First Fiscal Quarter 2020 Financial Highlights
- $638.6 million of consolidated revenue; including $483.2
million from the Zayo Networks segment, $63.7 million from the
zColo segment and $86.6 million from the Allstream segment.
- Net income of $17.9 million resulting in basic and diluted net
income per share during the quarter of $0.08.
- $314.8 million of adjusted EBITDA, including $277.5 million
from the Zayo Networks segment, $26.6 million from the zColo
segment and $9.3 million from the Allstream segment.
- Consolidated net installs, on a monthly recurring revenue (MRR)
and monthly amortized revenue (MAR) basis, were $0.9 million,
excluding the Allstream segment. This includes $1.1 million of net
installs from the Zayo Networks segment and ($0.2) million of net
installs from the zColo segment.
- Net cash provided by operating activities of $311.8 million and
adjusted unlevered free cash flow of $138.8 million.
Zayo Group Holdings, Inc. (“Zayo” or “the Company”) (NYSE:
ZAYO), a global leader in Communications Infrastructure, announced
results for the three months ended September 30, 2019.
First quarter net income decreased by $45.1 million over the
previous quarter. During the three months ended September 30, 2019,
capital expenditures were $217.1 million. As of September 30, 2019,
the Company had $254.6 million of cash and $316.4 million available
under its revolving credit facility.
Recent Developments
With respect to its previously announced pending merger, the
Company continues to make progress on all necessary approvals and
the transaction is expected to close in the first half of 2020. The
closing of the merger remains subject to customary conditions,
including certain regulatory approvals.
First Fiscal Quarter Financial Results
Three Months Ended September 30, 2019
and June 30, 2019 (in millions)
Three Months Ended
September 30, 2019
June 30, 2019
Revenue
$
638.6
$
650.6
Annualized revenue growth
-7
%
Operating income
128.9
121.2
Income from operations before income
taxes
31.9
27.3
Provision/(benefit) for income taxes
14.0
(35.7
)
Net income
$
17.9
$
63.0
Adjusted EBITDA
$
314.8
$
321.2
Annualized Adjusted EBITDA growth
-8
%
Adjusted EBITDA margin
49
%
49
%
Adjusted unlevered free cash flow
$
138.8
$
140.6
Three Months Ended September 30, 2019
and September 30, 2018
(in millions)
Three Months Ended
September 30, 2019
September 30, 2018
Revenue
$
638.6
$
641.1
Year-over-year revenue growth
-0.4
%
Operating income
128.9
122.8
Income from operations before income
taxes
31.9
42.6
Provision for income taxes
14.0
20.5
Net income
17.9
22.1
Adjusted EBITDA
314.8
319.4
Year-over-year Adjusted EBITDA growth
-1
%
Adjusted EBITDA margin
49
%
50
%
Adjusted unlevered free cash flow
138.8
130.4
Conference Call
Due to the pending merger, Zayo will not host a conference call
to discuss first fiscal quarter 2020 results. A presentation that
summarizes the financial, operational and commercial highlights of
the quarter and supplemental materials will be made available
through the Investor Relations section of the Company’s website
investors.zayo.com.
About Zayo Group
Zayo Group Holdings, Inc. (NYSE: ZAYO) provides mission-critical
bandwidth to the world’s most impactful companies, fueling the
innovations that are transforming our society. Zayo’s 133,000-mile
network in North America and Europe includes extensive metro
connectivity to thousands of buildings and data centers. Zayo’s
communications infrastructure solutions include dark fiber, private
data networks, wavelengths, Ethernet, dedicated internet access and
data center colocation services. Zayo owns and operates a Tier 1 IP
backbone and 44 carrier-neutral data centers. Through its CloudLink
service, Zayo provides low-latency private connectivity that
attaches enterprises to their public cloud environments. Zayo
serves wireless and wireline carriers, media, tech, content,
finance, healthcare and other large enterprises. For more
information, visit zayo.com.
Forward-Looking Statements
Certain statements made herein, including, for example,
statements regarding the benefits of the transaction, certainty of
the transaction, the anticipated timing of the transaction and
future results or expectations of the Company, are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934 (the
“Exchange Act”) and the Private Securities Litigation Reform Act of
1995. These forward-looking statements typically include words such
as “believes,” “expects,” “plans,” “intends,” “estimates,”
“projects,” “could,” “may,” “will,” “should,” or “anticipates” or
the negatives thereof, other variations thereon or comparable
terminology. No assurance can be given that future results
expressed or implied by the forward-looking statements will be
achieved, and actual results may differ materially from those
contemplated by the forward-looking statements. Such statements are
based on management’s current expectations and beliefs and are
subject to a number of risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by the forward-looking statements, many of which are beyond our
control, and are not guarantees of future results or achievements.
Consequently, no forward-looking statements may be guaranteed and
there can be no assurance that the actual results or developments
anticipated by such forward looking statements will be realized or,
even if substantially realized, that they will have the expected
consequences to, or effects on, the Company or its businesses or
operations. As a result, you should not place undue reliance on any
such statements and caution must be exercised in relying on
forward-looking statements.
The following factors, among others, could cause actual results
to differ materially from those described in these forward-looking
statements: risks and uncertainties relating to the Company’s
financial and operating prospects, current economic trends, future
opportunities, ability to retain existing customers and attract new
ones, outlook of customers, and strength of competition and
pricing; the Company’s acquisition strategy, including our ability
to integrate acquired companies and assets, in particular with
respect to our recent acquisitions, and the benefits thereof,
including financial and operating results and synergy benefits that
may be realized from these acquisitions and the timeframe for
realizing these benefits, such as our proposed restructuring
activities and potential REIT conversion including our ability to
successfully combine our divisions and the feasibility and timing
of any REIT conversion; the occurrence of any event, change or
other circumstances that could give rise to the delay or
termination of the merger agreement; the outcome or length of any
legal proceedings that have been, or will be, instituted related to
the merger agreement; the inability to complete the merger due to
the failure to timely or at all satisfy any conditions to
completion of the merger, including the receipt on a timely basis
or at all of any required regulatory clearances related to the
merger; the failure of the acquirer to obtain or provide on a
timely basis or at all the necessary financing as set forth in the
equity commitment letters delivered pursuant to the merger
agreement; risks that the proposed transaction disrupts current
plans and operations and the potential difficulties in employee
retention as a result of the merger; and the other risks and
uncertainties described herein, as well as those risks and
uncertainties discussed from time to time in our other reports and
other public filings with the Securities and Exchange Commission
(the “SEC”) as described below. The foregoing review of important
factors that could cause actual events to differ from expectations
should not be construed as exhaustive.
Additional information concerning these and other factors that
could affect our forward-looking statements, see our risk factors,
as they may be amended from time to time, set forth in our filings
with the SEC, including our Annual Report on Form 10-K for the
fiscal year ended June 30, 2019, and in any subsequent Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K or other filings
with the SEC. Our SEC filings are available publicly on the SEC’s
website at www.sec.gov, on the Company’s website at
https://investors.zayo.com or by contacting the investor relations
department of the Company. Except to the extent required by
applicable law, we disclaim any obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Non-GAAP Financial Measures
The Company provides financial measures that are not defined
under generally accepted accounting principles in the United States
(“GAAP”), including Adjusted EBITDA, Adjusted EBITDA Margin,
adjusted unlevered free cash flow and levered free cash flow.
Adjusted EBITDA, as defined below and in Note 17 – Segment
Reporting of our consolidated financial statements and notes
thereto included in our Annual Report, is the primary measure used
by our chief operating decision maker to evaluate segment operating
performance.
Adjusted EBITDA is defined as earnings/(loss) from operations
before interest, income taxes, depreciation and amortization
(“EBITDA”) adjusted to exclude acquisition or disposal-related
transaction costs, stock-based compensation, losses on
extinguishment of debt, unrealized foreign currency gains/(losses)
on intercompany loans, gains/(losses) on business dispositions and
non-cash income/(loss) on equity and cost method investments.
Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by
revenue. Adjusted unlevered free cash flow is defined as Adjusted
EBITDA less purchases of property and equipment, net of stimulus
grants, plus additions to deferred revenue, less non-cash monthly
amortized revenue. Levered free cash flow is defined as net cash
provided by operating activities less purchases of property and
equipment, net of stimulus grants. Adjusted unlevered free cash
flow and levered free cash flow are not measurements of our
financial performance under GAAP and should not be considered in
isolation or as alternatives to net income, net cash flows provided
by operating activities, total net cash flows or any other
performance measures derived in accordance with GAAP or as
alternatives to net cash flows from operating activities or total
net cash flows as measures of our liquidity.
Adjusted EBITDA is a performance rather than cash flow measure.
In addition to Adjusted EBITDA, management uses adjusted unlevered
free cash flow, which measures the ability of Adjusted EBITDA to
cover capital expenditures. We use levered free cash flow as a
measure to evaluate cash generated through normal operating
activities. These metrics are among the primary measures used by
management for planning and forecasting future periods. We believe
the presentation of Adjusted EBITDA is relevant and useful for
investors because it allows investors to view results in a manner
similar to the method used by management and make it easier to
compare our results with the results of other companies that have
different financing and capital structures. We believe that the
presentation of levered free cash flow is relevant and useful to
investors because it provides a measure of cash available to pay
the principal on our debt and pursue acquisitions of businesses or
other strategic investments or uses of capital.
We also monitor Adjusted EBITDA because our subsidiaries have
debt covenants that restrict their borrowing capacity that are
based on a leverage ratio, which utilizes a modified EBITDA, as
defined in our credit agreement and the indentures governing our
notes. The modified EBITDA is consistent with our definition of
Adjusted EBITDA; however, it includes the pro forma Adjusted EBITDA
of and expected cost synergies from the companies acquired by us
during the quarter for which the debt compliance certification is
due. Adjusted EBITDA results, along with the quantitative and
qualitative information, are also utilized by management and our
Compensation Committee, as an input for determining incentive
payments to employees.
Adjusted EBITDA has limitations as an analytical tool and should
not be considered in isolation from, or as a substitute for,
analysis of our results of operations and operating cash flows as
reported under GAAP. For example, Adjusted EBITDA:
- does not reflect capital expenditures, or future requirements
for capital and major maintenance expenditures or contractual
commitments;
- does not reflect changes in, or cash requirements for, our
working capital needs;
- does not reflect the interest expense, or the cash requirements
necessary to service the interest payments, on our debt; and
- does not reflect cash required to pay income taxes.
Adjusted unlevered free cash flow has limitations as an
analytical tool and should not be considered in isolation from, or
as a substitute for, analysis of our results as reported under
GAAP. For example, adjusted unlevered free cash flow:
- does not reflect changes in, or cash requirements for, our
working capital needs;
- does not reflect the interest expense, or the cash requirements
necessary to service the interest payments, on our debt; and
- does not reflect cash required to pay income taxes.
Levered free cash flow has limitations as an analytical tool and
should not be considered in isolation from, or as a substitute for,
analysis of our results as reported under GAAP. For example,
levered free cash flow:
- does not reflect principal payments on debt;
- does not reflect principal payments on capital lease
obligations;
- does not reflect dividend payments, if any; and
- does not reflect the cost of acquisitions.
Our computation of Adjusted EBITDA, and levered free cash flow
may not be comparable to other similarly titled measures computed
by other companies because all companies do not calculate these
measures in the same fashion.
Because we have acquired numerous entities since our inception
and incurred transaction costs in connection with each acquisition,
borrowed money in order to finance our operations and acquisitions,
and used capital and intangible assets in our business, and because
the payment of income taxes is necessary if we generate taxable
income after the utilization of our net operating loss carry
forwards, any measure that excludes these items has material
limitations. As a result of these limitations, these measures
should not be considered as a measure of discretionary cash
available to us to invest in the growth of our business or as a
measure of our liquidity. See “Reconciliation of Non-GAAP Financial
Measures” for a quantitative reconciliation of Adjusted EBITDA to
net income/(loss) and for quantitative reconciliations of adjusted
unlevered free cash flow and levered free cash flow, each to net
cash provided by operating activities.
Annualized revenue and annualized Adjusted EBITDA are derived by
multiplying the total revenue and Adjusted EBITDA, respectively,
for the most recent quarterly period by four. Our computations of
annualized revenue and annualized Adjusted EBITDA may not be
representative of our actual annual results.
Measures referred to as being calculated on a constant currency
basis are intended to present the relevant information assuming a
constant exchange rate between the two periods being compared. Such
metrics are calculated by applying the currency exchange rates used
in the preparation of the prior period financial results to the
subsequent period results.
Tables reconciling non-GAAP measures are included in the
Reconciliation of Non-GAAP Financial Measures section of this
earnings release and in a supplemental earnings presentation. A
glossary of terms used throughout and the supplemental earnings
presentation are available under the investor section of the
Company’s website at http://investors.zayo.com.
Consolidated Financial
Information
Consolidated Statements of
Operations
(in millions, except per share data)
Three Months Ended September
30,
2019
2018
Revenue
$
638.6
$
641.1
Operating costs and expenses
Operating costs (excluding depreciation
and amortization)
231.0
228.4
Selling, general and administrative
expenses (excluding depreciation and amortization )
122.6
122.1
Depreciation and amortization
156.1
167.8
Total operating costs and expenses
509.7
518.3
Operating income
128.9
122.8
Other expenses
Interest expense
(84.7
)
(82.2
)
Foreign currency loss on intercompany
loans
(12.9
)
(4.6
)
Other income, net
0.6
6.6
Total other expenses, net
(97.0
)
(80.2
)
Income from operations before income
taxes
31.9
42.6
Provision for income taxes
14.0
20.5
Net income
$
17.9
$
22.1
Weighted-average shares used to compute
net income per share:
Basic
236.3
246.4
Diluted
238.6
247.8
Net income per share:
Basic and diluted
$
0.08
$
0.09
Consolidated Balance Sheets
(in millions, except share amounts)
September 30, 2019
June 30, 2019
Assets
Current assets
Cash and cash equivalents
$
254.6
$
186.1
Trade receivables, net of allowance of
$16.9 and $17.6 as of September 30, 2019 and June 30, 2019,
respectively
151.9
177.0
Prepaid expenses
68.1
65.3
Other current assets
57.0
56.8
Total current assets
531.6
485.2
Property and equipment, net
5,851.8
5,808.9
Intangible assets, net
1,092.8
1,118.8
Goodwill
1,701.1
1,706.6
Right-of-use operating lease asset (1)
499.2
—
Deferred income taxes, net
21.3
24.8
Other assets
184.0
190.3
Total assets
$
9,881.8
$
9,334.6
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
31.9
$
73.7
Accrued liabilities
315.5
306.8
Accrued interest
84.9
73.1
Current portion of long-term debt
130.0
5.0
Operating lease obligations, current
(1)
127.2
—
Finance lease obligations, current
9.5
10.0
Deferred revenue, current
172.9
174.9
Total current liabilities
871.9
643.5
Long-term debt, non-current
5,696.1
5,839.7
Operating lease obligations, non-current
(1)
387.4
—
Finance lease obligations, non-current
176.0
172.2
Deferred revenue, non-current
1,205.4
1,148.1
Deferred income taxes, net
143.6
134.9
Other long-term liabilities
30.1
54.7
Total liabilities
8,510.5
7,993.1
Stockholders' equity
Preferred stock, $0.001 par value -
50,000,000 shares authorized; no shares issued and outstanding as
of September 30, 2019 and June 30, 2019, respectively
—
—
Common stock, $0.001 par value -
850,000,000 shares authorized; 236,829,304 and 236,257,893 shares
issued and outstanding as of September 30, 2019 and June 30, 2019,
respectively
0.2
0.2
Additional paid-in capital
1,607.5
1,581.2
Accumulated other comprehensive loss
(38.3
)
(23.9
)
Accumulated deficit
(198.1
)
(216.0
)
Total stockholders' equity
1,371.3
1,341.5
Total liabilities and stockholders'
equity
$
9,881.8
$
9,334.6
- The Company adopted Accounting Standards Update ("ASU")
2016-16, Leases (ASC 842) beginning July 1, 2019 and recorded
additional operating lease assets and liabilities in its
Consolidated Balance Sheet as of September 30, 2019.
Consolidated Statement of Cash
Flows
(in millions)
Three Months Ended September
30,
2019
2018
Cash flows from operating
activities
Net income
$
17.9
$
22.1
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
156.1
167.8
Loss on sale of Scott Rice Telephone
("SRT")
—
(5.5
)
Non-cash interest expense
2.7
2.5
Stock-based compensation
27.2
26.7
Amortization of deferred revenue
(40.3
)
(37.0
)
Foreign currency loss on intercompany
loans
12.9
4.6
Deferred income taxes
11.8
15.9
Provision for bad debts
2.6
1.5
Non-cash loss on investments
—
0.3
Changes in operating assets and
liabilities, net of acquisitions
Trade receivables
20.9
4.5
Accounts payable and accrued
liabilities
27.3
9.0
Additions to deferred revenue
81.4
30.5
Other assets and liabilities
(8.7
)
(1.1
)
Net cash provided by operating
activities
311.8
241.8
Cash flows from investing
activities
Purchases of property and equipment
(217.1
)
(182.5
)
Proceeds from sale of SRT, net of cash
held in escrow
—
39.0
Net cash used in investing
activities
(217.1
)
(143.5
)
Cash flows from financing
activities
Principal payments on long-term debt
(21.3
)
(1.3
)
Principal payments on finance lease
obligations
(2.1
)
(1.9
)
Common stock repurchases
—
(0.2
)
Cash paid for Santa Clara acquisition
financing arrangement and other
—
(3.3
)
Net cash used in financing
activities
(23.4
)
(6.7
)
Net cash flows
71.3
91.6
Effect of changes in foreign exchange
rates on cash
(2.7
)
2.2
Net increase in cash, cash equivalents and
restricted cash
68.6
93.8
Cash, cash equivalents and restricted
cash, beginning of period
187.3
261.3
Cash, cash equivalents and restricted
cash, end of period
$
255.9
$
355.1
Supplemental disclosure of non-cash
investing and financing activities:
Cash paid for interest, net of capitalized
interest
$
67.2
$
63.4
Cash paid for income taxes
$
3.0
$
2.0
Non-cash purchases of equipment through
capital leasing
$
5.7
$
21.9
Non-cash purchases of equipment through
nonmonetary exchange
$
19.5
$
31.1
Decrease in accounts payable and accrued
expenses for purchases of property and equipment
$
(39.9
)
$
(2.4
)
Reconciliation of cash, cash
equivalents, and restricted cash:
September 30, 2019
June 30, 2019
September 30, 2018
June 30, 2018
Cash and cash equivalents
$
254.6
$
186.1
$
353.9
$
256.7
Restricted cash included in other
assets
1.3
1.2
1.2
4.6
Total cash, cash equivalents and
restricted cash
$
255.9
$
187.3
$
355.1
$
261.3
Reconciliation of Non-GAAP Financial
Measures
(in millions)
Adjusted EBITDA and Cash Flow
Reconciliation
Three Months Ended
September 30, 2019
June 30, 2019
Reconciliation of Adjusted
EBITDA:
Net income
$
17.9
$
63.0
Interest expense
84.7
86.1
Provision/(benefit) for income taxes
14.0
(35.7
)
Depreciation and amortization
156.1
157.5
Transaction costs
2.0
12.6
Stock-based compensation
27.2
29.4
Foreign currency loss on intercompany
loans
12.9
8.3
Adjusted EBITDA
$
314.8
$
321.2
Reconciliation of adjusted unlevered
free cash flow:
Net cash provided by operating
activities
$
311.8
$
225.1
Cash paid for interest, net of capitalized
interest
67.2
92.4
Cash paid for income taxes
3.0
3.5
Transaction costs
2.0
12.6
Provision for bad debts
(2.6
)
(1.5
)
Additions to deferred revenue
(81.4
)
(54.4
)
Amortization of deferred revenue
40.3
39.2
Other changes in operating assets and
liabilities
(25.5
)
4.3
Adjusted EBITDA
314.8
321.2
Purchases of property and equipment
(217.1
)
(195.8
)
Additions to deferred revenue
81.4
54.4
Amortization of deferred revenue
(40.3
)
(39.2
)
Adjusted unlevered free cash
flow
$
138.8
$
140.6
Reconciliation of levered free cash
flow:
Net cash provided by operating
activities
$
311.8
$
225.1
Purchases of property and equipment
(217.1
)
(195.8
)
Levered free cash flow, as
defined
$
94.7
$
29.3
Adjusted EBITDA and Cash Flow
Reconciliation
Three Months Ended September
30, 2019
Zayo Consolidated
Allstream
Consolidated Excluding
Allstream
Reconciliation of Adjusted
EBITDA:
Net income/(loss)
$
17.9
$
(4.2
)
$
22.1
Interest expense
84.7
2.8
81.9
Provision/(benefit) for income taxes
14.0
(1.7
)
15.7
Depreciation and amortization
156.1
11.6
144.5
Transaction costs
2.0
—
2.0
Stock-based compensation
27.2
0.8
26.4
Foreign currency loss on intercompany
loans
12.9
—
12.9
Adjusted EBITDA
$
314.8
$
9.3
$
305.5
Reconciliation of levered free cash
flow:
Net cash provided by operating
activities
$
311.8
$
11.5
$
300.3
Purchases of property and equipment,
net
(217.1
)
(4.2
)
(212.9
)
Levered free cash flow, as
defined
$
94.7
$
7.3
$
87.4
Three Months Ended September
30, 2019
Zayo Networks
zColo
Allstream
Other
Corporate/
Eliminations
Total
Net income/(loss)
$
71.6
$
(21.6)
$
(4.2)
$
0.7
$
(28.6)
$
17.9
Interest expense
71.0
10.9
2.8
—
—
84.7
(Benefit)/provision for income taxes
—
—
(1.7)
—
15.7
14.0
Depreciation and amortization expense
113.5
30.5
11.6
0.5
—
156.1
Transaction costs
1.8
0.2
—
—
—
2.0
Stock-based compensation
19.6
6.6
0.8
0.2
—
27.2
Foreign currency loss on intercompany
loans
—
—
—
—
12.9
12.9
Segment and consolidated Adjusted
EBITDA
$
277.5
$
26.6
$
9.3
$
1.4
$
—
$
314.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106005881/en/
Media: Shannon Paulk, Corporate Communications
303-577-5897 press@zayo.com Investors: Brad Korch,
Investor Relations 720-306-7556 IR@zayo.com
Zayo (NYSE:ZAYO)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Zayo (NYSE:ZAYO)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024