. guidance a give implied all sales we've good perspective. really up quarter that which and to so to core reiterated from a any from terrific but intensity, predict very yes, make changes expect ready infer strong we're So not metrics or I ETL that I material itself With just capital harder and for to recurring -- and we But that's to core business. XXXX, think can any strong you the any on revenue, But doing so think we're fourth from think respect perspective. is revenue for I year the guidance just delivery installs, a going the bookings, and in minimal

a trajectory is below at general not margin and little the what levels, of think of I existing we're enhancement still simmering if kind of kind thinking. capital intensity

Simon Flannery

that think Can a us OpEx there. Great. that's costs, I guess going Because sustainable? just there? something give people inflationary are And what on worried any but I was was about pressures is also on color you elsewhere, the on good surprise

Kenny Gunderman

Yes.

the so. of we've combination One, conscious years. cost couple things, a it's just really -- I past Simon. three particularly think of We in been

are think pretty businesses thing we've But do. not just business. core that's to been general good two, a our that I non-recurring vocal about to low-margin exiting

much for numbers. wound projects, in and no pretty down the longer have like example those So they're businesses just one-off So construction

some from and focused showing benefit component we you We're where when at to margin, slide and then you But And stuff that. that impact the really these of seeing the and seeing show on lease lease-up really you're that cash right, But economics business. thirdly, that. really do then up. parts we've it higher bringing that, on starts -- the so higher flow margin you're scale the you

So ultimately, going exactly we forward, focusing what on. yes, continue that's to expect

Operator

this no At questions. for would it to to Mr. there remarks. back your are I like closing time, additional Gunderman turn over

Kenny Gunderman

all you next Uniti, for Thank we in you. interest conversation and your in Thank look a forward our to having months. few

Operator

Thank today's call. you. This conference concludes

disconnect. may You now

Uniti (UNIT) 4 Nov 212021 Q3 Earnings call transcript