Uniti logs $1M profit in first quarter

Uniti Group Inc. on Thursday reported a first-quarter profit, despite the overhang of Windstream's bankruptcy proceedings.

The Little Rock real estate investment trust posted better results for the three months that ended March 31, compared with last year's first quarter, but didn't meet analysts' expectations.

Total revenue rose to $261 million from $247 million a year ago.

Net income climbed to $1 million, or 1 cent per share, from a loss of $870,000, a year ago.

Uniti missed Wall Street estimates of earnings per share of 3 cents, according to a Yahoo Finance consensus of seven analysts.

In response to the Chapter 11 reorganization, Uniti Group, a spinoff of Windstream Holdings, has done away with its master lease agreement with Windstream and adopted a payment structure that accounts for Windstream's revenue on a cash basis, according to Uniti's quarterly filing with the U.S. Securities and Exchange Commission.

Borrowing under Uniti's revolving credit facility nearly doubled to $139 million from $70 million a year ago, the report said.

During a teleconference, Kenny Gunderman, Uniti's president and chief executive officer, said he was "pleased with how the [Windstream bankruptcy] proceedings have progressed" and remains confident that Windstream will emerge stronger than before.

Uniti is closely tied to Windstream Holdings, which filed for bankruptcy reorganization after losing a lawsuit in federal court on Feb. 15.

Windstream created Uniti in 2015 and Uniti bought Windstream's telecom assets and formed an agreement to lease them back to Windstream.

Two years later, a New York hedge fund sued Windstream, claiming the spinoff of certain telecommunications network as sets violated its shareholder agreements. Aurelius Capital Management prevailed in a $310 million judgment, according to filings with the southern U.S. District Court of New York.

Uniti's stock value plunged after Windstream's bankruptcy filing. Uniti's shares fell from $19.98 to $12.51 the weekend after the Feb. 15 ruling.

Uniti's shares rose 6 cents to close Thursday at $11.26. Windstream's shares closed at 30 cents. The report was released after the market closed.

Uniti's largest customer is Windstream. Uniti owns 5.5 million miles of fiber optic line, about 430 wireless towers and other U.S. communications real estate, as of Dec. 31.

For the quarter, total revenue climbed because of increases in the leasing of fiber infrastructure and wireless towers, while leasing of traditional wire line declined. Bob Williams, a former vice president of Simmons Investment Services, said that segment's decline is a sign of the times.

"To me that's just indicative of shifting consumer desires, more so in rural markets" moving toward wireless systems, Williams said.

Looking ahead, Gunderman said he saw growth opportunities in all business segments.

"We continue to expect to see solid organic revenue growth," he said. "As a result we are largely leaving our full year 2019 outlook unchanged."

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Uniti Group

Business on 05/10/2019

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