On August 1, 2024, Uniti Group Inc (UNIT, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. Uniti, a real estate investment trust (REIT) with approximately 140,000 route miles of fiber in the U.S., primarily in the Southeast, has agreed to merge with Windstream. This merger will result in Uniti giving up its REIT status and adding a consumer telecom business line. The combined firm will own 217,000 route miles of fiber and pass 4.3 million households and 150,000 commercial buildings, mostly in less populated markets in the Southeast.
Quarterly Performance Overview
Uniti Group Inc (UNIT, Financial) reported consolidated revenues of $294.9 million for Q2 2024, surpassing the analyst estimate of $293.31 million. Net income for the quarter was $18.3 million, with Adjusted EBITDA reaching $236.7 million, achieving an impressive Adjusted EBITDA margin of approximately 80%. Net income attributable to common shares was $17.6 million, and AFFO attributable to common shareholders was $92.3 million, or $0.34 per diluted common share.
Segment Contributions
Uniti Fiber contributed $76.7 million in revenues and $31.1 million in Adjusted EBITDA, achieving Adjusted EBITDA margins of approximately 40%. Uniti Leasing, on the other hand, contributed $218.3 million in revenues and $210.9 million in Adjusted EBITDA. The company also reported a decline in net success-based capital intensity at Uniti Fiber to 27% from 44% in the same quarter of the previous year.
Financial Achievements and Challenges
Uniti's performance was driven by strong demand for its fiber infrastructure, particularly from Hyperscalers and Generative AI demand, which accounted for approximately 40% of consolidated bookings during the quarter. This marks the highest level since 2022. However, the company faces challenges such as high leverage, with a leverage ratio of 5.97x based on net debt to annualized Adjusted EBITDA.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $294.9 million | $283.7 million |
| Net Income | $18.3 million | $25.6 million |
| Adjusted EBITDA | $236.7 million | $228.2 million |
| AFFO per Diluted Share | $0.34 | $0.34 |
Balance Sheet and Cash Flow
As of June 30, 2024, Uniti reported total assets of $5.12 billion, with cash and cash equivalents of $118.8 million. The company closed on the issuance of $300 million of additional senior secured notes due February 2028, bearing interest of 10.50%. The proceeds are expected to be used for general corporate purposes, including funding a portion of the cash consideration payable in connection with the merger with Windstream.
Updated 2024 Outlook
Uniti updated its 2024 outlook, projecting full-year revenues between $1,154 million and $1,174 million, and net income attributable to common shareholders between $98 million and $118 million. Adjusted EBITDA is expected to range from $930 million to $950 million.
"Uniti reported another quarter of solid results fueled by strong demand for its mission-critical fiber infrastructure. Approximately 40% of our consolidated bookings during the quarter, the highest level since 2022, was driven by Hyperscalers and Generative AI demand, and we expect that growth to continue," commented President and Chief Executive Officer, Kenny Gunderman.
Uniti Group Inc (UNIT, Financial) continues to make significant progress on its transformational merger with Windstream, which is expected to close by the second half of 2025. The combined company aims to expand its fiber network into Tier II and III markets, significantly improving its overall financial profile and capturing growth potential in both commercial and residential fiber demand.
Explore the complete 8-K earnings release (here) from Uniti Group Inc for further details.
