Earnings Call Presentation€¦ · Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Hard...

Earnings Call Presentation

Zayo Group Holdings, Inc.

Fiscal Year 2016 Q1 NYSE: ZAYO @ZayoGroup

2

Safe Harbor

Information contained in this 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 Zayo Group Holdings, Inc.’s (“the Company” or “ZGH”) 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 or Form 10-K filed with the

Securities and Exchange Commission (“SEC”) on September 18, 2015. 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.

In addition to this presentation and our filings with the SEC, the Company provides a supplemental earnings presentation, pricing

supplement and a glossary of terms used throughout. All of which can be found under the investor section of the Company’s website at

http://www.zayo.com/investors.

2

Dan Caruso Chairman & Chief Executive Officer

3

4

FY 1Q16 Highlights

Another consecutive quarter of revenue and adjusted EBITDA growth

7% organic recurring revenue growth with leading indicators pointing

to 8%

Record net installs driven by historically low churn of 1.1%

Revenue visibility enhanced with installation pipeline (backlog) and

revenue under contract reaching $14M and $6.2B respectively

Significant progress on major network & colo expansion projects

Strong bookings of $6.4M with attractive capital profile (average

payback of 12 months)

5

Zayo Vision & Mission

Vision: Amass fiber, data center, and structure assets and

unleash their value by providing exceptional communications

infrastructure services

Mission: Accelerate our customers’ capabilities to bring freedom

and prosperity to the world by providing enormous high-quality

bandwidth

FY2015 Q4 Earnings Presentation

Zayo at a Glance

6,938,000 fiber miles

87,273 route miles

1,867 employees

133 QBHC

Customers

6.7k customers

55% of rev from enterprise & content

45% carriers & wireless

Products

50% bandwidth infrastructure

48% cloud & connectivity

2% other

International Network Unique Metro Fiber Datacenters

Leading Fiber &

Datacenter Consolidator

34 acquisitions to date

6 since 2014

Track Record

24 consecutive quarters of sequential

revenue growth (all since reporting)2

$1.1B invested equity since 2007 inception

>$6.25B equity value today3; >5x return

6

Ou

r assets

W

hat

we d

o

Ou

r tr

ack r

eco

rd

45 zColo Datacenters

>500k billable sf

People

Financial1

$1.5B revenue

$862M adjusted EBITDA

Levered free cash flow 10% of revenue

$

1 September-15 quarter annualized 2 Including Zayo Group, LLC operating subsidiary 3 Based on last month average close price

18,528 buildings

152 avg metro fiber count


Q1 Segment & Product Split

7

% Revenue % EBITDA % of Adj.

UFCF

Dark Fiber Leased raw fiber

Mobile Infrastructure Tower/small cell backhaul

Interconnect-Oriented Colo

Space, power &

interconnects

Subtotal

Ph

ysic

al

Infr

as

tru

ctu

re

Wavelengths 1G, 2.5G, 10G & 100G

waves

Ethernet Switched & dedicated

service

IP Services Internet access & transit

SONET Legacy carrier-grade

service

Cloud Services Infrastructure-as-a-

Service

Subtotal

Clo

ud

& C

on

necti

vit

y

30% 37% 70%

7% 8% -39%

13% 11% 11%

50% 56% 42%

19% 16% 8%

11% 11% 20%

8% 8% 13%

6% 6% 15%

3% 2% 1%

48% 43% 56%

1 Based on quarter ended Sep-15 Physical Infrastructure & Cloud & Connectivity segment results; revenue from “Other” segment represents 2% of total revenue

1

8

8

$311 $353 $359

$10

$9 $8 $321

$362 $367

$0

$50

$100

$150

$200

$250

$300

$350

$400

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15

Recurring Other

($M) Revenue

Q1 Financial Highlights

98% of revenue is recurring

5% QoQ annualized total revenue growth

7% QoQ annualized recurring revenue growth

$176 $204 $211

$7

$7 $5 $183

$211 $215

58% 59% 58% 57% 59% 58% 58% 59%

$0

$50

$100

$150

$200

$250


($M)

Adjusted EBITDA

9% QoQ annualized total EBITDA growth

12% QoQ annualized recurring EBITDA growth

Associated with Other Revenue

Excluding Associated with Other Revenue

Adjusted EBITDA Margin

8

9

9

Q1 Financial Highlights Cont.

$105 $143 $150

$6

$8 $7

$4

$5 $3

$115

$156 $159

$0

$50

$100

$150

$200


Growth Maintenance Other

Purchases of Property & Equipment ($M)

Net AFFO (capturing churn replacement)

$63

$116 $127

26% 30% 24% 20% 26% 32% 32% 35%

$0

$50

$100

$150

$200


% of Revenue

Levered FCF ($M) ($M)

>90% of capex growth-related

net AFFO1 of $127M or 35% of revenue

$36M of quarterly levered free cash flow

($115) ($156)

($159)

118

195 195

$3 $39 $36

19% 24% 25% 1% -2% 11% 11% 10%

($250)

($150)

($50)

$50

$150

$250

$350


Purchases of PP&E Cash Flow From Operations LFCF

9

% of Revenue

2

1 Includes churn replacement capex plus ~2% implied growth 2 Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities

1

0

10

Q1 Operational Highlights

Net Installations

($M)

MR

R a

nd M

AR

MR

R a

nd M

AR

($3) ($3) ($3)

($1) ($1) ($1)

($3.9) ($4.0) ($3.8)

-1.4% -1.3% -1.3% -1.3% -1.2% -1.3% -1.2% -1.1%($7.0)

($6.0)

($5.0)

($4.0)

($3.0)

($2.0)

($1.0)

$0.0


Hard Disconnects

Upgrades / Price Decrease / Replacement

Churn % = $4 $5 $5

$1

$1 $1

$5.4

$6.3 $6.0

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0


Upgrades / Price Increase / Replacement

Installations from New Services

Gross Installations Churn Processed ($M)

$1.5

$2.2 $2.2

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0


MR

R a

nd M

AR

($M)

2nd highest gross install quarter at $6.0M

lowest churn % quarter in last 2 years

record net installs of $2.2M

net installs imply 8% annualized recurring

revenue growth rate1

10 1 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.24M * 4 = $8.96M), divided by the beginning of quarter run-rate $117.4M = 7.6%

1

1

11

Q1 Operational Highlights Cont.

$103.7 $117.4

$119.8

$0

$50

$100

$150


($M) Last day of quarter run-rate

(MRR+MAR)

8% QoQ annualized revenue run-rate growth

record service activation pipeline represents

12% of revenue run-rate

46 months average remaining contract term

$6.1 $6.3 $5.7

$5.1 $7.4 $8.4

$11.3

$13.7 $14.0

89 87 91 93 90 95 96 100

$0

$5

$10

$15

$20


Delivery date after 6 months

Delivery date within the next 6 months

Implied Average Days to Install

Service Activation Pipeline

11

($M)

1

2

12

$4.0 $4.5 $4.4

$1.4 $2.0 $1.7

$0.4

$0.3 $0.3

$5.8

$6.8 $6.4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0


<12 Month Payback and Positive IRR >12 Month Payback and Positive IRR

Speculative Projects

Q1 Operational Highlights Cont.

$545 $515 $404

($227) ($253)

($134)

16 17 16 35 15 38 33 12

($450)

($250)

($50)

$150

$350

$550

$750


Contract Value Capex & Upfront Expenditures Payback Months

Contract Value vs. Capex on Bookings

($M)

continued strong bookings:

$6.4M in bookings is 3rd highest in history

~70% of bookings have <12 month payback

<5% associated with speculative projects

total contract value associated with bookings is

greater than 3x the capex committed

average payback of 12 months reflecting

attractive capital profile

Bookings Stratification

MR

R a

nd

MA

R

($M)

12

1

3

13

Q1 Commercial Highlights

13

Strong quarter of on-net follow-on sales

strong and consistent ZCC bookings

momentum

lower capex, leveraging network deployed on

large ZPI projects

weighted towards smaller, on-net sales

ZCC Bookings

MR

R a

nd M

AR

($M)

ZPI Bookings

($M)

ZPI bookings of $2.6M have 10 month

average payback, reflecting strong on-net

sales and few large, long payback

projects MR

R a

nd

MA

R

$2.7

$3.6 $3.7

11 14 14 13 15 12 13 14

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0


Thousands

$2.9 $3.2

$2.6

21 21 18 62 17 67 59 10

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0


Thousands

Payback months=

Payback months=

1

4

14

Q1 Commercial Highlights Cont.

14

Fortune 500 customer sale leveraging existing metro footprint

customer replacing lit network with more scalable, higher bandwidth solution

leveraged existing dark fiber infrastructure, minimizing capex

Existing Fiber

New Build

Existing Conduit

Legend

1

5

15


15

UCHealth selects Zayo for holistic bandwidth infrastructure

comprehensive services, including colocation, waves and dark fiber

network enables technologically advanced delivery of healthcare, including real-time,

high-definition (HD) medicine

leverages existing Denver datacenters and dense (largely FTT funded) fiber footprint

Denver

Boulder

Ft. Collins

Colorado

Springs

1

6

16


16

customer needed a nationwide dedicated high-bandwidth network to support growing

business requirements

zayo leveraged existing 100G wave backbone to meet aggressive delivery schedule

Legend Existing 100G Route

Fortune 500 customer deployment of nationwide 6x100g Wavelengths

1

7

17

Organizational Changes

17

Reorganizing strategic & reporting segments

Strategic

product

groups – no

change

zColo

Mobile

Infrastructure

Group

current

reporting

segments Physical Infrastructure

Metro &

Intercity

Dark Fiber

Cloud & Connectivity

Waves Ethernet IP Cloud Sonet

new reporting

segments

starting

FY16Q2

Dark Fiber Solutions Dave Jones

Colocation & Cloud

Infrastructure Greg Friedman

Network Connectivity Max Clauson

co-COO Chris Morley will manage the 3 reporting segments

co-COO Matt Erickson will manage Global Sales and Customer Success 1

1 Includes sales, solutions engineering, strategic markets and alliances, IT, tranzact, customer service and security

1

8

18

Viatel Pending Acquisition

~7,500 km intercity dark fiber-capable network

transforms Zayo’s Frankfurt-London-

Amsterdam-Paris network from leased to

owned fiber

>900 km of metro fiber in 14 markets including

Germany

bandwidth infrastructure product mix

~€95M enterprise value reflects inherent

“asset value” and high pre-synergy multiple

(36x)

post-synergy multiple (10.5x) expected to be

realized rapidly

signed on Nov 10; expected close by Dec 31

Transforms Zayo into pan-European bandwidth infrastructure provider

Ken desGarennes Chief Financial Officer

19


Q1 Financial Results

20 1 Pro-forma annualized growth for revenue and Adjusted EBITDA are calculated as if the acquisitions occurred on the first day of the quarter preceding the respective quarter in which the acquisitions closed 2 Sep-15 EPS is based on 243.0 million weighted average shares outstanding for the quarter; 245.2 million shares were outstanding on 9/30/15

($ in millions)

September 30, December 31, March 31, June 30, September 30,2014 2014 2015 2015 2015

Revenue

Zayo Cloud & Connectivity 160.5 162.1 166.8 172.1 176.6Zayo Physical Infrastructure 154.0 156.4 168.2 183.8 183.7Other 6.1 5.4 5.7 6.0 6.5Corporate/Intercompany Elimination 0.0 0.0 (0.0) 0.0 0.0

Zayo Group Holdings Revenue $320.6 $323.9 $340.7 $361.9 $366.8

Annualized revenue growth 32% 4% 21% 25% 5%

Pro-forma annualized revenue growth 1 7% 4% 6% 5% 5%

Operating income/(loss) (39.5) 97.1 56.7 54.7 52.1 Net Earnings/(loss) (110.5) 3.8 (53.7) 5.1 (15.2)EPS (basic and diluted) 0.02 (0.22) 0.02 (0.06)

EBITDA

Zayo Cloud & Connectivity 83.2 85.7 87.3 88.4 93.1Zayo Physical Infrastructure 98.4 102.9 110.5 121.2 120.6Other 1.4 1.2 1.2 1.3 1.7Corporate/Intercompany Elimination (0.0) (0.0) 0.1 (0.0) (0.0)

Zayo Group Holdings Adjusted EBITDA $183.0 $189.7 $199.0 $210.9 $215.4

Annualized Adjusted EBITDA growth 28% 15% 20% 24% 9%

Pro-forma annualized Adjusted EBITDA growth 1 16% 15% 10% 7% 9%

Adjusted EBITDA margin 57% 59% 58% 58% 59%

Three Months Ended2


Equity: Waiver & Buyback

21

Stockholder agreement waiver

waive restrictions on remaining 156M

shares

minimize long-term overhang and multiple

friction events

82.5M of current pre-waiver restricted

shares held by post-2009 investors and

management

associated volatility may cause shares to be

undervalued

will take advantage of market conditions to

buy back shares

Size authorized $500M

Term Six Months

public float/

unrestricted

89.0M

currently

restricted

156.2M 82.5M

post-2009

investors &

management

73.7M

pre-2009

investors

Share repurchase program


$123 $23 $20

$20 $27

$123.1

$42.9 $46.1

($50)

($25)

$0

$25

$50

$75

$100

$125

$150


Pre-IPO Plan Post-IPO RSU Dilution % Range

Equity: Stock-Based Comp

22

Performance oriented stock-based compensation

post-IPO RSU plans based primarily

on measured equity IRR and share

price performance

pre-IPO plan non-dilutive to current

shares outstanding

($M)

Stock Based Compensation

0.2%-

0.8%

0.2%-

0.9%

N/A

N/A

N/A

N/A

0.1%-

1.0% 0.1%-

0.7%


$326

$1,643

$1,430

$350

$0

$1,000

$2,000

$3,000

$4,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Balance Sheet

6.375% 6.000% 10.125% L+275

ample liquidity including ~$440M of revolver capacity

$1.1B of net operating loss carry

forwards

23

($M)

Interest Rate

Debt Schedule1

4.4x gross leverage

>75% fixed rate incl. rate swap

>50% is unsecured

1 Principal value; excludes capital lease obligations

($ in millions) September 30, September 30,

2014 2015

Consolidated Balance Sheet Data

Cash and cash equivalents 167 346Property and equipment, net 2,896 3,349Total assets 4,974 6,166Long-term debt and capital lease

including current portion 3,177 3,704Total Stockholders' equity 294 1,244


Consolidation

24 Note: Acquisitions shown on the Calendar Year in which the transactions were closed

remain active & opportunistic

CY15 consistent with historical pace of

acquisitions – Viatel signed &

scheduled to close before year-end

focused on fiber and datacenter targets

targeting both North America & Europe

ample debt capacity for additional deals

34 closed acquisitions totaling $4.6 billion

signed, pending close

For detailed Supplemental Earnings Information presentation, please visit:

investors.zayo.com

Q&A

reconciliations

27

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, levered free cash flow, adjusted funds from operations, and net

adjusted funds from operations.

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. Adjusted unlevered free

cash flow is defined as Adjusted EBITDA minus 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 operating cash flow minus purchases of property and equipment, net of stimulus grants. Adjusted

funds from operations (“AFFO”) is defined as earnings/(loss) from continuing operations before depreciation and amortization, unrealized foreign currency

gains/(losses) on intercompany loans, stock-based compensation, acquisition or disposal-related transaction costs, losses on extinguishment of debt, non-cash

income/(loss) on equity and cost investments, non-cash monthly amortized revenue, less cash payments related to maintenance capital expenditures. Net AFFO

is defined as AFFO plus upfront customer payments from less than twelve month payback on net new sales less cash payments related to capital expenditures for

(i) less than twelve month payback on net new sales and (ii) network capacity. 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, and we use levered free cash flow as a measure to evaluate cash generated

through normal operating activities. 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 believe the presentation of AFFO and Net

AFFO is useful to investors by providing measures presented by certain datacenter and cellular tower REITs (and some non-REITs) with which we are sometimes compared.

27

28

Non-GAAP Financial Measures (cont.)

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 have limitations as analytical tools and should not be considered in isolation from, or as a

substitute for, analysis of our results as reported under GAAP. For example, 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, AFFO, and Net AFFO have 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, AFFO, and Net AFFO:

- 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.

28

29

Non-GAAP Financial Measures (cont.) Our computation of Adjusted EBITDA, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, AFFO, and Net AFFO 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 carryforwards, 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, AFFO, and Net AFFO to net

income/(loss) and for a quantitative reconciliation of unlevered free cash flow, adjusted unlevered free cash flow and levered free cash flow to net cash flows

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 such non-GAAP measures are included in the Historical Financial Data & Reconciliations section of this presentation. A glossary of terms used

throughout is available under the investor section of the Company’s website at http://www.zayo.com/investors.

29


Net (Loss)/Income to Adjusted EBITDA

30

($ in millions) Fiscal Year

2016

September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30,

2013 2013 2014 2014 Total 2014 2014 2015 2015 Total 2015

Net (loss)/income ($27.4) ($36.8) ($41.6) ($73.5) ($179.3) ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2)

Earnings/(loss) from discontinued operations (1.7) (0.8) (1.1) 1.3 (2.3) 0.0 0.0 0.0 0.0 0.0 0.0

Interest expense 51.5 50.3 49.1 52.6 203.5 46.9 53.4 60.7 53.0 214.0 53.8

Provision/(benefit) for income taxes 9.3 8.4 9.5 10.1 37.3 9.4 (4.4) (18.4) 4.6 (8.8) 2.7

Depreciation and amortization 81.0 81.7 84.2 91.3 338.2 96.0 96.9 100.1 113.2 406.2 117.1

Transaction costs 0.6 0.2 0.0 4.5 5.3 3.4 1.3 1.5 0.0 6.2 0.0

Stock-based compensation 42.9 57.0 65.2 88.6 253.7 123.1 (6.0) 40.7 42.9 200.7 46.1

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 1.9 0.0 30.9 54.9 8.5 94.3 0.0

Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) 14.7 13.3 13.2 (16.8) 24.4 10.7

Non-cash loss on investments 0.0 1.9 0.0 0.0 0.0 0.0 0.5 0.0 0.4 0.9 0.2

Adjusted EBITDA, from continuing operations $155.6 $161.7 $165.2 $171.1 $653.6 $183.0 $189.7 $199.0 $210.9 $782.6 $215.4

Purchases of property and equipment 86.7 88.3 90.9 94.9 360.8 115.3 129.5 130.1 155.5 530.4 159.2

Unlevered Free Cash Flow $68.9 $73.4 $74.3 $76.2 $292.8 $67.7 $60.2 $68.9 $55.4 $252.2 $56.2

Fiscal Year

2014

Fiscal Year

2015


Segment Data Reconciliation

31

Net (Loss)/Earnings to Adjusted EBITDA

($ in millions)

Zayo Physical

Infrastructure

Zayo Cloud

and

Connectivity Zayo Other

Corporate /

Intercompany

Elimination

Zayo Group

Holdings

Net earnings/(loss) ($13.0) $10.9 $1.2 ($14.3) ($15.2)

Interest expense 34.4 18.6 0.0 0.8 53.8

Benefit for income taxes 0.0 0.0 0.0 2.7 2.7

Depreciation and amortization expense 75.6 41.0 0.5 0.0 117.1

Transaction costs 0.0 0.0 0.0 0.0 0.0

Stock-based compensation 23.4 22.7 0.0 0.0 46.1

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 0.0

Foreign currency gain on intercompany loans 0.0 (0.1) 0.0 10.8 10.7

Non-cash loss on investments 0.2 0.0 0.0 0.0 0.2

Adjusted EBITDA $120.6 $93.1 $1.7 $0.0 $215.4

Three Months Ended September 30, 2015


Cash from Operating Activities to UFCF, Adjusted

UFCF & LFCF

32

($ in millions)Fiscal Year

2016


2013 2013 2014 2014 2014 2014 2015 2015 2015

Net cash provided by continuing operating activities: $97.1 $142.3 $159.0 $168.1 $118.2 $123.7 $168.5 $195.0 $195.2

Cash paid for income taxes 0.5 0.6 1.6 3.0 8.7 2.1 1.9 1.8 4.7

Cash paid for interest, net of capitalized interest 75.0 16.8 68.4 15.2 73.6 71.1 32.2 14.3 29.3

Non-liquidating distribution to common unit holders 0.0 10.0 3.0 9.1 0.0 0.0 0.0 0.0 0.0

Excess tax benefit from stock-based compensation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.9

Transaction costs 0.6 0.2 0.0 4.5 3.5 1.3 1.5 0.0 0.0

Provision for bad debts (0.4) (0.4) (0.8) (0.3) (0.6) (0.3) (0.4) (0.6) (0.6)

Additions to deferred revenue (24.0) (23.4) (65.2) (51.2) (43.2) (40.9) (39.5) (25.5) (49.7)

Amortization of deferred revenue 12.6 13.6 14.2 15.2 17.3 17.3 18.3 19.2 20.4

Other changes in operating assets and liabilities (5.8) 2.0 (15.0) 7.5 5.5 15.4 16.5 6.7 8.2

Adjusted EBITDA 155.6 161.7 165.2 171.1 183.0 189.7 199.0 210.9 215.4

Purchases of property and equipment (86.7) (88.3) (90.9) (94.9) (115.3) (129.5) (130.1) (155.5) (159.2)

Unlevered Free Cash Flow 68.9 73.4 74.3 76.2 67.7 60.2 68.9 55.4 56.2

Additions to deferred revenue 24.0 23.4 65.7 51.2 43.2 40.9 39.5 25.5 49.7

Amortization of deferred revenue (12.6) (13.6) (14.2) (15.2) (17.3) (17.3) (18.3) (19.2) (20.4)

Adjusted Unlevered Free Cash Flow $80.3 $83.2 $125.8 $112.2 $93.7 $83.8 $90.1 $61.7 $85.5

Reconciliation of levered free cash flow:

Net cash provided by continuing operating activities: $97.1 $142.3 $159.0 $168.1 $118.2 $123.7 $168.5 $195.0 $195.2

Purchases of property and equipment ($86.7) ($88.3) ($90.9) ($94.9) ($115.3) ($129.5) ($130.1) ($155.5) ($159.2)

Levered free cash flow: $10.4 $54.0 $68.1 $73.2 $2.9 ($5.8) $38.4 $39.5 $36.0

Fiscal Year

2014

Fiscal Year

2015


AFFO & Net AFFO Reconciliation

33

($ in millions)2016


2013 2013 2014 2014 Total 2014 2014 2015 2015 Total 2015

Earnings/(loss) from continuing operations ($29.1) ($37.6) ($42.7) ($72.2) ($181.6) ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2)

Depreciation and Amortization Expense $81.0 $81.7 $84.2 $91.3 $338.2 $96.0 $96.9 $100.1 $113.2 $406.2 $117.1

Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) 14.6 13.4 13.2 (16.8) 24.4 10.7

Stock-based compensation 42.9 57.0 65.2 88.5 253.6 123.1 (6.0) 40.7 42.9 200.7 46.1

Transaction costs 0.6 0.2 0.0 4.5 5.3 3.5 1.2 1.5 0.0 6.2 0.0

Loss on extinguishment of debt 0.0 1.9 0.0 0.0 1.9 0.0 30.9 54.9 8.5 94.3 0.0

Non-cash loss on investments 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.4 0.9 0.2

Amortization of deferred revenue (12.6) (13.6) (14.2) (15.2) (55.6) (17.3) (17.3) (18.3) (19.2) (72.1) (20.4)

Maintenance capital expenditures (5.1) (4.9) (4.9) (5.2) (20.1) (5.7) (5.7) (5.8) (7.5) (24.7) (7.0)

AFFO 77.2 84.5 87.5 87.9 337.0 103.7 117.7 132.6 126.6 480.6 131.5

Upfront customer payments on <12 mo payback of new sales 32.7 48.2 32.7 45.1 158.7 25.3 18.8 68.2 37.0 149.3 55.1

Capital expenditures for <12 mo payback net new sales (24.4) (44.1) (14.5) (39.4) (122.7) (45.4) (17.8) (50.6) (25.9) (139.7) (36.8)

Capital expenditures for network capacity (15.7) (17.4) (20.0) (23.8) (76.9) (20.6) (33.7) (42.7) (21.5) (118.5) (22.8)

Net AFFO $69.9 $71.2 $85.7 $69.8 $296.2 $63.0 $85.0 $107.5 $116.2 $371.7 $127.0

2014 2015

Earnings Call Presentation€¦ · Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Hard...

Documents

Transcript of Earnings Call Presentation€¦ · Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Hard...