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Zayo Group Holdings, Inc. Reports Financial Results for the Fourth Fiscal Quarter Ended June 30, 2018

08.22.18

Fourth Fiscal Quarter 2018 Financial Highlights

  • $657.6 million of consolidated revenue, including $546.6 million from the Communications Infrastructure segments and $111.0 million from the Allstream segment.
  • Net income of $43.8 million, including $30.6 million from the Communications Infrastructure segments and a net income of $13.2 million from the Allstream segment.
  • $324.9 million of adjusted EBITDA, including $300.7 million from Communications Infrastructure and $24.2 million from the Allstream segment.
  • Bookings of $8.0 million, gross installs of $7.7 million, churn of 1.2% and net installs of $1.5 million, all on a monthly recurring revenue (MRR) and monthly amortized revenue (MAR) basis, excluding the Allstream segment.
  • Adjusted unlevered free cash flow of $155.4 million.

 

BOULDER, Colo.--(BUSINESS WIRE)-- Zayo Group Holdings, Inc. (“Zayo” or “the Company”) (NYSE: ZAYO), a global leader in Communications Infrastructure, announced results for the three months ended June 30, 2018.

Fourth quarter operating income increased $14.9 million and net income increased by $20.4 million over the previous quarter. Basic and diluted net income per share during the quarter was $0.18. During the three months ended June 30, 2018, capital expenditures were $208.0 million.

As of June 30, 2018, the Company had $256.7 million of cash and $441.9 million available under its revolving credit facility.

Recent Developments

Scott-Rice Telephone Co

On July 31, 2018, the Company closed the sale of Scott-Rice Telephone Co (“SRT”) for $42 million to Nuvera (formerly New Ulm Telecom, Inc.). The Company acquired SRT as part of its March 2017 purchase of Electric Lightwave and it was reported as part of the Allstream segment. The Company concluded that SRT was not a significant disposal group and did not represent a strategic shift, and therefore was not classified as discontinued operations. Scott Rice had a net loss before taxes of $1.6 million for the year ended June 30, 2018.

Share Repurchases

On May 7, 2018, our Board of Directors authorized the repurchase of up to $500 million of our common stock from time to time using a variety of methods, including open market purchases, privately negotiated transactions and other means in accordance with federal securities laws. The authorization expires in November 2018, and may be suspended or discontinued at any time. During the year ended June 30, 2018, the Company repurchased 2.7 million of its outstanding common stock at an average price of $34.02, or $93.5 million.

Potential REIT Conversion

On May 3, 2018, the Company announced that it completed the first phase of its investigation on the advisability and feasibility of a conversion to a real estate investment trust for U.S. federal income tax purposes (a “REIT”). The Company has begun the next phase of its evaluation and preparation for a potential conversion to a REIT. As part of these efforts, the Company has begun a direct dialogue with the U.S. Internal Revenue Service (“IRS”) in an effort to obtain clarity and support for its position, and is seeking a private letter ruling (“PLR”) from the IRS. The Company’s ability to qualify for taxation as a REIT will depend upon its continuing compliance following REIT conversion with various requirements, including requirements related to the nature of its assets, the sources of its income and the distributions to its stockholders.

The Company is requesting that its PLR address whether its revenues from dark and lit fiber satisfy applicable REIT income tests, and the Company’s ultimate decision to convert to a REIT may depend upon a favorable ruling from the IRS on this topic. The Company submitted a PLR request to the IRS in July 2018, but the IRS may not provide a response until 2019 or later or may not respond at all.

Fourth Fiscal Quarter Financial Results

Three Months Ended June 30, 2018 and March 31, 2018

(in millions)

    Three months ended
June 30, 2018     March 31, 2018
Revenue $ 657.6 $ 649.4
Annualized revenue growth5%
Operating income 120.2 105.3
 

Income from operations before income taxes   

20.7 44.3
Provision/(benefit) for income taxes   (23.1 )   20.9  
Net income $ 43.8   $ 23.4  
 
Adjusted EBITDA $ 324.9 $ 319.6

Annualized Adjusted EBITDA growth  

7%
Adjusted EBITDA margin49%49%
 
Levered free cash flow $ 43.8 $ 67.7
 

Three Months Ended June 30, 2018 and June 30, 2017

(in millions)

    Three months ended
June 30, 2018     June 30, 2017
Revenue $ 657.6 $ 638.0
Annualized revenue growth3%
Operating income 120.2 105.4
 
Net income from operations before income taxes 20.7 34.2
Provision/(benefit) for income taxes   (23.1 )   11.0  
Net income $ 43.8   $ 23.2  
 
Adjusted EBITDA $ 324.9 $ 310.8
Annualized Adjusted EBITDA growth5%
Adjusted EBITDA margin49%49%
 
Levered free cash flow $ 43.8 $ 39.6
 

Conference Call

Zayo will host a conference call to discuss fourth fiscal quarter 2018 results at 5:00 p.m. EDT on August 22, 2018. To participate on the live call, listeners in the U.S. may dial 866-737-5498 and international listeners may dial 412-858-4607; please request to join the Zayo Group call. During the call, the Company will review an Earnings Presentation that summarizes the financial, operational and commercial highlights of the quarter. This Earnings Presentation, a live webcast of the conference call, and a Supplemental Earnings Presentation will be made available through the Investor Relations section of the Company’s website at investors.zayo.com.

About Zayo

Zayo Group Holdings, Inc. (NYSE: ZAYO) provides communications infrastructure solutions, including fiber and bandwidth connectivity, colocation and cloud infrastructure to the world’s leading businesses. Customers include wireless and wireline carriers, media and content companies and finance, healthcare and other large enterprises. Zayo’s 128,900-mile network in North America and Europe includes extensive metro connectivity to thousands of buildings and data centers. In addition to high-capacity dark fiber, wavelength, Ethernet and other connectivity solutions, Zayo offers colocation and cloud infrastructure in its carrier-neutral data centers. Zayo provides users with flexible, customized solutions and self-service through Tranzact, an innovative online platform for managing and purchasing bandwidth. For more information, visit zayo.com.

Forward-Looking Statements

Information contained in this earnings release that is not historical by nature constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “believes,” “expects,” “plans,” “intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates” or the negatives thereof, other variations thereon or comparable terminology, or by discussions of strategy. 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. These risks and uncertainties include, but are not limited to, those 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. In addition, there is risk and uncertainty in the Company’s acquisition strategy including our ability to integrate acquired companies and assets. Specifically there is a risk associated with 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. Other factors and risks that may affect our business and future financial results are detailed in the “Risk Factors” section of our Annual Report on Form 10-K to be filed with the Securities and Exchange Commission (our “Annual Report”). We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after releasing this supplemental information or to reflect the occurrence of unanticipated events, except as required by law.

This earnings release should be read together with the Company’s consolidated financial statements and notes thereto for the year ended June 30, 2018 included in the Company’s Annual Report.

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 16 – Segment Reporting of our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, 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, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/(losses) on intercompany loans, 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 a quantitative reconciliation of levered free cash flow 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)

 
Year Ended June 30,
201820172016
Revenue $2,604.0   $2,199.8   $1,721.7  
Operating costs and expenses
Operating costs (excluding depreciation and amortization) 941.9 782.9 578.7
Selling, general and administrative expenses 489.8 436.2 386.4
Depreciation and amortization   747.4     606.9     516.3  
Total operating costs and expenses   2,179.1     1,826.0     1,481.4  
Operating income   424.9     373.8     240.3  
Other expenses
Interest expense (299.8 ) (241.5 ) (220.1 )
Loss on extinguishment of debt (4.9 ) (18.2 ) (33.8 )
Foreign currency gain/(loss) on intercompany loans 5.4 (10.3 ) (53.8 )
Other income/(expense), net   2.4     0.3     (0.3 )
Total other expenses, net   (296.9 )   (269.7 )   (308.0 )
Income/(loss) from operations before income taxes 128.0104.1(67.7)
Provision for income taxes   26.1     18.4     8.5  
Net income/(loss) $101.9   $85.7   $(76.2)
 
Weighted-average shares used to compute net income/(loss) per share:
Basic 247.3 243.9 243.3
Diluted 248.5 246.8 243.3
Net income/(loss) per share:
Basic and diluted $ 0.41 $ 0.35 $ (0.31 )
 
       

Consolidated Balance Sheets

(in millions, except share amounts)

 
Year Ended June 30,
20182017
Assets
Current assets
Cash and cash equivalents $ 256.7 $ 220.7
Trade receivables, net of allowance of $11.1 and $9.5 as of June 30, 2018 and June 30, 2017, respectively 235.6 191.6
Prepaid expenses 74.1 68.3
Other assets 22.6 34.0
Assets held for sale 41.8    
Total current assets 630.8514.6
Property and equipment, net 5,447.2 5,016.0
Intangible assets, net 1,212.1 1,188.6
Goodwill 1,719.1 1,840.2
Deferred income taxes, net 37.6 38.3
Other assets   170.0     141.7  
Total assets $9,216.8   $8,739.4  
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 45.9 $ 72.4
Accrued liabilities 312.3 325.4
Accrued interest 72.6 63.5
Current portion of long-term debt 5.0 5.0
Capital lease obligations, current 11.9 8.0
Deferred revenue, current 164.4 146.0
Liabilities associated with assets held for sale   6.1      
Total current liabilities 618.2620.3
Long-term debt, non-current 5,690.1 5,532.7
Capital lease obligation, non-current 121.6 93.6
Deferred revenue, non-current 1,096.8 989.7
Deferred income taxes, net 143.2 40.2
Other long-term liabilities   57.8     52.4  
Total liabilities 7,727.77,328.9
 
Stockholders' equity
Preferred stock, $0.001 par value - 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2018 and June 30, 2017, respectively
Common stock, $0.001 par value - 850,000,000 shares authorized; 246,631,241 and 246,471,551 shares issued and outstanding as of June 30, 2018 and June 30, 2017, respectively 0.2 0.2
Additional paid-in capital 1,881.6 1,884.0
Accumulated other comprehensive income (15.5 ) 5.4
Accumulated deficit   (377.2 )   (479.1 )
Total stockholders' equity   1,489.1     1,410.5  
Total liabilities and stockholders' equity $9,216.8   $8,739.4  
 
           

Consolidated Statement of Cash Flows

(in millions)

 
Year Ended June 30,
201820172016
Cash flows from operating activities
Net income/(loss) $ 101.9 $ 85.7 $ (76.2 )
Adjustments to reconcile net income/(loss) to net cash provided by operating activities
Depreciation and amortization 747.4 606.9 516.3
Loss on extinguishment of debt 4.9 18.2 33.8
Non-cash interest expense 9.8 9.6 11.9
Stock-based compensation 96.7 114.1 155.9
Amortization of deferred revenue (137.8 ) (117.6 ) (111.5 )
Foreign currency (gain)/ loss on intercompany loans (5.4 ) 10.3 53.8
Excess tax benefit from stock-based compensation (7.9 )
Deferred income taxes 25.0 12.6 (2.8 )
Provision for bad debts 5.1 3.7 3.9
Non-cash loss on investments 1.0 1.2 1.2
Changes in operating assets and liabilities, net of acquisitions
Trade receivables (48.1 ) (7.2 ) 1.9
Accounts payable and accrued liabilities 7.3 5.2 (36.0 )
Additions to deferred revenue 212.8 200.5 184.0
Other assets and liabilities   (49.5 )   (33.4 )   (14.3 )
Net cash provided by operating activities   971.1     909.8     714.0  
Cash flows from investing activities
Purchases of property and equipment (789.9 ) (835.5 ) (704.1 )
Cash paid for acquisitions, net of cash acquired   (176.9 )   (1,434.8 )   (437.5 )
Net cash used in investing activities   (966.8)   (2,270.3)   (1,141.6)
Cash flows from financing activities
Proceeds from debt 462.8 3,865.8 929.3
Principal payments on long-term debt (315.7 ) (2,408.8 ) (535.0 )
Payment of early redemption fees on debt extinguished (20.3 )
Principal payments on capital lease obligations (8.4 ) (6.6 ) (4.9 )
Payment of debt issue costs (4.3 ) (35.4 ) (4.2 )
Common stock repurchases (93.5 ) (81.1 )
Excess tax benefit from stock-based compensation 7.9
Cash paid for Santa Clara acquisition financing arrangement and other   (5.3 )   (3.7 )    
Net cash provided by financing activities   35.6     1,411.3     291.7  
Net cash flows39.950.8(135.9)
Effect of changes in foreign exchange rates on cash   (3.9 )   (0.8 )   (2.0 )
Net increase/(decrease) in cash and cash equivalents 36.0 50.0 (137.9 )
Cash and cash equivalents, beginning of year   220.7     170.7     308.6  
Cash and cash equivalents, end of period $ 256.7   $ 220.7   $ 170.7  
Supplemental disclosure of non-cash investing and financing activities:
Cash paid for interest, net of capitalized interest $ 280.2 $ 195.6 $ 228.5
Cash paid for income taxes 20.3 13.1 14.0
Non-cash purchases of equipment through capital leasing 22.1 12.0 7.6
Non-cash purchases of equipment through nonmonetary exchange 17.1 12.8 50.6
(Decrease)/Increase in accounts payable and accrued expenses for purchases of property and equipment (32.2 ) 16.9 25.7
 
                   

Reconciliation of Non-GAAP Financial Measures

(in millions)

 
Adjusted EBITDA and Cash Flow ReconciliationThree months endedYear Ended June 30,
June 30, 2018March 31, 2018June 30, 201720182017
Reconciliation of Adjusted EBITDA:
Net income/(loss) $ 43.8 $ 23.4 $ 23.2 $ 101.9 $ 85.7
Interest expense 77.8 75.3 71.5 299.8 241.5
Provision for income taxes (23.1 ) 20.9 11.0 26.1 18.4
Depreciation and amortization 176.2 191.2 181.3 747.4 606.9
Transaction costs 1.1 3.3 2.9 18.6 20.5
Stock-based compensation 26.2 19.2 21.1 96.7 114.1
Loss on extinguishment of debt 13.7 4.9 18.2
Foreign currency loss/(gain) on intercompany loans 22.4 (13.9 ) (14.4 ) (5.4 ) 10.3
Non-cash loss on investments   0.5     0.2     0.5     1.0     1.2  
Adjusted EBITDA $ 324.9   $ 319.6   $ 310.8   $ 1,291.0   $ 1,116.8  
 
Reconciliation of adjusted unlevered free cash flow:
Net cash provided by continuing operating activities $ 251.8 $ 262.8 $ 244.9 $ 971.1 $ 909.8
Cash paid for income taxes 3.4 13.8 3.3 20.3 13.1
Cash paid for interest, net of capitalized interest 85.1 58.8 86.4 280.2 195.6
Transaction costs 1.1 3.3 2.9 18.6 20.5
Provision for bad debts 0.7 (3.5 ) (1.6 ) (5.1 ) (3.7 )
Additions to deferred revenue (74.8 ) (76.1 ) (43.8 ) (212.8 ) (200.5 )
Amortization of deferred revenue 36.3 35.1 32.1 137.8 117.6
Other changes in operating assets and liabilities   21.3     25.4     (13.4 )   80.9     64.4  
Adjusted EBITDA   324.9     319.6     310.8     1,291.0     1,116.8  
Purchases of property and equipment (208.0 ) (195.1 ) (205.3 ) (789.9 ) (835.5 )
Additions to deferred revenue 74.8 76.1 43.8 212.8 200.5
Amortization of deferred revenue   (36.3 )   (35.1 )   (32.1 )   (137.8 )   (117.6 )
Adjusted unlevered free cash flow $ 155.4   $ 165.5   $ 117.2   $ 576.1   $ 364.2  
 
Reconciliation of levered free cash flow:
Net cash provided by operating activities $ 251.8 $ 262.8 $ 244.9 $ 971.1 $ 909.8
Purchases of property and equipment, net   (208.0 )   (195.1 )   (205.3 )   (789.9 )   (835.5 )
Levered free cash flow, as defined$43.8   $67.7   $39.6   $181.2   $74.3  
 
           
Adjusted EBITDA and Cash Flow ReconciliationThree months ended June 30, 2018

Zayo
Consolidated

Allstream

Consolidated
Excluding
Allstream

Reconciliation of Adjusted EBITDA:
Net income/(loss) $ 43.8 $ 13.2 $ 30.6
Interest expense 77.8 4.2 73.6
Provision for income taxes (23.1 ) (22.8 ) (0.3 )
Depreciation and amortization 176.2 29.3 146.9
Transaction costs 1.1 0.3 0.8
Stock-based compensation 26.2 26.2
Foreign currency loss on intercompany loans 22.4 22.4
Non-cash loss on investments   0.5         0.5  
Adjusted EBITDA $ 324.9   $ 24.2   $ 300.7  
 
Reconciliation of levered free cash flow:
Net cash provided by operating activities $ 251.8 $ 23.9 $ 227.9
Purchases of property and equipment, net   (208.0 )   (5.0 )   (203.0 )
Levered free cash flow, as defined$43.8   $18.9   $24.9  
 
                               
Net income/(loss) to Adjusted EBITDAThree months ended June 30, 2018

Fiber
Solutions(1)

Transport(1)

Enterprise
Networks(1)

zColo(1)

Allstream

Other(1)

Corp/
Eliminations(1)

Total
(in millions)
Net income/(loss)$ 60.7 $ (6.2 ) $ 12.8 $ (13.6 ) $ 13.2 $ 0.3 $ (23.4 ) $43.8
Interest expense 42.8 12.6 7.5 10.6 4.2 0.1 77.8
Provision for income taxes (22.8 ) (0.3 ) (23.1 )
Depreciation and amortization 58.3 43.0 11.6 32.2 29.3 0.4 1.4 176.2
Transaction costs 0.5 0.2 0.1 0.3 1.1
Stock-based compensation 10.9 7.2 4.9 3.0 0.2 26.2
Foreign currency loss on intercompany loans 22.4 22.4
Non-cash loss on investments   0.5   (0.1 )   0.1   0.5  
Adjusted EBITDA $ 173.7 $ 56.8   $ 36.9 $ 32.1   $ 24.2   $ 1.0 $ 0.2   $ 324.9  
 

Effective April 1, 2018, with the continued increase in our scope and scale, the Company’s chief operating decision maker ("CODM"), who is the Company’s Chief Executive Officer, implemented certain organizational changes to the management and operation of the business that directly impact how the CODM makes resource allocation decisions and manages the Company. The changes in structure had the impact of creating two new SPGs and re-aligning an existing SPG among the Company’s reportable segments. The changes in structure also resulted in changes in how the Company measures the relative burden each segment bears of indirect and corporate related costs. These changes to the existing reportable segments have been recast for all prior period financial and operating metrics presented in our Annual Report for comparability, and for quarters ended September 30, 2017, December 31, 2017 and March 31, 2018 as shown below;

                               
  Three months ended March 31, 2018

Fiber
Solutions(1)

Transport(1)

Enterprise
Networks(1)

zColo(1)

Allstream

Other(1)

Corp/
Eliminations(1)

Total
Revenue $ 213.7 $ 166.5 $ 86.1 $ 59.6 $ 117.7 $ 5.8 $ $ 649.4
Adjusted EBITDA 171.4 55.1 36.2 28.6 26.4 2.0 (0.1 ) 319.6
 
Net income/(loss) to Adjusted EBITDA:
Net income/(loss) 36.8 (2.9 ) 10.7 (7.5 ) (7.7 ) 1.1 (7.1 ) 23.4
Interest expense 41.0 12.5 7.4 10.4 4.1 (0.1 ) 75.3
Provision/(benefit) for income taxes 20.9 20.9
Depreciation and amortization 84.2 39.6 14.5 23.4 29.0 0.5 191.2
Transaction costs 1.3 0.7 0.6 0.3 0.4 3.3
Stock-based compensation 8.0 5.2 3.1 2.1 0.6 0.1 0.1 19.2
-
Foreign currency loss on intercompany loans (13.9 ) (13.9 )
Non-cash loss on investments   0.1       (0.1 )   (0.1 )       0.3       0.2  
Adjusted EBITDA $ 171.4 $ 55.1   $ 36.2   $ 28.6   $ 26.4   $ 2.0 $ (0.1 ) $ 319.6  
 
                               
  Three months ended December 31, 2017

Fiber
Solutions(1)

Transport (1)

Enterprise
Networks(1)

zColo(1)

AllstreamOther (1)

Corp/
Eliminations(1)

  Total
Revenue $ 203.9 $ 166.0 $ 93.8 $ 59.9 $ 123.4 $ 6.4 $ $ 653.5
Adjusted EBITDA 168.0 57.4 41.4 30.9 31.0 1.2 329.9
 
Net income/(loss) to Adjusted EBITDA:
Net income/(loss) 16.6 (3.7) 18.9 (3.0) 2.0 0.2 (19.5) 11.5
Interest expense 42.1 12.4 7.1 7.7 3.9 (0.1) 73.1
Provision/(benefit) for income taxes 22.9 22.9
Depreciation and amortization 99.9 42.3 11.0 22.8 19.5 0.4 195.9
Transaction costs 1.4 1.0 0.7 0.5 2.2 0.1 5.9
Stock-based compensation 7.7 5.5 3.7 3.0 3.4 0.3 (0.1) 23.5

Foreign currency gain on intercompany loans

(3.1) (3.1)
Non-cash loss on investments   0.3             (0.1)   0.2
Adjusted EBITDA $ 168.0 $ 57.5 $ 41.4 $ 31.0 $ 31.0 $ 0.9 $ 0.1 $ 329.9
 
                               
  Three months ended September 30, 2017

Fiber
Solutions(1)

Transport (1)

Enterprise
Networks(1)

zColo(1)

AllstreamOther (1)

Corp/
Eliminations(1)

Total
Revenue $ 198.8 $ 168.0 $ 85.4 $ 58.4 $ 127.7 $ 5.2 $ $ 643.5
Adjusted EBITDA 160.1 60.8 33.6 28.6 32.4 1.2 (0.1 ) 316.6
 
Net income/(loss) to Adjusted EBITDA:
Net income/(loss) 10.6 (3.6 ) 10.1 (8.0 ) 13.3 0.6 0.2 23.2
Interest expense 40.1 12.5 7.3 9.8 3.9 73.6
Provision/(benefit) for income taxes 5.4 5.4
Depreciation and amortization 95.3 42.5 9.9 23.3 12.6 0.5 184.1
Transaction costs 2.3 1.8 1.7 0.4 2.1 8.3
Stock-based compensation 11.8 7.6 4.6 3.1 0.5 0.1 0.1 27.8
Loss on extinguishment of debt 4.9 4.9
Foreign currency gain on intercompany loans (10.8 ) (10.8 )
Non-cash loss on investments                   0.1     0.1  
 
Adjusted EBITDA $ 160.1 $ 60.8   $ 33.6 $ 28.6   $ 32.4 $ 1.2 $ (0.1 ) $ 316.6  

(1) These segments are included inCommunications Infrastructure

 

Zayo Group Holdings, Inc.
Media:
Shannon Paulk, 303-577-5897
Corporate Communications
press@zayo.com
or
Investors:
Brad Korch, 720-306-7556
Investor Relations
IR@zayo.com

Source: Zayo Group Holdings, Inc.

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