Uniti reports $22 million 1Q loss, revenue headed toward $1 billion mark

Uniti Group Inc., which recently announced its largest deal since splitting off from Windstream two years ago, reported a first quarter loss nearly $22 million as the company continues its aggressive expansion across the Southeast U.S.

For the period ended March, the Little Rock-based real estate investment trust (REIT) reported a first quarter loss of $21.8 million, or 14 cents per share, compared to earnings of $7.6 million, or five cents per share, a year ago. Quarterly revenues rose 21% to $211.4 million, compared to $174.7 million in the first quarter of 2016.

Uniti, formerly Communications Sales & Leasing Inc. (CS&L), reported funds from operations (FFO) of $100.3 million, or 65 cents per share. Funds from operations is a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization. Wall Street had expected Arkansas’ first publicly-held REIT to report first quarter earnings of 62 cents per share on revenue of $198.6 million, according to Thomson Reuters.

“We are pleased with the execution of our strategy during the first quarter and our businesses performed very well. Uniti Fiber and our two recently announced acquisitions, Southern Light and Hunt, had strong sales bookings including awards for 1,300 new small cell nodes as well as E-Rate and Fortune 500 enterprise wins,” said Uniti President and CEO Kenny Gunderman said in the Thursday (May 4) earnings report. “We have excellent momentum and industry dynamics are creating more opportunities for us to deploy capital for acquisitions, sale-leasebacks and other transactions involving critical communication infrastructure assets.”

Nearly a month ago, Uniti announced it had entered into a definitive agreement to acquire privately-held Southern Light LLC in a deal worth $700 million in cash and stock. The deal with Mobile, Ala.-based Southern Light, the largest since the company became Arkansas’ first publicly traded real estate investment trust in April 2015, comes nearly two months after the former CS&L took further steps to fully break away from its ties to former parent, Windstream Holding Inc.

On Feb. 23, the Little Rock-based REIT announced plans to change its bulky corporate name to Uniti Group, and begin trading under the stock symbol UNIT on the NASDAQ Stock Exchange. On the same day, the company signed a deal to acquire Hunt Telecommunications for an initial consideration of $170 million in cash-and-stock.

Southern Light offers data transport services along the Gulf Coast region serving twelve attractive Tier II and Tier III markets across Florida, Alabama, Louisiana, Georgia and Mississippi. Southern Light’s regional fiber network includes nearly 540,000 fiber strand miles, 5,700 fiber route miles, and over 4,500 on-net locations.

Hunt is data transport provider to K–12 schools and government agencies with a dense network of 140,000 fiber strand miles and 2,600 fiber route miles in Louisiana. Uniti’s deal with Hunt is expected to close in the second quarter, while the Southern Light acquisition is expected to be completed by the end of the third quarter.

For the remainder of 2017, Uniti expects its annual revenues to move closer to the $1 billion mark, adjusting its outlook to the range of $902 to $910 million for the fiscal year. Yearly profits, which will include adjusted earnings from the Hunt and Southern Light acquisitions, are forecasted to remain in the red at a loss of 18 to 12 cents per share.