[February 12, 2016] |
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Zayo Group Holdings, Inc. Reports Financial Results for the Second Fiscal Quarter Ended December 31, 2015
Zayo Group Holdings, Inc. ("Zayo" or "the Company") (NYSE: ZAYO), the
global leader in Communications Infrastructure, announced results for
the three months ended December 31, 2015. Second fiscal quarter revenue
of $369.6 million grew 3% over the previous quarter on an annualized
basis. Adjusted EBITDA of $218.9 million increased 7% over the previous
quarter on an annualized basis. Operating income for the quarter
increased $6.6 million from the previous quarter, and net loss decreased
by $4.4 million from the previous quarter.
During the three months ended December 31, 2015, capital expenditures
were $172.4 million and the Company added 7,905 route miles and 813
buildings to its network. As of December 31, 2015, the Company had
$176.2 million of cash and $440.8 million available under its revolving
credit facility.
Recent Developments
Viatel Acquisition
On December 31, 2015, the Company completed the acquisition of a 100%
interest in Viatel Infrastructure Europe Ltd., Viatel (UK) Limited,
Viatel France SAS, Viatel Deutschland GmbH and Viatel Nederland BV
(collectively, "Viatel") for cash consideration of €92.6 million (or
$101.0 million), net of cash acquired. The final purchase consideration
is subject to certain post-closing adjustments. The acquisition was
funded with cash on hand.
Dallas Data Center Acquisition
On December 31, 2015, the Company acquired a 36,000 square foot data
center located in Dallas, Texas for cash consideration of $16.7 million.
The acquisition was funded with cash on hand.
Term Loan Borrowings
On January 15, 2016, the Company entered into an Incremental Amendment
(the "Amendment") to its Credit Agreement. Under the terms of the
Amendment, the Company's term loan facility was increased by $400
million. The facility bears interest at LIBOR plus 3.5 percent with a
minimum LIBOR rate of 1.0 percent. The $400 million add-on was priced at
99.0 percent. No other terms of the Credit Agreement were amended.
Allstream Acquisition
On January 15, 2016, the Company acquired 100% of the equity interest in
Allstream, Inc. and Allstream Fiber U.S. Inc. (together, "Allstream")
for cash consideration of CAD $427.0 million (or $298.0 million),
subject to certain post-closing adjustments. The consideration paid is
net of CAD $38.0 million (or $26.0 million) of working capital and other
liabilities assumed by the Company in the acquisition. The acquisition
was funded with the incremental term loan proceeds.
The acquisition adds more than 18,000 route miles to the Company's fiber
network, including 12,500 miles of long-haul fiber connecting all major
Canadian markets and 5,500 route miles of metro fiber network connecting
approximately 3,300 on-net buildings concentrated in Canada's top five
metropolitan markets.
Share Repurchases
During the three and six months ended December 31, 2015, the Company
repurchased 726,327 shares of its outstanding common stock. This amount
includes 355,557 shares repurchased at an average price of $23.85 per
share, or $8.5 million, excluding commissions, under a $500 million,
6-month share repurchase program authorized by the Company's Board of
Directors (the "Board") on November 10, 2015. As of December 31, 2015,
$491.5 million remained available under the share repurchase
authorization approved by the Board through May 2016. The amounts
included in the "Common stock repurchases" line in the Company's
Condensed Consolidated Statements of Cash Flows represents both shares
authorized by the Board for repurchase under the publicly announced
authorization described above, as well as $9.4 million, or 370,770
shares, withheld from employees to cover tax withholding obligations on
restricted stock units that have vested. Total shares outstanding as of
December 31, 2015 were 244,667,472.
Second Fiscal Quarter 2016 Financial Results
Three Months Ended December 31, 2015 and September 30, 2015
($ in millions)
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Three months ended
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December 31,
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September 30,
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2015
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2015
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Revenue
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$
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369.6
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$
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366.8
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Annualized revenue growth
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3
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%
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Operating income
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58.7
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52.1
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Income/(loss) from operations before income taxes
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0.3
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(12.5
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)
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Provision for income taxes
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11.1
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2.7
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Net loss
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$
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(10.8
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)
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$
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(15.2
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)
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Adjusted EBITDA
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$
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218.9
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$
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215.4
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Annualized Adjusted EBITDA growth
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7
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%
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Adjusted EBITDA margin
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59
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%
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59
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%
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Unlevered free cash flow
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$
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46.5
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$
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56.2
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Levered free cash flow/(deficit)
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$
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(26.2
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)
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$
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36.0
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Three Months Ended December 31, 2015 and December 31, 2014
($ in millions)
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Three months ended
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December 31,
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December 31,
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2015
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2014
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Revenue
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$
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369.6
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$
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323.9
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Revenue growth
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14
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%
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Operating income
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58.7
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97.1
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Income/(loss) from operations before income taxes
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0.3
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(0.6
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)
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Provision/(benefit) for income taxes
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|
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11.1
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(4.4
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)
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Net (loss)/income
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$
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(10.8
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)
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$
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3.8
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Adjusted EBITDA
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$
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218.9
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$
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189.7
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Adjusted EBITDA growth
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15
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%
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Adjusted EBITDA margin
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59
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%
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59
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%
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Unlevered free cash flow
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$
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46.5
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$
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60.2
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Levered free cash flow/(deficit)
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$
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(26.2
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)
|
|
|
|
|
|
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$
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(5.8
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)
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Conference Call
Zayo will hold a conference call to report second fiscal quarter 2016
results at 10:00 a.m. EST, February 12, 2016. The dial in number for the
call is 800-941-1366. A live webcast of the call can be found in the
investor relations section of Zayo's website or can be accessed directly
at https://cc.readytalk.com/r/sle94d7kgju2&eom.
During the call, the Company will review an Earnings Presentation that
summarizes the financial, operational and commercial highlights of the
quarter, which can be found at http://investors.zayo.com/earnings-releases.
The Company's Supplemental Earnings Information presentation will be
made available in the investor relations section of Zayo's website after
the conclusion of the conference call.
About Zayo
Zayo Group Holdings, Inc. (NYSE: ZAYO) provides communications
infrastructure services, including fiber and bandwidth connectivity,
colocation and cloud services to the world's leading businesses.
Customers include wireless and wireline carriers, media and content
companies and finance, healthcare and other large enterprises. The
Company's 110,000-mile network in North America and Europe, inclusive of
the Company's Allstream acquisition, 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 services in its
carrier-neutral data centers. Zayo provides clients with flexible,
customized solutions and self-service through Tranzact, an innovative
online platform for managing and purchasing bandwidth and services. For
more information, visit zayo.com.
Forward Looking Statements
Information contained in this supplemental presentation 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 filed with the SEC on September 18, 2015 (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
unaudited condensed consolidated financial statements and notes thereto
for the quarter ended December 31, 2015 included in the Company's
Quarterly Report on Form 10-Q to be filed with the SEC on February 12,
2016 and the Company's audited consolidated financial statements and
notes thereto for the year ended June 30, 2015 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, or GAAP,
including Adjusted EBITDA, Adjusted EBITDA Margin, unlevered free cash
flow, adjusted unlevered free cash flow, and levered free cash flow.
Adjusted EBITDA is defined as earnings/(loss) from continuing 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. Unlevered free
cash flow is defined as Adjusted EBITDA minus purchases of property and
equipment, net of stimulus grants. Levered free cash flow is defined as
operating cash flow minus purchases of property and equipment, net of
stimulus grants. These measures 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.
We use Adjusted EBITDA to evaluate our operating performance and
liquidity. In addition to Adjusted EBITDA, management uses unlevered
free cash flow, which measures the ability of Adjusted EBITDA to cover
capital expenditures. Adjusted EBITDA is a performance rather than cash
flow measure. Correlating our capital expenditures to our Adjusted
EBITDA does not imply that we will be able to fund such capital
expenditures solely with cash from operations. In addition to these
measures, 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.
Unlevered free cash flow and 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, levered 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, unlevered free cash flow, 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 unlevered free cash flow and 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 presentation. A glossary
of terms used throughout is available under the investor section of the
Company's website at http://investors.zayo.com/glossary.
Consolidated Financial Information
Consolidated Statements of Operations
($ in millions)
|
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|
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Three months ended
|
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Six months ended
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
Revenue
|
|
|
|
$
|
369.6
|
|
|
|
|
$
|
323.9
|
|
|
|
|
$
|
736.4
|
|
|
|
|
$
|
644.5
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs (excluding depreciation and amortization)
|
|
|
|
|
112.2
|
|
|
|
|
|
97.8
|
|
|
|
|
|
225.2
|
|
|
|
|
|
205.1
|
|
Selling, general and administrative expenses
|
|
|
|
|
85.0
|
|
|
|
|
|
32.1
|
|
|
|
|
|
169.6
|
|
|
|
|
|
188.9
|
|
Depreciation and amortization
|
|
|
|
|
113.7
|
|
|
|
|
|
96.9
|
|
|
|
|
|
230.8
|
|
|
|
|
|
192.9
|
|
Total operating costs and expenses
|
|
|
|
|
310.9
|
|
|
|
|
|
226.8
|
|
|
|
|
|
625.6
|
|
|
|
|
|
586.9
|
|
Operating income
|
|
|
|
|
58.7
|
|
|
|
|
|
97.1
|
|
|
|
|
|
110.8
|
|
|
|
|
|
57.6
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
(51.2
|
)
|
|
|
|
|
(53.4
|
)
|
|
|
|
|
(105.0
|
)
|
|
|
|
|
(100.3
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
-
|
|
|
|
|
|
(30.9
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(30.9
|
)
|
Foreign currency loss on intercompany loans
|
|
|
|
|
(7.1
|
)
|
|
|
|
|
(13.3
|
)
|
|
|
|
|
(17.8
|
)
|
|
|
|
|
(27.9
|
)
|
Other expense, net
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.2
|
)
|
Total other expenses, net
|
|
|
|
|
(58.4
|
)
|
|
|
|
|
(97.7
|
)
|
|
|
|
|
(123.0
|
)
|
|
|
|
|
(159.3
|
)
|
Income/(loss) from operations before income taxes
|
|
|
|
|
0.3
|
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
(12.2
|
)
|
|
|
|
|
(101.7
|
)
|
Provision/(benefit) for income taxes
|
|
|
|
|
11.1
|
|
|
|
|
|
(4.4
|
)
|
|
|
|
|
13.8
|
|
|
|
|
|
5.0
|
|
Net (loss)/income
|
|
|
|
$
|
(10.8
|
)
|
|
|
|
$
|
3.8
|
|
|
|
|
$
|
(26.0
|
)
|
|
|
|
$
|
(106.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
244.8
|
|
|
|
|
|
236.2
|
|
|
|
|
|
243.9
|
|
|
|
|
|
229.6
|
|
Diluted
|
|
|
|
|
244.8
|
|
|
|
|
|
237.2
|
|
|
|
|
|
243.9
|
|
|
|
|
|
229.6
|
|
Net (loss)/income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
0.02
|
|
|
|
|
|
(0.11
|
)
|
|
|
|
|
(0.46
|
)
|
Diluted
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
0.02
|
|
|
|
|
|
(0.11
|
)
|
|
|
|
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
($ in millions, except share amounts)
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
2015
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
176.2
|
|
|
|
|
|
|
|
|
|
$
|
308.6
|
|
Trade receivables, net of allowance of $4.8 and $3.4 as of December
31, 2015 and June 30, 2015, respectively
|
|
|
|
|
73.9
|
|
|
|
|
|
|
|
|
|
|
88.0
|
|
Due from related parties
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Prepaid expenses
|
|
|
|
|
33.8
|
|
|
|
|
|
|
|
|
|
|
37.3
|
|
Deferred income taxes, net
|
|
|
|
|
129.8
|
|
|
|
|
|
|
|
|
|
|
129.5
|
|
Other assets
|
|
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
3.9
|
|
Total current assets
|
|
|
|
|
419.8
|
|
|
|
|
|
|
|
|
|
|
567.9
|
|
Property and equipment, net
|
|
|
|
|
3,626.1
|
|
|
|
|
|
|
|
|
|
|
3,299.2
|
|
Intangible assets, net
|
|
|
|
|
933.0
|
|
|
|
|
|
|
|
|
|
|
948.3
|
|
Goodwill
|
|
|
|
|
1,222.2
|
|
|
|
|
|
|
|
|
|
|
1,224.4
|
|
Other assets
|
|
|
|
|
72.4
|
|
|
|
|
|
|
|
|
|
|
54.8
|
|
Total assets
|
|
|
|
$
|
6,273.5
|
|
|
|
|
|
|
|
|
|
$
|
6,094.6
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
$
|
16.5
|
|
|
|
|
|
|
|
|
|
$
|
16.5
|
|
Accounts payable
|
|
|
|
|
66.2
|
|
|
|
|
|
|
|
|
|
|
40.0
|
|
Accrued liabilities
|
|
|
|
|
182.2
|
|
|
|
|
|
|
|
|
|
|
182.2
|
|
Accrued interest
|
|
|
|
|
40.2
|
|
|
|
|
|
|
|
|
|
|
57.2
|
|
Capital lease obligations, current
|
|
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Deferred revenue, current
|
|
|
|
|
97.8
|
|
|
|
|
|
|
|
|
|
|
86.6
|
|
Total current liabilities
|
|
|
|
|
408.3
|
|
|
|
|
|
|
|
|
|
|
386.9
|
|
Long-term debt, non-current
|
|
|
|
|
3,649.8
|
|
|
|
|
|
|
|
|
|
|
3,652.2
|
|
Capital lease obligation, non-current
|
|
|
|
|
30.5
|
|
|
|
|
|
|
|
|
|
|
28.3
|
|
Deferred revenue, non-current
|
|
|
|
|
727.4
|
|
|
|
|
|
|
|
|
|
|
612.7
|
|
Deferred income taxes, net
|
|
|
|
|
171.6
|
|
|
|
|
|
|
|
|
|
|
174.7
|
|
Other long-term liabilities
|
|
|
|
|
37.6
|
|
|
|
|
|
|
|
|
|
|
28.6
|
|
Total liabilities
|
|
|
|
|
5,025.2
|
|
|
|
|
|
|
|
|
|
|
4,883.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value-- 50,000,000 shares authorized; no
shares issued and outstanding as of December 31, 2015 and June 30,
2015, respectively
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
Common stock, $0.001 par value--850,000,000 shares authorized;
244,667,472 and 243,008,679 shares issued and outstanding as of
December 31, 2015 and June 30, 2015, respectively
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Additional paid-in capital
|
|
|
|
|
1,780.6
|
|
|
|
|
|
|
|
|
|
|
1,705.8
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(19.6
|
)
|
|
|
|
|
|
|
|
|
|
(7.9
|
)
|
Accumulated deficit
|
|
|
|
|
(512.9
|
)
|
|
|
|
|
|
|
|
|
|
(486.9
|
)
|
Total stockholders' equity
|
|
|
|
|
1,248.3
|
|
|
|
|
|
|
|
|
|
|
1,211.2
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
6,273.5
|
|
|
|
|
|
|
|
|
|
$
|
6,094.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows
($ in millions)
|
|
|
|
Six months ended
December 31,
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
2014
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(26.0
|
)
|
|
|
|
|
|
|
|
|
$
|
(106.7
|
)
|
Adjustments to reconcile net loss to net cash provided by
operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
230.8
|
|
|
|
|
|
|
|
|
|
|
192.9
|
|
Loss on extinguishment of debt
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
30.9
|
|
Non-cash interest expense
|
|
|
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
9.4
|
|
Stock-based compensation
|
|
|
|
|
89.0
|
|
|
|
|
|
|
|
|
|
|
117.1
|
|
Amortization of deferred revenue
|
|
|
|
|
(41.9
|
)
|
|
|
|
|
|
|
|
|
|
(34.6
|
)
|
Additions to deferred revenue
|
|
|
|
|
86.6
|
|
|
|
|
|
|
|
|
|
|
84.1
|
|
Foreign currency loss on intercompany loans
|
|
|
|
|
17.8
|
|
|
|
|
|
|
|
|
|
|
27.9
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
|
(7.9
|
)
|
|
|
|
|
|
|
|
|
|
-
|
|
Deferred income taxes
|
|
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
|
(0.7
|
)
|
Provision for bad debts
|
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
0.9
|
|
Non-cash loss on investments
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Changes in operating assets and liabilities, net of acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
|
|
15.3
|
|
|
|
|
|
|
|
|
|
|
(5.0
|
)
|
Prepaid expenses
|
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Payables to/(from) related parties, net
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
(26.0
|
)
|
|
|
|
|
|
|
|
|
|
(67.5
|
)
|
Other assets and liabilities
|
|
|
|
|
(20.4
|
)
|
|
|
|
|
|
|
|
|
|
(7.5
|
)
|
Net cash provided by operating activities
|
|
|
|
|
341.4
|
|
|
|
|
|
|
|
|
|
|
241.9
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
(331.6
|
)
|
|
|
|
|
|
|
|
|
|
(244.8
|
)
|
Acquisition of Neo Telecoms, net of cash acquired
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(73.9
|
)
|
Acquisition of Colo Facilities Atlanta, net of cash acquired
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(52.5
|
)
|
Acquisition of Viatel, net of cash acquired
|
|
|
|
|
(101.0
|
)
|
|
|
|
|
|
|
|
|
|
-
|
|
Acquisition of Dallas Data Center, net of cash acquired
|
|
|
|
|
(16.7
|
)
|
|
|
|
|
|
|
|
|
|
-
|
|
Other
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
Net cash used in investing activities
|
|
|
|
|
(449.6
|
)
|
|
|
|
|
|
|
|
|
|
(371.3
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from equity offerings and contributions
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
304.2
|
|
Direct costs associated with initial public offering
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(22.2
|
)
|
Principal payments on long-term debt
|
|
|
|
|
(8.3
|
)
|
|
|
|
|
|
|
|
|
|
(259.7
|
)
|
Payment of early redemption fees on debt extinguished
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(23.8
|
)
|
Principal payments on capital lease obligations
|
|
|
|
|
(2.2
|
)
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
Common stock repurchases
|
|
|
|
|
(17.9
|
)
|
|
|
|
|
|
|
|
|
|
-
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
|
7.9
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Other
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
-
|
|
Net cash used in financing activities
|
|
|
|
|
(20.9
|
)
|
|
|
|
|
|
|
|
|
|
(2.8
|
)
|
Net cash flows
|
|
|
|
|
(129.1
|
)
|
|
|
|
|
|
|
|
|
|
(132.2
|
)
|
Effect of changes in foreign exchange rates on cash
|
|
|
|
|
(3.3
|
)
|
|
|
|
|
|
|
|
|
|
(1.6
|
)
|
Net decrease in cash and cash equivalents
|
|
|
|
|
(132.4
|
)
|
|
|
|
|
|
|
|
|
|
(133.8
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
308.6
|
|
|
|
|
|
|
|
|
|
|
297.4
|
|
Cash and cash equivalents, end of period
|
|
|
|
$
|
176.2
|
|
|
|
|
|
|
|
|
|
$
|
163.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Cash Flow Reconciliation
|
|
|
|
Three months ended
|
($ in millions)
|
|
|
|
December 31,
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
|
2015
|
|
|
|
2014
|
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
|
|
|
|
|
(10.8
|
)
|
|
|
|
|
(15.2
|
)
|
|
|
|
|
3.8
|
|
Interest expense
|
|
|
|
|
51.2
|
|
|
|
|
|
53.8
|
|
|
|
|
|
53.4
|
|
(Benefit)/provision for income taxes
|
|
|
|
|
11.1
|
|
|
|
|
|
2.7
|
|
|
|
|
|
(4.4
|
)
|
Depreciation and amortization
|
|
|
|
|
113.7
|
|
|
|
|
|
117.1
|
|
|
|
|
|
96.9
|
|
Transaction costs
|
|
|
|
|
3.3
|
|
|
|
|
|
-
|
|
|
|
|
|
1.3
|
|
Stock-based compensation
|
|
|
|
|
42.9
|
|
|
|
|
|
46.1
|
|
|
|
|
|
(6.0
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
30.9
|
|
Foreign currency loss/(gain) on intercompany loans
|
|
|
|
|
7.1
|
|
|
|
|
|
10.7
|
|
|
|
|
|
13.3
|
|
Non-cash loss on investments
|
|
|
|
|
0.4
|
|
|
|
|
|
0.2
|
|
|
|
|
|
0.5
|
|
Adjusted EBITDA
|
|
|
|
$
|
218.9
|
|
|
|
|
$
|
215.4
|
|
|
|
|
$
|
189.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of unlevered free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities:
|
|
|
|
$
|
146.2
|
|
|
|
|
$
|
195.2
|
|
|
|
|
$
|
123.7
|
|
Cash paid for income taxes
|
|
|
|
|
2.0
|
|
|
|
|
|
4.7
|
|
|
|
|
|
2.1
|
|
Cash paid for interest, net of capitalized interest
|
|
|
|
|
83.2
|
|
|
|
|
|
29.3
|
|
|
|
|
|
71.1
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
|
-
|
|
|
|
|
|
7.9
|
|
|
|
|
|
-
|
|
Transaction costs
|
|
|
|
|
3.3
|
|
|
|
|
|
-
|
|
|
|
|
|
1.3
|
|
Provision for bad debts
|
|
|
|
|
(1.9
|
)
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
(0.3
|
)
|
Additions to deferred revenue
|
|
|
|
|
(36.9
|
)
|
|
|
|
|
(49.7
|
)
|
|
|
|
|
(40.9
|
)
|
Amortization of deferred revenue
|
|
|
|
|
21.5
|
|
|
|
|
|
20.4
|
|
|
|
|
|
17.3
|
|
Other changes in operating assets and liabilities
|
|
|
|
|
1.5
|
|
|
|
|
|
8.2
|
|
|
|
|
|
15.4
|
|
Adjusted EBITDA
|
|
|
|
|
218.9
|
|
|
|
|
|
215.4
|
|
|
|
|
|
189.7
|
|
Purchases of property and equipment
|
|
|
|
|
(172.4
|
)
|
|
|
|
|
(159.2
|
)
|
|
|
|
|
(129.5
|
)
|
Unlevered Free Cash Flow
|
|
|
|
$
|
46.5
|
|
|
|
|
$
|
56.2
|
|
|
|
|
$
|
60.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of levered free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
146.2
|
|
|
|
|
$
|
195.2
|
|
|
|
|
$
|
123.7
|
|
Purchases of property and equipment, net
|
|
|
|
|
(172.4
|
)
|
|
|
|
|
(159.2
|
)
|
|
|
|
|
(129.5
|
)
|
Levered free cash flow/(deficit), as defined
|
|
|
|
$
|
(26.2
|
)
|
|
|
|
$
|
36.0
|
|
|
|
|
$
|
(5.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160212005179/en/
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