Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Uniti Group Inc (UNIT, Financial) delivered a solid quarter with strong demand for its fiber infrastructure.
- Core recurring strategic fiber business grew by 3% in Q2, with enterprise, wholesale, and dark fiber revenue increasing by 12%, 15%, and 18%, respectively.
- The company achieved near-record consolidated bookings MRR of $1.1 million.
- Net capital intensity decreased to 31% from 44% in the same period last year.
- The pending merger with Windstream is expected to create a national fiber powerhouse, with significant strategic and financial interest in the combined assets.
Negative Points
- Wireless bookings for the quarter were muted, with expectations for a pickup in the second half of the year.
- AFFO estimate for full-year 2024 was lowered due to higher interest expenses related to recent secured notes.
- Uniti Leasing revenue and adjusted EBITDA estimates were slightly lowered due to lower than expected non-cash straight-line revenue and timing of delivery on a recent lease-up award.
- The company’s leverage ratio at quarter-end was 5.97 times, indicating high debt levels.
- The merger with Windstream still requires 12 more PUC approvals, and the transaction is not expected to close until the second half of 2025.
Q & A Highlights
Uniti Group Inc (UNIT) Q2 2024 Earnings Call Highlights
Q: What's the expected cadence of deals going forward, especially with the significant bookings from generative AI?
A: (Kenneth Gunderman, CEO) While $1 million-plus quarters may not be sequential, solid bookings are expected to persist. The hyperscaler deals, driven by AI, are promising, and the funnel of opportunities is growing. The hyperscalers' bullish stance on AI investments further supports this outlook.
Q: What are the most important pieces of information from the merger filing with Windstream?
A: (Kenneth Gunderman, CEO) Key highlights include pro forma financials, strategic dialogues dating back to Windstream's bankruptcy, and validation of intrinsic value through historical strategic and financial interest. The merger is expected to create substantial value and strategic opportunities.
Q: Can you elaborate on the path to achieving positive free cash flow by 2026?
A: (Paul Bullington, CFO) The plan involves executing current strategies, achieving fiber penetration goals at Kinetic, maintaining low capital intensity, and realizing synergies. The fully funded business plan and strategic investments are expected to drive positive cash flow.
Q: Are there any plans for BEAD-related builds within Uniti fiber in 2025?
A: (Kenneth Gunderman, CEO) Currently, BEAD-related conversations are focused on Kinetic. Post-merger, there may be opportunities to leverage Kinetic's expertise for builds around Uniti's metro-fiber markets, but this will be evaluated after the transaction closes.
Q: How is the merger with Windstream progressing, and what are the expected benefits?
A: (Kenneth Gunderman, CEO) The merger is on track to close in the second half of 2025, with several regulatory approvals already received. The combined entity will have a significant fiber network, targeting Tier II & III markets, and is expected to drive substantial value through synergies and strategic opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
