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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________
FORM 10-Q
_______________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 001-36708
_______________________________________________________________
Uniti Group Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________________
Maryland46-5230630
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2101 Riverfront Drive, Suite A
Little Rock, Arkansas
72202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (501) 850-0820
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockUNITThe NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of April 26, 2024, the registrant had 240,257,455 shares of common stock, $0.0001 par value per share, outstanding.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities law. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: our expectations regarding the settlement we have entered into with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”); expectations regarding our potential Merger (as defined herein) with Windstream; the future prospects and financial health of Windstream; our expectations about our ability to maintain our status as a real estate investment trust (a “REIT”); our expectations regarding the refinancing of and interest expense on our new ABS Loan Facility; our expectations regarding the effect of tax-related legislation on our tax position; our expectations related to our ability to satisfy the requirements necessary to access the remaining capacity under our ABS Loan Facility (as defined below); our expectations regarding the future growth and demand of the telecommunication industry, future financing plans, business strategies, growth prospects, operating and financial performance, and our future liquidity needs and access to capital; expectations regarding future deployment of fiber strand miles and small cell networks and recognition of revenue related thereto; expectations regarding levels of capital expenditures; expectations regarding the deductibility of goodwill for tax purposes; expectations regarding reclassification of accumulated other comprehensive income (loss) related to derivatives to interest expense; expectations regarding the amortization of intangible assets; expectations regarding remediation of the material weakness in our internal control over financial reporting as discussed in Part I Item 4 of this Quarterly Report on Form 10-Q; and expectations regarding the payment of dividends.
Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:
the Company’s and Windstream’s ability to consummate our Merger with Windstream on the expected terms or according to the anticipated timeline;
the risk that the Merger Agreement (as defined herein) may be modified or terminated prior to its expiration, that the conditions to our Merger with Windstream may not be satisfied or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
the effect of the announcement of our Merger with Windstream on relationships with our customers, suppliers, vendors, employees and other stakeholders and our operating results and the operating results of Windstream;
the diversion of management’s time on issues related to our Merger with Windstream;
the risk that we fail to fully realize the potential benefits, expected synergies, efficiencies and cost savings from our Merger with Windstream within the expected time period (if all all);
legal proceedings that may be instituted against Uniti or Windstream following announcement of the Merger;
the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;
adverse impacts of inflation and higher interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets;
the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;
the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;
the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;
2

our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;
our ability to access debt and equity capital markets;
the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;
our ability to retain our key management personnel;
our ability to maintain our status as a REIT;
changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs;
covenants in our debt agreements that may limit our operational flexibility;
the possibility that we may experience equipment failures, natural disasters, cyber-attacks or terrorist attacks for which our insurance may not provide adequate coverage;
the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;
other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and
additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K filed with the SEC
on February 29, 2024, as amended by Amendment No. 1 and Amendment No. 2 thereto filed on Form 10-K/A with the SEC on March 26, 2024 and March 27, 2024, respectively as well as those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (the “SEC”).
Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.
3

Uniti Group Inc.
Table of Contents
Page
Uniti Group Inc.
4

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
5

Uniti Group Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Thousands, except par value)March 31, 2024December 31, 2023
Assets:
Property, plant and equipment, net$4,042,485 $3,982,069 
Cash and cash equivalents43,058 62,264 
Restricted cash and cash equivalents7,684  
Accounts receivable, net48,584 46,358 
Goodwill157,380 157,380 
Intangible assets, net297,689 305,115 
Straight-line revenue receivable96,659 90,988 
Operating lease right-of-use assets, net131,810 125,105 
Derivative asset1,845  
Other assets42,471 118,117 
Deferred income tax assets, net114,904 109,128 
Assets held for sale 28,605 
Total Assets$4,984,569 $5,025,129 
Liabilities and Shareholders' Deficit:  
Liabilities:  
Accounts payable, accrued expenses and other liabilities$90,039 $119,340 
Settlement payable (Note 12)141,043 163,583 
Intangible liabilities, net153,724 156,397 
Accrued interest payable51,797 133,683 
Deferred revenue1,227,454 1,273,661 
Dividends payable37,048 36,162 
Operating lease liabilities81,778 84,404 
Finance lease obligations18,473 18,110 
Notes and other debt, net5,660,696 5,523,579 
Liabilities held for sale 331 
Total liabilities7,462,052 7,509,250 
Commitments and contingencies (Note 12)
Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized; no shares issued and outstanding
  
Common stock, $0.0001 par value, 500,000 shares authorized; issued and outstanding: 237,309 shares at March 31, 2024 and 236,559 at December 31, 2023
24 24 
Additional paid-in capital1,223,983 1,221,824 
Accumulated other comprehensive loss(167) 
Distributions in excess of accumulated earnings(3,703,597)(3,708,240)
Total Uniti shareholders' deficit(2,479,757)(2,486,392)
Noncontrolling interests:  
Operating partnership units2,024 2,021 
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding
250 250 
Total shareholders' deficit(2,477,483)(2,484,121)
Total Liabilities and Shareholders' Deficit$4,984,569 $5,025,129 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Uniti Group Inc.
Condensed Consolidated Statements of Income (Loss)
(unaudited)
Three Months Ended March 31,
(Thousands, except per share data)20242023
Revenues:  
Revenue from rentals
Uniti Leasing$215,992 $209,643 
Uniti Fiber12,163 22,277 
Total revenue from rentals228,155 231,920 
Service revenues
Uniti Leasing1,629 1,165 
Uniti Fiber56,634 56,737 
Total service revenues58,263 57,902 
Total revenues286,418 289,822 
Costs and Expenses:
Interest expense, net123,211 148,863 
Depreciation and amortization77,485 76,775 
General and administrative expense28,133 28,433 
Operating expense (exclusive of depreciation and amortization)35,198 35,068 
Transaction related and other costs5,687 2,788 
Gain on sale of real estate(18,999) 
Other (income) expense, net(282)20,179 
Total costs and expenses250,433 312,106 
  
Income (loss) before income taxes and equity in earnings from unconsolidated entities35,985 (22,284)
Income tax benefit(5,363)(2,412)
Equity in earnings from unconsolidated entities (661)
Net income (loss)41,348 (19,211)
Net income (loss) attributable to noncontrolling interests19 (9)
Net income (loss) attributable to shareholders41,329 (19,202)
Participating securities' share in earnings(436)(247)
Dividends declared on convertible preferred stock(5)(5)
Net income (loss) attributable to common shareholders$40,888 $(19,454)
Income (loss) per common share:
Basic$0.17 $(0.08)
Diluted$0.16 $(0.08)
Weighted-average number of common shares outstanding:
Basic236,901 236,090 
Diluted292,407 236,090 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Uniti Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
Three Months Ended March 31,
(Thousands)20242023
Net income (loss)$41,348 $(19,211)
Other comprehensive income (loss):
Change in fair value of derivative asset(355) 
Interest rate cap amortization188  
Other comprehensive loss(167) 
Comprehensive income (loss)41,181 (19,211)
Comprehensive income (loss) attributable to noncontrolling interest19 (9)
Comprehensive income (loss) attributable to shareholders$41,162 $(19,202)
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Uniti Group Inc.
Condensed Consolidated Statements of Shareholders’ Deficit
(unaudited)
For the three months ended March 31,
(Thousands, except share data)Preferred StockCommon StockAdditional Paid-in
Capital
Accumulated Other
Comprehensive
Loss
Distributions in
Excess of
Accumulated
Earnings
Noncontrolling
Interest - OP Units
Noncontrolling
Interest - Non-
voting Preferred
Shares
Total Shareholders'
Deficit
SharesAmountSharesAmount
Balance at December 31, 2022 $ 235,829,485 $24 $1,210,033 $ $(3,483,634)$2,121 $250 $(2,271,206)
Net loss— — — — — — (19,202)(9)— (19,211)
Common stock dividends declared ($0.15 per share)
— — — — — — (35,847)— — (35,847)
Distributions to noncontrolling interest declared— — — — — — — (15)— (15)
Payments for settlement of common stock warrant— — — — (56)— — — — (56)
Termination of bond hedge option59 (1,343)
Payments related to tax withholding for stock-based compensation(1,343)3,130 
Stock-based compensation— — 530,861 — 3,130 — — — — 59 
Issuance of common stock - employee stock purchase plan— — 66,904 — 314 — — — — 314 
Balance at March 31 2023 $ 236,427,250 $24 $1,212,137 $ $(3,538,683)$2,097 $250 $(2,324,175)
Balance at December 31, 2023 $ 236,558,601 $24 $1,221,824 $ $(3,708,240)$2,021 $250 $(2,484,121)
Net income— — — — — — 41,329 19 — 41,348 
Other comprehensive loss— — — — — (167)— — — (167)
Common stock dividends declared ($0.15 per share)
— — — — — — (36,686)— — (36,686)
Distributions to noncontrolling interest declared— — — — — — — (16)— (16)
Payments related to tax withholding for stock-based compensation— — — — (1,515)— — — — (1,515)
Stock-based compensation— — 667,051 — 3,348 — — — — 3,348 
Issuance of common stock - employee stock purchase plan— — 83,047 — 326 — — — — 326 
Balance at March 31, 2024 $ 237,308,699 $24 $1,223,983 (167)$(3,703,597)$2,024 $250 $(2,477,483)
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Uniti Group Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Three Months Ended March 31,
(Thousands)20242023
Cash flow from operating activities    
Net income (loss) $41,348  $(19,211)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation and amortization 77,485  76,775 
Amortization of deferred financing costs and debt discount 5,035  4,963 
Loss on extinguishment of debt, net 31,187 
Interest rate cap amortization 188   
Deferred income taxes (5,776) (2,754)
Equity in earnings of unconsolidated entities   (661)
Distributions of cumulative earnings from unconsolidated entities   980 
Cash paid for interest rate cap (2,200)  
Straight-line revenues and amortization of below-market lease intangibles (8,822) (9,427)
Stock-based compensation 3,348  3,130 
Loss (gain) on asset disposals 228  (422)
Gain on sale of real estate(18,999) 
Accretion of settlement obligation 1,965  3,017 
Other 20   
Changes in assets and liabilities:   
Accounts receivable (2,226) (10,963)
Other assets 1,139  6,553 
Accounts payable, accrued expenses and other liabilities (86,543) (68,605)
Net cash provided by operating activities 6,190  14,562 
Cash flow from investing activities    
Capital expenditures (167,939) (114,981)
Proceeds from sale of other equipment341 607 
Proceeds from sale of real estate40,011  
Proceeds from sale of unconsolidated entity40,000  
Net cash used in investing activities (87,587) (114,374)
Cash flow from financing activities    
Repayment of debt   (2,263,662)
Proceeds from issuance of notes   2,600,000 
Dividends paid (35,800) (9)
Payments of settlement payable (24,505) (24,505)
Borrowings under revolving credit facility 80,000  140,000 
Payments under revolving credit facility (215,000) (253,000)
Proceeds from ABS Loan Facility275,000  
Finance lease payments (696) (452)
Payments for financing costs (7,919)(26,688)
Payment for settlement of common stock warrant (56)
Termination of bond hedge option 59 
Costs related to the early repayment of debt (44,303)
Distributions paid to noncontrolling interests(16) 
Employee stock purchase program 326  314 
Payments related to tax withholding for stock-based compensation (1,515) (1,343)
9

Net cash provided by financing activities 69,875  126,355 
Net (decrease) increase in cash, restricted cash and cash equivalents (11,522) 26,543 
Cash, restricted cash and cash equivalents at beginning of period 62,264  43,803 
Cash, restricted cash and cash equivalents at end of period $50,742  $70,346 
     
Non-cash investing and financing activities:    
Property and equipment acquired but not yet paid $9,009  $13,049 
Tenant capital improvements $66,082  $81,592 
The accompanying notes are an integral part of these condensed consolidated financial statements.
10

Uniti Group Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization and Description of Business
Uniti Group Inc. (the “Company,” “Uniti,” “we,” “us,” or “our”) was incorporated in the state of Maryland on September 4, 2014. We are an independent internally managed real estate investment trust (“REIT”) engaged in the acquisition, construction and leasing of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data centers. We manage our operations focused on our two primary lines of business: Uniti Fiber and Uniti Leasing.
The Company operates through a customary “up-REIT” structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”) that we control as general partner. The up-REIT structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of March 31, 2024, we are the sole general partner of the Operating Partnership and own approximately 99.96% of the partnership interests in the Operating Partnership.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and/or controlled subsidiaries, including the Operating Partnership. Under the Accounting Standards Codification 810, Consolidation (“ASC 810”), the Operating Partnership is considered a variable interest entity and is consolidated in the Condensed Consolidated Financial Statements of Uniti Group Inc. because the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.
ASC 810 provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 29, 2024, as amended by Amendment No. 1 and Amendment No. 2 thereto filed on Form 10-K/A with the SEC on March 26, 2024 and March 27, 2024, respectively (the “Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our Annual Report.
Restricted Cash and Cash Equivalents—Restricted cash and cash equivalents represent funds that are restricted for an obligation under the ABS Loan Facility (Note 9) to maintain three months of interest and other expenses.
11

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents within the Condensed Consolidated Balance Sheets to the total cash and cash equivalents and restricted cash and cash equivalents within the Condensed Consolidated Statements of Cash Flows.
(Thousands)Mar 31, 2024Dec 31, 2023
Cash and cash equivalents$43,058 $62,264 
Restricted cash and cash equivalents7,684  
Cash, restricted cash and cash equivalents at end of period$50,742 $62,264 
Concentration of Credit Risks—Prior to September 2020, we were party to a long-term exclusive triple-net lease (the “Master Lease”) with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which a substantial portion of our real property was leased to Windstream and from which a substantial portion of our leasing revenues were derived. On September 18, 2020, Uniti and Windstream bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. The Windstream Leases consist of (a) a master lease (the "ILEC MLA") that governs Uniti owned assets used for Windstream's incumbent local exchange carrier ("ILEC") operations and (b) a master lease (the "CLEC MLA") that governs Uniti owned assets used for Windstream's consumer competitive local exchange carrier ("CLEC") operations. Revenue under the Windstream Leases provided 68.8% and 66.0% of our revenue for the three months ended March 31, 2024 and 2023, respectively. Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to pay dividends and service debt if Windstream were to default under the Windstream Leases or otherwise experiences operating or liquidity difficulties and becomes unable to generate sufficient cash to make payments to us.
We monitor the credit quality of Windstream through numerous methods, including by (i) reviewing credit ratings of Windstream by nationally recognized credit agencies, (ii) reviewing the financial statements of Windstream that are required to be delivered to us pursuant to the Windstream Leases, (iii) monitoring news reports regarding Windstream and its business, (iv) conducting research to ascertain industry trends potentially affecting Windstream, (v) monitoring Windstream’s compliance with the terms of the Windstream Leases and (vi) monitoring the timeliness of its payments under the Windstream Leases.
As of the date of this Quarterly Report on Form 10-Q, Windstream is current on all lease payments. We note that in August 2020, Moody’s Investor Service assigned a B3 corporate family rating with a stable outlook to Windstream in connection with its post-emergence exit financing. At the same time, S&P Global Ratings assigned Windstream a B- issuer rating with a stable outlook. Both ratings remain current as of the date of this filing. In order to assist us in our continuing assessment of Windstream’s creditworthiness, we periodically receive certain confidential financial information and metrics from Windstream.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires incremental disclosures related to reportable segments. Specifically, the ASU requires disclosure of significant segment expense categories and amounts for each reportable segment. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it will have on our financial statements.
12

Note 3. Revenues
Disaggregation of Revenue
The following table presents our revenues disaggregated by revenue stream.
Three Months Ended
March 31,
(Thousands)20242023
Revenue disaggregated by revenue stream
Revenue from contracts with customers
Uniti Fiber
Lit backhaul$17,722 $19,522 
Enterprise and wholesale26,893 22,576 
E-Rate and government11,144 13,891 
Other875 748 
Uniti Fiber$56,634 $56,737 
Uniti Leasing1,629 1,165 
Total revenue from contracts with customers58,263 57,902 
Revenue accounted for under leasing guidance  
Uniti Leasing215,992 209,643 
Uniti Fiber12,163 22,277 
Total revenue accounted for under leasing guidance228,155 231,920 
Total revenue$286,418 $289,822 
At March 31, 2024 and December 31, 2023, lease receivables were $24.2 million and $22.0 million, respectively, and receivables from contracts with customers were $21.1 million and $18.8 million, respectively.
Contract Assets (Unbilled Revenue) and Liabilities (Deferred Revenue)
Contract assets primarily consist of unbilled construction revenue where we are utilizing our costs incurred as the measure of progress of satisfying our performance obligation. Contract assets are reported within accounts receivable, net on our Condensed Consolidated Balance Sheets. When the contract price is invoiced, the related unbilled receivable is reclassified to trade accounts receivable, where the balance will be settled upon the collection of the invoiced amount. Contract liabilities are generally comprised of upfront fees charged to the customer for the cost of establishing the necessary components of the Company’s network prior to the commencement of use by the customer. Fees charged to customers for the recurring use of the Company’s network are recognized during the related periods of service. Upfront fees that are billed in advance of providing services are deferred until such time the customer accepts the Company’s network and then are recognized as service revenues ratably over a period in which substantive services required under the revenue arrangement are expected to be performed, which is the initial term of the arrangement. During the three months ended March 31, 2024, we recognized revenues of $1.3 million which were included in the December 31, 2023 contract liabilities balance.
The following table provides information about contract assets and contract liabilities accounted for under ASC 606.
(Thousands)Contract AssetsContract Liabilities
Balance at December 31, 2023$26 $11,109 
Balance at March 31, 2024$68 $9,478 
13

Transaction Price Allocated to Remaining Performance Obligations
Performance obligations within contracts to stand ready to provide services are typically satisfied over time or as those services are provided. Contract liabilities primarily relate to deferred revenue from upfront customer payments. The deferred revenue is recognized, and the liability reduced, over the contract term as the Company completes the performance obligation. As of March 31, 2024, our future revenues (i.e., transaction price related to remaining performance obligations) under contract accounted for under ASC 606 totaled $627.1 million, of which $564.6 million is related to contracts that are currently being invoiced and have an average remaining contract term of 3.3 years, while $62.5 million represents our backlog for sales bookings which have yet to be installed and have an average contract term of 5.0 years. We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.
Note 4. Leases
Lessor Accounting
We lease communications towers, ground space, colocation space and dark fiber to tenants under operating leases. Our leases have initial lease terms ranging from less than one year to 35 years, most of which include options to extend or renew the leases for less than one year to 20 years (based on the satisfaction of certain conditions as defined in the lease agreements), and some of which may include options to terminate the leases within one to six months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.
The components of lease income for the three months ended March 31, 2024 and 2023 respectively, are as follows:
Three Months Ended March 31,
(Thousands)20242023
Lease income - operating leases$228,155 $231,920 
Lease payments to be received under non-cancellable operating leases where we are the lessor for the remainder of the lease terms as of March 31, 2024 are as follows:
(Thousands)March 31, 2024⁽¹⁾
2024$602,886 
2025823,403 
2026826,155 
2027827,029 
2028827,652 
Thereafter1,535,465 
Total lease receivables$5,442,590 
(1) Total future minimum lease payments to be received include $4.6 billion relating to the Windstream Leases.
14

The underlying assets under operating leases where we are the lessor are summarized as follows:
(Thousands)March 31, 2024December 31, 2023
Land$26,519 $26,533 
Building and improvements348,391 347,700 
Poles320,351 314,488 
Fiber3,950,464 3,862,635 
Equipment437 436 
Copper3,978,023 3,974,410 
Conduit90,117 90,087 
Tower assets58 58 
Finance lease assets1,890 1,890 
Other assets10,434 10,434 
8,726,684 8,628,671 
Less: accumulated depreciation(5,735,435)(5,690,066)
Underlying assets under operating leases, net$2,991,249 $2,938,605 
Depreciation expense for the underlying assets under operating leases where we are the lessor for the three months ended March 31, 2024 and 2023, respectively, is summarized as follows:
Three Months Ended March 31,
(Thousands)20242023
Depreciation expense for underlying assets under operating leases$46,005 $45,206 
Lessee Accounting
We have commitments under operating leases for communications towers, ground space, colocation space, dark fiber and buildings. We also have finance leases for dark fiber and automobiles. Our leases have initial lease terms ranging from less than one year to 30 years, most of which include options to extend or renew the leases for less than one year to 20 years, and some of which may include options to terminate the leases within one to six months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.
As of March 31, 2024, we have short term lease commitments amounting to approximately $4.0 million.
Future lease payments under non-cancellable leases as of March 31, 2024 are as follows:
(Thousands)Operating Leases Finance Leases
2024$13,600 $3,013 
202516,689 4,011 
202613,172 3,885 
202710,377 3,178 
20288,764 2,460 
Thereafter98,861 9,613 
Total undiscounted lease payments$161,463 $26,160 
Less: imputed interest(79,685)(7,687)
Total lease liabilities$81,778 $18,473 
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Note 5. Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements, establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring assets and liabilities at fair values. This hierarchy establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the assessment date;
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3 – Unobservable inputs for the asset or liability.
Our financial instruments consist of cash and cash equivalents, accounts and other receivables, our outstanding notes and other debt, settlement payable, interest and dividends payable.
The following table summarizes the fair value of our financial instruments at March 31, 2024 and December 31, 2023:
(Thousands)Total
Quoted Prices in Active
Markets
(Level 1)
Prices with Other Observable
Inputs
(Level 2)
Prices with Unobservable
Inputs (Level 3)
At March 31, 2024    
Assets
Derivative asset$1,845 $ $1,845 $ 
Total$1,845 $ $1,845 $ 
Liabilities    
Senior secured notes - 10.50%, due February 15, 2028
$2,696,343 $ $2,696,343 $ 
Senior secured notes - 4.75%, due April 15, 2028
497,682  497,682  
Senior unsecured notes - 6.50%, due February 15, 2029
859,509  859,509  
Senior unsecured notes - 6.00%, due January 15, 2030
521,677  521,677  
Exchangeable senior notes - 4.00%, due June 15, 2024
122,346  122,346  
Convertible senior notes - 7.50% due December 1, 2027
319,440  319,440  
ABS Loan Facility, variable rate, due September 1, 2025
273,625 273,625 
Senior secured revolving credit facility, variable rate, due September 24, 2027
72,993  72,993  
Settlement payable140,500  140,500  
Total$5,504,115 $ $5,504,115 $ 
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(Thousands)Total
Quoted Prices in Active
Markets
(Level 1)
Prices with Other Observable
Inputs
(Level 2)
Prices with Unobservable
Inputs (Level 3)
At December 31, 2023
Liabilities
Senior secured notes - 7.875%, due February 15, 2025
$2,624,596 $ $2,624,596 $ 
Senior secured notes - 4.75%, due April 15, 2028
488,205  488,205  
Senior unsecured notes - 6.50% , due February 15, 2029
796,125  796,125  
Senior unsecured notes - 6.00%, due January 15, 2030
486,675  486,675  
Exchangeable senior notes - 4.00%, due June 15, 2024
122,140  122,140 
Convertible senior notes - 7.50%, due December 1, 2027
301,755 301,755 
Senior secured revolving credit facility, variable rate, due December 10, 2024
207,979  207,979  
Settlement payable160,550  160,550  
Total$5,188,025 $ $5,188,025 $ 
The carrying value of cash and cash equivalents, accounts and other receivables, and accounts, interest and dividends payable approximate fair values due to the short-term nature of these financial instruments.
The total principal balance of our outstanding notes and other debt was $5.76 billion at March 31, 2024, with a fair value of $5.36 billion. The estimated fair value of our outstanding notes and other debt was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.
Uniti is required to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive quarters beginning October 2020 (the “Settlement Payable”). See Note 12. The Settlement Payable was initially recorded at fair value, using the present value of future cash flows. The future cash flows are discounted using discount rate input based on observable market data. Accordingly, we classify inputs used as Level 2 in the fair value hierarchy. As of March 31, 2024, the remaining Settlement Payable is $141.0 million and is reported on our Condensed Consolidated Balance Sheets. There have been no changes in the valuation methodologies used since the initial recording.
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Note 6. Property, Plant and Equipment
The carrying value of property, plant and equipment is as follows:
(Thousands)Depreciable Lives March 31, 2024December 31, 2023
LandIndefinite $30,080 $30,099 
Building and improvements
3 - 40 years
368,865 366,490 
Poles30 years320,351 314,489 
Fiber30 years4,941,964 4,835,623 
Equipment
5 - 7 years
466,727 460,463 
Copper20 years3,978,023 3,974,410 
Conduit30 years90,117 90,087 
Tower assets20 years1,221 1,221 
Finance lease assets(1)53,590 52,589 
Other assets
15 - 20 years
10,358 10,436 
Corporate assets
3 - 7 years
16,002 15,731 
Construction in progress(1)50,861 49,771 
10,328,159 10,201,409 
Less accumulated depreciation(6,285,674)(6,219,340)
Net property, plant and equipment$4,042,485 $3,982,069 
(1) See our Annual Report for property, plant and equipment accounting policies.
Depreciation expense for the three months ended March 31, 2024 and 2023 was $70.1 million and $69.3 million, respectively.
CableSouth Transaction
In 2018, we acquired certain fiber assets from CableSouth Media, LLC (“CableSouth”) and leased back certain of those acquired assets to CableSouth pursuant to a triple-net lease.

During the fourth quarter of 2023, the Company entered into an agreement with a fund managed by Macquarie Asset Management ("MAM") pursuant to which MAM would make a structured equity investment into CableSouth in order to assist CableSouth in the acquisition of all of our previously acquired CableSouth fiber assets and the buyout of their triple-net lease for cash consideration of $40.0 million (the "CableSouth Transaction"). The Company completed the CableSouth Transaction on January 31, 2024 and recorded a $19 million gain on sale of real estate in our Condensed Consolidated Statements of Income (Loss).

The CableSouth Transaction is included in the results of the Uniti Leasing segment, and because the sale does not represent a strategic shift that will have a major effect on operations and financial results, it does not qualify for presentation as a discontinued operation.
Note 7. Derivative Instruments and Hedging Activities

The Company uses derivative instruments to mitigate the effects of interest rate volatility inherent in our variable rate debt, which could unfavorably impact our future earnings and forecasted cash flows. The Company does not use derivative instruments for speculative or trading purposes.
On March 1, 2024, the Company entered into an interest rate cap agreement (the "ABS Loan Interest Rate Cap") related to the ABS Loan Facility (as defined in Note 9). This interest rate cap was designated as a cash flow hedge, has a notional value of $275.0 million, and effectively caps the 1-month term secured overnight financing rate ("SOFR ") at 4.50%.

The following table presents the fair value of the Company’s derivatives designated as hedging instruments as of March 31, 2024 and March 31, 2023:

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(Thousands)Location on Condensed Consolidated Balance SheetsMarch 31, 2024December 31, 2023
Interest rate capsDerivative asset$1,845 $ 

The following table presents the effects of the Company’s derivative financial instrument on the Condensed Consolidated Statements of Income (Loss) for the periods presented:

(Thousands)Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Caps)20242023
Amount of gain (loss) recognized on derivative in Other Comprehensive Income$(163)$ 
Amount of gain (loss) reclassified from Accumulated Other Comprehensive Income into Interest Expense$4 $ 
Total Amount of Interest Expense Presented in the Consolidated Income Statements$123,211 $148,863 

The company estimates that an additional $0.4 million will be reclassified from accumulated other comprehensive income as a decrease to interest expense over the next twelve months.

Exchangeable Notes Hedge Transactions
On June 25, 2019, concurrently with the pricing of the 4.00% Exchangeable Notes due June 15, 2024 (the "Exchangeable Notes"), and on June 27, 2019, concurrently with the exercise by the initial purchasers involved in the offering of the Exchangeable Notes (the “Initial Purchasers”) of their option to purchase additional Exchangeable Notes, Uniti Fiber Holdings Inc., the issuer of the Exchangeable Notes, entered into exchangeable note hedge transactions with respect to the Company’s common stock (the “Note Hedge Transactions”) with certain of the Initial Purchasers or their respective affiliates (collectively, the “Counterparties”). The Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of the Company’s common stock that initially underlie the Exchangeable Notes in the aggregate and are exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions have an initial strike price that corresponds to the initial exchange price of the Exchangeable Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are intended to reduce potential dilution to the Company’s common stock upon any exchange of the Exchangeable Notes and/or offset any cash payments Uniti Fiber is required to make in excess of the principal amount of exchanged Exchangeable Notes, as the case may be, in the event that the market value per share of the Company’s common stock, as measured under the Note Hedge Transactions, at the time of exercise is greater than the strike price of the Note Hedge Transactions.
The Note Hedge Transactions are separate transactions, entered into by Uniti Fiber Holdings Inc. with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Note Hedge Transactions. The Note Hedge Transactions meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.
Warrant Transactions
On June 25, 2019, concurrently with the pricing of the Exchangeable Notes, and on June 27, 2019 concurrently with the exercise by the Initial Purchasers of their option to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 27.8 million shares of the Company’s common stock in the aggregate at an exercise price of approximately $16.42 per share. The initial maximum number of shares of the Company’s common stock that could be issued pursuant to the Warrants was approximately 55.5 million. The maximum number of shares of the Company's common stock that could be issued pursuant to the Warrants has subsequently decreased due to the partial unwind agreements that the Company entered into with the Counterparties in connection with each repurchase of Exchangeable Notes. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. If the market value per share of the Company’s common stock, as measured under the Warrants, at the time of exercise exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on the Company’s common stock unless, subject to the terms of the Warrants, the Company elects to cash settle the Warrants. The Warrants will expire over a period beginning in September 2024.
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The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Warrants. The Warrants meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.

Capped Call Transactions
On December 7, 2022, in connection with the pricing of the 7.50% Convertible 2027 Notes due December 1, 2027 (the "Convertible 2027 Notes"), the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institutions at a cost of $21.1 million. The Capped Calls cover the same number of shares of the Company’s common stock that initially underlie the Convertible 2027 Notes in the aggregate. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event a conversion of the Convertible 2027 Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the Convertible 2027 Notes its common stock price exceeds the conversion price of the Convertible 2027 Notes. The cap price of the Capped Calls will initially be $10.63 per share of common stock, which represents a premium of 75% over the last reported sale price of the Company’s common stock of $6.075 per share on December 7, 2022 and is subject to customary anti-dilution adjustments substantially similar to those applicable to the Convertible 2027 Notes. The Company used approximately $21.1 million of the net proceeds from the offering of the Convertible 2027 Notes to pay for the cost of the Capped Calls. The Capped Calls meet the criteria for classification in equity, are not remeasured each reporting period and are included as a reduction to additional paid-in-capital within stockholders’ equity.

Additionally on December 7, 2022, in connection with the Company’s repurchase of the Exchangeable Notes, the Company entered into partial unwind agreements (the “Unwind Agreements”) with the Counterparties to unwind a portion of the Note Hedge Transactions and the Warrants described above (collectively, the “Unwind Transactions”). In connection with the Unwind Transactions, the Company received cash as a termination payment for the portion of the Note Hedge Transactions that were unwound, and the Company delivered cash as a termination payment in respect of the portion of the Warrants that were unwound. The amount of cash that was received, which was approximately $1.2 million, and the amount of cash that was delivered to the Counterparties, which was approximately $0.5 million, were based generally on the termination values of the unwound portions of such instruments.
Note 8. Goodwill and Intangible Assets and Liabilities
Changes in the carrying amount of goodwill occurring during the three months ended March 31, 2024 are as follows:
(Thousands)Uniti FiberTotal
Goodwill at December 31, 2023$672,878 $672,878 
Accumulated impairment charges as of December 31, 2023(515,498)(515,498)
Balance at December 31, 2023$157,380 $157,380 
Goodwill at March 31, 2024$672,878 $672,878 
Accumulated impairment charges as of March 31, 2024(515,498)(515,498)
Balance at March 31, 2024$157,380 $157,380 
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(Thousands)March 31, 2024December 31, 2023
Original
Cost
Accumulated
Amortization
Original
Cost
Accumulated
Amortization
Finite life intangible assets:
Customer lists$416,104 $(157,238)$416,104 $(151,542)
Contracts52,536 (22,984)52,536 (21,343)
Underlying Rights10,496 (1,225)10,497 (1,137)
    
Total intangible assets$479,136  $479,137  
Less: accumulated amortization(181,447) (174,022) 
Total intangible assets, net$297,689  $305,115  
    
Finite life intangible liabilities:    
Below-market leases$191,154 $(37,430)$191,154 $(34,757)
    
Finite life intangible liabilities:    
Below-market leases$191,154  $191,154  
Less: accumulated amortization(37,430) (34,757) 
Total intangible liabilities, net$153,724  $156,397  
As of March 31, 2024, the remaining weighted average amortization period of the Company’s intangible assets was 13.8 years, 4.5 years, and 26.5 years for customer lists, contracts, and underlying assets, respectively. As of March 31, 2024, the total remaining weighted average amortization period for total intangible assets was 13.3 years.
Amortization expense for the three months ended March 31, 2024 and 2023 was $7.4 million and $7.4 million, respectively. Amortization expense is estimated to be $29.7 million for the full year of 2024, $29.7 million in 2025, $29.7 million in 2026, $29.7 million in 2027, and $28.1 million for 2028.
We recognize the amortization of below-market leases in revenue. Revenue related to the amortization of the below-market leases for the three months ended March 31, 2024 and 2023 was $2.7 million and $2.7 million, respectively. As of March 31, 2024, the remaining weighted average amortization period of the Company’s intangible liabilities was 15.8 years. Revenue due to the amortization of the below-market leases is estimated to be $10.7 million for the full year of 2024, $10.7 million in 2025, $10.7 million in 2026, $10.7 million in 2027, and $10.2 million in 2028.
Note 9. Notes and Other Debt
All debt, including the senior secured credit facility and notes described below, are obligations of the Operating Partnership and/or certain of its subsidiaries as discussed below. The Company is, however, a guarantor of such debt.
Notes and other debt are as follows:
(Thousands)March 31, 2024December 31, 2023
Principal amount$5,757,442 $5,617,442 
Less unamortized discount, premium and debt issuance costs(96,746)(93,863)
Notes and other debt less unamortized discount, premium and debt issuance costs$5,660,696 $5,523,579 
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Notes and other debt at March 31, 2024 and December 31, 2023 consisted of the following:
March 31, 2024December 31, 2023
(Thousands)Principal
Unamortized
Discount,
Premium and
Debt Issuance
Costs
Principal
Unamortized
Discount,
Premium and
Debt Issuance
Costs
Senior secured notes - 10.50% due February 15, 2028
(discount is based on imputed interest rate of 11.06%)
$2,600,000 $(45,946)$2,600,000 $(48,290)
Senior secured notes - 4.75%, due April 15, 2028
(discount is based on imputed interest rate of 5.04%)
570,000 (6,026)570,000 (6,360)
Senior unsecured notes - 6.50%, due February 15, 2029
(discount is based on imputed interest rate of 6.83%)
1,110,000 (15,113)1,110,000 (15,761)
Senior unsecured notes - 6.00% due January 15, 2030
(discount is based on imputed interest rate of 6.27%)
700,000 (8,988)700,000 (9,307)
Exchangeable senior notes - 4.00%, due June 15, 2024
(discount is based on imputed interest rate of 4.77%)
122,942 (195)122,942 (427)
Convertible senior notes - 7.50%, due December 1, 2027
(discount is based on imputed interest rate of 8.29%)
306,500 (7,652)306,500 (8,092)
ABS Loan Facility, variable rate, due September 1, 2025
275,000 (7,510)  
Senior secured revolving credit facility, variable rate, due September 24, 2027
73,000 (5,316)208,000 (5,625)
Total$5,757,442 $(96,746)$5,617,442 $(93,863)
At March 31, 2024, notes and other debt included the following: (i) $73.0 million under the Revolving Credit Facility (as defined below) pursuant to that certain credit agreement, dated as of April 24, 2015, by and among the Operating Partnership, Uniti Group Finance 2019 Inc. and CSL Capital, LLC (hereinafter, the “Borrowers”), the guarantors party thereto, Bank of America, N.A., as administrative agent, collateral agent, swing line lender and an L/C issuer and certain other lenders named therein, as amended (the “Credit Agreement”); (ii) $275.0 million under the bridge loan and security agreement (the "ABS Loan Agreement"), a multi-draw term loan facility dated February 23, 2024, entered into by and among Uniti Fiber Bridge Borrower LLC (the “ABS Bridge Borrower”), Uniti Fiber Bridge HoldCo LLC and Uniti Fiber GulfCo LLC (together, the “ABS Bridge Loan Parties”), each an indirect subsidiary of the Company, Wilmington Trust, National Association, as administrative agent, collateral agent, account bank and verification agent, Barclays Bank PLC, as facility agent, and the lenders identified therein; (iii) $2.6 billion aggregate principal amount of 10.50% Senior Secured Notes due February 15, 2028 (the “February 2028 Secured Notes”); (iv) $570.0 million aggregate principal amount of 4.75% Senior Secured Notes due April 15, 2028 (the “April 2028 Secured Notes”); (v) $1.1 billion aggregate principal amount of 6.50% Senior Unsecured Notes due February 15, 2029 (the “2029 Notes”); (vi) $122.9 million aggregate principal amount of the Exchangeable Notes; (vii) $700.0 million aggregate principal amount of 6.00% Senior Secured Notes due January 15, 2030 (the “2030 Notes”); and (viii) $306.5 million aggregate principal amount of Convertible 2027 Notes and, together with the February 2028 Secured Notes, April 2028 Secured Notes, 2029 Notes, 2030 Notes and the Exchangeable Notes, the "Notes"). The terms of the Notes are as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Credit Agreement
The Borrowers are party to the Credit Agreement, which provides for a $500 million revolving credit facility that will mature on September 24, 2027 (the “Revolving Credit Facility”) and provides us with the ability to obtain revolving loans as well as swingline loans and letters of credit from time to time. All obligations under the Credit Agreement are guaranteed by (i) the Company and (ii) certain of the Operating Partnership’s subsidiaries (the “Subsidiary Guarantors”) and are secured by substantially all of the assets of the Borrowers and the Subsidiary Guarantors.
The Borrowers are subject to customary covenants under the Credit Agreement, including an obligation to maintain a consolidated secured leverage ratio, as defined in the Credit Agreement, not to exceed 5.00 to 1.00. We are permitted,
22

subject to customary conditions, to incur other indebtedness, so long as, on a pro forma basis after giving effect to any such indebtedness, our consolidated total leverage ratio, as defined in the Credit Agreement, does not exceed 6.50 to 1.00 and, if such debt is secured, our consolidated secured leverage ratio, as defined in the Credit Agreement, does not exceed 4.00 to 1.00. In addition, the Credit Agreement contains customary events of default, including a cross default provision whereby the failure of the Borrowers or certain of their subsidiaries to make payments under other debt obligations, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the Credit Agreement. In particular, a repayment obligation could be triggered if (i) the Borrowers or certain of their subsidiaries fail to make a payment when due of any principal or interest on any other indebtedness aggregating $75.0 million or more, or (ii) an event occurs that causes, or would permit the holders of any other indebtedness aggregating $75.0 million or more to cause, such indebtedness to become due prior to its stated maturity. As of March 31, 2024, the Borrowers were in compliance with all of the covenants under the Credit Agreement.
A termination of either Windstream Lease would result in an “event of default” under the Credit Agreement if a replacement lease is not entered into within ninety (90) calendar days and we do not maintain pro forma compliance with a consolidated secured leverage ratio, as defined in the Credit Agreement, of 5.00 to 1.00.
Borrowings under the Revolving Credit Facility bear interest at a rate equal to either a base rate plus an applicable margin ranging from 2.75% to 3.50% or a Term SOFR rate plus an applicable margin ranging from 3.75% to 4.50% in each case, calculated in a customary manner and determined based on our consolidated secured leverage ratio. We are required to pay a quarterly commitment fee under the Revolving Credit Facility equal to 0.50% of the average amount of unused commitments during the applicable quarter (subject to a step-down to 0.40% per annum of the average amount of unused commitments during the applicable quarter upon achievement of a consolidated secured leverage ratio not to exceed a certain level), as well as quarterly letter of credit fees equal to the product of (A) the applicable margin with respect to Term SOFR borrowings and (B) the average amount available to be drawn under outstanding letters of credit during such quarter.
Secured Notes
On February 14, 2023, the Operating Partnership, CSL Capital, LLC, Uniti Group Finance 2019 Inc. and Uniti Fiber Holdings Inc. (collectively, the “Issuers”) issued $2.6 billion aggregate principal amount of the February 2028 Secured Notes. The Issuers used the net proceeds from the offering to fund the redemption in full of the Issuers’ outstanding 7.875% senior secured notes due 2025 (the "2025 Secured Notes"), to repay outstanding borrowings under the Revolving Credit Facility and to pay any related premiums, fees and expenses in connection with the foregoing. On February 14, 2023, the Issuers deposited the full redemption price of $2.25 billion for the 2025 Secured Notes with the trustee and satisfied and discharged their obligations with respect to the 2025 Secured Notes at such time. During the first quarter of 2023, we recorded $32.3 million of loss on the extinguishment of the 2025 Secured Notes within interest expense, net on the Condensed Consolidation Statements of Income (Loss), which includes $10.3 million of non-cash interest expense for the write off of the unamortized discount and deferred financing costs and $22.0 million of cash interest expense for the redemption premium.
Asset-Backed Bridge Loan Facility
On February 23, 2024, ABS Bridge Borrower and the other ABS Bridge Loan Parties entered the ABS Loan Agreement, which provides for a secured, multi-draw term loan facility of up to $350 million (the “ABS Loan Facility”). On March 1, 2024 (the “ABS Loan Closing Date”), the ABS Bridge Borrower made an initial drawing under the ABS Loan Facility in a principal amount of $275 million. Amounts borrowed under the ABS Loan Facility may not be reborrowed. Unless otherwise terminated pursuant to the terms of the ABS Loan Agreement, the ABS Loan Facility matures on the date that is 18 months from the ABS Loan Closing Date. The Company intends to refinance the ABS Loan Facility in full with proceeds from a long-term asset-backed securitized debt offering secured primarily by certain Uniti Fiber network assets.

Amounts outstanding under the ABS Loan Facility bear interest at a floating rate equal to, at the Company’s option, either (i) the one-month or three-month SOFR, plus a spread of 3.75% per annum or (ii) Base Rate (as defined in the ABS Loan Agreement), plus a spread of 2.75% per annum; provided that the spread will automatically increase to (a) 4.50% per annum in the case of loans bearing interest based on SOFR and 3.50% per annum in the case of loans bearing interest based on Base Rate, in each case to the extent outstanding on and after the date that is 12 months following the ABS Loan Closing Date and (b) 5.25% per annum in the case of loans bearing interest based on SOFR and 4.25% per annum in the case of loans bearing interest based on Base Rate, in each case to the extent outstanding on and after the date that is 15 months following the ABS Loan Closing Date. The Company capped SOFR interest expense at 4.50% for the duration of the ABS Loan Facility pursuant to the ABS Loan Interest Rate Cap (see Note 7)..
23


In connection with the ABS Loan Facility, the Company formed Uniti Fiber ABS Parent LLC, an indirect subsidiary of the Company that qualifies as a bankruptcy-remote special purpose entity (“ABS Parent”), and directed the formation of the ABS Bridge Loan Parties, which are direct or indirect wholly-owned subsidiaries of ABS Parent. Each of the ABS Bridge Loan Parties is a special purpose, bankruptcy-remote, indirect subsidiary of the Company. The ABS Loan Facility is secured by equity in the ABS Bridge Borrower and substantially all of the assets of the ABS Bridge Loan Parties (subject to certain customary limited exceptions) and is non-recourse to the Company. Each of the ABS Bridge Loan Parties and ABS Parent was designated as an unrestricted subsidiary under the Credit Agreement and the applicable indentures governing the Company’s outstanding senior notes. The assets of the ABS Bridge Loan Parties will only be available for payment of the obligations arising under the ABS Loan Agreement and will not be available to pay any obligations or claims of the Company’s other creditors.

In connection with the initial funding under the ABS Loan Facility on the ABS Loan Closing Date, the Company, directly or indirectly, (i) transferred certain Uniti Fiber non-regulated and interstate customer contracts and related equipment to the ABS Bridge Loan Parties and (ii) granted an indefeasible right of use in the related fiber network assets to such ABS Bridge Loan Parties. In addition, certain of the ABS Bridge Loan Parties entered into a management agreement (the “Management Agreement”) with Uniti Fiber Holdings Inc. (in its capacity as manager thereunder, the “Manager”), pursuant to which the Manager is responsible for servicing and administering the assets securing the ABS Loan Facility and is permitted to make reimbursable servicing advances in respect of the collateral securing the ABS Loan Facility under certain circumstances.

The ABS Loan Agreement contains customary covenants limiting the ability of the ABS Bridge Loan Parties to: incur or guarantee additional indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell fiber network assets; enter into transactions with the Company and other affiliates; and create restrictions on the ability of the ABS Bridge Loan Parties to incur liens on their assets constituting collateral to secure obligations under the ABS Loan Agreement. These covenants are subject to a number of limitations, qualifications and exceptions. The ABS Loan Agreement also contains a maximum leverage financial maintenance covenant and customary events of default.
Deferred Financing Cost
Deferred financing costs were incurred in connection with the issuance of the Notes and our entry into the Revolving Credit Facility and the ABS Loan Facility. These costs are amortized using the effective interest method over the term of the related indebtedness and are included in interest expense in our Condensed Consolidated Statements of Income. For the three months ended March 31, 2024 and 2023, we recognized $5.0 million and $4.8 million, respectively, of non-cash interest expense related to the amortization of deferred financing costs.
Note 10. Earnings Per Share
Our time-based restricted stock awards are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as common stock. As participating securities, we included these instruments in the computation of earnings per share under the two-class method described in FASB ASC 260, Earnings per Share (“ASC 260”).
We also have outstanding performance-based restricted stock units that contain forfeitable rights to receive dividends. Therefore, the awards are considered non-participating restrictive shares and are not dilutive under the two-class method until performance conditions are met.
The dilutive effect of the Exchangeable Notes and the Convertible 2027 Notes is calculated by using the “if-converted” method. This assumes an add-back of interest, net of income taxes, to net income attributable to shareholders as if the securities were converted at the beginning of the reporting period (or at time of issuance, if later) and the resulting common shares included in number of weighted average shares. The dilutive effect of the Warrants (see Note 7) is calculated using the treasury-stock method. During the three months ended March 31, 2024 and 2023, the Warrants were excluded from diluted shares outstanding because the exercise price exceeded the average market price of our common stock for the reporting period.
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The following sets forth the computation of basic and diluted earnings per share under the two-class method:
 Three Months Ended March 31,
(Thousands, except per share data)20242023
Basic earnings per share:  
Numerator:  
Net income (loss) attributable to shareholders$41,329 $(19,202)
Less: Income allocated to participating securities(436)(247)
Dividends declared on convertible preferred stock(5)(5)
Net income (loss) attributable to common shares$40,888 $(19,454)
Denominator:  
Basic weighted-average common shares outstanding236,901 236,090 
Basic income (loss) earnings per common share$0.17 $(0.08)
 Three Months Ended March 31,
(Thousands, except per share data)20242023
Diluted earnings per share:  
Numerator:  
Net income (loss) attributable to shareholders$41,329 $(19,202)
Less: Income allocated to participating securities(436)(247)
Dividends declared on convertible preferred stock(5)(5)
Impact on if-converted dilutive securities7,022  
Net income (loss) attributable to common shares$47,910 $(19,454)
Denominator:  
Basic weighted-average common shares outstanding236,901 236,090 
Effect of dilutive non-participating securities708  
Impact on if-converted dilutive securities54,798  
Weighted-average shares for dilutive earnings per common share292,407 236,090 
Dilutive earnings (loss) per common share$0.16 $(0.08)
For the three months ended March 31, 2023, 1,053,189 non-participating securities were excluded from the computation of earnings per share, as their performance conditions have not been met, and 54,748,359 potential common shares related to the Exchangeable Notes and the Convertible Notes were excluded from the computation of earnings per share, as their effect would have been anti-dilutive.
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Note 11. Segment Information
Our management, including our chief executive officer, who is our chief operating decision maker, manages our operations as two reportable segments, in addition to our corporate operations, which include:
Uniti Leasing: Represents the operations of our leasing business which is engaged in the acquisition and construction of mission-critical communications assets and leasing them to anchor customers on either an exclusive or shared-tenant basis, in addition to the leasing of dark fiber on our existing dark fiber network assets that we either constructed or acquired. While the Leasing segment represents our REIT operations, certain aspects of the Leasing segment are also operated through taxable REIT subsidiaries.
Uniti Fiber: Represents the operations of our fiber business which is a leading provider of infrastructure solutions, including cell site backhaul and dark fiber, to the telecommunications industry.
Corporate: Represents our corporate office and shared service functions. Certain costs and expenses, primarily related to headcount, information technology systems, insurance, professional fees and similar charges, that are directly attributable to operations of our business segments are allocated to the respective segments.
Management evaluates the performance of each segment using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense and the impact, which may be recurring in nature, of transaction and integration related costs, costs associated with Windstream’s bankruptcy, costs associated with litigation claims made against us, costs associated with the implementation of our enterprise resource planning system, severance costs, costs related to the settlement with Windstream, amortization of non-cash rights-of-use assets, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, including early tender and redemption premiums and costs associated with the termination of related hedging activities, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments, and other similar or infrequent items (although we may not have had such charges in the periods presented). Adjusted EBITDA includes adjustments to reflect the Company’s share of Adjusted EBITDA from unconsolidated entities. The Company believes that net income, as defined by GAAP, is the most appropriate earnings metric; however, we believe that Adjusted EBITDA serves as a useful supplement to net income because it allows investors, analysts and management to evaluate the performance of our segments in a manner that is comparable period over period. Adjusted EBITDA should not be considered as an alternative to net income as determined in accordance with GAAP.

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Selected financial data related to our segments is presented below for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, 2024
(Thousands)Uniti LeasingUniti FiberCorporate Subtotal of Reportable Segments
Revenues$217,621 $68,797 $— $286,418 
Adjusted EBITDA$210,677 $23,838 $(5,887)$228,628 
Less:
Interest expense123,211 
Depreciation and amortization44,980 32,492 13 77,485 
Transaction related and other costs5,687 
Gain on sale of real estate(18,999)
Other, net1,911 
Stock-based compensation3,348 
Income tax benefit(5,363)
Net income$41,348