| |||||
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
| |||||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| ||||
Maryland | 46-5230630 | ||||
(State or other jurisdiction of
| (I.R.S. Employer | ||||
| |||||
2101 Riverfront Drive,
A Little Rock, Arkansas |
| ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock | UNIT | The NASDAQ Global Select Market |
Large accelerated filer | x |
| Accelerated filer |
| ||||||||||
Non-accelerated filer | o |
| Smaller reporting company |
| ||||||||||
Emerging growth company |
|
|
|
•the future prospects of our largest customer, Windstream, following its emergence from bankruptcy; |
|
•adverse impacts of the COVID-19 pandemic, inflation and rising interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets; |
|
•the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements; |
|
•the ability of our customers to comply with laws, rules and regulations in the operation of the assets we lease to them; |
|
•the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, 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; |
|
•our ability to renew, extend or retain our contracts or to obtain new contracts with significant customers (including customers of the businesses that we acquire); |
|
•the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses; |
|
•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; |
|
•adverse impacts of litigation or disputes involving us or our customers; |
|
•our ability to retain our key management personnel; |
|
|
|
•changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs, including the impact of the CARES Act, the Families First Coronavirus Response Act and the 2021 Appropriations Act; |
|
•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; |
|
•the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire; |
|
•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 |
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(Unaudited) | ||||||||||||||
(Thousands, except par value) | June 30, 2022 | December 31, 2021 | ||||||||||||
Assets: | ||||||||||||||
Property, plant and equipment, net | $ | 3,615,532 | $ | 3,508,939 | ||||||||||
Cash and cash equivalents | 61,405 | 58,903 | ||||||||||||
Accounts receivable, net | 45,679 | 38,455 | ||||||||||||
Goodwill | 601,878 | 601,878 | ||||||||||||
Intangible assets, net | 349,737 | 364,630 | ||||||||||||
Straight-line revenue receivable | 55,621 | 41,323 | ||||||||||||
Operating lease right-of-use assets, net | 82,162 | 80,271 | ||||||||||||
Other assets | 84,976 | 38,900 | ||||||||||||
Investment in unconsolidated entities | 39,309 | 64,223 | ||||||||||||
Deferred income tax assets, net | 18,907 | 11,721 | ||||||||||||
Total Assets | $ | 4,955,206 | $ | 4,809,243 | ||||||||||
Liabilities and Shareholders' Deficit: | ||||||||||||||
Liabilities: | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 131,073 | $ | 86,868 | ||||||||||
Settlement payable (Note 13) | 245,171 | 239,384 | ||||||||||||
Intangible liabilities, net | 172,439 | 177,786 | ||||||||||||
Accrued interest payable | 131,080 | 109,826 | ||||||||||||
Deferred revenue | 1,170,004 | 1,134,236 | ||||||||||||
Derivative liability, net | 4,067 | 10,413 | ||||||||||||
Dividends payable | 745 | 1,264 | ||||||||||||
Operating lease liabilities | 60,829 | 57,355 | ||||||||||||
Finance lease obligations | 15,214 | 15,348 | ||||||||||||
Notes and other debt, net | 5,099,782 | 5,090,537 | ||||||||||||
Total liabilities | 7,030,404 | 6,923,017 | ||||||||||||
Commitments and contingencies (Note 13) | 0 | 0 | ||||||||||||
Shareholders' Deficit: | ||||||||||||||
Preferred stock, $0.0001 par value, 50,000 shares authorized, no shares issued and outstanding | — | — | ||||||||||||
Common stock, $0.0001 par value, 500,000 shares authorized, issued and outstanding: 235,700 shares at June 30, 2022 and 234,779 at December 31, 2021 | 24 | 23 | ||||||||||||
Additional paid-in capital | 1,224,427 | 1,214,830 | ||||||||||||
Accumulated other comprehensive loss | (3,516) | (9,164) | ||||||||||||
Distributions in excess of accumulated earnings | (3,298,455) | (3,333,481) | ||||||||||||
Total Uniti shareholders' deficit | (2,077,520) | (2,127,792) | ||||||||||||
Noncontrolling interests: | ||||||||||||||
Operating partnership units | 2,072 | 13,893 | ||||||||||||
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding | 250 | 125 | ||||||||||||
Total shareholders' deficit | (2,075,198) | (2,113,774) | ||||||||||||
Total Liabilities and Shareholders' Deficit | $ | 4,955,206 | $ | 4,809,243 |
(Thousands, except par value) |
| (Unaudited) September 30, 2021 |
|
| December 31, 2020 |
| ||
Assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
| $ | 3,472,642 |
|
| $ | 3,273,353 |
|
Cash and cash equivalents |
|
| 69,751 |
|
|
| 77,534 |
|
Accounts receivable, net |
|
| 39,014 |
|
|
| 62,952 |
|
Goodwill |
|
| 601,878 |
|
|
| 601,878 |
|
Intangible assets, net |
|
| 372,076 |
|
|
| 390,725 |
|
Straight-line revenue receivable |
|
| 33,839 |
|
|
| 13,107 |
|
Other assets, net |
|
| 122,901 |
|
|
| 152,883 |
|
Investment in unconsolidated entities |
|
| 64,659 |
|
|
| 66,043 |
|
Deferred income tax assets, net |
|
| 7,524 |
|
|
| - |
|
Assets held for sale |
|
| - |
|
|
| 93,343 |
|
Total Assets |
| $ | 4,784,284 |
|
| $ | 4,731,818 |
|
Liabilities and Shareholders' Deficit: |
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities, net |
| $ | 156,428 |
|
| $ | 146,144 |
|
Settlement payable (Note 14) |
|
| 358,329 |
|
|
| 418,840 |
|
Intangible liabilities, net |
|
| 180,459 |
|
|
| 187,886 |
|
Accrued interest payable |
|
| 60,726 |
|
|
| 95,338 |
|
Deferred revenue |
|
| 1,143,301 |
|
|
| 995,123 |
|
Derivative liability, net |
|
| 13,606 |
|
|
| 22,897 |
|
Dividends payable |
|
| 964 |
|
|
| 36,725 |
|
Deferred income tax liabilities, net |
|
| - |
|
|
| 10,540 |
|
Finance lease obligations |
|
| 15,538 |
|
|
| 15,468 |
|
Contingent consideration |
|
| - |
|
|
| 2,957 |
|
Notes and other debt, net |
|
| 4,973,174 |
|
|
| 4,816,524 |
|
Liabilities held for sale |
|
| - |
|
|
| 55,752 |
|
Total liabilities |
|
| 6,902,525 |
|
|
| 6,804,194 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Deficit: |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 50,000 shares authorized, 0 shares issued and outstanding |
|
| - |
|
|
| - |
|
Common stock, $0.0001 par value, 500,000 shares authorized, issued and outstanding: 234,495 shares at September 30, 2021 and 231,262 at December 31, 2020 |
|
| 23 |
|
|
| 23 |
|
Additional paid-in capital |
|
| 1,208,611 |
|
|
| 1,209,141 |
|
Accumulated other comprehensive loss |
|
| (11,984 | ) |
|
| (20,367 | ) |
Distributions in excess of accumulated earnings |
|
| (3,333,686 | ) |
|
| (3,330,455 | ) |
Total Uniti shareholders' deficit |
|
| (2,137,036 | ) |
|
| (2,141,658 | ) |
Noncontrolling interests: |
|
|
|
|
|
|
|
|
Operating partnership units |
|
| 18,670 |
|
|
| 69,157 |
|
Cumulative non-voting convertible preferred stock, $0.01 par value, 3 shares authorized, 1 issued and outstanding |
|
| 125 |
|
|
| 125 |
|
Total shareholders' deficit |
|
| (2,118,241 | ) |
|
| (2,072,376 | ) |
Total Liabilities and Shareholders' Deficit |
| $ | 4,784,284 |
|
| $ | 4,731,818 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands, except per share data) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: | |||||||||||||||||||||||||
Leasing |
| $ | 199,485 |
|
| $ | 182,370 |
|
| $ | 590,478 |
|
| $ | 552,042 |
| Leasing | $ | 205,614 | $ | 196,057 | $ | 410,255 | $ | 390,993 | |||||||||||||||||
Fiber Infrastructure |
|
| 67,262 |
|
|
| 76,395 |
|
|
| 217,035 |
|
|
| 232,942 |
| Fiber Infrastructure | 78,361 | 72,123 | 151,754 | 149,773 | |||||||||||||||||||||
Tower |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,112 |
| ||||||||||||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 651 |
| ||||||||||||||||||||||||||
Total revenues |
|
| 266,747 |
|
|
| 258,765 |
|
|
| 807,513 |
|
|
| 791,747 |
| Total revenues | 283,975 | 268,180 | 562,009 | 540,766 | |||||||||||||||||||||
Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Costs and Expenses: | |||||||||||||||||||||||||
Interest expense |
|
| 94,793 |
|
|
| 102,791 |
|
|
| 341,762 |
|
|
| 388,427 |
| ||||||||||||||||||||||||||
Interest expense, net | Interest expense, net | 96,377 | 106,388 | 192,549 | 246,969 | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
| 70,530 |
|
|
| 79,880 |
|
|
| 211,165 |
|
|
| 250,970 |
| Depreciation and amortization | 72,303 | 69,671 | 143,760 | 140,635 | |||||||||||||||||||||
General and administrative expense |
|
| 25,077 |
|
|
| 26,659 |
|
|
| 75,800 |
|
|
| 81,686 |
| General and administrative expense | 25,085 | 24,900 | 48,955 | 50,723 | |||||||||||||||||||||
Operating expense (exclusive of depreciation and amortization) |
|
| 34,167 |
|
|
| 37,831 |
|
|
| 105,436 |
|
|
| 118,308 |
| Operating expense (exclusive of depreciation and amortization) | 36,917 | 33,185 | 71,893 | 71,269 | |||||||||||||||||||||
Settlement expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 650,000 |
| ||||||||||||||||||||||||||
Transaction related and other costs |
|
| 1,063 |
|
|
| 20,816 |
|
|
| 5,624 |
|
|
| 55,344 |
| Transaction related and other costs | 3,235 | 424 | 4,949 | 4,561 | |||||||||||||||||||||
Gain on sale of real estate |
|
| - |
|
|
| (22,908 | ) |
|
| (442 | ) |
|
| (86,726 | ) | Gain on sale of real estate | (250) | (442) | (250) | (442) | |||||||||||||||||||||
Gain on sale of operations (Note 5) |
|
| - |
|
|
| - |
|
|
| (28,143 | ) |
|
| - |
| ||||||||||||||||||||||||||
Other expense, net |
|
| 283 |
|
|
| 3,098 |
|
|
| 8,758 |
|
|
| 12,186 |
| ||||||||||||||||||||||||||
Gain on sale of operations | Gain on sale of operations | — | (28,143) | — | (28,143) | |||||||||||||||||||||||||||||||||||||
Other (income) expense, net | Other (income) expense, net | (7,930) | 8,021 | (8,328) | 8,475 | |||||||||||||||||||||||||||||||||||||
Total costs and expenses |
|
| 225,913 |
|
|
| 248,167 |
|
|
| 719,960 |
|
|
| 1,470,195 |
| Total costs and expenses | 225,737 | 214,004 | 453,528 | 494,047 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Income (loss) before income taxes and equity in earnings from unconsolidated entities |
|
| 40,834 |
|
|
| 10,598 |
|
|
| 87,553 |
|
|
| (678,448 | ) | ||||||||||||||||||||||||||
Income tax (benefit) expense |
|
| (2,244 | ) |
|
| 2,801 |
|
|
| 283 |
|
|
| (7,650 | ) | ||||||||||||||||||||||||||
Equity in (earnings) from unconsolidated entities |
|
| (604 | ) |
|
| 342 |
|
|
| (1,549 | ) |
|
| 342 |
| ||||||||||||||||||||||||||
Net income (loss) |
|
| 43,682 |
|
|
| 7,455 |
|
|
| 88,819 |
|
|
| (671,140 | ) | ||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests |
|
| 316 |
|
|
| 190 |
|
|
| 984 |
|
|
| (11,808 | ) | ||||||||||||||||||||||||||
Net income (loss) attributable to shareholders |
|
| 43,366 |
|
|
| 7,265 |
|
|
| 87,835 |
|
|
| (659,332 | ) | ||||||||||||||||||||||||||
Income before income taxes and equity in earnings from unconsolidated entities | Income before income taxes and equity in earnings from unconsolidated entities | 58,238 | 54,176 | 108,481 | 46,719 | |||||||||||||||||||||||||||||||||||||
Income tax expense | Income tax expense | 4,944 | 5,084 | 2,873 | 2,527 | |||||||||||||||||||||||||||||||||||||
Equity in earnings from unconsolidated entities | Equity in earnings from unconsolidated entities | (480) | (547) | (1,024) | (945) | |||||||||||||||||||||||||||||||||||||
Net income | Net income | 53,774 | 49,639 | 106,632 | 45,137 | |||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | Net income attributable to noncontrolling interests | 77 | 732 | 205 | 668 | |||||||||||||||||||||||||||||||||||||
Net income attributable to shareholders | Net income attributable to shareholders | 53,697 | 48,907 | 106,427 | 44,469 | |||||||||||||||||||||||||||||||||||||
Participating securities' share in earnings |
|
| (283 | ) |
|
| (229 | ) |
|
| (864 | ) |
|
| (853 | ) | Participating securities' share in earnings | (340) | (333) | (671) | (581) | |||||||||||||||||||||
Dividends declared on convertible preferred stock |
|
| (3 | ) |
|
| (2 | ) |
|
| (8 | ) |
|
| (6 | ) | Dividends declared on convertible preferred stock | (5) | (2) | (10) | (5) | |||||||||||||||||||||
Net income (loss) attributable to common shareholders |
| $ | 43,080 |
|
| $ | 7,034 |
|
| $ | 86,963 |
|
| $ | (660,191 | ) | ||||||||||||||||||||||||||
Net income attributable to common shareholders | Net income attributable to common shareholders | $ | 53,352 | $ | 48,572 | $ | 105,746 | $ | 43,883 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Income per common share: | Income per common share: | |||||||||||||||||||||||||||||||||||||||||
Basic |
| $ | 0.18 |
|
| $ | 0.04 |
|
| $ | 0.37 |
|
| $ | (3.40 | ) | Basic | $ | 0.23 | $ | 0.21 | $ | 0.45 | $ | 0.19 | |||||||||||||||||
Diluted |
| $ | 0.17 |
|
| $ | 0.04 |
|
| $ | 0.37 |
|
| $ | (3.40 | ) | Diluted | $ | 0.21 | $ | 0.20 | $ | 0.42 | $ | 0.19 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||||
Basic |
|
| 233,513 |
|
|
| 198,054 |
|
|
| 232,269 |
|
|
| 194,278 |
| Basic | 235,656 | 231,801 | 235,352 | 231,636 | |||||||||||||||||||||
Diluted |
|
| 264,421 |
|
|
| 198,373 |
|
|
| 232,540 |
|
|
| 194,278 |
| Diluted | 267,361 | 262,268 | 267,045 | 231,862 |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) |
| $ | 43,682 |
|
| $ | 7,455 |
|
| $ | 88,819 |
|
| $ | (671,140 | ) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on derivative contracts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,036 | ) |
Interest rate swap termination |
|
| 2,830 |
|
|
| 2,829 |
|
|
| 8,488 |
|
|
| 7,325 |
|
Other comprehensive income: |
|
| 2,830 |
|
|
| 2,829 |
|
|
| 8,488 |
|
|
| 289 |
|
Comprehensive income (loss) |
|
| 46,512 |
|
|
| 10,284 |
|
|
| 97,307 |
|
|
| (670,851 | ) |
Comprehensive income (loss) attributable to noncontrolling interest |
|
| 338 |
|
|
| 237 |
|
|
| 1,089 |
|
|
| (11,806 | ) |
Comprehensive income (loss) attributable to common shareholders |
| $ | 46,174 |
|
| $ | 10,047 |
|
| $ | 96,218 |
|
| $ | (659,045 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
(Thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
Net income | $ | 53,774 | $ | 49,639 | $ | 106,632 | $ | 45,137 | ||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||
Interest rate swap termination | 2,829 | 2,829 | 5,659 | 5,658 | ||||||||||||||||||||||
Other comprehensive income: | 2,829 | 2,829 | 5,659 | 5,658 | ||||||||||||||||||||||
Comprehensive income | 56,603 | 52,468 | 112,291 | 50,795 | ||||||||||||||||||||||
Comprehensive income attributable to noncontrolling interest | 81 | 773 | 216 | 751 | ||||||||||||||||||||||
Comprehensive income attributable to shareholders | $ | 56,522 | $ | 51,695 | $ | 112,075 | $ | 50,044 |
|
| For the Three Months Ended September 30, |
| For the Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Thousands, except share data) |
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Distributions in Excess of Accumulated Earnings |
|
| Noncontrolling Interest - OP Units |
|
| Noncontrolling Interest - Non-voting Preferred Shares |
|
| Total Shareholders' Deficit |
| (Thousands, except share data) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Distributions in Excess of Accumulated Earnings | Noncontrolling Interest - OP Units | Noncontrolling Interest - Non- voting Preferred Shares | Total Shareholders' Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 |
|
| - |
|
| $ | - |
|
|
| 192,523,083 |
|
| $ | 19 |
|
| $ | 957,656 |
|
| $ | (25,937 | ) |
| $ | (3,219,623 | ) |
| $ | 70,622 |
|
| $ | 125 |
|
| $ | (2,217,138 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | Balance at March 31, 2021 | — | $ | — | 231,694,203 | $ | 23 | $ | 1,150,550 | $ | (17,580) | $ | (3,355,423) | $ | 68,615 | $ | 125 | $ | (2,153,690) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,265 |
|
|
| 190 |
|
|
| - |
|
|
| 7,455 |
| Net income | — | — | — | — | — | — | 48,907 | 732 | — | 49,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,782 |
|
|
| - |
|
|
| 47 |
|
|
| - |
|
|
| 2,829 |
| Other comprehensive income | — | — | — | — | — | 2,788 | — | 41 | — | 2,829 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.15 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (35,731 | ) |
|
| - |
|
|
| - |
|
|
| (35,731 | ) | Common stock dividends declared ($0.15 per share) | — | — | — | — | — | — | (34,855) | — | — | (34,855) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (521 | ) |
|
| - |
|
|
| (521 | ) | Distributions to noncontrolling interest declared | — | — | — | — | — | — | — | (520) | — | (520) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payments related to tax withholding for stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 88 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 88 |
| Payments related to tax withholding for stock-based compensation | — | — | — | — | (336) | — | — | — | — | (336) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
| - |
|
|
| - |
|
|
| 34,830 |
|
|
| - |
|
|
| 3,341 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,341 |
| Stock-based compensation | — | — | 110,718 | — | 3,462 | — | — | — | — | 3,462 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock - employee stock purchase plan |
|
| - |
|
|
| - |
|
|
| 52,939 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| Issuance of common stock - employee stock purchase plan | — | — | — | — | 31 | — | — | — | — | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Common Stock |
|
| - |
|
|
| - |
|
|
| 38,633,470 |
|
|
| 4 |
|
|
| 244,546 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 244,550 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 |
|
| - |
|
| $ | - |
|
|
| 231,244,322 |
|
| $ | 23 |
|
| $ | 1,205,631 |
|
| $ | (23,155 | ) |
| $ | (3,248,089 | ) |
| $ | 70,338 |
|
| $ | 125 |
|
| $ | (1,995,127 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30 2021 | Balance at June 30 2021 | — | — | 231,804,921 | 23 | 1,153,707 | (14,792) | (3,341,371) | 68,868 | 125 | (2,133,440) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 |
|
| - |
|
| $ | - |
|
|
| 231,804,921 |
|
| $ | 23 |
|
| $ | 1,153,707 |
|
| $ | (14,792 | ) |
| $ | (3,341,371 | ) |
| $ | 68,868 |
|
| $ | 125 |
|
| $ | (2,133,440 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | Balance at March 31, 2022 | — | $ | — | 235,297,990 | $ | 23 | $ | 1,220,039 | $ | (6,341) | $ | (3,316,781) | $ | 10,788 | $ | 250 | $ | (2,092,022) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 43,366 |
|
|
| 316 |
|
|
| - |
|
|
| 43,682 |
| Net income | — | — | — | — | — | — | 53,697 | 77 | — | 53,774 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,808 |
|
|
| - |
|
|
| 22 |
|
|
| - |
|
|
| 2,830 |
| Other comprehensive income | — | — | — | — | — | 2,825 | — | 4 | — | 2,829 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.15 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (35,681 | ) |
|
| - |
|
|
| - |
|
|
| (35,681 | ) | Common stock dividends declared ($0.15 per share) | — | — | — | — | — | — | (35,371) | — | — | (35,371) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (141 | ) |
|
| - |
|
|
| (141 | ) | Distributions to noncontrolling interest declared | — | — | — | — | — | — | — | (78) | — | (78) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| 2,528,199 |
|
|
| - |
|
|
| 50,395 |
|
|
| - |
|
|
| - |
|
|
| (50,395 | ) |
|
| - |
|
|
| - |
| Exchange of noncontrolling interest | — | — | 86,949 | — | 4,099 | — | — | (8,719) | — | (4,620) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payments related to tax withholding for stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (10 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (10 | ) | Payments related to tax withholding for stock-based compensation | — | — | — | — | (2,911) | — | — | — | — | (2,911) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
| - |
|
|
| - |
|
|
| 123,050 |
|
|
| - |
|
|
| 4,166 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,166 |
| Stock-based compensation | — | — | 314,574 | 1 | 3,200 | — | — | — | — | 3,201 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock - employee stock purchase plan |
|
| - |
|
|
| - |
|
|
| 39,186 |
|
|
| - |
|
|
| 353 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 353 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 |
|
| - |
|
| $ | - |
|
|
| 234,495,356 |
|
| $ | 23 |
|
| $ | 1,208,611 |
|
| $ | (11,984 | ) |
| $ | (3,333,686 | ) |
| $ | 18,670 |
|
| $ | 125 |
|
| $ | (2,118,241 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | Balance at June 30, 2022 | — | — | 235,699,513 | 24 | 1,224,427 | (3,516) | (3,298,455) | 2,072 | 250 | (2,075,198) |
8
|
| For the Nine Months Ended September 30, |
| For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Thousands, except share data) |
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Distributions in Excess of Accumulated Earnings |
|
| Noncontrolling Interest - OP Units |
|
| Noncontrolling Interest - Non-voting Preferred Shares |
|
| Total Shareholders' Deficit |
| (Thousands, except share data) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Distributions in Excess of Accumulated Earnings | Noncontrolling Interest - OP Units | Noncontrolling Interest - Non- voting Preferred Shares | Total Shareholders' Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
|
| - |
|
| $ | - |
|
|
| 192,141,634 |
|
| $ | 19 |
|
| $ | 951,295 |
|
| $ | (23,442 | ) |
| $ | (2,494,740 | ) |
| $ | 83,704 |
|
| $ | - |
|
| $ | (1,483,164 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (659,332 | ) |
|
| (11,808 | ) |
|
| - |
|
|
| (671,140 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 287 |
|
|
| - |
|
|
| 2 |
|
|
| - |
|
|
| 289 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.15 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (94,017 | ) |
|
| - |
|
|
| - |
|
|
| (94,017 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,560 | ) |
|
| - |
|
|
| (1,560 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative non-voting convertible preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 125 |
|
|
| 125 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payments related to tax withholding for stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (962 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (962 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
| - |
|
|
| - |
|
|
| 372,430 |
|
|
| - |
|
|
| 10,446 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,446 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock - employee stock purchase plan |
|
| - |
|
|
| - |
|
|
| 96,788 |
|
|
| - |
|
|
| 306 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 306 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement Common Stock |
|
| - |
|
|
| - |
|
|
| 38,633,470 |
|
|
| 4 |
|
|
| 244,546 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 244,550 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 |
|
| - |
|
| $ | - |
|
|
| 231,244,322 |
|
| $ | 23 |
|
| $ | 1,205,631 |
|
| $ | (23,155 | ) |
| $ | (3,248,089 | ) |
| $ | 70,338 |
|
| $ | 125 |
|
| $ | (1,995,127 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 |
|
| - |
|
| $ | - |
|
|
| 231,261,958 |
|
| $ | 23 |
|
| $ | 1,209,141 |
|
| $ | (20,367 | ) |
| $ | (3,330,455 | ) |
| $ | 69,157 |
|
| $ | 125 |
|
| $ | (2,072,376 | ) | Balance at December 31, 2020 | — | $ | — | 231,261,958 | $ | 23 | $ | 1,209,141 | $ | (20,367) | $ | (3,330,455) | $ | 69,157 | $ | 125 | $ | (2,072,376) | |||||||||||||||||||||||||||||||||||||||||||
Cumulative effect adjustment for adoption of new accounting standard |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (59,908 | ) |
|
| - |
|
|
| 14,598 |
|
|
| - |
|
|
| - |
|
|
| (45,310 | ) | Cumulative effect adjustment for adoption of new accounting standard | — | — | — | — | (59,908) | — | 14,598 | — | — | (45,310) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 87,835 |
|
|
| 984 |
|
|
| - |
|
|
| 88,819 |
| Net income | — | — | — | — | — | — | 44,469 | 668 | — | 45,137 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,383 |
|
|
| - |
|
|
| 105 |
|
|
| - |
|
|
| 8,488 |
| Other comprehensive income | — | — | — | — | — | 5,575 | — | 83 | — | 5,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.15 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (105,664 | ) |
|
| - |
|
|
| - |
|
|
| (105,664 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.30 per share) | Common stock dividends declared ($0.30 per share) | — | — | — | — | — | — | (69,983) | — | — | (69,983) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,181 | ) |
|
| - |
|
|
| (1,181 | ) | Distributions to noncontrolling interest declared | — | — | — | — | — | — | — | (1,040) | — | (1,040) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payments related to tax withholding for stock-based compensation | Payments related to tax withholding for stock-based compensation | — | — | — | — | (2,642) | — | — | — | — | (2,642) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | Stock-based compensation | — | — | 507,199 | — | 6,797 | — | — | — | — | 6,797 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock - employee stock purchase plan | Issuance of common stock - employee stock purchase plan | — | — | 35,764 | — | 319 | — | — | — | — | 319 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30 2021 | Balance at June 30 2021 | — | — | 231,804,921 | 23 | 1,153,707 | (14,792) | (3,341,371) | 68,868 | 125 | (2,133,440) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | Balance at December 31, 2021 | — | $ | — | 234,779,247 | $ | 23 | $ | 1,214,830 | $ | (9,164) | $ | (3,333,481) | $ | 13,893 | $ | 125 | $ | (2,113,774) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | — | — | — | — | 106,427 | 205 | — | 106,632 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | — | — | 5,648 | — | 11 | — | 5,659 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends declared ($0.30 per share) | Common stock dividends declared ($0.30 per share) | — | — | — | — | — | — | (71,276) | — | — | (71,276) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest declared | Distributions to noncontrolling interest declared | — | — | — | — | — | — | — | (160) | — | (160) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative non-voting convertible preferred stock | Cumulative non-voting convertible preferred stock | — | — | — | — | — | — | (125) | — | 125 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| 2,528,199 |
|
|
| - |
|
|
| 50,395 |
|
|
| - |
|
|
| - |
|
|
| (50,395 | ) |
|
| - |
|
|
| - |
| Exchange of noncontrolling interest | — | — | 244,682 | — | 7,257 | — | — | (11,877) | — | (4,620) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payments related to tax withholding for stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,652 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,652 | ) | Payments related to tax withholding for stock-based compensation | — | — | — | — | (4,436) | — | — | — | — | (4,436) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
| - |
|
|
| - |
|
|
| 630,249 |
|
|
| - |
|
|
| 10,963 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,963 |
| Stock-based compensation | — | — | 646,260 | 1 | 6,512 | — | — | — | — | 6,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock - employee stock purchase plan | Issuance of common stock - employee stock purchase plan | — | — | 29,324 | — | 264 | — | — | — | — | 264 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | Balance at June 30, 2022 | — | — | 235,699,513 | 24 | 1,224,427 | (3,516) | (3,298,455) | 2,072 | 250 | (2,075,198) |
9
Issuance of common stock - employee stock purchase plan |
|
| - |
|
|
| - |
|
|
| 74,950 |
|
|
| - |
|
|
| 672 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 672 |
|
Balance at September 30, 2021 |
|
| - |
|
| $ | - |
|
|
| 234,495,356 |
|
| $ | 23 |
|
| $ | 1,208,611 |
|
| $ | (11,984 | ) |
| $ | (3,333,686 | ) |
| $ | 18,670 |
|
| $ | 125 |
|
| $ | (2,118,241 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
10
Six Months Ended June 30, | ||||||||||||||
(Thousands) | 2022 | 2021 | ||||||||||||
Cash flow from operating activities | ||||||||||||||
Net income | $ | 106,632 | $ | 45,137 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | 143,760 | 140,635 | ||||||||||||
Amortization of deferred financing costs and debt discount | 9,015 | 9,371 | ||||||||||||
Loss on debt extinguishment | — | 43,369 | ||||||||||||
Interest rate swap termination | 5,659 | 5,658 | ||||||||||||
Deferred income taxes | (7,185) | 605 | ||||||||||||
Equity in earnings of unconsolidated entities | (1,024) | (945) | ||||||||||||
Distributions of cumulative earnings from unconsolidated entities | 1,969 | 1,950 | ||||||||||||
Cash paid for interest rate swap settlement | (6,346) | (6,110) | ||||||||||||
Straight-line revenues and amortization of below-market lease intangibles | (21,148) | (14,215) | ||||||||||||
Stock-based compensation | 6,513 | 6,797 | ||||||||||||
Change in fair value of contingent consideration | — | 21 | ||||||||||||
Gain on sale of unconsolidated entity (see Note 5) | (7,923) | — | ||||||||||||
Gain on sale of real estate | (250) | (442) | ||||||||||||
Gain on sale of operations | — | (28,143) | ||||||||||||
Loss (gain) on asset disposals | 586 | (218) | ||||||||||||
Accretion of settlement obligation | 5,787 | 8,889 | ||||||||||||
Other | (630) | 143 | ||||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||
Accounts receivable | (7,224) | 19,965 | ||||||||||||
Other assets | 559 | 39,019 | ||||||||||||
Accounts payable, accrued expenses and other liabilities | 5,858 | 46,991 | ||||||||||||
Net cash provided by operating activities | 234,608 | 318,477 | ||||||||||||
Cash flow from investing activities | ||||||||||||||
Capital expenditures | (184,039) | (177,934) | ||||||||||||
Proceeds from sale of unconsolidated entity (see Note 5) | 32,527 | — | ||||||||||||
Proceeds from sale of real estate, net of cash | 325 | 1,034 | ||||||||||||
Proceeds from sale of operations | — | 62,113 | ||||||||||||
Proceeds from sale of other equipment | 431 | 399 | ||||||||||||
Net cash used in investing activities | (150,756) | (114,388) | ||||||||||||
Cash flow from financing activities | ||||||||||||||
Repayment of debt | — | (1,660,000) | ||||||||||||
Proceeds from issuance of notes | — | 1,680,000 | ||||||||||||
Dividends paid | (71,771) | (70,386) | ||||||||||||
Payments of settlement payable | — | (49,011) | ||||||||||||
Payments of contingent consideration | — | (2,979) | ||||||||||||
Distributions paid to noncontrolling interest | (186) | (1,039) | ||||||||||||
Payment for exchange of noncontrolling interest | (4,620) | — | ||||||||||||
Borrowings under revolving credit facility | 105,000 | 205,000 | ||||||||||||
Payments under revolving credit facility | (105,000) | (220,000) | ||||||||||||
Finance lease payments | (601) | (1,393) | ||||||||||||
Payments for financing costs | — | (25,156) | ||||||||||||
Payment of tender premium | — | (25,800) | ||||||||||||
Employee stock purchase program | 264 | 319 | ||||||||||||
Payments related to tax withholding for stock-based compensation | (4,436) | (2,642) | ||||||||||||
Net cash used in financing activities | (81,350) | (173,087) | ||||||||||||
Net increase in cash and cash equivalents | 2,502 | 31,002 | ||||||||||||
Cash and cash equivalents at beginning of period | 58,903 | 77,534 | ||||||||||||
Cash and cash equivalents at end of period | $ | 61,405 | $ | 108,536 | ||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Property and equipment acquired but not yet paid | $ | 10,739 | $ | 17,764 | ||||||||||
Tenant capital improvements | 85,389 | 106,789 |
|
| Nine Months Ended September 30, |
| |||||
(Thousands) |
| 2021 |
|
| 2020 |
| ||
Cash flow from operating activities |
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 88,819 |
|
| $ | (671,140 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 211,165 |
|
|
| 250,970 |
|
Amortization of deferred financing costs and debt discount |
|
| 13,723 |
|
|
| 27,703 |
|
Loss on debt extinguishment |
|
| 43,369 |
|
|
| 73,952 |
|
Interest rate swap termination |
|
| 8,488 |
|
|
| 7,325 |
|
Deferred income taxes |
|
| (2,270 | ) |
|
| (8,506 | ) |
Equity in earnings of unconsolidated entities |
|
| (1,549 | ) |
|
| 342 |
|
Distributions of cumulative earnings from unconsolidated entities |
|
| 2,933 |
|
|
| 960 |
|
Cash paid for interest rate swap settlement |
|
| (9,291 | ) |
|
| (4,886 | ) |
Straight-line revenues |
|
| (22,455 | ) |
|
| (1,036 | ) |
Stock-based compensation |
|
| 10,963 |
|
|
| 10,446 |
|
Change in fair value of contingent consideration |
|
| 21 |
|
|
| 8,086 |
|
Gain on sale of real estate |
|
| (442 | ) |
|
| (86,726 | ) |
Gain on sale of operations |
|
| (28,143 | ) |
|
| - |
|
(Gain) loss on asset disposals |
|
| (232 | ) |
|
| 1,483 |
|
Accretion of settlement obligation |
|
| 13,006 |
|
|
| - |
|
Other |
|
| 97 |
|
|
| (300 | ) |
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 23,938 |
|
|
| 17,699 |
|
Other assets |
|
| (150 | ) |
|
| 4,331 |
|
Accounts payable, accrued expenses and other liabilities |
|
| 1,363 |
|
|
| 43,535 |
|
Settlement payable (Note 15) |
|
| - |
|
|
| 438,577 |
|
Net cash provided by operating activities |
|
| 353,353 |
|
|
| 112,815 |
|
Cash flow from investing activities |
|
|
|
|
|
|
|
|
Other capital expenditures |
|
| (276,010 | ) |
|
| (214,150 | ) |
Proceeds from sale of real estate, net of cash |
|
| 1,034 |
|
|
| 392,011 |
|
Proceeds from sale of operations (Note 5) |
|
| 62,113 |
|
|
| - |
|
Proceeds from sale of other equipment |
|
| 1,143 |
|
|
| - |
|
Windstream asset acquisition |
|
| - |
|
|
| (73,127 | ) |
Net cash (used in) provided by investing activities |
|
| (211,720 | ) |
|
| 104,734 |
|
Cash flow from financing activities |
|
|
|
|
|
|
|
|
Repayment of debt |
|
| (1,660,000 | ) |
|
| (2,044,728 | ) |
Proceeds from issuance of notes |
|
| 1,680,000 |
|
|
| 2,250,000 |
|
Dividends paid |
|
| (105,941 | ) |
|
| (100,759 | ) |
Payment of settlement obligation |
|
| (73,516 | ) |
|
| - |
|
Payments of contingent consideration |
|
| (2,979 | ) |
|
| (15,713 | ) |
Distributions paid to noncontrolling interest |
|
| (1,700 | ) |
|
| (1,802 | ) |
Borrowings under revolving credit facility |
|
| 290,000 |
|
|
| 140,000 |
|
Payments under revolving credit facility |
|
| (220,000 | ) |
|
| (585,019 | ) |
Finance lease payments |
|
| (1,745 | ) |
|
| (2,890 | ) |
Payments for financing costs |
|
| (25,755 | ) |
|
| (47,775 | ) |
Settlement Common Stock issuance |
|
| - |
|
|
| 244,550 |
|
Costs related to the early repayment of debt |
|
| (25,800 | ) |
|
| - |
|
Employee stock purchase program |
|
| 672 |
|
|
| 306 |
|
Payments related to tax withholding for stock-based compensation |
|
| (2,652 | ) |
|
| (962 | ) |
Net cash used in financing activities |
|
| (149,416 | ) |
|
| (164,792 | ) |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
| (7,783 | ) |
|
| 52,757 |
|
Cash and cash equivalents at beginning of period |
|
| 77,534 |
|
|
| 142,813 |
|
Cash and cash equivalents at end of period |
| $ | 69,751 |
|
| $ | 195,570 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Property and equipment acquired but not yet paid |
| $ | 22,586 |
|
| $ | 15,242 |
|
Tenant capital improvements |
|
| 140,996 |
|
|
| 101,877 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
11
12
In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. ASU 2020-06 is effectivewhich have previously adopted Topic 842 for fiscal years beginning after December 15, 2021, andincluding interim periods within those fiscal years, with early adoption permitted.years. The Company elected to early adopt the guidanceadopted ASU 2020-06 as of2021-05 effective January 1, 2021 using the modified retrospective transition method. Pursuant to the transition guidance, the Company is required to apply the guidance to all impacted2022, and there was no impact on our consolidated financial instruments that were outstanding as of January 1, 2021 with the cumulative effect recognized as an adjustment to the opening balance of retained earnings.
As a result of early adopting ASU 2020-06, the Company made certain adjustments to its accounting for the outstanding exchangeable senior unsecured notes. statements.
13
Note 3. Revenues
The following is a description of principal activities, separated by reportable segments (see Note 13), from which the Company generates its revenues.
Leasing
Leasing revenue represents the results from our leasing program, Uniti Leasing, which is engaged in the acquisition of mission-critical communications assets and leasing them to anchor customers on either an exclusive or shared-tenant basis. See Note 4.
Fiber Infrastructure
The Fiber Infrastructure segment represents the operations of our fiber business, Uniti Fiber, which provides (i) consumer, enterprise, wholesale and backhaul lit fiber, (ii) E-rate, (iii) small cell, (iv) construction services, (v) dark fiber and (vi) other revenue generating activities.
|
|
|
|
|
|
|
|
|
|
|
|
Towers
The Towers segment represents the operations of our former towers business, Uniti Towers, through which we acquired and constructed tower and tower-related real estate, which we then leased to our customers in the United States and Latin America. Revenue from our towers business qualifies as a lease under ASC 842 and is outside the scope of ASC 606. Starting in 2019, the Company completed a series of transactions to largely divest of its towers business and on April 2, 2019, May 23, 2019 and June 1,
14
2020, the Company completed the sales of its Latin American business, substantially all of its U.S. ground lease business, and its U.S. tower business, respectively.
Consumer CLEC
The Consumer CLEC segment represents the operations of Talk America through which we operated the Consumer CLEC Business, which provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. Customers are billed monthly for services rendered based on actual usage or contracted amounts. The transaction price is equal to the monthly-recurring charge multiplied by the initial contract term (typically 12 months), plus any non-recurring or variable charges. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC business.
Disaggregation of Revenue
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||||||||||||||||||||||||
|
| September 30, |
|
| September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Revenue disaggregated by revenue stream |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue disaggregated by revenue stream | |||||||||||||||||||||||||
Revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue from contracts with customers | |||||||||||||||||||||||||
Fiber Infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fiber Infrastructure | |||||||||||||||||||||||||
Lit backhaul |
| $ | 19,381 |
|
| $ | 25,160 |
|
| $ | 67,404 |
|
| $ | 80,568 |
| Lit backhaul | $ | 19,937 | $ | 22,979 | $ | 39,375 | $ | 48,023 | |||||||||||||||||
Enterprise and wholesale |
|
| 20,863 |
|
|
| 19,875 |
|
|
| 63,190 |
|
|
| 58,761 |
| Enterprise and wholesale | 21,001 | 21,327 | 41,936 | 42,327 | |||||||||||||||||||||
E-Rate and government |
|
| 13,505 |
|
|
| 17,375 |
|
|
| 48,795 |
|
|
| 60,133 |
| E-Rate and government | 18,505 | 15,926 | 32,782 | 35,290 | |||||||||||||||||||||
Other |
|
| 839 |
|
|
| 2,345 |
|
|
| 2,479 |
|
|
| 3,648 |
| Other | 712 | 824 | 1,373 | 1,640 | |||||||||||||||||||||
Fiber Infrastructure |
| $ | 54,588 |
|
| $ | 64,755 |
|
| $ | 181,868 |
|
| $ | 203,110 |
| Fiber Infrastructure | $ | 60,155 | $ | 61,056 | $ | 115,466 | $ | 127,280 | |||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 651 |
| ||||||||||||||||||||||||||
Leasing |
|
| 1,070 |
|
|
| 177 |
|
|
| 3,237 |
|
|
| 177 |
| Leasing | 1,194 | 1,000 | 2,352 | 2,167 | |||||||||||||||||||||
Total revenue from contracts with customers |
|
| 55,658 |
|
|
| 64,932 |
|
|
| 185,105 |
|
|
| 203,938 |
| Total revenue from contracts with customers | 61,349 | 62,056 | 117,818 | 129,447 | |||||||||||||||||||||
Revenue accounted for under other applicable guidance |
|
| 211,089 |
|
|
| 193,833 |
|
|
| 622,408 |
|
|
| 587,809 |
| ||||||||||||||||||||||||||
Revenue accounted for under leasing guidance | Revenue accounted for under leasing guidance | |||||||||||||||||||||||||||||||||||||||||
Leasing | Leasing | 204,420 | 195,057 | 407,903 | 388,826 | |||||||||||||||||||||||||||||||||||||
Fiber Infrastructure | Fiber Infrastructure | 18,206 | 11,067 | 36,288 | 22,493 | |||||||||||||||||||||||||||||||||||||
Total revenue accounted for under leasing guidance | Total revenue accounted for under leasing guidance | 222,626 | 206,124 | 444,191 | 411,319 | |||||||||||||||||||||||||||||||||||||
Total revenue |
| $ | 266,747 |
|
| $ | 258,765 |
|
| $ | 807,513 |
|
| $ | 791,747 |
| Total revenue | $ | 283,975 | $ | 268,180 | $ | 562,009 | $ | 540,766 |
(Thousands) |
| Contract Assets |
|
| Contract Liabilities |
| ||
Balance at December 31, 2020 |
| $ | 3,462 |
|
| $ | 18,601 |
|
Balance at September 30, 2021 |
| $ | 614 |
|
| $ | 13,942 |
|
(Thousands) | Contract Assets | Contract Liabilities | ||||||||||||
Balance at December 31, 2021 | $ | 4,066 | $ | 9,099 | ||||||||||
Balance at June 30, 2022 | $ | 805 | $ | 8,853 |
15
Practical Expedients and Exemptions
We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.
We exclude from the transaction price any amounts collected from customers for sales taxes and therefore, such amounts are not included in revenue.
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Lease income - operating leases |
| $ | 211,089 |
|
| $ | 193,833 |
|
| $ | 622,408 |
|
| $ | 587,809 |
| Lease income - operating leases | $ | 222,626 | $ | 206,124 | $ | 444,191 | $ | 411,319 |
(Thousands) |
| September 30, 2021 (1) |
| (Thousands) | June 30, 2022⁽¹⁾ | |||||||
2021 |
| $ | 185,067 |
| ||||||||
2022 |
|
| 753,180 |
| 2022 | $ | 379,415 | |||||
2023 |
|
| 760,567 |
| 2023 | 775,007 | ||||||
2024 |
|
| 762,163 |
| 2024 | 778,548 | ||||||
2025 |
|
| 763,786 |
| 2025 | 779,719 | ||||||
2026 | 2026 | 781,321 | ||||||||||
Thereafter |
|
| 3,749,758 |
| Thereafter | 3,043,381 | ||||||
Total lease receivables |
| $ | 6,974,521 |
| Total lease receivables | $ | 6,537,391 | |||||
(1) Total future minimum lease payments to be received include $6.0 billion relating to the Windstream Leases. |
| |||||||||||
(1) Total future minimum lease payments to be received include $5.6 billion relating to the Windstream Leases. | (1) Total future minimum lease payments to be received include $5.6 billion relating to the Windstream Leases. |
16
(Thousands) |
| September 30, 2021 |
|
| December 31, 2020 |
| (Thousands) | June 30, 2022 | December 31, 2021 | |||||||||||||
Land |
| $ | 26,596 |
|
| $ | 26,596 |
| Land | $ | 26,564 | $ | 26,593 | |||||||||
Building and improvements |
|
| 342,907 |
|
|
| 335,495 |
| Building and improvements | 343,988 | 343,624 | |||||||||||
Poles |
|
| 278,565 |
|
|
| 266,758 |
| Poles | 290,624 | 281,130 | |||||||||||
Fiber |
|
| 3,224,832 |
|
|
| 2,994,465 |
| Fiber | 3,382,487 | 3,278,276 | |||||||||||
Equipment |
|
| 428 |
|
|
| 421 |
| Equipment | 428 | 428 | |||||||||||
Copper |
|
| 3,919,421 |
|
|
| 3,850,988 |
| Copper | 3,952,978 | 3,918,281 | |||||||||||
Conduit |
|
| 89,831 |
|
|
| 89,773 |
| Conduit | 89,925 | 89,859 | |||||||||||
Tower assets |
|
| 1,397 |
|
|
| 1,397 |
| Tower assets | 1,397 | 1,397 | |||||||||||
Finance lease assets |
|
| 28,126 |
|
|
| 32,660 |
| Finance lease assets | 28,126 | 28,126 | |||||||||||
Other assets |
|
| 10,647 |
|
|
| 10,425 |
| Other assets | 10,602 | 10,649 | |||||||||||
|
|
| 7,922,750 |
|
|
| 7,608,978 |
| 8,127,119 | 7,978,363 | ||||||||||||
Less: accumulated depreciation |
|
| (5,364,117 | ) |
|
| (5,222,731 | ) | Less: accumulated depreciation | (5,477,554) | (5,391,479) | |||||||||||
Underlying assets under operating leases, net |
| $ | 2,558,633 |
|
| $ | 2,386,247 |
| Underlying assets under operating leases, net | $ | 2,649,565 | $ | 2,586,884 |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Depreciation expense for underlying assets under operating leases |
| $ | 44,763 |
|
| $ | 50,841 |
|
| $ | 134,783 |
|
| $ | 160,278 |
| Depreciation expense for underlying assets under operating leases | $ | 43,544 | $ | 44,107 | $ | 86,731 | $ | 90,020 |
The components of lease cost for the three and nine months ended September 30, 2021 and 2020, respectively, are as follows:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of ROU assets |
| $ | 1,024 |
|
| $ | 920 |
|
| $ | 3,721 |
|
| $ | 2,890 |
|
Interest on lease liabilities |
|
| 392 |
|
|
| 943 |
|
|
| 2,019 |
|
|
| 2,890 |
|
Total finance lease cost |
|
| 1,416 |
|
|
| 1,863 |
|
|
| 5,740 |
|
|
| 5,780 |
|
Operating lease cost |
|
| 3,658 |
|
|
| 5,313 |
|
|
| 11,873 |
|
|
| 19,272 |
|
Short-term lease cost |
|
| 907 |
|
|
| 542 |
|
|
| 2,347 |
|
|
| 1,551 |
|
Variable lease cost |
|
| 95 |
|
|
| 41 |
|
|
| 391 |
|
|
| 124 |
|
Less sublease income |
|
| (3,211 | ) |
|
| (2,733 | ) |
|
| (9,439 | ) |
|
| (9,503 | ) |
Total lease cost |
| $ | 2,865 |
|
| $ | 5,026 |
|
| $ | 10,912 |
|
| $ | 17,224 |
|
17
Amounts reported in the Condensed Consolidated Balance Sheets for leases where we are the lessee were as follows:
(Thousands) |
| Location on Condensed Consolidated Balance Sheets |
| September 30, 2021 |
|
| December 31, 2020 |
| ||
Operating leases |
|
|
|
|
|
|
|
|
|
|
ROU assets, net |
| Other assets, net |
| $ | 72,965 |
|
| $ | 97,850 |
|
Lease liabilities |
| Accounts payable, accrued expenses and other liabilities, net |
|
| 49,902 |
|
|
| 71,483 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases |
|
|
|
|
|
|
|
|
|
|
ROU asset, gross |
| Property, plant and equipment, net |
| $ | 72,254 |
|
| $ | 128,098 |
|
Lease liabilities |
| Finance lease obligations |
|
| 15,538 |
|
|
| 48,724 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average remaining lease term |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
| 8.9 years |
|
| 12.2 years |
| ||
Finance leases |
|
|
| 13.0 years |
|
| 13.3 years |
| ||
|
|
|
|
|
|
|
|
|
|
|
Weighted-average discount rate |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
| 9.2 | % |
|
| 9.9 | % |
Finance leases |
|
|
|
| 9.8 | % |
|
| 8.0 | % |
Other information related to leases as of September 30, 2021 and 2020, respectively, are as follows:
(Thousands) |
| 2021 |
|
| 2020 |
| ||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
|
|
Operating cash flows from finance leases |
| $ | 2,019 |
|
| $ | 2,890 |
|
Operating cash flows from operating leases |
|
| 14,197 |
|
|
| 22,573 |
|
Financing cash flows from finance leases |
|
| 1,745 |
|
|
| 2,890 |
|
|
|
|
|
|
|
|
|
|
Non-cash items: |
|
|
|
|
|
|
|
|
New operating leases and remeasurements, net |
| $ | 4,649 |
|
| $ | 426 |
|
New finance leases |
|
| - |
|
|
| 31 |
|
Future lease payments under non-cancellable leases as of SeptemberJune 30, 2021 2022 are as follows:
(Thousands) |
| Operating Leases |
|
| Finance Leases |
| (Thousands) | Operating Leases | Finance Leases | |||||||||||||
2021 |
| $ | 3,807 |
|
| $ | 610 |
| ||||||||||||||
2022 |
|
| 13,149 |
|
|
| 2,334 |
| 2022 | $ | 7,978 | $ | 1,192 | |||||||||
2023 |
|
| 10,963 |
|
|
| 2,281 |
| 2023 | 14,362 | 2,375 | |||||||||||
2024 |
|
| 8,558 |
|
|
| 2,082 |
| 2024 | 11,971 | 2,176 | |||||||||||
2025 |
|
| 5,896 |
|
|
| 2,021 |
| 2025 | 9,323 | 2,115 | |||||||||||
2026 | 2026 | 6,608 | 2,115 | |||||||||||||||||||
Thereafter |
|
| 33,072 |
|
|
| 16,667 |
| Thereafter | 39,103 | 14,683 | |||||||||||
Total undiscounted lease payments |
| $ | 75,445 |
|
| $ | 25,995 |
| Total undiscounted lease payments | $ | 89,345 | $ | 24,656 | |||||||||
Less:�� imputed interest |
|
| (25,543 | ) |
|
| (10,457 | ) | ||||||||||||||
Less: imputed interest | Less: imputed interest | (28,516) | (9,442) | |||||||||||||||||||
Total lease liabilities |
| $ | 49,902 |
|
| $ | 15,538 |
| Total lease liabilities | $ | 60,829 | $ | 15,214 | |||||||||
|
|
Future sublease rentals as of September 30, 2021 are as follows:
18
(Thousands) |
| Sublease Rentals |
| |
2021 |
| $ | 2,896 |
|
2022 |
|
| 9,175 |
|
2023 |
|
| 9,252 |
|
2024 |
|
| 9,331 |
|
2025 |
|
| 9,411 |
|
Thereafter |
|
| 136,554 |
|
Total |
| $ | 176,619 |
|
Note 5. Asset Acquisitions and Dispositions
2021 Transaction
Everstream OpCo-PropCo Transaction
On May 28, 2021, the Company completed its previously announced strategic transaction with Everstream Solutions LLC (“Everstream”). As part of the transaction, Uniti entered into two 20-year dark fiber indefeasible rights of use (“IRU”) lease agreements with Everstream on Uniti owned fiber. Concurrently, Uniti sold its Uniti Fiber Northeast operations and certain dark fiber IRU contracts acquired as part of the Windstream settlement to Everstream. Total cash consideration, including upfront IRU payments, was approximately $135 million. In addition to the upfront proceeds, Uniti will receive fees of approximately $3 million annually from Everstream over the initial 20-year term of the IRU lease agreements, subject to an annual escalator of 2%. During the quarter ended June 30, 2021, we recorded a gain of $28.1 million related to this transaction, which is included in gain on sale of operations in our Condensed Consolidated Statements of Income (Loss).
(Thousands) |
|
|
|
|
Assets and liabilities sold: |
|
|
|
|
Assets: |
|
|
|
|
Property, plant and equipment, net |
| $ | 44,685 |
|
Goodwill |
|
| 17,794 |
|
Intangible assets, net |
|
| 7,264 |
|
Right of use assets, net |
|
| 19,841 |
|
Total assets |
| $ | 89,584 |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
Lease liabilities |
| $ | 18,779 |
|
Intangible liabilities, net |
|
| 4,492 |
|
Finance lease obligations |
|
| 32,343 |
|
Total liabilities |
| $ | 55,614 |
|
|
|
|
|
|
Cash consideration |
| $ | 62,113 |
|
Less: total assets and liabilities sold, net |
|
| (33,970 | ) |
Gain on sale of operations |
| $ | 28,143 |
|
2020 Transactions
Windstream Settlement Agreement
On September 18, 2020, and in furtherance of our settlement agreement with Windstream (see Note 14), Uniti and Windstream closed an asset purchase agreement, as amended by a letter agreement (collectively, the “Asset Purchase Agreement”), pursuant to which (a) Uniti paid to Windstream approximately $284.6 million and (b) Windstream (i) granted to Uniti exclusive rights to use 1.8 million fiber strand miles leased by Windstream under the CLEC MLA, which fiber strands are either unutilized or utilized under certain dark fiber indefeasible rights of use (“IRUs”) that were simultaneously transferred to Uniti, (ii) conveyed to Uniti fiber assets (and
19
underlying rights) consisting of 0.4 million fiber strand miles (covering 4,000 route miles) owned by Windstream, and (iii) transferred and assigned to subsidiaries of Uniti dark fiber IRUs relating to (x) the fiber strand miles granted to Uniti under the CLEC MLA (and described in clause (i), and (y) the fiber assets (and underlying rights) for the 0.4 million fiber strand miles conveyed to Uniti (and described in clause (ii)), which IRUs generated $28.9 million of annual EBITDA in the aggregate as of the closing of the Asset Purchase Agreement. In addition, upon the transfer of the Windstream owned fiber assets (described in clause (ii) above), Uniti granted to Windstream a 20-year IRU for certain strands included in the transferred fiber assets.
The Company concluded that the Asset Purchase Agreement, and the obligation for Uniti to make cash payments to Windstream in accordance with the terms of the Settlement Agreement (see Note 14), should be combined for the accounting purpose of ASC 842. As such, total consideration provided to Windstream under the Settlement has been allocated as follows:
(Thousands) |
|
|
|
|
Consideration: |
|
|
|
|
Asset Purchase Agreement |
| $ | 284,550 |
|
Fair value of settlement obligation |
|
| 438,577 |
|
Total consideration |
| $ | 723,127 |
|
|
|
|
|
|
Fair values of the assets acquired and liabilities assumed as of the acquisition date: |
|
|
|
|
Property, plant and equipment |
| $ | 170,754 |
|
Intangible assets, net |
|
| 69,832 |
|
Other assets |
|
| 27,632 |
|
Intangible liabilities, net |
|
| (195,091 | ) |
Total assets acquired, net |
|
| 73,127 |
|
Settlement expense |
|
| 650,000 |
|
Total |
| $ | 723,127 |
|
Of the $69.8 million of intangible assets acquired, $59.3 million is related to contracts (8 year weighted-average life) and $10.5 million is related to underlying rights agreements (30 year life). The Company determined the useful life of the contract intangible assets using the weighted-average remaining term and the rights of way intangible asset by aligning the useful life of the intangible with that of the underlying fiber assets acquired. The intangible liabilities represents below market leases, where we are the lessor, and has a weighted-average useful life of 19 years, which aligns with the term of the agreement. Acquired right of use assets $27.6 million are recorded within other assets on our Condensed Consolidated Balance Sheets.
Sale of Midwest Fiber Network
On July 1, 2020, the Company completed the sale of the entity that controlled the Company’s Midwest fiber network assets (the “Propco”) to Macquarie Infrastructure Partners (“MIP”), selling net assets having a book value of $186.5 million for total cash consideration of $167.6 million. The Company retained a 20% investment interest in the Propco, having a fair value of $41.9 million, through a newly-formed limited liability company with MIP (see Note 6). During the quarter ended September 30, 2020, we recorded a gain of $23.0 million related to this transaction.
Sale of U.S. Tower Portfolio
On June 1, 2020, the Company completed the sale of its U.S. tower business to Melody Investment Advisors LP (“Melody”), selling net assets having a book value of $190.0 million for total cash consideration of $225.8 million. The Company retained a 10% investment interest in the tower business, having a fair value of $26.0 million, through a newly formed limited partnership with Melody (see Note 6), and will receive incremental earn-out payments, estimated to be $1.6 million, which is included in other assets on the Condensed Consolidated Balance Sheet as of December 31, 2020. During the quarter ended June 30, 2020, we recorded a gain of $63.4 million related to this transaction.
As of September 30, 2021, the Company had an aggregate investment of $64.7 million in its equity method unconsolidated entities, which included a 42% interest in
Fiber Holdings
20
Fiber Holdings was primarily established to develop fiber networks as real estate property for long-term investment. On July 1, 2020, the Company completed the sale of an ownership stake in the entity that controls the Company’s Midwest fiber network assets (the “Propco”). Fiber Holdings has a 47.5% ownership in the Propco that is under a long-term, triple net lease with our joint venture partner. Our ownership interest in Fiber Holdings represents approximately a 20% economic interest in the Propco. The Company’s current investment and maximum exposure to loss as a result of its involvement with Fiber Holdings, an equity method unconsolidated entity, was approximately $40.3$39.3 million as of SeptemberJune 30, 2021.2022. The Company has not provided financial support to Fiber Holdings.
Harmoni
We provide transition services to Harmoni in exchange for fees and reimbursements. Total transition service fees earned in connection with Harmoni for the three and nine months ended September 30, 2021 were $0.1 million and $0.3 million, respectively, which is included in operatingtax expense on a net basis inwithin income tax expense within our Condensed Consolidated Statements of Income (Loss).
(Thousands) |
| Total |
| Quoted Prices in Active Markets (Level 1) |
| Prices with Other Observable Inputs (Level 2) |
| Prices with Unobservable Inputs (Level 3) |
| (Thousands) | Total | Quoted Prices in Active Markets (Level 1) | Prices with Other Observable Inputs (Level 2) | Prices with Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
At September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
At June 30, 2022 | At June 30, 2022 | ||||||||||||||||||||||||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
| Liabilities | ||||||||||||||||||||||||||||
Senior secured notes - 7.875%, due February 15, 2025 |
| $ | 2,376,990 |
| $ | - |
| $ | 2,376,990 |
| $ | - |
| Senior secured notes - 7.875%, due February 15, 2025 | $ | 2,183,625 | $ | — | $ | 2,183,625 | $ | — | |||||||||||||||||
Senior secured notes - 4.75%, due April 15, 2028 |
|
| 579,519 |
| - |
| 579,519 |
| - |
| Senior secured notes - 4.75%, due April 15, 2028 | 471,695 | — | 471,695 | — | ||||||||||||||||||||||||
Senior unsecured notes - 7.125%, due December 15, 2024 |
|
| 616,770 |
| - |
| 616,770 |
| - |
| |||||||||||||||||||||||||||||
Senior unsecured notes - 6.50%, due February 15, 2029 |
|
| 1,131,073 |
| - |
| 1,131,073 |
| - |
| |||||||||||||||||||||||||||||
Senior unsecured notes - 6.50% , due February 15, 2029 | Senior unsecured notes - 6.50% , due February 15, 2029 | 817,471 | — | 817,471 | — | ||||||||||||||||||||||||||||||||||
Senior unsecured notes - 6.00%, due January 15, 2030 | Senior unsecured notes - 6.00%, due January 15, 2030 | 491,719 | — | 491,719 | — | ||||||||||||||||||||||||||||||||||
Exchangeable senior notes - 4.00%, due June 15, 2024 |
|
| 428,897 |
| - |
| 428,897 |
| - |
| Exchangeable senior notes - 4.00%, due June 15, 2024 | 367,999 | — | 367,999 | — | ||||||||||||||||||||||||
Senior secured revolving credit facility, variable rate, due December 10, 2024 |
|
| 179,982 |
| - |
| 179,982 |
| - |
| Senior secured revolving credit facility, variable rate, due December 10, 2024 | 199,980 | — | 199,980 | — | ||||||||||||||||||||||||
Settlement payable |
|
| 348,500 |
| - |
| 348,500 |
| - |
| Settlement payable | 211,500 | — | 211,500 | — | ||||||||||||||||||||||||
Derivative liability, net |
|
| 13,606 |
|
| - |
|
| 13,606 |
|
| - |
| Derivative liability, net | 4,067 | — | 4,067 | — | |||||||||||||||||||||
Total |
| $ | 5,675,337 |
| $ | - |
| $ | 5,675,337 |
| $ | - |
| Total | $ | 4,748,056 | $ | — | $ | 4,748,056 | $ | — |
21
(Thousands) |
| Total |
| Quoted Prices in Active Markets (Level 1) |
| Prices with Other Observable Inputs (Level 2) |
| Prices with Unobservable Inputs (Level 3) |
| ||||
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior secured notes - 6.00%, due April 15, 2023 |
| $ | 561,000 |
| $ | - |
| $ | 561,000 |
| $ | - |
|
Senior secured notes - 7.875%, due February 15, 2025 |
|
| 2,410,313 |
|
| - |
|
| 2,410,313 |
|
| - |
|
Senior unsecured notes - 8.25%, due October 15, 2023 |
|
| 1,112,775 |
|
| - |
|
| 1,112,775 |
|
| - |
|
Senior unsecured notes - 7.125%, due December 15, 2024 |
|
| 601,500 |
|
| - |
|
| 601,500 |
|
| - |
|
Exchangeable senior unsecured notes - 4.00%, due June 15, 2024 |
|
| 426,058 |
|
| - |
|
| 426,058 |
|
| - |
|
Senior secured revolving credit facility, variable rate, due April 24, 2022 |
|
| 110,000 |
|
| - |
|
| 110,000 |
|
| - |
|
Settlement payable |
|
| 418,840 |
|
| - |
|
| 418,840 |
|
| - |
|
Derivative liability, net |
|
| 22,897 |
|
| - |
|
| 22,897 |
|
| - |
|
Contingent consideration |
|
| 2,957 |
|
| - |
|
| - |
|
| 2,957 |
|
Total |
| $ | 5,666,340 |
| $ | - |
| $ | 5,663,383 |
| $ | 2,957 |
|
(Thousands) | Total | Quoted Prices in Active Markets (Level 1) | Prices with Other Observable Inputs (Level 2) | Prices with Unobservable Inputs (Level 3) | ||||||||||||||||||||||
At December 31, 2021 | ||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Senior secured notes - 7.875%, due February 15, 2025 | $ | 2,351,576 | $ | — | $ | 2,351,576 | $ | — | ||||||||||||||||||
Senior secured notes - 4.75%, due April 15, 2028 | 560,857 | — | 560,857 | — | ||||||||||||||||||||||
Senior unsecured notes - 6.50% , due February 15, 2029 | 1,087,844 | — | 1,087,844 | — | ||||||||||||||||||||||
Senior unsecured notes - 6.00%, due January 15, 2030 | 659,992 | — | 659,992 | — | ||||||||||||||||||||||
Exchangeable senior notes - 4.00%, due June 15, 2024 | 453,104 | — | 453,104 | — | ||||||||||||||||||||||
Senior secured revolving credit facility, variable rate, due December 10, 2024 | 199,980 | — | 199,980 | — | ||||||||||||||||||||||
Settlement payable | 254,725 | — | 254,725 | — | ||||||||||||||||||||||
Derivative liability, net | 10,413 | — | 10,413 | — | ||||||||||||||||||||||
Total | $ | 5,578,491 | $ | — | $ | 5,578,491 | $ | — |
hierarchy.
We acquired Tower Cloud, Inc. (“Tower Cloud”) on August 31, 2016. As part of the Tower Cloud acquisition, we were obligated to pay contingent consideration upon achievement of certain defined operational and financial milestones from the date of acquisition through December 31, 2021. During the three months ended March 31, 2021, the Company paid $3.0 million for the achievement of the final remaining milestone in accordance with the Tower Cloud merger agreement. During the nine months ended September 30, 2020, we paid $15.7 million for the achievement of certain milestones in accordance with the Tower Cloud merger agreement.
Changes in the fair value of contingent consideration arrangements are recorded in our Condensed Consolidated Statements of Income (Loss) in the period in which the change occurs. The final measurement of the contingent consideration was recorded during the three months ended March 31, 2021, resulting in an increase in the fair value of less than $0.1 million. For the three and nine months ended September 30, 2020, there was a $1.9 million and $8.1 million, respectively, increase in the fair value of the contingent consideration that was recorded in other (income) expense on the Condensed Consolidated Statements of Income (Loss).
The following is a roll forward of our liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3):
22
(Thousands) |
| December 31, 2020 |
|
| Transfers into Level 3 |
|
| (Gain)/Loss included in earnings |
|
| Settlements |
|
| September 30, 2021 |
| |||||
Contingent consideration |
| $ | 2,957 |
|
| $ | - |
|
| $ | 22 |
|
| $ | (2,979 | ) |
| $ | - |
|
(Thousands) |
| Depreciable Lives |
|
| September 30, 2021 |
|
| December 31, 2020 |
| (Thousands) | Depreciable Lives | June 30, 2022 | December 31, 2021 | |||||||||||||||||||
Land |
| Indefinite |
|
| $ | 28,157 |
|
| $ | 27,945 |
| Land | Indefinite | $ | 28,693 | $ | 28,449 | |||||||||||||||
Building and improvements |
| 3 - 40 years |
|
|
| 359,045 |
|
|
| 351,305 |
| Building and improvements | 3 - 40 years | 360,736 | 359,980 | |||||||||||||||||
Poles |
| 30 years |
|
|
| 278,565 |
|
|
| 266,758 |
| Poles | 30 years | 290,624 | 281,130 | |||||||||||||||||
Fiber |
| 30 years |
|
|
| 4,033,649 |
|
|
| 3,737,372 |
| Fiber | 30 years | 4,254,488 | 4,107,519 | |||||||||||||||||
Equipment |
| 5 - 7 years |
|
|
| 321,324 |
|
|
| 298,912 |
| Equipment | 5 - 7 years | 360,376 | 331,761 | |||||||||||||||||
Copper |
| 20 years |
|
|
| 3,919,421 |
|
|
| 3,850,987 |
| Copper | 20 years | 3,952,978 | 3,918,281 | |||||||||||||||||
Conduit |
| 30 years |
|
|
| 89,831 |
|
|
| 89,773 |
| Conduit | 30 years | 89,925 | 89,859 | |||||||||||||||||
Tower assets |
| 20 years |
|
|
| 8,545 |
|
|
| 8,571 |
| Tower assets | 20 years | 8,544 | 8,544 | |||||||||||||||||
Finance lease assets |
|
| (1 | ) |
|
| 72,254 |
|
|
| 74,103 |
| Finance lease assets | (1) | 72,680 | 72,284 | ||||||||||||||||
Other assets |
| 15 - 20 years |
|
|
| 10,648 |
|
|
| 10,553 |
| Other assets | 15 - 20 years | 10,833 | 10,652 | |||||||||||||||||
Corporate assets |
| 3 - 7 years |
|
|
| 13,924 |
|
|
| 13,475 |
| Corporate assets | 3 - 7 years | 14,621 | 14,326 | |||||||||||||||||
Construction in progress |
|
| (1 | ) |
|
| 31,953 |
|
|
| 47,086 |
| Construction in progress | (1) | 38,471 | 27,366 | ||||||||||||||||
|
|
|
|
|
|
| 9,167,316 |
|
|
| 8,776,840 |
| 9,482,969 | 9,250,151 | ||||||||||||||||||
Less accumulated depreciation |
|
|
|
|
|
| (5,694,674 | ) |
|
| (5,503,487 | ) | Less accumulated depreciation | (5,867,437) | (5,741,212) | |||||||||||||||||
Net property, plant and equipment |
|
|
|
|
| $ | 3,472,642 |
|
| $ | 3,273,353 |
| Net property, plant and equipment | $ | 3,615,532 | $ | 3,508,939 | |||||||||||||||
(1) See our Annual Report for property, plant and equipment accounting policies. |
|
23
Offsetting of Derivative Assets and Liabilities (Thousands) |
| Gross Amounts of Recognized Assets or Liabilities |
|
| Gross Amounts Offset in the Condensed Consolidated Balance Sheets |
|
| Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets |
| Offsetting of Derivative Assets and Liabilities (Thousands) | Gross Amounts of Recognized Assets or Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets | |||||||||||||||||||
At September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
At June 30, 2022 | At June 30, 2022 | |||||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| Assets | |||||||||||||||||||
Interest rate swaps |
| $ | 16,355 |
|
| $ | (16,355 | ) |
| $ | - |
| Interest rate swaps | $ | 1,310 | $ | (1,310) | $ | — | |||||||||||||
Total |
| $ | 16,355 |
|
| $ | (16,355 | ) |
| $ | - |
| Total | $ | 1,310 | $ | (1,310) | $ | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities | |||||||||||||||||||
Interest rate swaps |
| $ | 29,961 |
|
| $ | (16,355 | ) |
| $ | 13,606 |
| Interest rate swaps | $ | 5,377 | $ | (1,310) | $ | 4,067 | |||||||||||||
Total |
| $ | 29,961 |
|
| $ | (16,355 | ) |
| $ | 13,606 |
| Total | $ | 5,377 | $ | (1,310) | $ | 4,067 |
Offsetting of Derivative Assets and Liabilities (Thousands) |
| Gross Amounts of Recognized Assets or Liabilities |
|
| Gross Amounts Offset in the Condensed Consolidated Balance Sheets |
|
| Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets |
| Offsetting of Derivative Assets and Liabilities (Thousands) | Gross Amounts of Recognized Assets or Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts of Assets or Liabilities presented in the Condensed Consolidated Balance Sheets | |||||||||||||||||||
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
At December 31, 2021 | At December 31, 2021 | |||||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
| �� |
|
| Assets | |||||||||||||||||||
Interest rate swaps |
| $ | 27,869 |
|
| $ | (27,869 | ) |
| $ | - |
| Interest rate swaps | $ | 10,788 | $ | (10,788) | $ | — | |||||||||||||
Total |
| $ | 27,869 |
|
| $ | (27,869 | ) |
| $ | - |
| Total | $ | 10,788 | $ | (10,788) | $ | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities | |||||||||||||||||||
Interest rate swaps |
| $ | 50,766 |
|
| $ | (27,869 | ) |
| $ | 22,897 |
| Interest rate swaps | $ | 21,201 | $ | (10,788) | $ | 10,413 | |||||||||||||
Total |
| $ | 50,766 |
|
| $ | (27,869 | ) |
| $ | 22,897 |
| Total | $ | 21,201 | $ | (10,788) | $ | 10,413 |
(Thousands) |
| Location on Condensed Consolidated Balance Sheets |
| September 30, 2021 |
|
| December 31, 2020 |
| (Thousands) | Location on Condensed Consolidated Balance Sheets | June 30, 2022 | December 31, 2021 | ||||||||||||||||||
Interest rate swaps |
| Derivative liability, net |
| $ | 13,606 |
|
| $ | 22,897 |
| Interest rate swaps | Derivative liability, net | $ | 4,067 | $ | 10,413 |
24
anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are intended to reduce potential dilution to the Company’s common stock upon any exchange of the Exchangeable Notes and/or offset any cash payments Uniti Fiber is required to make in excess of the principal amount of exchanged Exchangeable Notes, as the case may be, in the event that the market value per share of the Company’s common stock, as measured under the Note Hedge Transactions, at the time of exercise is greater than the strike price of the Note Hedge Transactions.
(Thousands) |
| Fiber Infrastructure |
|
| Total |
| ||
Goodwill at December 31, 2020 |
| $ | 601,878 |
|
| $ | 601,878 |
|
Goodwill at September 30, 2021 |
|
| 601,878 |
|
|
| 601,878 |
|
(Thousands) | Fiber Infrastructure | Total | ||||||||||||
Goodwill at December 31, 2021 | $ | 601,878 | $ | 601,878 | ||||||||||
Goodwill at June 30, 2022 | $ | 601,878 | $ | 601,878 |
25
(Thousands) |
| September 30, 2021 |
|
| December 31, 2020 |
| (Thousands) | June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||
|
| Original Cost |
|
| Accumulated Amortization |
|
| Original Cost |
|
| Accumulated Amortization |
| Original Cost | Accumulated Amortization | Original Cost | Accumulated Amortization | ||||||||||||||||||||||||||
Finite life intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Finite life intangible assets: | |||||||||||||||||||||||||
Customer lists |
| $ | 416,104 |
|
| $ | (100,144 | ) |
| $ | 416,104 |
|
| $ | (82,989 | ) | Customer lists | $ | 416,104 | $ | (117,296) | $ | 416,104 | $ | (105,861) | |||||||||||||||||
Contracts |
|
| 52,536 |
|
|
| (6,567 | ) |
|
| 48,269 |
|
|
| (1,068 | ) | Contracts | 52,536 | (11,492) | 52,536 | (8,209) | |||||||||||||||||||||
Underlying Rights |
|
| 10,497 |
|
|
| (350 | ) |
|
| 10,497 |
|
|
| (87 | ) | Underlying Rights | 10,497 | (612) | 10,497 | (437) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Total intangible assets |
| $ | 479,137 |
|
|
|
|
|
| $ | 474,870 |
|
|
|
|
| Total intangible assets | $ | 479,137 | $ | 479,137 | |||||||||||||||||||||
Less: accumulated amortization |
|
| (107,061 | ) |
|
|
|
|
|
| (84,145 | ) |
|
|
|
| Less: accumulated amortization | (129,400) | (114,507) | |||||||||||||||||||||||
Total intangible assets, net |
| $ | 372,076 |
|
|
|
|
|
| $ | 390,725 |
|
|
|
|
| Total intangible assets, net | $ | 349,737 | $ | 364,630 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Finite life intangible liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Finite life intangible liabilities: | |||||||||||||||||||||||||
Below-market leases |
| $ | 191,154 |
|
|
| (10,695 | ) |
| $ | 190,086 |
|
|
| (2,200 | ) | Below-market leases | $ | 191,154 | (18,715) | $ | 191,154 | (13,368) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Finite life intangible liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Finite life intangible liabilities: | |||||||||||||||||||||||||
Below-market leases |
| $ | 191,154 |
|
|
|
|
|
| $ | 190,086 |
|
|
|
|
| Below-market leases | $ | 191,154 | $ | 191,154 | |||||||||||||||||||||
Less: accumulated amortization |
|
| (10,695 | ) |
|
|
|
|
|
| (2,200 | ) |
|
|
|
| Less: accumulated amortization | (18,715) | (13,368) | |||||||||||||||||||||||
Total intangible liabilities, net |
| $ | 180,459 |
|
|
|
|
|
| $ | 187,886 |
|
|
|
|
| Total intangible liabilities, net | $ | 172,439 | $ | 177,786 |
14.6 years.
Amortization expense is estimated to be $19.1$29.8 million for the full year of 2021, $19.1 million in 2022, $19.0$29.8 million in 2023, $19.0$29.7 million in 2024, $29.7 million in 2025, and $19.0$29.7 million for 2025.
(Thousands) |
| September 30, 2021 |
|
| December 31, 2020 |
| (Thousands) | June 30, 2022 | December 31, 2021 | |||||||||||||
Principal amount |
| $ | 5,055,000 |
|
| $ | 4,965,000 |
| Principal amount | $ | 5,175,000 | $ | 5,175,000 | |||||||||
Less unamortized discount, premium and debt issuance costs |
|
| (81,826 | ) |
|
| (148,476 | ) | Less unamortized discount, premium and debt issuance costs | (75,218) | (84,463) | |||||||||||
Notes and other debt less unamortized discount, premium and debt issuance costs |
| $ | 4,973,174 |
|
| $ | 4,816,524 |
| Notes and other debt less unamortized discount, premium and debt issuance costs | $ | 5,099,782 | $ | 5,090,537 |
26
|
| September 30, 2021 |
|
| December 31, 2020 |
| June 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Principal |
|
| Unamortized Discount, Premium and Debt Issuance Costs |
|
| Principal |
|
| Unamortized Discount, Premium and Debt Issuance Costs |
| (Thousands) | Principal | Unamortized Discount, Premium and Debt Issuance Costs | Principal | Unamortized Discount, Premium and Debt Issuance Costs | |||||||||||||||||||||||||
Senior secured notes - 6.00%, due April 15, 2023 (discount is based on imputed interest rate of 6.49%) |
| $ | - |
|
| $ | - |
|
| $ | 550,000 |
|
| $ | (4,053 | ) | ||||||||||||||||||||||||||
Senior secured notes - 7.875%, due February 15, 2025 (discount is based on imputed interest rate of 8.38%) |
|
| 2,250,000 |
|
|
| (33,589 | ) |
|
| 2,250,000 |
|
|
| (39,852 | ) | Senior secured notes - 7.875%, due February 15, 2025 (discount is based on imputed interest rate of 8.38%) | $ | 2,250,000 | $ | (26,922) | $ | 2,250,000 | $ | (31,411) | |||||||||||||||||
Senior secured notes - 4.75%, due April 15, 2028 (discount is based on imputed interest rate of 5.04%) |
|
| 570,000 |
|
|
| (9,184 | ) |
|
| - |
|
|
| - |
| Senior secured notes - 4.75%, due April 15, 2028 (discount is based on imputed interest rate of 5.04%) | 570,000 | (8,278) | 570,000 | (8,886) | |||||||||||||||||||||
Senior unsecured notes - 8.25%, due October 15, 2023 (discount is based on imputed interest rate of 9.06%) |
|
| - |
|
|
| - |
|
|
| 1,110,000 |
|
|
| (22,024 | ) | ||||||||||||||||||||||||||
Senior unsecured notes - 4.00%, due June 15, 2024 (discount is based on imputed interest rate of 4.77%) |
|
| 345,000 |
|
|
| (6,776 | ) |
|
| 345,000 |
|
|
| (69,608 | ) | Senior unsecured notes - 4.00%, due June 15, 2024 (discount is based on imputed interest rate of 4.77%) | 345,000 | (4,986) | 345,000 | (6,187) | |||||||||||||||||||||
Senior unsecured notes - 7.125% due December 15, 2024 (discount is based on imputed interest rate of 7.38%) |
|
| 600,000 |
|
|
| (4,526 | ) |
|
| 600,000 |
|
|
| (5,316 | ) | ||||||||||||||||||||||||||
Senior unsecured notes - 6.50%, due February 15, 2029 (discount is based on imputed interest rate of 6.83%) |
|
| 1,110,000 |
|
|
| (21,721 | ) |
|
| - |
|
|
| - |
| Senior unsecured notes - 6.50%, due February 15, 2029 (discount is based on imputed interest rate of 6.83%) | 1,110,000 | (19,425) | 1,110,000 | (20,797) | |||||||||||||||||||||
Senior unsecured notes - 6.00% due January 15, 2030 (discount is based on imputed interest rate of 6.27%) | Senior unsecured notes - 6.00% due January 15, 2030 (discount is based on imputed interest rate of 6.27%) | 700,000 | (11,121) | 700,000 | (11,689) | |||||||||||||||||||||||||||||||||||||
Senior secured revolving credit facility, variable rate, due December 10, 2024 |
|
| 180,000 |
|
|
| (6,030 | ) |
|
| 110,000 |
|
|
| (7,623 | ) | Senior secured revolving credit facility, variable rate, due December 10, 2024 | 200,000 | (4,486) | 200,000 | (5,493) | |||||||||||||||||||||
Total |
| $ | 5,055,000 |
|
| $ | (81,826 | ) |
| $ | 4,965,000 |
|
| $ | (148,476 | ) | Total | $ | 5,175,000 | $ | (75,218) | $ | 5,175,000 | $ | (84,463) |
On October 13, 2021, the Operating Partnership, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC (the “Issuers”) issued $700 million aggregate principal amount of 6.00% Senior Unsecured Notes due 2030 (the “2030 Notes” and used the proceeds to fund the redemption
2025 Secured Notes below 5.75 to 1.0 and, therefore, the covenant reversion date (as defined in the 2025 Secured Notes indenture) has occurred. As a result, the restriction imposed by our 2025 Secured Notes from paying cash dividends in excess of 90% of our REIT taxable income has been lifted.
The
27
Company and (ii) certain of the Operating Partnership’s subsidiaries (the “Subsidiary Guarantors”) and are secured by substantially all of the assets of the Borrowers and the Subsidiary Guarantors.
On December 10, 2020, we entered into an amendment (the “Seventh Amendment”) to our Credit Agreement. Pursuant to the Seventh Amendment, commitments from new and existing lenders
Borrowings under (a) the Non-Extended Revolving Credit Facility bear interest at a rate equal to either a base rate plus an applicable margin ranging from 3.75% to 4.25% or a eurodollar rate plus an applicable margin ranging from 4.75% to 5.25% and (b) effective April 17, 2021, following the receipt of certain routine regulatory approvals, the Extended Revolving Credit Facility bear interest at a rate equal to either a base rate plus an applicable margin ranging from 2.75% to 3.50% or a eurodollar rate plus an applicable margin ranging from 3.75% to 4.50%, in each case, calculated in a customary manner and determined based on our consolidated secured leverage ratio.ratio. We are required to pay a quarterly commitment fee under the Revolving Credit Facility equal to 0.50% of the average amount of unused commitments during the applicable quarter (subject to a step-down to 0.40% per annum of the average amount of unused commitments during the applicable quarter upon achievement of a consolidated secured leverage ratio not to exceed a certain level), as well as quarterly letter of credit fees equal to the product of (A) the applicable margin with respect to eurodollar borrowings and (B) the average amount available to be drawn under outstanding letters of credit during such quarter.
28
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands, except per share data) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share: | |||||||||||||||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator: | |||||||||||||||||||||||||
Net income (loss) attributable to shareholders |
| $ | 43,366 |
|
| $ | 7,265 |
|
| $ | 87,835 |
|
| $ | (659,332 | ) | ||||||||||||||||||||||||||
Net income attributable to shareholders | Net income attributable to shareholders | $ | 53,697 | $ | 48,907 | $ | 106,427 | $ | 44,469 | |||||||||||||||||||||||||||||||||
Less: Income allocated to participating securities |
|
| (283 | ) |
|
| (229 | ) |
|
| (864 | ) |
|
| (853 | ) | Less: Income allocated to participating securities | (340) | (333) | (671) | (581) | |||||||||||||||||||||
Dividends declared on convertible preferred stock |
|
| (3 | ) |
|
| (2 | ) |
|
| (8 | ) |
|
| (6 | ) | Dividends declared on convertible preferred stock | (5) | (2) | (10) | (5) | |||||||||||||||||||||
Net income (loss) attributable to common shares |
| $ | 43,080 |
|
| $ | 7,034 |
|
| $ | 86,963 |
|
| $ | (660,191 | ) | ||||||||||||||||||||||||||
Net income attributable to common shares | Net income attributable to common shares | $ | 53,352 | $ | 48,572 | $ | 105,746 | $ | 43,883 | |||||||||||||||||||||||||||||||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Denominator: | |||||||||||||||||||||||||
Basic weighted-average common shares outstanding |
|
| 233,513 |
|
|
| 198,054 |
|
|
| 232,269 |
|
|
| 194,278 |
| Basic weighted-average common shares outstanding | 235,656 | 231,801 | 235,352 | 231,636 | |||||||||||||||||||||
Basic earnings (loss) per common share |
| $ | 0.18 |
|
| $ | 0.04 |
|
| $ | 0.37 |
|
| $ | (3.40 | ) | ||||||||||||||||||||||||||
Basic earnings per common share | Basic earnings per common share | $ | 0.23 | $ | 0.21 | $ | 0.45 | $ | 0.19 |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands, except per share data) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share: | |||||||||||||||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator: | |||||||||||||||||||||||||
Net income (loss) attributable to shareholders |
| $ | 43,366 |
|
| $ | 7,265 |
|
| $ | 87,835 |
|
| $ | (659,332 | ) | ||||||||||||||||||||||||||
Net income attributable to shareholders | Net income attributable to shareholders | $ | 53,697 | $ | 48,907 | $ | 106,427 | $ | 44,469 | |||||||||||||||||||||||||||||||||
Less: Income allocated to participating securities |
|
| (283 | ) |
|
| (229 | ) |
|
| (864 | ) |
|
| (853 | ) | Less: Income allocated to participating securities | (340) | (333) | (671) | (581) | |||||||||||||||||||||
Dividends declared on convertible preferred stock |
|
| (3 | ) |
|
| (2 | ) |
|
| (8 | ) |
|
| (6 | ) | Dividends declared on convertible preferred stock | (5) | (2) | (10) | (5) | |||||||||||||||||||||
Impact on if-converted dilutive securities |
|
| 2,984 |
|
|
| - |
|
|
| - |
|
|
| - |
| Impact on if-converted dilutive securities | 3,000 | 2,974 | 5,994 | — | |||||||||||||||||||||
Net income (loss) attributable to common shares |
| $ | 46,064 |
|
| $ | 7,034 |
|
| $ | 86,963 |
|
| $ | (660,191 | ) | ||||||||||||||||||||||||||
Net income attributable to common shares | Net income attributable to common shares | $ | 56,352 | $ | 51,546 | $ | 111,740 | $ | 43,883 | |||||||||||||||||||||||||||||||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Denominator: | |||||||||||||||||||||||||
Basic weighted-average common shares outstanding |
|
| 233,513 |
|
|
| 198,054 |
|
|
| 232,269 |
|
|
| 194,278 |
| Basic weighted-average common shares outstanding | 235,656 | 231,801 | 235,352 | 231,636 | |||||||||||||||||||||
Effect of dilutive non-participating securities |
|
| 338 |
|
|
| 319 |
|
|
| 271 |
|
|
| - |
| Effect of dilutive non-participating securities | 359 | 135 | 347 | 226 | |||||||||||||||||||||
Impact on if-converted dilutive securities |
|
| 30,570 |
|
|
| - |
|
|
| - |
|
|
| - |
| Impact on if-converted dilutive securities | 31,346 | 30,332 | 31,346 | — | |||||||||||||||||||||
Weighted-average shares for dilutive earnings per common share |
|
| 264,421 |
|
|
| 198,373 |
|
|
| 232,540 |
|
|
| 194,278 |
| Weighted-average shares for dilutive earnings per common share | 267,361 | 262,268 | 267,045 | 231,862 | |||||||||||||||||||||
Dilutive earnings (loss) per common share |
| $ | 0.17 |
|
| $ | 0.04 |
|
| $ | 0.37 |
|
| $ | (3.40 | ) | ||||||||||||||||||||||||||
Dilutive earnings per common share | Dilutive earnings per common share | $ | 0.21 | $ | 0.20 | $ | 0.42 | $ | 0.19 |
Historically our
29
business and wind down of the Consumer CLEC business, effective January 1, 2021, we manage our operations focused on our 2 primary businesses, Leasing and Fiber Infrastructure.
which include:
Consumer CLEC: Represents the operations of Talk America through which we operated the Consumer CLEC business, which prior to Uniti’s separation and spin-off from Windstream (the “Spin-Off”) was reported as an integrated operation within Windstream. Talk America provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC business.
Corporate: Represents our corporate office and back officeshared service functions. Certain costs and expenses, primarily related to headcount, insurance, professional fees and similar charges, that are directly attributable to operations of our business segments are allocated to the respective segments.
30
Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||
(Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | ||||||||||||||||||||||
Revenues | $ | 205,614 | 78,361 | $ | — | $ | 283,975 | |||||||||||||||||||
Adjusted EBITDA | $ | 200,349 | 33,583 | (6,768) | $ | 227,164 | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Interest expense | 96,377 | |||||||||||||||||||||||||
Depreciation and amortization | 42,513 | 29,753 | 37 | 72,303 | ||||||||||||||||||||||
Transaction related and other costs | 3,235 | |||||||||||||||||||||||||
Gain on sale of real estate | (250) | |||||||||||||||||||||||||
Other, net | (7,495) | |||||||||||||||||||||||||
Stock-based compensation | 3,201 | |||||||||||||||||||||||||
Income tax expense | 4,944 | |||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities | 1,075 | |||||||||||||||||||||||||
Net income | $ | 53,774 |
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||
(Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | ||||||||||||||||||||||
Revenues | $ | 196,057 | $ | 72,123 | $ | — | $ | 268,180 | ||||||||||||||||||
Adjusted EBITDA | $ | 192,137 | $ | 29,439 | $ | (5,842) | $ | 215,734 | ||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Interest expense | 106,388 | |||||||||||||||||||||||||
Depreciation and amortization | 40,474 | 29,132 | 65 | 69,671 | ||||||||||||||||||||||
Transaction related and other costs | 424 | |||||||||||||||||||||||||
Gain on sale of real estate | (442) | |||||||||||||||||||||||||
Gain on sale of operations | (28,143) | |||||||||||||||||||||||||
Other, net | 8,779 | |||||||||||||||||||||||||
Stock-based compensation | 3,462 | |||||||||||||||||||||||||
Income tax expense | 5,084 | |||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities | 872 | |||||||||||||||||||||||||
Net income | $ | 49,639 |
|
| Three Months Ended September 30, 2021 |
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 199,485 |
|
| $ | 67,262 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 266,747 |
| Revenues | 410,255 | 151,754 | $ | — | $ | 562,009 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 194,303 |
|
| $ | 27,556 |
|
| $ | - |
|
| $ | - |
|
| $ | (4,632 | ) |
| $ | 217,227 |
| Adjusted EBITDA | 399,322 | 65,042 | (12,411) | $ | 451,953 | ||||||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 94,793 |
| Interest expense | 192,549 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 41,432 |
|
|
| 29,036 |
|
|
| - |
|
|
| - |
|
|
| 62 |
|
|
| 70,530 |
| Depreciation and amortization | 84,616 | 59,071 | 73 | 143,760 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,472 |
| ||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,063 |
| Transaction related and other costs | 4,949 | ||||||||||||||||||||||||
Gain on sale of real estate | Gain on sale of real estate | (250) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other, net | Other, net | (7,134) | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,166 |
| Stock-based compensation | 6,513 | ||||||||||||||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,244 | ) | ||||||||||||||||||||||||||
Income tax expense | Income tax expense | 2,873 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 765 |
| Adjustments for equity in earnings from unconsolidated entities | 2,061 | ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 43,682 |
| Net income | $ | 106,632 |
|
| Three Months Ended September 30, 2020 |
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 182,370 |
|
| $ | 76,395 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 258,765 |
| Revenues | $ | 390,993 | $ | 149,773 | $ | — | $ | 540,766 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 181,103 |
|
| $ | 25,419 |
|
| $ | - |
|
| $ | (186 | ) |
| $ | (7,775 | ) |
| $ | 198,561 |
| Adjusted EBITDA | $ | 383,634 | $ | 59,160 | $ | (12,812) | $ | 429,982 | |||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 102,791 |
| Interest expense | 246,969 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 48,189 |
|
|
| 31,617 |
|
|
| - |
|
|
| - |
|
|
| 74 |
|
|
| 79,880 |
| Depreciation and amortization | 82,700 | 57,802 | 133 | 140,635 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,098 |
| ||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20,816 |
| Transaction related and other costs | 4,561 | ||||||||||||||||||||||||
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (22,908 | ) | Gain on sale of real estate | (442) | ||||||||||||||||||||||||
Gain on sale of operations | Gain on sale of operations | (28,143) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other, net | Other, net | 10,097 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,341 |
| Stock-based compensation | 6,797 | ||||||||||||||||||||||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,801 |
| Income tax expense | 2,527 | ||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,287 |
| Adjustments for equity in earnings from unconsolidated entities | 1,844 | ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 7,455 |
| Net income | $ | 45,137 |
31
|
| Nine Months Ended September 30, 2021 |
| |||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| ||||||
Revenues |
| $ | 590,478 |
|
| $ | 217,035 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 807,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
| $ | 577,937 |
|
| $ | 86,716 |
|
| $ | - |
|
| $ | - |
|
| $ | (17,444 | ) |
| $ | 647,209 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 341,762 |
|
Depreciation and amortization |
|
| 124,132 |
|
|
| 86,838 |
|
|
| - |
|
|
| - |
|
|
| 195 |
|
|
| 211,165 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 14,569 |
|
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,624 |
|
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (442 | ) |
Gain on sale of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (28,143 | ) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10,963 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 283 |
|
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,609 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 88,819 |
|
|
| Nine Months Ended September 30, 2020 |
| |||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| ||||||
Revenues |
| $ | 552,042 |
|
| $ | 232,942 |
|
| $ | 6,112 |
|
| $ | 651 |
|
| $ | - |
|
| $ | 791,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
| $ | 545,792 |
|
| $ | 81,453 |
|
| $ | 77 |
|
| $ | (461 | ) |
| $ | (23,717 | ) |
| $ | 603,144 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 388,427 |
|
Depreciation and amortization |
|
| 155,216 |
|
|
| 93,957 |
|
|
| 783 |
|
|
| 791 |
|
|
| 223 |
|
|
| 250,970 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,186 |
|
Settlement expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 650,000 |
|
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55,344 |
|
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (86,726 | ) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10,446 |
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (7,650 | ) |
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,287 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (671,140 | ) |
32
33
Guzzo et al. v. Gunderman et al., 1:22-cv-00366-GLR (the “Guzzo Derivative Action”). The complaint names Kenneth Gunderman, Mark Wallace, Francis Frantz, David Solomon, Jennifer Banner, and Scott Bruce as defendants and the Company as a nominal defendant and asserts claims for contribution against Gunderman and Wallace if the Company is found to be liable for violations of the federal securities laws in the Class Action and claims against all the individual defendants for breaches of fiduciary duty, waste of corporate assets, and unjust enrichment. The allegations in the Guzzo Derivative Action are similar to those in the Mayer Derivative Action and the Class Action. The complaint seeks unspecified damages, equitable relief, and related costs and fees. On March 16, 2022, the court entered a joint stipulation to stay the Guzzo Derivative Action, including the time for the defendants to respond to the complaint, pending the outcome of the Class Action. We intend to defend this matter vigorously, and, because it is still in its relatively
34
Loss
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Cash flow hedge changes in fair value (loss) gain: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Balance at beginning of period attributable to common shareholders |
| $ | (30,353 | ) |
| $ | (30,353 | ) |
| $ | (30,353 | ) |
| $ | (23,442 | ) | ||||||||||||||||||||||||||
Other comprehensive loss before reclassifications |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,713 | ) | ||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 677 |
| ||||||||||||||||||||||||||
Balance at end of period |
|
| (30,353 | ) |
|
| (30,353 | ) |
|
| (30,353 | ) |
|
| (30,478 | ) | ||||||||||||||||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (125 | ) | ||||||||||||||||||||||||||
Balance at end of period attributable to common shareholders |
|
| (30,353 | ) |
|
| (30,353 | ) |
|
| (30,353 | ) |
|
| (30,353 | ) | ||||||||||||||||||||||||||
Cash flow hedge changes in fair value: | Cash flow hedge changes in fair value: | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period attributable to shareholders | Balance at beginning of period attributable to shareholders | $ | (30,353) | $ | (30,353) | $ | (30,353) | $ | (30,353) | |||||||||||||||||||||||||||||||||
Balance at end of period attributable to shareholders | Balance at end of period attributable to shareholders | (30,353) | (30,353) | (30,353) | (30,353) | |||||||||||||||||||||||||||||||||||||
Interest rate swap termination: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate swap termination: | |||||||||||||||||||||||||
Balance at beginning of period attributable to common shareholders |
|
| 15,561 |
|
|
| 4,416 |
|
|
| 9,986 |
|
|
| - |
| ||||||||||||||||||||||||||
Balance at beginning of period attributable to shareholders | Balance at beginning of period attributable to shareholders | 24,012 | 12,773 | 21,189 | 9,986 | |||||||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income |
|
| 2,830 |
|
|
| 2,829 |
|
|
| 8,488 |
|
|
| 7,325 |
| Amounts reclassified from accumulated other comprehensive income | 2,829 | 2,829 | 5,659 | 5,658 | |||||||||||||||||||||
Balance at end of period |
|
| 18,391 |
|
|
| 7,245 |
|
|
| 18,474 |
|
|
| 7,325 |
| Balance at end of period | 26,841 | 15,602 | 26,848 | 15,644 | |||||||||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interest |
|
| 22 |
|
|
| 47 |
|
|
| 105 |
|
|
| 127 |
| Less: Other comprehensive income attributable to noncontrolling interest | $ | 4 | 41 | 11 | 83 | ||||||||||||||||||||
Balance at end of period attributable to common shareholders |
|
| 18,369 |
|
|
| 7,198 |
|
|
| 18,369 |
|
|
| 7,198 |
| ||||||||||||||||||||||||||
Balance at end of period attributable to shareholders | Balance at end of period attributable to shareholders | 26,837 | 15,561 | 26,837 | 15,561 | |||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive loss at end of period |
| $ | (11,984 | ) |
| $ | (23,155 | ) |
| $ | (11,984 | ) |
| $ | (23,155 | ) | Accumulated other comprehensive loss at end of period | $ | (3,516) | $ | (14,792) | $ | (3,516) | $ | (14,792) |
Note 17. Subsequent Events
2030 Notes
On October 13, 2021,dates. During the Issuers issued $700.0 million aggregate principal amountsix months ended June 30, 2022, the Company exchanged 591,349 OP Units held by third parties, of 6.00% Senior Notes due 2030. The Issuers deposited a portionwhich 244,683 OP Units were exchanged for an equal number of the net proceeds from the offering with the trustee for the Issuers’ outstanding 2024 Notes sufficient to fund the redemption thereof on December 15, 2021, and to pay any related premiums, fees and expenses in connection with the foregoing. Upon such deposit, the Issuers’ obligations under the 2024 Notes and indenture were discharged. The Company used the remaining proceedscommon shares of $78.0 million to prepay a portion of the settlement obligations under the settlement agreement with Windstream. See Note 14.
The 2030 Notes were issued at an issue price of 100% of their principal amount pursuant to an Indenture, dated as of October 13, 2021 (the “2030 Indenture”), among the Issuers, the guarantors named therein (collectively, the “Guarantors”) and Deutsche Bank Trust Company Americas, as trustee (in such capacity, the “Trustee”). The 2030 Notes mature on January 15, 2030 and bear interest at a rate of 6.000% per year. Interest on the 2030 Notes is payable on January 15 and July 15 of each year, beginning on July 15, 2022.
The Issuers may redeem the 2030 Notes, in whole or in part, at any time prior to January 15, 2025 at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed plus accrued and unpaid interest on the 2030 Notes, if any, to, but not including, the redemption date, plus an applicable “make whole” premium described in the 2030 Indenture. Thereafter, the Issuers may redeem
35
the 2030 Notes in whole or in part, at the redemption prices set forth in the 2030 Indenture. Further, at any time on or prior to January 15, 2025, up to 40% of the aggregate principal amount of the 2030 Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price of 106.000% of the principal amount plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date; provided that at least 60% of aggregate principal amount of the originally issued 2030 Notes remains outstanding. If certain changes of control of Uniti Group LP occur, holders of the 2030 Notes will have the right to require the Issuers to offer to repurchase their 2030 Notes at 101% of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.
The 2030 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and by each346,667 OP Units were exchanged for cash consideration of Uniti Group LP’s existing and future domestic restricted subsidiaries (other than the Issuers and certain regulated subsidiaries) that guarantees indebtedness under the Company’s senior secured credit facilities and existing notes (collectively, the “Guarantors”). In addition, the Issuers will use commercially reasonable efforts to obtain necessary regulatory approval to allow such non-guarantor subsidiaries$4.6 million, representing approximately 85% of the Company to guarantee the 2030 Notes, includingOP Units held by making filings to obtain such approval within 60 daysthird parties with a carrying value of $11.9 million as of the issuance of the 2030 Notes. The guarantees are subject to release under specified circumstances, including certain circumstances in which such guarantees may be automatically released without the consent of the holders of the 2030 Notes.
The 2030 Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior unsecured indebtedness and senior in right of payment to any of the Issuers’ and the Guarantors’ subordinated indebtedness. The 2030 Notes and related guarantees are effectively subordinated to all of the Issuers’ and Guarantors’ secured indebtedness (including the senior secured credit facilities and secured notes) to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all existing and future liabilities (including trade payables) of the Issuers’ subsidiaries that do not guarantee the 2030 Notes.
The 2030 Indenture contains customary high yield covenants limiting the ability of Uniti Group LP and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; enter into transactions with affiliates; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of the Issuers and their restricted subsidiaries to pay dividends or other amounts to the Issuers. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. The 2030 Indenture also contains customary events of default.
centers.
36
“ILEC “ILEC MLA”) that governs Uniti owned assets used for Windstream’s incumbent local exchange carrier (“ILEC”) operations and (b) a master lease (the “CLEC MLA”) that governs Uniti owned assets used for Windstream’s CLEC operations.
In addition, we have undertaken a series of transactions to permit us to hold certain assets through subsidiaries that are taxed as REITs, which may also facilitate future acquisition opportunities.
Towers Segment: Represents the operations of our former towers business, Uniti Towers, through which we acquired and constructed tower and tower-related real estate and leased space on communications towers to wireless service providers and other tenants in the United States. Starting in 2019, the Company completed a series of transactions to largely divest of its towers business and on April 2, 2019, May 23, 2019 and June 1, 2020, the Company completed the sales of its Latin American business, substantially all of its U.S. ground lease business, and its U.S. tower business, respectively. Portions of our former towers business were a component of our REIT operations, while the remainder were owned and operated by our TRSs.
Consumer CLEC Segment: Represents the operations of Talk America through which we operated the Consumer CLEC Business that, prior to the Spin-Off, was reported as an integrated operation within Windstream. Talk America provided local telephone, high-speed internet and long-distance services to customers in the eastern and central United States. As of the end of the second quarter of 2020, we substantially completed a wind down of our Consumer CLEC Business.
37
38
2021
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Amount |
|
| % of Revenues |
|
| Amount |
|
| % of Revenues |
| (Thousands) | Amount | % of Revenues | Amount | % of Revenues | |||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: | |||||||||||||||||||||||||
Leasing |
| $ | 199,485 |
|
| 74.8% |
|
| $ | 182,370 |
|
| 70.5% |
| Leasing | $ | 205,614 | 72.4% | $ | 196,057 | 73.1% | |||||||||||||||||||||
Fiber Infrastructure |
|
| 67,262 |
|
| 25.2% |
|
|
| 76,395 |
|
| 29.5% |
| Fiber Infrastructure | 78,361 | 27.6% | 72,123 | 26.9% | |||||||||||||||||||||||
Tower |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||||||||||||||||||||||||||||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||||||||||||||||||||||||||||
Total revenues |
|
| 266,747 |
|
| 100.0% |
|
|
| 258,765 |
|
| 100.0% |
| Total revenues | 283,975 | 100.0% | 268,180 | 100.0% | |||||||||||||||||||||||
Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Costs and Expenses: | |||||||||||||||||||||||||
Interest expense |
|
| 94,793 |
|
| 35.6% |
|
|
| 102,791 |
|
| 39.8% |
| ||||||||||||||||||||||||||||
Interest expense, net | Interest expense, net | 96,377 | 34.0% | 106,388 | 39.6% | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
| 70,530 |
|
| 26.4% |
|
|
| 79,880 |
|
| 30.9% |
| Depreciation and amortization | 72,303 | 25.5% | 69,671 | 26.0% | |||||||||||||||||||||||
General and administrative expense |
|
| 25,077 |
|
| 9.4% |
|
|
| 26,659 |
|
| 10.3% |
| General and administrative expense | 25,085 | 8.8% | 24,900 | 9.3% | |||||||||||||||||||||||
Operating expense (exclusive of depreciation and amortization) |
|
| 34,167 |
|
| 12.8% |
|
|
| 37,831 |
|
| 14.6% |
| Operating expense (exclusive of depreciation and amortization) | 36,917 | 13.0% | 33,185 | 12.4% | |||||||||||||||||||||||
Transaction related and other costs |
|
| 1,063 |
|
| 0.4% |
|
|
| 20,816 |
|
| 8.0% |
| Transaction related and other costs | 3,235 | 1.1% | 424 | 0.2% | |||||||||||||||||||||||
Gain on sale of real estate |
|
| - |
|
| 0.0% |
|
|
| (22,908 | ) |
| (8.9%) |
| Gain on sale of real estate | (250) | (0.1%) | (442) | (0.2)% | |||||||||||||||||||||||
Other expense, net |
|
| 283 |
|
| 0.1% |
|
|
| 3,098 |
|
| 1.2% |
| ||||||||||||||||||||||||||||
Gain on sale of operations | Gain on sale of operations | — | —% | (28,143) | (10.5)% | |||||||||||||||||||||||||||||||||||||
Other (income) expense, net | Other (income) expense, net | (7,930) | (2.8%) | 8,021 | 3.0% | |||||||||||||||||||||||||||||||||||||
Total costs and expenses |
|
| 225,913 |
|
| 84.7% |
|
|
| 248,167 |
|
| 95.9% |
| Total costs and expenses | 225,737 | 79.5% | 214,004 | 79.8% | |||||||||||||||||||||||
Income before income taxes and equity in earnings from unconsolidated entities |
|
| 40,834 |
|
| 15.3% |
|
|
| 10,598 |
|
| 4.1% |
| Income before income taxes and equity in earnings from unconsolidated entities | 58,238 | 20.5% | 54,176 | 20.2% | |||||||||||||||||||||||
Income tax (benefit) expense |
|
| (2,244 | ) |
| (0.9%) |
|
|
| 2,801 |
|
| 1.1% |
| ||||||||||||||||||||||||||||
Equity in (earnings) loss from unconsolidated entities |
|
| (604 | ) |
| (0.2%) |
|
|
| 342 |
|
| 0.1% |
| ||||||||||||||||||||||||||||
Income tax expense | Income tax expense | 4,944 | 1.8% | 5,084 | 1.9% | |||||||||||||||||||||||||||||||||||||
Equity in earnings from unconsolidated entities | Equity in earnings from unconsolidated entities | (480) | (0.2%) | (547) | (0.2%) | |||||||||||||||||||||||||||||||||||||
Net income |
|
| 43,682 |
|
| 16.4% |
|
|
| 7,455 |
|
| 2.9% |
| Net income | 53,774 | 18.9% | 49,639 | 18.5% | |||||||||||||||||||||||
Net income attributable to noncontrolling interests |
|
| 316 |
|
| 0.1% |
|
|
| 190 |
|
| 0.1% |
| Net income attributable to noncontrolling interests | 77 | 0.0% | 732 | 0.3% | |||||||||||||||||||||||
Net income attributable to shareholders |
|
| 43,366 |
|
| 16.3% |
|
|
| 7,265 |
|
| 2.8% |
| Net income attributable to shareholders | 53,697 | 18.9% | 48,907 | 18.2% | |||||||||||||||||||||||
Participating securities' share in earnings |
|
| (283 | ) |
| (0.1%) |
|
|
| (229 | ) |
| (0.1%) |
| Participating securities' share in earnings | (340) | (0.1%) | (333) | (0.1%) | |||||||||||||||||||||||
Dividends declared on convertible preferred stock |
|
| (3 | ) |
| (0.0%) |
|
|
| (2 | ) |
| (0.0%) |
| Dividends declared on convertible preferred stock | (5) | 0.0% | (2) | 0.0% | |||||||||||||||||||||||
Net income attributable to common shareholders |
| $ | 43,080 |
|
| 16.2% |
|
| $ | 7,034 |
|
| 2.7% |
| Net income attributable to common shareholders | $ | 53,352 | 18.8% | $ | 48,572 | 18.1% |
39
|
| Three Months Ended September 30, 2021 |
| Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 199,485 |
|
| $ | 67,262 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 266,747 |
| Revenues | $ | 205,614 | $ | 78,361 | $ | — | $ | 283,975 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 194,303 |
|
| $ | 27,556 |
|
| $ | - |
|
| $ | - |
|
| $ | (4,632 | ) |
| $ | 217,227 |
| Adjusted EBITDA | $ | 200,349 | $ | 33,583 | $ | (6,768) | $ | 227,164 | |||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 94,793 |
| Interest expense | 96,377 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 41,432 |
|
|
| 29,036 |
|
|
| - |
|
|
| - |
|
|
| 62 |
|
|
| 70,530 |
| Depreciation and amortization | 42,513 | 29,753 | 37 | 72,303 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,472 |
| ||||||||||||||||||||||||||
Gain on sale of real estate | Gain on sale of real estate | (250) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other, net | Other, net | (7,495) | ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,063 |
| Transaction related and other costs | 3,235 | ||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,166 |
| Stock-based compensation | 3,201 | ||||||||||||||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,244 | ) | ||||||||||||||||||||||||||
Income tax expense | Income tax expense | 4,944 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 765 |
| Adjustments for equity in earnings from unconsolidated entities | 1,075 | ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 43,682 |
| Net income | $ | 53,774 |
|
| Three Months Ended September 30, 2020 |
| Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 182,370 |
|
| $ | 76,395 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 258,765 |
| Revenues | $ | 196,057 | $ | 72,123 | $ | — | $ | 268,180 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 181,103 |
|
| $ | 25,419 |
|
| $ | - |
|
| $ | (186 | ) |
| $ | (7,775 | ) |
| $ | 198,561 |
| Adjusted EBITDA | $ | 192,137 | $ | 29,439 | $ | (5,842) | $ | 215,734 | |||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 102,791 |
| Interest expense | 106,388 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 48,189 |
|
|
| 31,617 |
|
|
| - |
|
|
| - |
|
|
| 74 |
|
|
| 79,880 |
| Depreciation and amortization | 40,474 | 29,132 | 65 | 69,671 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,098 |
| ||||||||||||||||||||||||||
Other, net | Other, net | 8,779 | ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20,816 |
| Transaction related and other costs | 424 | ||||||||||||||||||||||||
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (22,908 | ) | Gain on sale of real estate | (442) | ||||||||||||||||||||||||
Gain on sale of operations | Gain on sale of operations | (28,143) | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,341 |
| Stock-based compensation | 3,462 | ||||||||||||||||||||||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,801 |
| Income tax expense | 5,084 | ||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,287 |
| Adjustments for equity in earnings from unconsolidated entities | 872 | ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 7,455 |
| Net income | $ | 49,639 |
40
|
| Operating Metrics |
| Operating Metrics | ||||||||||||||||||||||||||||
|
| As of September 30, |
| As of June 30, | ||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| % Increase / (Decrease) |
| 2022 | 2021 | % Increase / (Decrease) | ||||||||||||||||||||
Operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
| Operating metrics: | |||||||||||||||||||
Leasing: |
|
|
|
|
|
|
|
|
|
|
|
| Leasing: | |||||||||||||||||||
Fiber strand miles |
|
| 4,890,000 |
|
|
| 4,500,000 |
|
| 8.7% |
| Fiber strand miles | 4,980,000 | 4,600,000 | 8.3% | |||||||||||||||||
Copper strand miles |
|
| 230,000 |
|
|
| 230,000 |
|
| 0.0% |
| Copper strand miles | 230,000 | 230,000 | 0.0% | |||||||||||||||||
Fiber Infrastructure: |
|
|
|
|
|
|
|
|
|
|
|
| Fiber Infrastructure: | |||||||||||||||||||
Fiber strand miles |
|
| 2,590,000 |
|
|
| 2,200,000 |
|
| 17.7% |
| Fiber strand miles | 2,800,000 | 2,540,000 | 10.2% | |||||||||||||||||
Customer connections |
|
| 25,897 |
|
|
| 25,885 |
|
| 0.0% |
| Customer connections | 27,171 | 25,383 | 7.0% |
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues | �� |
| Amount |
|
| % of Consolidated Revenues |
| (Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | |||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: | |||||||||||||||||||||||||
Leasing |
| $ | 199,485 |
|
| 74.8% |
|
| $ | 182,370 |
|
| 70.5% |
| Leasing | $ | 205,614 | 72.4% | $ | 196,057 | 73.1% | |||||||||||||||||||||
Fiber Infrastructure |
|
| 67,262 |
|
| 25.2% |
|
|
| 76,395 |
|
| 29.5% |
| Fiber Infrastructure | 78,361 | 27.6% | 72,123 | 26.9% | |||||||||||||||||||||||
Towers |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||||||||||||||||||||||||||||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||||||||||||||||||||||||||||
Total revenues |
| $ | 266,747 |
|
| 100.0% |
|
| $ | 258,765 |
|
| 100.0% |
| Total revenues | $ | 283,975 | 100.0% | $ | 268,180 | 100.0% |
41
because we funded $84.7 million of the $125 million limit in 2020, we are committed to fund up to $265.3 million of Growth Capital Improvements in 2021.
Leases.”
Uniti and Windstream have entered into separate ILEC and CLEC Equipment Loan and Security Agreements (collectively “Equipment Loan Agreement”) in which Uniti will provide up to $125 million (limited to $25 million in any calendar year) of the $1.75 billion of Growth Capital Improvements commitments discussed above in the form of loans for Windstream to purchase equipment related to network upgrades or to be used in connection with the Windstream Leases. Interest on these loans will accrue at 8% from the date of the borrowing. All equipment financed through the Equipment Loan Agreement is the sole property of Windstream; however, Uniti will receive a first-lien security interest in the equipment purchased with the loans. No such loans were made to Windstream during quarter ended September 30, 2021.
Three Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Segment Revenues | Amount | % of Segment Revenues | ||||||||||||||||||||||
Leasing revenues: | ||||||||||||||||||||||||||
Windstream Leases: | ||||||||||||||||||||||||||
Cash revenue | ||||||||||||||||||||||||||
Cash rent | $ | 167,223 | 81.3% | $ | 166,390 | 84.9% | ||||||||||||||||||||
GCI revenue | 2,891 | 1.4% | — | 0.0% | ||||||||||||||||||||||
Total cash revenue | 170,114 | 82.7% | 166,390 | 84.9% | ||||||||||||||||||||||
Non-cash revenue | ||||||||||||||||||||||||||
TCI revenue | 10,667 | 5.2% | 9,580 | 4.9% | ||||||||||||||||||||||
GCI revenue | 3,609 | 1.8% | 2,513 | 1.3% | ||||||||||||||||||||||
Other straight-line revenue | 2,525 | 1.2% | 3,375 | 1.7% | ||||||||||||||||||||||
Total non-cash revenue | 16,801 | 8.2% | 15,468 | 7.9% | ||||||||||||||||||||||
Total Windstream revenue | 186,915 | 90.9% | 181,858 | 92.8% | ||||||||||||||||||||||
Other services | 18,699 | 9.1% | 14,199 | 7.2% | ||||||||||||||||||||||
Total Leasing revenues | $ | 205,614 | 100.0% | $ | 196,057 | 100.0% |
|
| Three Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
|
|
|
|
| ||||||
(Thousands) |
| Amount |
|
| % of Segment Revenues |
|
| Amount |
|
| % of Segment Revenues |
| ||||
Leasing revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Windstream Leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rent |
| $ | 166.7 |
|
| 83.5% |
|
| $ | 165.8 |
|
| 90.9% |
| ||
Non-cash revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCI revenue |
|
| 10.0 |
|
| 5.0% |
|
|
| 9.2 |
|
| 5.0% |
| ||
Straight-line revenue |
|
| 6.5 |
|
| 3.3% |
|
|
| 0.5 |
|
| 0.3% |
| ||
Total non-cash revenue |
|
| 16.5 |
|
| 8.3% |
|
|
| 9.7 |
|
| 5.3% |
| ||
Total Windstream revenue |
|
| 183.2 |
|
| 91.8% |
|
|
| 175.5 |
|
| 96.2% |
| ||
Other triple-net leasing and dark fiber IRU |
|
| 16.3 |
|
| 8.2% |
|
|
| 6.9 |
|
| 3.8% |
| ||
Total Leasing revenues |
| $ | 199.5 |
|
| 100.0% |
|
| $ | 182.4 |
|
| 100.0% |
|
The increase in TCI revenue is attributable to continued investment by Windstream, which invested $34.2We recognized $18.7 million in TCIs during the three months ended September 30, 2021. The total amount invested in TCIs by Windstream since the inception of the Windstream Leases and Master Lease was $986.7 million as of September 30, 2021. For the three months ended September 30, 2021, we recognized $16.3$14.2 million of leasing revenues from other services including non-Windstream triple-net leasing and dark fiber indefeasible rights of use (“IRU”)
42
arrangements. For arrangements for the three months ended SeptemberJune 30, 2020, we recognized $6.9 million from non-Windstream triple-net leasing2022 and dark fiber IRU arrangements.
2021, respectively.
Windstream.
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Amount |
|
| % of Segment Revenues |
|
| Amount |
|
| % of Segment Revenues |
| (Thousands) | Amount | % of Segment Revenues | Amount | % of Segment Revenues | |||||||||||||||||||||||||
Fiber Infrastructure revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fiber Infrastructure revenues: | |||||||||||||||||||||||||
Lit backhaul services |
| $ | 19,381 |
|
| 28.8% |
|
| $ | 25,160 |
|
| 33.0% |
| Lit backhaul services | $ | 19,937 | 25.4% | $ | 22,979 | 31.9% | |||||||||||||||||||||
Enterprise and wholesale |
|
| 20,863 |
|
| 31.1% |
|
|
| 19,875 |
|
| 26.0% |
| Enterprise and wholesale | 21,001 | 26.8% | 21,327 | 29.6% | |||||||||||||||||||||||
E-Rate and government |
|
| 13,505 |
|
| 20.1% |
|
|
| 17,375 |
|
| 22.7% |
| E-Rate and government | 18,505 | 23.6% | 15,926 | 22.1% | |||||||||||||||||||||||
Dark fiber and small cells |
|
| 12,674 |
|
| 18.8% |
|
|
| 11,640 |
|
| 15.2% |
| Dark fiber and small cells | 18,206 | 23.2% | 11,067 | 15.3% | |||||||||||||||||||||||
Other services |
|
| 839 |
|
| 1.2% |
|
|
| 2,345 |
|
| 3.1% |
| Other services | 712 | 0.9% | 824 | 1.1% | |||||||||||||||||||||||
Total Fiber Infrastructure revenues |
| $ | 67,262 |
|
| 100.0% |
|
| $ | 76,395 |
|
| 100.0% |
| Total Fiber Infrastructure revenues | $ | 78,361 | 100.0% | $ | 72,123 | 100.0% |
activities.
43
Consumer CLEC – For the three months ended September 30, 2021, we recognized no revenue from the Consumer CLEC Business, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| Increase / (Decrease) |
| (Thousands) | 2022 | 2021 | % Increase / (Decrease) | |||||||||||||||||||
Interest expense, net: |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net: | |||||||||||||||||||
Cash: |
|
|
|
|
|
|
|
|
|
|
|
| Cash: | |||||||||||||||||||
Senior secured notes - 4.75%, 6.00% and 7.875% |
|
| 49,691 |
|
|
| 52,547 |
|
|
| (2,856 | ) | ||||||||||||||||||||
Senior unsecured notes - 4.00%, 6.50%. 7.125% and 8.25% |
|
| 32,176 |
|
|
| 37,031 |
|
|
| (4,855 | ) | ||||||||||||||||||||
Senior secured notes | Senior secured notes | $ | 51,066 | $ | 54,312 | (3,246) | ||||||||||||||||||||||||||
Senior unsecured notes | Senior unsecured notes | 31,987 | 32,377 | (390) | ||||||||||||||||||||||||||||
Senior secured revolving credit facility - variable rate |
|
| 2,210 |
|
|
| 710 |
|
|
| 1,500 |
| Senior secured revolving credit facility - variable rate | 2,877 | 2,571 | 306 | ||||||||||||||||
Tender premium payment | Tender premium payment | — | 2,991 | (2,991) | ||||||||||||||||||||||||||||
Interest rate swap termination |
|
| 2,829 |
|
|
| 2,829 |
|
|
| - |
| Interest rate swap termination | 2,829 | 2,829 | — | ||||||||||||||||
Other |
|
| 366 |
|
|
| 1,082 |
|
|
| (716 | ) | Other | 323 | 783 | (460) | ||||||||||||||||
Total cash interest |
|
| 87,272 |
|
|
| 94,199 |
|
|
| (6,927 | ) | Total cash interest | 89,082 | 95,863 | (6,781) | ||||||||||||||||
Non-cash: |
|
|
|
|
|
|
|
|
|
|
|
| Non-cash: | |||||||||||||||||||
Amortization of deferred financing costs and debt discount |
|
| 4,352 |
|
|
| 9,037 |
|
|
| (4,685 | ) | Amortization of deferred financing costs and debt discount | 4,501 | 4,412 | 89 | ||||||||||||||||
Write off of deferred financing costs and debt discount | Write off of deferred financing costs and debt discount | — | 2,413 | (2,413) | ||||||||||||||||||||||||||||
Accretion of settlement payable |
|
| 4,117 |
|
|
| - |
|
|
| 4,117 |
| Accretion of settlement payable | 2,911 | 4,326 | (1,415) | ||||||||||||||||
Capitalized Interest |
|
| (948 | ) |
|
| (445 | ) |
|
| (503 | ) | ||||||||||||||||||||
Capitalized interest | Capitalized interest | (117) | (626) | 509 | ||||||||||||||||||||||||||||
Total non-cash interest |
|
| 7,521 |
|
|
| 8,592 |
|
|
| (1,071 | ) | Total non-cash interest | 7,295 | 10,525 | (3,230) | ||||||||||||||||
Total interest expense, net |
| $ | 94,793 |
|
| $ | 102,791 |
|
| $ | (7,998 | ) | Total interest expense, net | $ | 96,377 | $ | 106,388 | $ | (10,011) | |||||||||||||
(1) Swapped to fixed rate. See Note 9 |
|
|
|
|
|
|
|
|
|
|
|
|
, which resulted in the write off of $1.1 million of deferred financing costs and debt discount during the three months ended June 30, 2021 and (iii) lower cash interest expense of $4.0 million, primarily associated with the 2028 Notes and 2029 Notes financing transactions, and a $1.4 million decrease in accretion expense associated with the settlement payable during the three months ended June 30, 2022.
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| Increase / (Decrease) |
| (Thousands) | 2022 | 2021 | % Increase / (Decrease) | |||||||||||||||||||
Depreciation and amortization expense by segment: |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense by segment: | |||||||||||||||||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation expense | |||||||||||||||||||
Leasing |
| $ | 42,376 |
|
| $ | 48,189 |
|
| $ | (5,813 | ) | Leasing | $ | 40,784 | $ | 41,419 | $ | (635) | |||||||||||||
Fiber Infrastructure |
|
| 23,318 |
|
|
| 25,105 |
|
|
| (1,787 | ) | Fiber Infrastructure | 24,035 | 23,414 | 621 | ||||||||||||||||
Corporate |
|
| 62 |
|
|
| 74 |
|
|
| (12 | ) | Corporate | 37 | 65 | (28) | ||||||||||||||||
Towers |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Total depreciation expense |
|
| 65,756 |
|
|
| 73,368 |
|
|
| (7,612 | ) | Total depreciation expense | 64,856 | 64,898 | (42) | ||||||||||||||||
Amortization expense |
|
|
|
|
|
|
|
|
|
|
|
| Amortization expense | |||||||||||||||||||
Leasing |
|
| (944 | ) |
|
| - |
|
|
| (944 | ) | Leasing | 1,729 | (945) | 2,674 | ||||||||||||||||
Fiber Infrastructure |
|
| 5,718 |
|
|
| 6,512 |
|
|
| (794 | ) | Fiber Infrastructure | 5,718 | 5,718 | — | ||||||||||||||||
Corporate |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Towers |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Total amortization expense |
|
| 4,774 |
|
|
| 6,512 |
|
|
| (1,738 | ) | Total amortization expense | 7,447 | 4,773 | 2,674 | ||||||||||||||||
Total depreciation and amortization expense |
| $ | 70,530 |
|
| $ | 79,880 |
|
| $ | (9,350 | ) | Total depreciation and amortization expense | $ | 72,303 | $ | 69,671 | $ | 2,632 |
44
|
| Three Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
|
|
|
|
| ||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues |
|
| Amount |
|
| % of Consolidated Revenues |
| ||||
General and administrative expense by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Infrastructure |
| $ | 13,427 |
|
| 5.1% |
|
| $ | 14,538 |
|
| 5.6% |
| ||
Leasing |
|
| 2,254 |
|
| 0.8% |
|
|
| 1,735 |
|
| 0.7% |
| ||
Corporate |
|
| 9,396 |
|
| 3.5% |
|
|
| 10,304 |
|
| 4.0% |
| ||
Towers |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| 82 |
|
| 0.0% |
| ||
Total general and administrative expenses |
| $ | 25,077 |
|
| 9.4% |
|
| $ | 26,659 |
|
| 10.3% |
|
General and administrative expenses include compensation costs, including stock-based compensation awards, professional and legal services, corporate office costs and other costs associated with administrative activities. Foractivities of our segments.
Three Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | ||||||||||||||||||||||
General and administrative expense by segment: | ||||||||||||||||||||||||||
Leasing | $ | 3,236 | 1.1% | $ | 2,612 | 1.0% | ||||||||||||||||||||
Fiber Infrastructure | 13,137 | 4.6% | 13,926 | 5.2% | ||||||||||||||||||||||
Corporate | 8,712 | 3.1% | 8,362 | 3.1% | ||||||||||||||||||||||
Total general and administrative expenses | $ | 25,085 | 8.8% | $ | 24,900 | 9.3% |
Three Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | ||||||||||||||||||||||
Operating expense by segment: | ||||||||||||||||||||||||||
Leasing | $ | 4,839 | 1.7% | $ | 3,613 | 1.3% | ||||||||||||||||||||
Fiber Infrastructure | 32,078 | 11.3% | 29,572 | 11.1% | ||||||||||||||||||||||
Total operating expenses | $ | 36,917 | 13.0% | $ | 33,185 | 12.4% |
|
| Three Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues |
|
| Amount |
|
| % of Consolidated Revenues |
| ||||
Operating expenses by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Infrastructure |
| $ | 28,983 |
|
| 10.9% |
|
| $ | 37,122 |
|
| 14.4% |
| ||
Leasing |
|
| 5,184 |
|
| 1.9% |
|
|
| 605 |
|
| 0.2% |
| ||
Towers |
|
| - |
|
| 0.0% |
|
|
| - |
|
| 0.0% |
| ||
CLEC |
|
| - |
|
| 0.0% |
|
|
| 104 |
|
| 0.0% |
| ||
Total operating expenses |
| $ | 34,167 |
|
| 12.8% |
|
| $ | 37,831 |
|
| 14.6% |
|
45
Leasing – Leasing operating expense was $5.2of $0.8 million, network maintenance expenses of $0.3 million, and $0.6 million for the three months ended September 30, 2021 and 2020, respectively. The increase is primarily driven by a $4.1 million increase in network expenses due to the Asset Purchase Agreement the Company entered into with Windstream which was completed in the third quarterdark fiber early termination fees of 2020$0.3 million..
Towers – For the three months ended September 30, 2021, Towers operating expenses were not incurred as the U.S. tower business sale was completed on June 1, 2020.
Consumer CLEC – For the three months ended September 30, 2021, Consumer CLEC Business operating expenses were not incurred, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.
|
| Three Months Ended September 30, |
| Three Months Ended June 30, | ||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | |||||||||||||
Income tax (benefit) expense |
|
|
|
|
|
|
|
| ||||||||||||||
Income tax expense | Income tax expense | |||||||||||||||||||||
Pre-tax loss (Fiber Infrastructure) |
| $ | (3,476 | ) |
| $ | 3,606 |
| Pre-tax loss (Fiber Infrastructure) | $ | (3,431) | $ | (2,949) | |||||||||
Gain on sale of operations |
|
| - |
|
|
| - |
| Gain on sale of operations | — | 7,041 | |||||||||||
Gain on sale of unconsolidated entity | Gain on sale of unconsolidated entity | 6,711 | — | |||||||||||||||||||
Other undistributed REIT taxable income |
|
| 778 |
|
|
| - |
| Other undistributed REIT taxable income | 1,106 | 467 | |||||||||||
REIT state and local taxes |
|
| 352 |
|
|
| - |
| REIT state and local taxes | 540 | 561 | |||||||||||
Other |
|
| 102 |
|
|
| (805 | ) | Other | 18 | (36) | |||||||||||
Total income tax (benefit) expense |
| $ | (2,244 | ) |
| $ | 2,801 |
| ||||||||||||||
Total income tax expense | Total income tax expense | $ | 4,944 | $ | 5,084 |
46
2021
|
| Nine Months Ended September 30, |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Amount |
|
| % of Revenues |
|
| Amount |
|
| % of Revenues |
| (Thousands) | Amount | % of Revenues | Amount | % of Revenues | |||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: | |||||||||||||||||||||||||
Leasing |
| $ | 590,478 |
|
| 73.1% |
|
| $ | 552,042 |
|
| 69.7% |
| Leasing | $ | 410,255 | 73.0% | $ | 390,993 | 72.3% | |||||||||||||||||||||
Fiber Infrastructure |
|
| 217,035 |
|
| 26.9% |
|
|
| 232,942 |
|
| 29.4% |
| Fiber Infrastructure | 151,754 | 27.0% | 149,773 | 27.7% | |||||||||||||||||||||||
Tower |
|
| - |
|
| 0.0% |
|
|
| 6,112 |
|
| 0.8% |
| ||||||||||||||||||||||||||||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| 651 |
|
| 0.1% |
| ||||||||||||||||||||||||||||
Total revenues |
|
| 807,513 |
|
| 100.0% |
|
|
| 791,747 |
|
| 100.0% |
| Total revenues | 562,009 | 100.0% | 540,766 | 100.0% | |||||||||||||||||||||||
Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Costs and Expenses: | |||||||||||||||||||||||||
Interest expense |
|
| 341,762 |
|
| 42.3% |
|
|
| 388,427 |
|
| 49.2% |
| ||||||||||||||||||||||||||||
Interest expense, net | Interest expense, net | 192,549 | 34.3% | 246,969 | 45.7% | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
| 211,165 |
|
| 26.2% |
|
|
| 250,970 |
|
| 31.7% |
| Depreciation and amortization | 143,760 | 25.6% | 140,635 | 26.0% | |||||||||||||||||||||||
General and administrative expense |
|
| 75,800 |
|
| 9.4% |
|
|
| 81,686 |
|
| 10.3% |
| General and administrative expense | 48,955 | 8.7% | 50,723 | 9.4% | |||||||||||||||||||||||
Operating expense (exclusive of depreciation and amortization) |
|
| 105,436 |
|
| 13.1% |
|
|
| 118,308 |
|
| 14.9% |
| Operating expense (exclusive of depreciation and amortization) | 71,893 | 12.8% | 71,269 | 13.2% | |||||||||||||||||||||||
Settlement expense |
|
| - |
|
| 0.0% |
|
|
| 650,000 |
|
| 82.1% |
| ||||||||||||||||||||||||||||
Transaction related and other costs |
|
| 5,624 |
|
| 0.7% |
|
|
| 55,344 |
|
| 7.0% |
| Transaction related and other costs | 4,949 | 0.9% | 4,561 | 0.8% | |||||||||||||||||||||||
Gain on sale of real estate |
|
| (442 | ) |
| (0.1%) |
|
|
| (86,726 | ) |
| (11.0%) |
| Gain on sale of real estate | (250) | (0.1%) | (442) | (0.1)% | |||||||||||||||||||||||
Gain on sale of operations |
|
| (28,143 | ) |
| (3.5%) |
|
|
| - |
|
| 0.0% |
| Gain on sale of operations | — | —% | (28,143) | (5.2)% | |||||||||||||||||||||||
Other expense |
|
| 8,758 |
|
| 1.1% |
|
|
| 12,186 |
|
| 1.5% |
| ||||||||||||||||||||||||||||
Other (income) expense, net | Other (income) expense, net | (8,328) | (1.5%) | 8,475 | 1.6% | |||||||||||||||||||||||||||||||||||||
Total costs and expenses |
|
| 719,960 |
|
| 89.2% |
|
|
| 1,470,195 |
|
| 185.7% |
| Total costs and expenses | 453,528 | 80.7% | 494,047 | 91.4% | |||||||||||||||||||||||
Income (loss) before income taxes and equity in earnings (loss) from unconsolidated entities |
|
| 87,553 |
|
| 10.8% |
|
|
| (678,448 | ) |
| (85.7%) |
| ||||||||||||||||||||||||||||
Income tax expense (benefit) |
|
| 283 |
|
| 0.0% |
|
|
| (7,650 | ) |
| (0.9%) |
| ||||||||||||||||||||||||||||
Equity in (earnings) loss from unconsolidated entities |
|
| (1,549 | ) |
| (0.2%) |
|
|
| 342 |
|
| 0.0% |
| ||||||||||||||||||||||||||||
Net income (loss) |
|
| 88,819 |
|
| 11.0% |
|
|
| (671,140 | ) |
| (84.8%) |
| ||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests |
|
| 984 |
|
| 0.1% |
|
|
| (11,808 | ) |
| (1.5%) |
| ||||||||||||||||||||||||||||
Net income (loss) attributable to shareholders |
|
| 87,835 |
|
| 10.9% |
|
|
| (659,332 | ) |
| (83.3%) |
| ||||||||||||||||||||||||||||
Income before income taxes and equity in earnings from unconsolidated entities | Income before income taxes and equity in earnings from unconsolidated entities | 108,481 | 19.3% | 46,719 | 8.6% | |||||||||||||||||||||||||||||||||||||
Income tax expense | Income tax expense | 2,873 | 0.5% | 2,527 | 0.5% | |||||||||||||||||||||||||||||||||||||
Equity in earnings from unconsolidated entities | Equity in earnings from unconsolidated entities | (1,024) | (0.2%) | (945) | (0.2%) | |||||||||||||||||||||||||||||||||||||
Net income | Net income | 106,632 | 19.0% | 45,137 | 8.3% | |||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | Net income attributable to noncontrolling interests | 205 | 0.1% | 668 | 0.1% | |||||||||||||||||||||||||||||||||||||
Net income attributable to shareholders | Net income attributable to shareholders | 106,427 | 18.9% | 44,469 | 8.2% | |||||||||||||||||||||||||||||||||||||
Participating securities' share in earnings |
|
| (864 | ) |
| (0.1%) |
|
|
| (853 | ) |
| (0.1%) |
| Participating securities' share in earnings | (671) | (0.1%) | (581) | (0.1%) | |||||||||||||||||||||||
Dividends declared on convertible preferred stock |
|
| (8 | ) |
| (0.0%) |
|
|
| (6 | ) |
| (0.0%) |
| Dividends declared on convertible preferred stock | (10) | 0.0% | (5) | 0.0% | |||||||||||||||||||||||
Net income (loss) attributable to common shareholders |
| $ | 86,963 |
|
| 10.8% |
|
| $ | (660,191 | ) |
| (83.4%) |
| ||||||||||||||||||||||||||||
Net income attributable to common shareholders | Net income attributable to common shareholders | $ | 105,746 | 18.8% | $ | 43,883 | 8.1% |
47
|
| Nine Months Ended September 30, 2021 |
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 590,478 |
|
| $ | 217,035 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 807,513 |
| Revenues | $ | 410,255 | $ | 151,754 | $ | — | $ | 562,009 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 577,937 |
|
| $ | 86,716 |
|
| $ | - |
|
| $ | - |
|
| $ | (17,444 | ) |
| $ | 647,209 |
| Adjusted EBITDA | $ | 399,322 | $ | 65,042 | $ | (12,411) | $ | 451,953 | |||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 341,762 |
| Interest expense | 192,549 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 124,132 |
|
|
| 86,838 |
|
|
| - |
|
|
| - |
|
|
| 195 |
|
|
| 211,165 |
| Depreciation and amortization | 84,616 | 59,071 | 73 | 143,760 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 14,569 |
| ||||||||||||||||||||||||||
Gain on sale of real estate | Gain on sale of real estate | (250) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other, net | Other, net | (7,134) | ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,624 |
| Transaction related and other costs | 4,949 | ||||||||||||||||||||||||
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (442 | ) | ||||||||||||||||||||||||||
Gain on sale of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (28,143 | ) | ||||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10,963 |
| Stock-based compensation | 6,513 | ||||||||||||||||||||||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 283 |
| Income tax expense | 2,873 | ||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,609 |
| Adjustments for equity in earnings from unconsolidated entities | 2,061 | ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 88,819 |
| Net income | $ | 106,632 |
|
| Nine Months Ended September 30, 2020 |
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Leasing |
|
| Fiber Infrastructure |
|
| Towers |
|
| Consumer CLEC |
|
| Corporate |
|
| Subtotal of Reportable Segments |
| (Thousands) | Leasing | Fiber Infrastructure | Corporate | Subtotal of Reportable Segments | |||||||||||||||||||||||||||
Revenues |
| $ | 552,042 |
|
| $ | 232,942 |
|
| $ | 6,112 |
|
| $ | 651 |
|
| $ | - |
|
| $ | 791,747 |
| Revenues | $ | 390,993 | $ | 149,773 | $ | — | $ | 540,766 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjusted EBITDA |
| $ | 545,792 |
|
| $ | 81,453 |
|
| $ | 77 |
|
| $ | (461 | ) |
| $ | (23,717 | ) |
| $ | 603,144 |
| Adjusted EBITDA | $ | 383,634 | $ | 59,160 | $ | (12,812) | $ | 429,982 | |||||||||||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: | |||||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 388,427 |
| Interest expense | 246,969 | ||||||||||||||||||||||||
Depreciation and amortization |
|
| 155,216 |
|
|
| 93,957 |
|
|
| 783 |
|
|
| 791 |
|
|
| 223 |
|
|
| 250,970 |
| Depreciation and amortization | 82,700 | 57,802 | 133 | 140,635 | |||||||||||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,186 |
| ||||||||||||||||||||||||||
Settlement expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 650,000 |
| ||||||||||||||||||||||||||
Other, net | Other, net | 10,097 | ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction related and other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55,344 |
| Transaction related and other costs | 4,561 | ||||||||||||||||||||||||
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (86,726 | ) | Gain on sale of real estate | (442) | ||||||||||||||||||||||||
Gain on sale of operations | Gain on sale of operations | (28,143) | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10,446 |
| Stock-based compensation | 6,797 | ||||||||||||||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (7,650 | ) | ||||||||||||||||||||||||||
Income tax expense | Income tax expense | 2,527 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,287 |
| Adjustments for equity in earnings from unconsolidated entities | 1,844 | ||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (671,140 | ) | ||||||||||||||||||||||||||
Net income | Net income | $ | 45,137 |
48
|
| Nine Months Ended September 30, |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues |
|
| Amount |
|
| % of Consolidated Revenues |
| (Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | |||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues: | |||||||||||||||||||||||||
Leasing |
| $ | 590,478 |
|
| 73.1% |
|
| $ | 552,042 |
|
| 69.7% |
| Leasing | $ | 410,255 | 73.0% | $ | 390,993 | 72.3% | |||||||||||||||||||||
Fiber Infrastructure |
|
| 217,035 |
|
| 26.9% |
|
|
| 232,942 |
|
| 29.4% |
| Fiber Infrastructure | 151,754 | 27.0% | 149,773 | 27.7% | |||||||||||||||||||||||
Towers |
|
| - |
|
| 0.0% |
|
|
| 6,112 |
|
| 0.8% |
| ||||||||||||||||||||||||||||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| 651 |
|
| 0.1% |
| ||||||||||||||||||||||||||||
Total revenues |
| $ | 807,513 |
|
| 100.0% |
|
| $ | 791,747 |
|
| 100.0% |
| Total revenues | $ | 562,009 | 100.0% | $ | 540,766 | 100.0% |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Segment Revenues | Amount | % of Segment Revenues | ||||||||||||||||||||||
Leasing revenues: | ||||||||||||||||||||||||||
Windstream Leases: | ||||||||||||||||||||||||||
Cash revenue | ||||||||||||||||||||||||||
Cash rent | $ | 333,890 | 81.4% | $ | 332,229 | 85.0% | ||||||||||||||||||||
GCI revenue | 4,820 | 1.2% | — | 0.0% | ||||||||||||||||||||||
Total cash revenue | 338,710 | 82.6% | 332,229 | 85.0% | ||||||||||||||||||||||
Non-cash revenue | ||||||||||||||||||||||||||
TCI revenue | 21,073 | 5.1% | 18,832 | 4.8% | ||||||||||||||||||||||
GCI revenue | 7,449 | 1.8% | 4,224 | 1.1% | ||||||||||||||||||||||
Other straight-line revenue | 5,610 | 1.4% | 7,309 | 1.9% | ||||||||||||||||||||||
Total non-cash revenue | 34,132 | 8.3% | 30,365 | 7.8% | ||||||||||||||||||||||
Total Windstream revenue | 372,842 | 90.9% | 362,594 | 92.7% | ||||||||||||||||||||||
Other services | 37,414 | 9.1% | 28,399 | 7.3% | ||||||||||||||||||||||
Total Leasing revenues | $ | 410,255 | 100.0% | $ | 390,993 | 100.0% |
|
| Nine Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(Thousands) |
| Amount |
|
| % of Segment Revenues |
|
| Amount |
|
| % of Segment Revenues |
| ||||
Leasing revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Windstream leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rent |
| $ | 498.9 |
|
| 84.5% |
|
| $ | 496.4 |
|
| 89.9% |
| ||
Non-cash revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCI revenue |
|
| 28.8 |
|
| 4.8% |
|
|
| 26.2 |
|
| 4.7% |
| ||
Straight-line revenue |
|
| 18.1 |
|
| 3.1% |
|
|
| 0.4 |
|
| 0.1% |
| ||
Total non-cash revenue |
|
| 46.9 |
|
| 7.9% |
|
|
| 26.6 |
|
| 4.8% |
| ||
Total Windstream revenue |
|
| 545.8 |
|
| 92.4% |
|
|
| 523.0 |
|
| 94.7% |
| ||
Other triple-net leasing and dark fiber IRU |
|
| 44.7 |
|
| 7.6% |
|
|
| 29.0 |
|
| 5.3% |
| ||
Total Leasing revenues |
| $ | 590.5 |
|
| 100.0% |
|
| $ | 552.0 |
|
| 100.0% |
|
The increase in TCI revenue is attributable to continued investment by Windstream, which invested $141.0We recognized $37.4 million in TCIs during the nine months ended September 30, 2021. The total amount invested in TCIs by Windstream since the inception of the Windstream Leases and Master Lease was $986.7 million as of September 30, 2021. For the nine months ended September 30, 2021, we recognized $44.7$28.4 million of leasing revenues from non-Windstream triple-net leasing, and dark fiber IRU arrangements. Forarrangements, and other services for the ninesix months ended SeptemberJune 30, 2020, we recognized $29.0 million from non-Windstream triple-net leasing2022 and dark fiber IRU arrangements.
2021, respectively.
49
Six Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Segment Revenues | Amount | % of Segment Revenues | ||||||||||||||||||||||
Fiber Infrastructure revenues: | ||||||||||||||||||||||||||
Lit backhaul services | $ | 39,375 | 26.0% | $ | 48,023 | 32.0% | ||||||||||||||||||||
Enterprise and wholesale | 41,936 | 27.6% | 42,327 | 28.3% | ||||||||||||||||||||||
E-Rate and government | 32,782 | 21.6% | 35,290 | 23.6% | ||||||||||||||||||||||
Dark fiber and small cells | 36,288 | 23.9% | 22,493 | 15.0% | ||||||||||||||||||||||
Other services | 1,373 | 0.9% | 1,640 | 1.1% | ||||||||||||||||||||||
Total Fiber Infrastructure revenues | $ | 151,754 | 100.0% | $ | 149,773 | 100.0% |
|
| Nine Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(Thousands) |
| Amount |
|
| % of Segment Revenues |
|
| Amount |
|
| % of Segment Revenues |
| ||||
Fiber Infrastructure revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lit backhaul services |
| $ | 67,404 |
|
| 31.1% |
|
| $ | 80,568 |
|
| 34.6% |
| ||
Enterprise and wholesale |
|
| 63,190 |
|
| 29.1% |
|
|
| 58,761 |
|
| 25.2% |
| ||
E-Rate and government |
|
| 48,795 |
|
| 22.5% |
|
|
| 60,133 |
|
| 25.8% |
| ||
Dark fiber and small cells |
|
| 35,167 |
|
| 16.2% |
|
|
| 29,832 |
|
| 12.8% |
| ||
Other services |
|
| 2,479 |
|
| 1.1% |
|
|
| 3,648 |
|
| 1.6% |
| ||
Total Fiber Infrastructure revenues |
| $ | 217,035 |
|
| 100.0% |
|
| $ | 232,942 |
|
| 100.0% |
|
For the ninesix months ended SeptemberJune 30, 2021,2022, Fiber Infrastructure revenues totaled $217.0$151.8 million as compared to $232.9$149.8 million for the ninesix months ended SeptemberJune 30, 2020. The $15.92021. Fiber Infrastructure revenues increased $2.0 million, primarily due to an increase in one-time early termination revenues of $12.3 million within dark fiber and small cells revenues, partially offset by a $8.6 million decrease in Lit backhaul service revenues, primarily driven by the sale of our Uniti Fiber Infrastructure revenues is primarily attributable toNortheast operations on May 28, 2021 and lit-to-dark fiber conversions, and a $10.0$1.6 million decrease relateddue to the wind down of our construction activities, shown above within E-rate and government, and a decreaseactivities.
TowersContents
Consumer CLEC – For the nine months ended September 30, 2021, we recognized no revenue from the Consumer CLEC Business, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.
|
| Nine Months Ended September 30, |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| Increase / (Decrease) |
| (Thousands) | 2022 | 2021 | % Increase / (Decrease) | |||||||||||||||||||
Interest expense, net: |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net: | |||||||||||||||||||
Cash: |
|
|
|
|
|
|
|
|
|
|
|
| Cash: | |||||||||||||||||||
Senior secured term loan B - variable rate (1) |
| $ | - |
|
| $ | 15,709 |
|
| $ | (15,709 | ) | ||||||||||||||||||||
Senior secured notes - 4.75%, 6.00% and 7.875% |
|
| 156,550 |
|
|
| 138,344 |
|
|
| 18,206 |
| ||||||||||||||||||||
Senior unsecured notes - 4.00%, 6.50%. 7.125% and 8.25% |
|
| 99,438 |
|
|
| 111,092 |
|
|
| (11,654 | ) | ||||||||||||||||||||
Senior secured notes | Senior secured notes | $ | 102,132 | $ | 106,859 | (4,727) | ||||||||||||||||||||||||||
Senior unsecured notes | Senior unsecured notes | 63,975 | 67,262 | (3,287) | ||||||||||||||||||||||||||||
Senior secured revolving credit facility - variable rate |
|
| 7,095 |
|
|
| 12,942 |
|
|
| (5,847 | ) | Senior secured revolving credit facility - variable rate | 5,479 | 4,885 | 594 | ||||||||||||||||
Tender premium and early redemption payments |
|
| 20,541 |
|
|
| - |
|
|
| 20,541 |
| ||||||||||||||||||||
Tender premium payment | Tender premium payment | — | 20,541 | (20,541) | ||||||||||||||||||||||||||||
Interest rate swap termination |
|
| 8,488 |
|
|
| 7,325 |
|
|
| 1,163 |
| Interest rate swap termination | 5,659 | 5,658 | 1 | ||||||||||||||||
Other |
|
| 2,070 |
|
|
| 3,157 |
|
|
| (1,087 | ) | Other | 679 | 1,705 | (1,026) | ||||||||||||||||
Total cash interest |
|
| 294,182 |
|
|
| 288,569 |
|
|
| 5,613 |
| Total cash interest | 177,924 | 206,910 | (28,986) | ||||||||||||||||
Non-cash: |
|
|
|
|
|
|
|
|
|
|
|
| Non-cash: | |||||||||||||||||||
Amortization of deferred financing costs and debt discount |
|
| 13,723 |
|
|
| 27,703 |
|
|
| (13,980 | ) | Amortization of deferred financing costs and debt discount | 9,015 | 9,371 | (356) | ||||||||||||||||
Write off of deferred financing costs and debt discount |
|
| 22,828 |
|
|
| 73,952 |
|
|
| (51,124 | ) | Write off of deferred financing costs and debt discount | — | 22,828 | (22,828) | ||||||||||||||||
Accretion of settlement payable |
|
| 13,006 |
|
|
| - |
|
|
| 13,006 |
| Accretion of settlement payable | 5,787 | 8,889 | (3,102) | ||||||||||||||||
Capitalized Interest |
|
| (1,977 | ) |
|
| (1,797 | ) |
|
| (180 | ) | ||||||||||||||||||||
Capitalized interest | Capitalized interest | (177) | (1,029) | 852 | ||||||||||||||||||||||||||||
Total non-cash interest |
|
| 47,580 |
|
|
| 99,858 |
|
|
| (52,278 | ) | Total non-cash interest | 14,625 | 40,059 | (25,434) | ||||||||||||||||
Total interest expense, net |
| $ | 341,762 |
|
| $ | 388,427 |
|
| $ | (46,665 | ) | Total interest expense, net | $ | 192,549 | $ | 246,969 | $ | (54,420) | |||||||||||||
(1) Swapped to fixed rate. See Note 9 |
|
|
|
|
|
|
|
|
|
|
|
|
2022.
|
| Nine Months Ended September 30, |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
|
| Increase / (Decrease) |
| (Thousands) | 2022 | 2021 | % Increase / (Decrease) | |||||||||||||||||||
Depreciation and amortization expense by segment: |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense by segment: | |||||||||||||||||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
| Depreciation expense | |||||||||||||||||||
Leasing |
| $ | 126,965 |
|
| $ | 151,845 |
|
| $ | (24,880 | ) | Leasing | $ | 81,157 | $ | 84,589 | $ | (3,432) | |||||||||||||
Fiber Infrastructure |
|
| 69,684 |
|
|
| 75,505 |
|
|
| (5,821 | ) | Fiber Infrastructure | 47,637 | 46,366 | 1,271 | ||||||||||||||||
Corporate |
|
| 195 |
|
|
| 223 |
|
|
| (28 | ) | Corporate | 73 | 133 | (60) | ||||||||||||||||
Towers |
|
| - |
|
|
| 783 |
|
|
| (783 | ) | ||||||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Total depreciation expense |
|
| 196,844 |
|
|
| 228,356 |
|
|
| (31,512 | ) | Total depreciation expense | 128,867 | 131,088 | (2,221) | ||||||||||||||||
Amortization expense |
|
|
|
|
|
|
|
|
|
|
|
| Amortization expense | |||||||||||||||||||
Leasing |
|
| (2,833 | ) |
|
| 3,371 |
|
|
| (6,204 | ) | Leasing | 3,459 | (1,889) | 5,348 | ||||||||||||||||
Fiber Infrastructure |
|
| 17,154 |
|
|
| 18,452 |
|
|
| (1,298 | ) | Fiber Infrastructure | 11,434 | 11,436 | (2) | ||||||||||||||||
Corporate |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Towers |
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||||||||||
Consumer CLEC |
|
| - |
|
|
| 791 |
|
|
| (791 | ) | ||||||||||||||||||||
Total amortization expense |
|
| 14,321 |
|
|
| 22,614 |
|
|
| (8,293 | ) | Total amortization expense | 14,893 | 9,547 | 5,346 | ||||||||||||||||
Total depreciation and amortization expense |
| $ | 211,165 |
|
| $ | 250,970 |
|
| $ | (39,805 | ) | Total depreciation and amortization expense | $ | 143,760 | $ | 140,635 | $ | 3,125 |
|
| Nine Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues |
|
| Amount |
|
| % of Consolidated Revenues |
| ||||
General and administrative expense by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Infrastructure |
| $ | 41,190 |
|
| 5.1% |
|
| $ | 42,124 |
|
| 5.3% |
| ||
Leasing |
|
| 7,436 |
|
| 0.9% |
|
|
| 5,242 |
|
| 0.7% |
| ||
Corporate |
|
| 27,174 |
|
| 3.4% |
|
|
| 31,492 |
|
| 4.0% |
| ||
Towers |
|
| - |
|
| 0.0% |
|
|
| 2,607 |
|
| 0.3% |
| ||
Consumer CLEC |
|
| - |
|
| 0.0% |
|
|
| 221 |
|
| 0.0% |
| ||
Total general and administrative expenses |
| $ | 75,800 |
|
| 9.4% |
|
| $ | 81,686 |
|
| 10.3% |
|
General and administrative expenses include compensation costs, including stock-based compensation awards, professional and legal services, corporate office costs and other costs associated with administrative activities. For the nine months ended September 30, 2021,activities of our segments.
Six Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | ||||||||||||||||||||||
General and administrative expense by segment: | ||||||||||||||||||||||||||
Leasing | $ | 6,539 | 1.1% | $ | 5,182 | 1.0% | ||||||||||||||||||||
Fiber Infrastructure | 25,783 | 4.6% | 27,763 | 5.1% | ||||||||||||||||||||||
Corporate | 16,633 | 3.0% | 17,778 | 3.3% | ||||||||||||||||||||||
Total general and administrative expenses | $ | 48,955 | 8.7% | $ | 50,723 | 9.4% |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(Thousands) | Amount | % of Consolidated Revenues | Amount | % of Consolidated Revenues | ||||||||||||||||||||||
Operating expense by segment: | ||||||||||||||||||||||||||
Leasing | $ | 9,706 | 1.7% | $ | 6,842 | 1.3% | ||||||||||||||||||||
Fiber Infrastructure | 62,187 | 11.1% | 64,427 | 11.9% | ||||||||||||||||||||||
Total operating expenses | $ | 71,893 | 12.8% | $ | 71,269 | 13.2% |
|
| Nine Months Ended September 30, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(Thousands) |
| Amount |
|
| % of Consolidated Revenues |
|
| Amount |
|
| % of Consolidated Revenues |
| ||||
Operating expenses by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Infrastructure |
| $ | 93,410 |
|
| 11.6% |
|
| $ | 111,405 |
|
| 14.0% |
| ||
Leasing |
|
| 12,026 |
|
| 1.5% |
|
|
| 2,320 |
|
| 0.3% |
| ||
Towers |
|
| - |
|
| 0.0% |
|
|
| 3,692 |
|
| 0.5% |
| ||
CLEC |
|
| - |
|
| 0.0% |
|
|
| 891 |
|
| 0.1% |
| ||
Total operating expenses |
| $ | 105,436 |
|
| 13.1% |
|
| $ | 118,308 |
|
| 14.9% |
|
Fiber Infrastructure – For the nine months ended September 30, 2021, Fiber Infrastructure operating expenses totaled $93.4 million as compared to $111.4decreased $2.2 million for the ninesix months ended SeptemberJune 30, 2020.2022 compared to the six months ended June 30, 2021. Operating expense consists of network related costs, such as dark
Leasing – Leasing operating expense was $12.02021, partially offset by increases in dark fiber early termination fees of $1.8 million, unsplicing expenses of $0.9 million, and $2.3 million for the nine months ended September 30, 2021network maintenance and 2020, respectively. The increase is primarily driven by a $8.1 million increase in networkrepair expenses due to the Asset Purchase Agreement the Company entered into with Windstream which was completed in the third quarter of 2020.
Towers – For the nine months ended September 30, 2021, Towers operating expenses were not incurred as the U.S. tower business sale was completed on June 1, 2020. Towers operating expense was $3.7 million for the nine months ended September 30, 2020.
Consumer CLEC – For the nine months ended September 30, 2021, Consumer CLEC Business operating expenses were not incurred, as we substantially completed the wind down of the business as of the end of the second quarter of 2020.
$0.8 million.
2021.
|
| Nine Months Ended September 30, |
| Six Months Ended June 30, | ||||||||||||||||||
(Thousands) |
| 2021 |
|
| 2020 |
| (Thousands) | 2022 | 2021 | |||||||||||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
| ||||||||||||||
Income tax expense | Income tax expense | |||||||||||||||||||||
Pre-tax loss (Fiber Infrastructure) |
| $ | (9,484 | ) |
| $ | (7,128 | ) | Pre-tax loss (Fiber Infrastructure) | $ | (7,243) | $ | (6,008) | |||||||||
Gain on sale of operations |
|
| 7,041 |
|
|
| - |
| Gain on sale of operations | — | 7,041 | |||||||||||
Gain on sale of unconsolidated entity | Gain on sale of unconsolidated entity | 6,711 | — | |||||||||||||||||||
Other undistributed REIT taxable income |
|
| 1,310 |
|
|
| - |
| Other undistributed REIT taxable income | 2,266 | 532 | |||||||||||
REIT state and local taxes |
|
| 1,291 |
|
|
| - |
| REIT state and local taxes | 1,078 | 939 | |||||||||||
Other |
|
| 125 |
|
|
| (522 | ) | Other | 61 | 23 | |||||||||||
Total income tax expense (benefit) |
| $ | 283 |
|
| $ | (7,650 | ) | ||||||||||||||
Total income tax expense | Total income tax expense | $ | 2,873 | $ | 2,527 |
52
53
54
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) | $ | 43,682 |
|
| $ | 7,455 |
|
| $ | 88,819 |
|
| $ | (671,140 | ) |
Depreciation and amortization |
| 70,530 |
|
|
| 79,880 |
|
|
| 211,165 |
|
|
| 250,970 |
|
Interest expense, net |
| 94,793 |
|
|
| 102,791 |
|
|
| 341,762 |
|
|
| 388,427 |
|
Income tax (benefit) expense |
| (2,244 | ) |
|
| 2,801 |
|
|
| 283 |
|
|
| (7,650 | ) |
EBITDA | $ | 206,761 |
|
| $ | 192,927 |
|
| $ | 642,029 |
|
| $ | (39,393 | ) |
Stock based compensation |
| 4,166 |
|
|
| 3,341 |
|
|
| 10,963 |
|
|
| 10,446 |
|
Transaction related and other costs |
| 1,063 |
|
|
| 20,816 |
|
|
| 5,624 |
|
|
| 55,344 |
|
Settlement expense |
| - |
|
|
| - |
|
|
| - |
|
|
| 650,000 |
|
Gain on sale of operations |
| - |
|
|
| - |
|
|
| (28,143 | ) |
|
| - |
|
Gain on sale of real estate |
| - |
|
|
| (22,908 | ) |
|
| (442 | ) |
|
| (86,726 | ) |
Other expense |
| 4,472 |
|
|
| 3,098 |
|
|
| 14,569 |
|
|
| 12,186 |
|
Adjustments for equity in earnings from unconsolidated entities |
| 765 |
|
|
| 1,287 |
|
|
| 2,609 |
|
|
| 1,287 |
|
Adjusted EBITDA | $ | 217,227 |
|
| $ | 198,561 |
|
| $ | 647,209 |
|
| $ | 603,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) attributable to common shareholders | $ | 43,080 |
|
| $ | 7,034 |
|
| $ | 86,963 |
|
| $ | (660,191 | ) |
Real estate depreciation and amortization |
| 53,620 |
|
|
| 59,318 |
|
|
| 159,175 |
|
|
| 185,377 |
|
Gain on sale of real estate assets, net of tax |
| - |
|
|
| (22,501 | ) |
|
| (442 | ) |
|
| (86,319 | ) |
Participating securities share in earnings |
| 283 |
|
|
| 229 |
|
|
| 864 |
|
|
| 853 |
|
Participating securities share in FFO |
| (635 | ) |
|
| (331 | ) |
|
| (1,660 | ) |
|
| (937 | ) |
Real estate depreciation and amortization from unconsolidated entities |
| 646 |
|
|
| 366 |
|
|
| 1,876 |
|
|
| 366 |
|
Adjustments for noncontrolling interests |
| (412 | ) |
|
| (598 | ) |
|
| (1,979 | ) |
|
| (1,700 | ) |
FFO attributable to common shareholders | $ | 96,582 |
|
| $ | 43,517 |
|
| $ | 244,797 |
|
| $ | (562,551 | ) |
Transaction related and other costs |
| 1,063 |
|
|
| 20,816 |
|
|
| 5,624 |
|
|
| 55,344 |
|
Change in fair value of contingent consideration |
| - |
|
|
| 1,946 |
|
|
| 21 |
|
|
| 8,086 |
|
Amortization of deferred financing costs and debt discount |
| 4,352 |
|
|
| 9,037 |
|
|
| 13,723 |
|
|
| 27,703 |
|
Write off of deferred financing costs and debt discount |
| - |
|
|
| - |
|
|
| 22,828 |
|
|
| 73,952 |
|
Costs related to the early repayment of debt |
| - |
|
|
| - |
|
|
| 28,485 |
|
|
| - |
|
Stock based compensation |
| 4,166 |
|
|
| 3,341 |
|
|
| 10,963 |
|
|
| 10,446 |
|
Gain on sale of operations |
| - |
|
|
| - |
|
|
| (28,143 | ) |
|
| - |
|
Non-real estate depreciation and amortization |
| 16,910 |
|
|
| 20,562 |
|
|
| 51,990 |
|
|
| 65,593 |
|
Settlement expense |
| - |
|
|
| - |
|
|
| - |
|
|
| 650,000 |
|
Straight-line revenues |
| (8,240 | ) |
|
| (1,747 | ) |
|
| (22,455 | ) |
|
| (1,036 | ) |
Maintenance capital expenditures |
| (1,938 | ) |
|
| (1,617 | ) |
|
| (6,322 | ) |
|
| (4,978 | ) |
Other, net |
| (2,949 | ) |
|
| (3,461 | ) |
|
| (4,958 | ) |
|
| (25,271 | ) |
Adjustments for equity in earnings from unconsolidated entities |
| 119 |
|
|
| 921 |
|
|
| 733 |
|
|
| 921 |
|
Adjustments for noncontrolling interests |
| (120 | ) |
|
| (775 | ) |
|
| (990 | ) |
|
| (15,114 | ) |
AFFO attributable to common shareholders | $ | 109,945 |
|
| $ | 92,540 |
|
| $ | 316,296 |
|
| $ | 283,095 |
|
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net income | $ | 53,774 | $ | 49,639 | $ | 106,632 | $ | 45,137 | |||||||||||||||
Depreciation and amortization | 72,303 | 69,671 | 143,760 | 140,635 | |||||||||||||||||||
Interest expense, net | 96,377 | 106,388 | 192,549 | 246,969 | |||||||||||||||||||
Income tax expense | 4,944 | 5,084 | 2,873 | 2,527 | |||||||||||||||||||
EBITDA | $ | 227,398 | $ | 230,782 | $ | 445,814 | $ | 435,268 | |||||||||||||||
Stock based compensation | 3,201 | 3,462 | 6,513 | 6,797 | |||||||||||||||||||
Transaction related and other costs | 3,235 | 424 | 4,949 | 4,561 | |||||||||||||||||||
Gain on sale of operations | — | (28,143) | — | (28,143) | |||||||||||||||||||
Gain on sale of real estate | (250) | (442) | (250) | (442) | |||||||||||||||||||
Other, net | (7,495) | 8,779 | (7,134) | 10,097 | |||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities | 1,075 | 872 | 2,061 | 1,844 | |||||||||||||||||||
Adjusted EBITDA | $ | 227,164 | $ | 215,734 | $ | 451,953 | $ | 429,982 |
55
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(Thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net income attributable to common shareholders | $ | 53,352 | $ | 48,572 | $ | 105,746 | $ | 43,883 | |||||||||||||||
Real estate depreciation and amortization | 52,424 | 52,178 | 104,317 | 105,555 | |||||||||||||||||||
Gain on sale of real estate assets, net of tax | (250) | (442) | (250) | (442) | |||||||||||||||||||
Participating securities share in earnings | 340 | 333 | 671 | 581 | |||||||||||||||||||
Participating securities share in FFO | (904) | (681) | (1,562) | (1,025) | |||||||||||||||||||
Real estate depreciation and amortization from unconsolidated entities | 806 | 614 | 1,496 | 1,230 | |||||||||||||||||||
Adjustments for noncontrolling interests | (82) | (771) | (211) | (1,567) | |||||||||||||||||||
FFO attributable to common shareholders | $ | 105,686 | $ | 99,803 | $ | 210,207 | $ | 148,215 | |||||||||||||||
Transaction related and other costs | 3,235 | 424 | 4,949 | 4,561 | |||||||||||||||||||
Change in fair value of contingent consideration | — | — | — | 21 | |||||||||||||||||||
Amortization of deferred financing costs and debt discount | 4,501 | 4,412 | 9,015 | 9,371 | |||||||||||||||||||
Write off of deferred financing costs and debt discount | — | 2,413 | — | 22,828 | |||||||||||||||||||
Costs related to the early repayment of debt | — | 10,935 | — | 28,485 | |||||||||||||||||||
Stock based compensation | 3,201 | 3,462 | 6,513 | 6,797 | |||||||||||||||||||
Gain on sale of unconsolidated entity, net of tax | (1,212) | — | (1,212) | — | |||||||||||||||||||
Gain on sale of operations | — | (28,143) | — | (28,143) | |||||||||||||||||||
Non-real estate depreciation and amortization | 19,879 | 17,493 | 39,443 | 35,080 | |||||||||||||||||||
Straight-line revenues and amortization of below-market lease intangibles | (10,126) | (7,309) | (21,148) | (14,215) | |||||||||||||||||||
Maintenance capital expenditures | (2,456) | (2,408) | (4,822) | (4,384) | |||||||||||||||||||
Other, net | (8,060) | 1,961 | (16,230) | (2,009) | |||||||||||||||||||
Adjustments for equity in earnings from unconsolidated entities | 269 | 258 | 565 | 614 | |||||||||||||||||||
Adjustments for noncontrolling interests | (20) | (52) | (41) | (870) | |||||||||||||||||||
AFFO attributable to common shareholders | $ | 114,897 | $ | 103,249 | $ | 227,239 | $ | 206,351 |
Six Months Ended June 30, | ||||||||||||||
(Thousands) | 2022 | 2021 | ||||||||||||
Cash flow from operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 234,608 | $ | 318,477 |
Six Months Ended June 30, | ||||||||||||||
(Thousands) | 2022 | 2021 | ||||||||||||
Cash flow from investing activities: | ||||||||||||||
Capital expenditures | $ | (184,039) | $ | (177,934) | ||||||||||
Proceeds from sale of unconsolidated entity (see Note 5) | 32,527 | — | ||||||||||||
Proceeds from sale of real estate, net of cash | 325 | 1,034 | ||||||||||||
Proceeds from sale of operations | — | 62,113 | ||||||||||||
Proceeds from sale of other equipment | 431 | 399 | ||||||||||||
Net cash used in investing activities | $ | (150,756) | $ | (114,388) |
Six Months Ended June 30, | ||||||||||||||
(Thousands) | 2022 | 2021 | ||||||||||||
Cash flow from financing activities: | ||||||||||||||
Repayment of debt | $ | — | $ | (1,660,000) | ||||||||||
Proceeds from issuance of notes | — | 1,680,000 | ||||||||||||
Dividends paid | (71,771) | (70,386) | ||||||||||||
Payments of settlement payable | — | (49,011) | ||||||||||||
Payments of contingent consideration | — | (2,979) | ||||||||||||
Distributions paid to noncontrolling interest | (186) | (1,039) | ||||||||||||
Payment for exchange of noncontrolling interest | (4,620) | — | ||||||||||||
Borrowings under revolving credit facility | 105,000 | 205,000 | ||||||||||||
Payments under revolving credit facility | (105,000) | (220,000) | ||||||||||||
Finance lease payments | (601) | (1,393) | ||||||||||||
Payments for financing costs | — | (25,156) | ||||||||||||
Payment of tender premium | — | (25,800) | ||||||||||||
Employee stock purchase program | 264 | 319 | ||||||||||||
Payments related to tax withholding for stock-based compensation | (4,436) | (2,642) | ||||||||||||
Net cash used in financing activities | $ | (81,350) | $ | (173,087) |
Our primary sourcesthe form of liquidity and capital resources are cash on hand, cash provided by operating activities (primarily from theloans for Windstream Leases), available borrowings under our credit agreement by and among the Operating Partnership, CSL Capital, LLC and Uniti Group Finance 2019 Inc., the guarantors and lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “Credit Agreement”), and proceeds from the issuance of debt and equity securities.
As of September 30, 2021, we had cash and cash equivalents of $69.8 million and approximately $380.5 million of borrowing availability under our Revolving Credit Facility. Subsequent to September 30, 2021, other than the redemption of the 2024 Notes as described below, and $16.5 million of Growth Capital Improvements (see “Result of Operations—Revenues” above), there have been no material outlays of funds outside of our scheduled interest and dividend payments. Availability under our Revolving Credit Facility is subject to various conditions, including a maximum secured leverage ratio of 5.0:1. In addition, if we incur debt under our Revolving Credit Facility or otherwise such that our total leverage ratio exceeds 6.5:1, our Revolving Credit Facility would impose significant restrictions on our ability to pay dividends. See “—Dividends.”
|
| Nine Months Ended September 30, |
| |||||
(Thousands) |
| 2021 |
|
| 2020 |
| ||
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
| $ | 353,353 |
|
| $ | 112,815 |
|
Cash provided by operating activities was $353.4 million and $112.8 million for the nine months ended September 30, 2021 and 2020, respectively. Cash provided by operating activities is primarily attributable to our leasing activities.
|
| Nine Months Ended September 30, |
| |||||
(Thousands) |
| 2021 |
|
| 2020 |
| ||
Cash flow from investing activities: |
|
|
|
|
|
|
|
|
Windstream asset acquisition |
| $ | - |
|
| $ | (73,127 | ) |
Proceeds from sale of real estate, net of cash |
|
| 1,034 |
|
|
| 392,011 |
|
Proceeds from sale of operations (Note 5) |
|
| 62,113 |
|
|
| - |
|
Proceeds from sale of other equipment |
|
| 1,143 |
|
|
| - |
|
Other capital expenditures |
|
| (276,010 | ) |
|
| (214,150 | ) |
Net cash (used in) provided by investing activities |
| $ | (211,720 | ) |
| $ | 104,734 |
|
56
Cash used in investing activities was $211.7 million for the nine months ended September 30, 2021 and is driven by capital expenditures, primarilypurchase equipment related to our Uniti Fiber and Uniti Leasing business for deployment of network assets, partially offset by proceeds from the sale of the Uniti Fiber Northeast operationsupgrades or to Everstream ($62.1 million). Cash provided by investing activities for the nine months ended September 30, 2020 was $104.7 million, which was driven by proceeds from the sale of our U.S. tower business ($225.1 million), proceeds from the sale of our Midwest fiber network ($166.9 million), partially offset by capital expenditures ($214.2 million), which primarily related to our Uniti Fiber and Uniti Leasing businesses for the deployment of network assets but also includes $29.1 million of Growth Capital Improvements and expenditures of $73.1 millionbe used in connection with the Asset Purchase Agreement.
|
| Nine Months Ended September 30, |
| |||||
(Thousands) |
| 2021 |
|
| 2020 |
| ||
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
Repayment of debt |
| $ | (1,660,000 | ) |
| $ | (2,044,728 | ) |
Proceeds from issuance of notes |
|
| 1,680,000 |
|
|
| 2,250,000 |
|
Dividends paid |
|
| (105,941 | ) |
|
| (100,759 | ) |
Payment of settlement obligation |
|
| (73,516 | ) |
|
| - |
|
Payments of contingent consideration |
|
| (2,979 | ) |
|
| (15,713 | ) |
Distributions paid to noncontrolling interest |
|
| (1,700 | ) |
|
| (1,802 | ) |
Borrowings under revolving credit facility |
|
| 290,000 |
|
|
| 140,000 |
|
Payments under revolving credit facility |
|
| (220,000 | ) |
|
| (585,019 | ) |
Finance lease payments |
|
| (1,745 | ) |
|
| (2,890 | ) |
Payments for financing costs |
|
| (25,755 | ) |
|
| (47,775 | ) |
Settlement Common Stock issuance |
|
| - |
|
|
| 244,550 |
|
Costs related to the early repayment of debt |
|
| (25,800 | ) |
|
| - |
|
Employee stock purchase program |
|
| 672 |
|
|
| 306 |
|
Payments related to tax withholding for stock-based compensation |
|
| (2,652 | ) |
|
| (962 | ) |
Net cash used in financing activities |
| $ | (149,416 | ) |
| $ | (164,792 | ) |
Cash used in financing activities was $149.4 million forWindstream Leases. Interest on these loans will accrue at 8% from the nine months ended September 30, 2021, which was primarily driven by the repaymentdate of the 2023 Notes and 2023 Secured Notes ($1.66 billion), net borrowings underborrowing. All equipment financed through the Revolving Credit Facility ($70.0 million), dividend payments ($105.9 million), payments for financing costs ($25.8 million), paymentEquipment Loan Agreement is the sole property of settlement obligation ($73.5 million), 2023 Notes tender premium payment ($17.6 million), 2023 Secured Notes early redemption payment ($8.3 million) and contingent consideration payments ($3.0 million), partially offset by proceeds fromWindstream; however, Uniti will receive a first-lien security interest in the issuance of the 2029 Notes and 2028 Secured Notes ($1.68 billion). Cash used in financing activities was $164.8 million for the nine months ended September 30, 2020, which was primarily driven by the repayment of senior secured term loan B ($2.04 billion), net payments under the Revolving Credit Facility ($445.0 million), dividend payments ($100.8 million) and payments for financing costs ($47.8 million), contingent consideration payments ($15.7 million), partially offset by the proceeds from the issuance of the 2025 Secured Notes ($2.25 billion) and the issuance of the Settlement Common Stock ($244.6 million).
Senior Notes
On October 13, 2021, Uniti Group LP, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC (together, the “Issuers”) issued $700 million aggregate principal amount of 6.00% Senior Notes due 2030 and will use the proceeds to fund the redemption of the Issuer’s 2024 Notes on December 15, 2021. On October 13, 2021, the Issuers deposited amountsequipment purchased with the trustee of the 2024 Notes sufficient to fund the redemption of the 2024 Notes on December 15, 2021, and to pay any related premiums, fees and expenses in connection with the foregoing, and therefore satisfied and discharged their respective obligations under the indenture governing the 2024 Notes.
The 2030 Notes were issued at an issue price of 100% of their principal amount pursuant to an indenture, dated as of October 13, 2021, among the Issuers, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee. The 2030 Notes mature on January 15, 2030 and bear interest at a rate of 6.000% per year. Interest on the 2030 Notes is payable on January 15 and July 15 of each year, beginning on July 15, 2022.
For additional information, see Note 11 to our accompanying Condensed Consolidated Financial Statements contained in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
57
loans.
|
| Nine Months Ended September 30, 2021 |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
(Thousands) |
| Success Based |
|
| Maintenance |
|
| Integration |
|
| Non-Network |
|
| Total |
| (Thousands) | Success Based | Maintenance | Integration | Non-Network | Total | |||||||||||||||||||||||||||||||
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures: | |||||||||||||||||||||||||||||||
Leasing |
| $ | 2,551 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 2,551 |
| Leasing | $ | 14,161 | $ | — | $ | — | $ | — | $ | 14,161 | |||||||||||||||||||||
Growth capital improvements |
|
| 152,254 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 152,254 |
| Growth capital improvements | 91,657 | — | — | — | 91,657 | ||||||||||||||||||||||||||
Fiber Infrastructure |
|
| 113,388 |
|
|
| 6,322 |
|
|
| 485 |
|
|
| 1,010 |
|
|
| 121,205 |
| Fiber Infrastructure | 72,390 | 4,822 | 367 | 296 | 77,875 | ||||||||||||||||||||||||||
Corporate | Corporate | — | — | — | 346 | 346 | ||||||||||||||||||||||||||||||||||||||||||||||
Total capital expenditures |
| $ | 268,193 |
|
| $ | 6,322 |
|
| $ | 485 |
|
| $ | 1,010 |
|
| $ | 276,010 |
| Total capital expenditures | $ | 178,208 | $ | 4,822 | $ | 367 | $ | 642 | $ | 184,039 |
58
and expect that cash on hand and cash flows provided by operating activities will be sufficient to support these investments. We have the right, but not the obligation (except for Growth Capital Improvements), to reimburse growth capital expenditures in certain of our lease arrangements where we are the lessor.
amounts.
Dividends
We have elected to be taxed as a REIT for U.S. federal income tax purposes. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. Subject to the restrictions imposed by our 7.875% senior secured notes due 2025 (the “2025 Secured Notes”), inIn order to maintain our REIT status, we intend to make dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our board of directors. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service obligations. If our cash available for distribution is less than our taxable income, we could be required to sell assets or borrow funds to make
Period |
| Payment Date |
| Cash Dividend Per Share |
|
| Record Date | |
October 1, 2020 - December 31, 2020 |
| January 4, 2021 |
| $ | 0.15 |
|
| December 15, 2020 |
January 1, 2021 - March 31, 2021 |
| April 16, 2021 |
| $ | 0.15 |
|
| April 1, 2021 |
April 1, 2021 - June 30, 2021 |
| July 2, 2021 |
| $ | 0.15 |
|
| June 18, 2021 |
July 1, 2021 - September 30, 2021 |
| October 1, 2021 |
| $ | 0.15 |
|
| September 17, 2021 |
Period | Payment Date | Cash Dividend Per Share | Record Date | |||||||||||||||||
October 1, 2021 - December 31, 2021 | January 3, 2022 | $ | 0.15 | December 17, 2021 | ||||||||||||||||
January 1, 2022 - March 31, 2022 | April 15, 2022 | $ | 0.15 | April 1, 2022 | ||||||||||||||||
April 1, 2022 - June 30, 2022 | July 1, 2022 | $ | 0.15 | June 17, 2022 |
has been lifted.
59
impairment and business combinations as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method.
In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt the guidance ASU 2020-06 as of JanuaryPart I Item 1 2021 using the modified retrospective transition method. Pursuant to the transition guidance, the Company is required to apply the guidance to all impacted financial instruments that were outstanding as of January 1, 2021 with the cumulative effect recognized as an adjustment to the opening balance of retained earnings.
As a result of early adopting ASU 2020-06, the Company made certain adjustments to its accounting for the outstanding exchangeable senior unsecured notes. The adoption of ASU 2020-06 resulted in the re-combination of the liability and equity components of these notes into a single liability instrument. The carrying value as of December 31, 2020, totaled approximately $275.4 million and as a result of the adoption increased by $61.1 million to $336.5 million as of January 1, 2021. Because of this adoption, the effective interest rate on the exchangeable senior unsecured notes went from 11.1% to 4.8%. Additional paid-in-capital was reduced by $59.9 million and deferred tax liabilities were reduced by $15.8 million. Approximately $14.6 million of cumulative effect of adoption was recognized to the opening balance of retained earnings as of January 1, 2021.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements.
60
Internal Control over Financial Reporting
As disclosed in “Part II. Item 9A. Controls and Procedures” in our Annual Report, during the fourth quarter of 2020, we identified a material weakness in our internal control over financial reporting due to ineffective controls over the annual goodwill impairment assessment, specifically, the control activities over the determination of the carrying value to be used in the assessment of goodwill impairment did not operate effectively due to an insufficient complement of qualified personnel.As of September 30, 2021, management is continuing to implement the remediation plan as disclosed in “Part II. Item 9A. Controls and Procedures” in our Annual Report, which is described below.
Management believes that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with U.S. GAAP. Our principal executive officer and principal financial officer have certified that, based on such officer’s knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report.
Remediation Plan
61
Period |
| Total Number of Shares Purchased |
| Average Price Paid per Share(1) |
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
| Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
| ||||
July 1, 2021 to July 31, 2021 |
|
| 957 |
| $ | 11.10 |
|
| — |
|
| — |
|
August 1, 2021 to August 31, 2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
September 1, 2021 to September 30, 2021 |
|
| 89,513 |
|
| 12.94 |
|
| — |
|
| — |
|
Total |
|
| 90,470 |
| $ | 12.92 |
|
| — |
|
| — |
|
Period | Total Number of Shares Purchased | Average Price Paid per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
April 1, 2022 to April 30, 2022 | 209,717 | $ | 13.85 | — | — | |||||||||||||||||||||
May 1, 2022 to May 31, 2022 | 976 | 10.65 | — | — | ||||||||||||||||||||||
June 1, 2022 to June 30, 2022 | — | — | — | — | ||||||||||||||||||||||
Total | 210,693 | $ | 13.83 | — | — |
|
| |||||||
Exhibit Number | Description | |||||||
| ||||||||
10.1* | ||||||||
| ||||||||
62
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
*Filed herewith. |
|
UNITI GROUP INC. | |||||||||||||||
Date: |
| /s/ Paul E. Bullington | |||||||||||||
Paul E. Bullington
| |||||||||||||||
Date: |
| /s/ Travis T. Black | |||||||||||||
Travis T. Black
|
63