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Uniti Group Inc. Reports Fourth Quarter and Full Year 2023 Results
February 29 2024 - 08:00AM
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Uniti Group Inc. (“Uniti” or the “Company”) (Nasdaq: UNIT) today announced its results for the fourth quarter and full year 2023.
“2023 was another productive year for Uniti. Our core recurring strategic fiber business continues to demonstrate its resiliency with top line growth of 5% in 2023 when compared to 2022 and continued declining net success-based capital intensity. Non-recurring revenue was predictably lower in 2023 than in 2022 due to lower ETL fees and one-time low-margin equipment sales, which we have decided to largely exit in 2024. As a result, our full year 2023 Adjusted EBITDA and AFFO results were essentially in-line with our previous full year guidance,” commented President and Chief Executive Officer, Kenny Gunderman.
Mr. Gunderman continued, “Despite a challenging economic backdrop, Uniti successfully fully financed its current business plan by refinancing $3.1 billion of its outstanding debt in 2023, while also raising up to $437 million of additional capital through the ABS bridge financing and recent non-core asset sales at premium multiples. These initiatives result in our current business plan being fully funded, no material permanent debt maturities until 2027, and over 95% of our consolidated debt being fixed rate.”
QUARTERLY RESULTS
Consolidated revenues for the fourth quarter of 2023 were $285.7 million. Net income and Adjusted EBITDA were $30.7 million and $231.1 million, respectively, for the same period, achieving Adjusted EBITDA margins of approximately 81%. Net income attributable to common shares was $30.4 million for the period. AFFO attributable to common shareholders was $91.6 million, or $0.34 per diluted common share.
Uniti Fiber contributed $70.7 million of revenues and $27.0 million of Adjusted EBITDA for the fourth quarter of 2023, achieving Adjusted EBITDA margins of approximately 38%. Uniti Fiber’s net success-based capital expenditures during the quarter were $20.7 million.
Uniti Leasing contributed revenues of $214.9 million and Adjusted EBITDA of $209.5 million for the fourth quarter. During the quarter, Uniti Leasing deployed capital expenditures of $23.1 million.
FULL YEAR RESULTS
Consolidated revenues for the year ended December 31, 2023 were $1.1 billion. Net loss and Adjusted EBITDA were $81.7 million and $923.5 million, respectively, for the same period. Net loss attributable to common shares was $82.9 million for the period, and included a $204.0 million goodwill impairment charge related to our Uniti Fiber segment that was driven by an increase in the macro interest rate environment. AFFO attributable to common shareholders was $385.3 million, or $1.42 per diluted common share.
Uniti Fiber contributed $297.1 million of revenues and $115.7 million of Adjusted EBITDA for the full year of 2023, achieving Adjusted EBITDA margins of approximately 39%. Uniti Fiber’s net success-based capital expenditures for the full year of 2023 were $118.3 million.
Uniti Leasing contributed revenues of $852.8 million and Adjusted EBITDA of $829.6 million for the full year of 2023. For the full year of 2023, Uniti Leasing deployed capital expenditures of $277.2 million primarily related to the construction of approximately 4,100 new route miles of valuable fiber infrastructure.
FINANCING TRANSACTIONS
On February 26th, Uniti announced that it had entered into an asset-backed Bridge Loan and Security Agreement for up to $350 million of borrowings pursuant to a multi-draw term loan facility (the “ABS Facility”) through an indirect, bankruptcy remote subsidiary of the Company. Borrowings under the ABS Facility will bear interest at an initial rate equal to Term SOFR for the applicable interest period plus an applicable margin of 3.75%, subject to customary step-ups in the applicable margin based on how long the ABS Facility remains outstanding. The ABS Facility will mature 18 months from the initial draw date and is subject to customary covenants.
INVESTMENT TRANSACTIONS
On February 26th, Uniti also announced multiple asset sales that it recently completed. First, Uniti sold its remaining investment interest in the fiber network operated by Bluebird Network LLC. In addition, Uniti sold to CableSouth Media III, LLC (“SwyftFiber”) the fiber network assets previously leased to SwyftFiber since its 2018 sale leaseback transaction with Uniti. As part of the agreement, Uniti will continue to have access to certain strands within the SwyftFiber network at zero cost. Finally, Uniti recently completed the sale of essentially all of its remaining wireless towers to CTI Towers, Inc., a portfolio company of Palistar Capital LP. Total cash consideration for these transactions was approximately $87 million.
LIQUIDITY
At year-end, the Company had approximately $354.3 million of unrestricted cash and cash equivalents, and undrawn borrowing availability under its revolving credit agreement. The Company’s leverage ratio at year-end was 6.03x based on net debt to fourth quarter 2023 annualized Adjusted EBITDA.
On February 22, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on April 12, 2024, to stockholders of record on March 28, 2024.
FULL YEAR 2024 OUTLOOK
Our 2024 outlook includes the estimated impact from the recent ABS Facility, the planned exit of most one-time equipment sales, the recently completed asset sales, and the upcoming maturity of the remaining 4.00% exchangeable notes due June 2024. Our outlook excludes future acquisitions, capital market transactions, and future transaction-related and other costs not mentioned herein.
It's a bear raid.
I think it's ready.
POSITIVE RESULTS COULD PRODUCE 20% JUMP.
Expectations are low in UNITI GROUP and options are pointing to a fall to $10, we are looking for a positive move and buy alerts placed above $13 but also sells below $10, either way volatility is expected and we are biased to the long side. Analysts have a underweight price target of $9.
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