Q2 2022 Uniti Group Inc Earnings Call
Welcome to Uniti group's second quarter 2022 conference call. My name is Daniel and I will be your operator for today.
A webcast of this call will be available on the company's web site Www Dot <unk> dot com, beginning today and will remain available for 14 days.
At this time all participants are in a listen only mode.
Participants on the call we will have the opportunity to ask questions. Following the companys prepared comments.
The company would like to remind you that today's remarks include forward looking statements and actual results could differ materially from those projected in these statements.
The factors that could cause actual results to differ are discussed in the company's filings with the SEC.
The company's remarks. This morning will reference slides posted on its website and you are encouraged to refer to those materials. During this call discussions during the call will also include certain financial.
<unk> that were not prepared in accordance with generally accepted accounting principles.
Conciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on the company's current report on form 8-K dated today.
I would now like to turn the call over to Uniti group's Chief Executive Officer, Kenny Gunderman. Please go ahead Mr. Gunderman.
Thank you.
Morning, everyone and thank you for joining.
Starting on slide three the demand for our mission critical fiber infrastructure continues to accelerate across virtually all of our customer segments.
Our results for the second quarter exceeded our expectations and we continue to be enthusiastic about our prospects in the second half of the year.
As a result, we announced today that we're once again raising our full year outlook.
We achieved our fifth consecutive quarter of elevated consolidated new sales bookings.
Also realizing our highest level of gross install activity since 2017.
As the second largest independent fiber operator in the country with 133000 route mile network.
Successfully enabling broadband connectivity for our customers from.
From local businesses to large national carriers.
We remain uniquely positioned to benefit from the favorable trends within our industry and our strategy also further demonstrates that the shared infrastructure benefits of fiber, resulting in healthy adjusted EBITDA and <unk> growth.
Turning to slide four.
<unk> continues to track well and the shared infrastructure economics as.
As a result, we believe that a healthy mix of anchor and lease up bookings and installs represents the most effective way to drive profitable growth.
You acquired or builds new fiber largely for our wireless customers.
With attractive long term anchor cash flow yields in the mid to high single digits within.
We're then successfully adding additional tenants with very high margins and minimal capex, resulting in a cumulative cash flow yield today a 21%.
A threefold increase from the anchor yield of these projects.
Slide five illustrates an important part of our healthy business mix.
We continue to show that the majority of new bookings are lease up in nature and the business mix results in predictable cash flow with industry, leading monthly churn of 3% and an average remaining contract term of over eight years.
Our continued intentional focus on balancing wholesale non wholesale and anchor lease up opportunities has resulted in outsized margin enhancement in <unk> growth.
In a business that is relatively immune to swings in the economy.
Which I will elaborate more later in the call.
Turning to slide six as I previously stated, although we report in Uniti fiber and Uniti leasing separately, both businesses are marketed to our customers as one consolidated fiber business.
An increasing number of customers and network solutions are a mix of uniti leasing annuity fiber networks, and we fully expect that encourage that trend to continue.
High capacity long haul routes.
Needed by all of our customers, including carriers, Hyperscale or international carriers, Msos and large enterprises to connect their disparate markets Datacenters and Pops.
Today dark fiber in North America is an approximately one $5 billion annual market opportunity and is expected to grow about 10% annually over the next several years, reaching approximately $4 billion by 2030.
With long haul fiber contributing to the majority of these revenues.
The continued broadband explosion fueled by five G metro fiber small cells fiber to the tower fiber to the home.
And even fixed wireless and satellite broadband I'll provide on ramps of demand into the long haul market.
A critical ingredient to being a successful provider for these customers is having a robust national network as most large customers require multi rail solutions.
Its own National network is a meaningful barrier to entry for competitors unity.
Especially given that it would take billions and billions of dollars and many years to build a new national network.
We estimate there are only five truly owned national networks, and two independent fiber providers with national networks in the U S today with unity being one of them.
Thus, we have a unique opportunity to capitalize on this growing demand in the fiber market.
We've created a 133000 route mile network through proprietary acquisitions at attractive economics, with approximately 3 million strand miles of fiber fiber available to lease to third parties.
We continue to grow that network and have built over 16000 route miles of new fiber in the past four years.
And our networks are intentionally constructed with high strand fiber in order to capitalize on highly accretive lease up opportunities.
As a reminder, the economics of long haul fiber are very attractive with high margin passively managed revenue.
Little to no churn long term contracts that routinely have escalators built into them had minimal capex requirements.
Since most of our network is dark today, we also have a great opportunity to grow our business by lighting more of our network in a disciplined manner.
Our national wholesale network has the added benefit of providing terrific growth potential for uniti fiber as.
As we expand our national network into new regions, the economics of adding lit Metro services enterprise lease up in particular become more achievable.
Turning to slide seven.
Although enterprise sales represent less than 5% of our total revenue today and will likely always represent a minority percentage. It remains a critical element of our lease up strategy.
Enterprise, new sales bookings and install activity during the second quarter were both the highest levels we've ever achieved in company history and.
And we expect these strong trends to continue as we further capture market share and deploy fiber base lit services to our customers and our existing and new markets.
As a result of our consistent strong bookings activity enterprise revenue enterprise recurring revenue was up 11% in the second quarter from the prior year.
As I've mentioned before we're only offering lit services and approximately 25 metro markets today with an average market share of only approximately 5%.
Providing us with a long runway to increase our market share substantially over the next several years.
Even more exciting as you can see from the map, we own metro fiber and nearly 300 markets nationwide.
Which represents terrific capital and margin efficient growth potential for enterprise wireless backhaul and even small cells.
We only recently acquired access to these markets and our 2020 settlement with Windstream.
So we are just beginning to capitalize on the opportunity.
Given the proven success of our anchor lease up strategy in the attractive economics of these enterprise opportunities with payback periods at about half the initial contract term and cash yields of 50 <unk>.
<unk> plus.
We continue to actively prioritize these metro markets for expansion in both 2023 and beyond.
And looking at our National wholesale network, and our 300 Metro markets combined we estimate that less than 5% of our total $7 8 million strand miles of fiber are actually live.
This virtual blank canvas provides us with a terrific runway for disciplined growth without the burden of legacy declining products.
With that I'll now turn the call over to Paul.
Thank you Kenny and good morning, everyone.
Both our uniti leasing and Uniti fiber businesses continue to perform well and this performance is reflected on our better than expected second quarter results.
Despite increased economic uncertainty and volatility within the capital markets generally remains well positioned given our robust level of long term revenues under contract are declining capital intensity, along with the work we've done to strengthen our balance sheet and push out our debt maturities as a result of the strength of the quarter and our continued confidence in our ability to execute in.
In the second half of the year, we are once again, increasing the midpoint of our 2022 outlook for revenue and adjusted EBITDA.
Please turn to slide eight and I'll start with comments on our second quarter.
We reported consolidated revenues of $284 million consolidated adjusted EBITDA of $227 million <unk> attributed to common shares of $115 million and <unk> <unk> per diluted common share of <unk> 44.
Net income attributable to common shares for the quarter was approximately $53 million or 21 per diluted share.
At Uniti leasing we report we reported segment revenues of $206 million and adjusted EBITDA of $200 billion up 5% and 4% respectively from the prior year.
Accordingly, Uniti leasing achieved an adjusted EBITDA margin of 97% for the quarter.
Turning to slide nine our growth capital investment program continues to make progress and provide positive results for unity over the past six years, our tenant has invested approximately $1 billion of tenant capital improvements in our network.
<unk> continues to invest its own capital and long term value accretive fiber largely focused on highly valuable last mile fiber, including fiber and commercial parks and fiber to the home collectively.
Collectively these investments have resulted in 16400 route miles of newly constructed fiber and 22% of the legacy copper network being overbuilt with fiber both of these numbers continue to gradually increase each quarter and we expect they will increase materially over the coming years.
During the second quarter Uniti leasing deployed approximately $53 million towards growth capital investment initiatives with the majority of the investments relating to the Windstream GCI program.
These GCI investments added around 700 route miles of fiber to entities own network across several different markets.
As of June 30th Unity has invested approximately $400 million of capital to date under the GCI program with Windstream, adding around 11200 route miles and 594000 strand miles of fiber to our network.
These investments will be added to the master leases at an 8% initial yield at the one year anniversary of unity, making such investment they are subject to a 5% annual escalator and result in nearly 100% margin.
The investments we have made to date will ultimately generate approximately $32 million of annualized cash rent.
During the quarter, we sold our remaining investment interest in harmony towers to Palo Star capital, formerly known as melody investment advisors for total cash consideration of $32 5 million or approximately 35 times our ownership interest in annualized run rate cash flows.
This transaction generated a gain on sale of approximately $8 million, excluding related tax expense of $7 million.
We had previously sold 90% of our U S tower business to <unk> in June of 2020, the net effects of this transaction are included within our leasing segment.
At Uniti fiber, we turned over 459 lit backhaul dark fiber and small cell sites for our wireless carriers across our southeast footprint. During the second quarter. These installs at annualized revenues of approximately $4 9 million and represent the highest level of wireless growth installs ever for unity.
We currently have around 1400 lit backhaul dark fiber and small cell sites remaining in our backlog that we expect to deploy within the next few years.
<unk> wireless backlog represents an incremental $12 million of annualized revenues.
At Uniti fiber, we reported revenues of $78 million and adjusted EBITDA of $34 million during the second quarter, both revenues and adjusted EBITDA were higher than expected largely due to the timing of equipment sales and early termination fees and lower costs.
We achieved an adjusted EBITDA margin of 43% for the quarter, a 200 basis point improvement from the prior year period.
Uniti fiber net success based Capex was $30 million in the second quarter, we also incurred $2 million of maintenance capex or about 3% of revenues.
Please turn to slide 10, and I'll now cover our updated 2022 guidance.
We are revising our guidance primarily for business unit level revisions and the impact of transaction related and other costs incurred to date, our outlook excludes future acquisitions capital market transactions and future transaction related and other costs not specifically mentioned herein actual results could differ materially from these forward looking statements.
Our current full year outlook for 2022 includes the following for each segment.
Beginning with Uniti leasing based on better than expected lease up success. We are now we now expect revenues and adjusted EBITDA to be $822 million and $800 million, respectively at the midpoint, representing adjusted EBITDA margins of approximately 97%.
Revenue and adjusted EBITDA each include $14 million of cash rent associated with the GCI investments and $26 million relating to the straight line rent associated with the Windstream master leases and GCI investments we.
We expect to deploy $275 million of success based capex at the midpoint of our guidance of which $250 million relates to estimated windstream GCI investments.
Turning to slide 11, we continue to expect Uniti fiber to contribute $309 million of revenues at the midpoint and adjusted EBITDA of $121 million for full year 2022.
When adjusting for the ever stream transaction that incurred in may of 2021, the year over year revenue and adjusted EBITDA growth of 6% and 8% respectively. This strong growth demonstrates our continued success in managing our cost structure and improving margins, while executing on lease up that leverages, our existing dense southeast fiber footprint.
As I previously mentioned, we still expect 2022 to be the peak year for sprint related churn, which means higher than normal onetime <unk> fees related to legacy sprint sites being disconnected as part of the T mobile merger.
As we turn to 2023, we still expect to realize some <unk>, but most likely $12 million to $13 million less than in 2022, we do still expect that our core recurring revenue at Uniti fiber will increase by mid single digit percentage rate for full year 2023, when compared to 2022.
Net success based Capex for Uniti fiber. This year is still expected to be $120 million at the midpoint of our guidance a 12% decrease from levels in 2021.
Turning to slide 12 for 2022, we expect full year <unk> to range between $1 70, and $1 77 per diluted common share with a midpoint of $1 74 per diluted share a 4% increase from 2021 on a consolidated basis, we expect revenues to be $1 1 billion.
And adjusted EBITDA to be $896 million at the midpoint.
Our guidance contemplates consolidated interest expense for the full year of approximately $390 million corporate SG&A, excluding amounts allocated to our business segments is expected to be approximately $33 million, including $8 million of stock based compensation expense.
We still expect our weighted average diluted common shares outstanding for full year 2022 to be around 267 million shares as a reminder guidance ranges for key components of our outlook are included in the appendix to our presentation.
Turning now to our capital structure with.
With the work we've done over the past couple of years to push out our debt maturities and strengthen our balance sheet and liquidity position, we do not have a need to access external capital through the end of 2023 as such we continue to be opportunistic in our approach to managing our capital structure over the near term.
At quarter end, we had approximately $360 million of combined unrestricted cash and cash equivalents and undrawn revolver capacity, our leverage ratios stood at 564 times based on net debt to last quarter annualized adjusted EBITDA.
Our consolidated net leverage ratio at quarter end as defined in the indenture governing our 778 senior secured notes stood at $5 71 times, which is below the 575 times threshold imposed by the indenture that had restricted our ability to distribute dividends in excess of 90% of taxable.
REIT income in light of this milestone our board will continue to evaluate our dividend policy and the optimal capital allocation strategy going forward.
On July 29th our board declared a dividend of <unk> 15 per share to stockholders of record on September 9th payable September 23.
With that I'll now turn the call back over to Kenny.
Thanks, Paul.
Before turning to Q&A I'd like to address the current economic backdrop and the implications for unity.
We're prepared for the likelihood of a recession or at least a sustained economic downturn as well as an elevated interest rate environment for some time.
With respect to a potential recession we.
We believe our core business will likely see little to no noticeable impact given the mission critical nature of broadband.
Further the vast majority of our revenue is wholesale in nature with long term contracts some of which have escalators pegged to CPI.
This customer base has proven more resilient than enterprise during downturns.
With respect to costs, we're beginning to forecast higher labor and material costs in some areas.
With that said however, we don't expect any meaningful changes to current or forecasted margins or capital intensity.
Given that our business performed exceptionally well during the depths of the pandemic, we would expect to execute at a similar level during any potential recession or economic downturn.
The elevated interest rate environment has created capital market challenges for high yield issuers seeking to finance M&A or to refinance near term debt.
Fortunately for unity, we have no significant near term maturities.
As it relates to potential debt refinancing and M&A, we have the ability to be patient.
To be clear, we remain confident in our intrinsic value and our ability to execute on our strategic options, but we believe better execution could be achieved in more normalized markets.
Despite this macroeconomic backdrop, we continue to prioritize investment in our core business we can.
Currently have over $7 billion of revenue under contract with the average remaining term of eight and a half years.
The majority of this revenue is passively managed in the form of triple net or dark fiber MLA.
As a result, the operating costs associated with this revenue is de Minimis.
Which results in a cash flow rich business over the mid to long term.
We think this is an underappreciated part of our story.
Especially since about 2030, we expect to have generated approximately $1 5 billion of cumulative free cash flow after dividends, if we maintain our current dividend and approximate level of annual capital investment.
This trajectory leads to substantial deleveraging, resulting in two and a half to three five times net leverage and more than doubling the size of our non windstream fiber business by 2030.
Our network is highly underutilized representing.
Presenting profitable growth potential for some time.
We expect net capital intensity to decline from our current level of approximately 35% to approximately 10% by 2030.
This decline is indicative of accelerating operating leverage in the business and many years of high margins high yielding lease up including dark fiber lighting unique long haul routes and expanding deeper into our existing 300 Metro markets.
With that said, our cash rich MLA to provide great optionality to pay an increasing dividend and.
Invest even more in our core business in lieu of paying down debt.
As I mentioned in my earlier remarks, regardless of our capital allocation policy, our runway for organic growth appears long and fruitful, especially given strong industry tailwind.
In summary, we believe unity is well positioned with a recession resistant business and a terrific opportunity for material value creation with no reliance upon M&A.
With that operator, we're now ready to take questions.
To ask a question you will need to press star one one on your telephone.
Please standby, while we compile the Q&A roster.
Thanks.
Our first question comes from Gregory Williams with Cowen. Your line is now open.
Great. Thanks for taking my questions.
First one is just on the solid gross installs.
Obviously impressive here and you're finally chipping away at the backlog and just sort of a function of the better weather. So you can get out there and installed they're coming out of the pandemic and how does that translate to your ability to hire contractors in the workforce I think as I think about the sustainability of the solid gross and stuff and then the second question is just on the.
The M&A environment, I think you'd noted youre waiting for better execution for a more normalized environment.
How would you characterize your M&A appetite and I didn't see any deals today does that mean something more transformative is still on the table.
Greg on installs I'd say, it's a result of three things.
One we've just had elevated bookings now for several quarters and just starting to see I mean, obviously bookings precede installs so youre starting to see installs catch up.
You will.
Secondly.
Very active first half of the year with dish.
Which I think was probably more active than we expected.
So that was.
An important contributor.
And to your question about labor.
Continues to be a challenge to get.
Whether it be contract labor, our full time labor frankly, it's one of the reasons, we called it out in our prepared remarks.
But fortunately we've been able to.
To staff the positions we need.
We actively manage that so I think we're confident that that's not going to be a bottleneck for us although like we said there could be some elevated costs associated with it going forward, but at this level of bookings in this level of installs for us.
So cost well worth bearing.
With respect to M&A not much more to say than what we had.
<unk> had in our prepared remarks, we're just going to continue to be patient and opportunistic like we always have we continue to think the trends both in the industry and in the conversations that we're having are very favorable and we believe will be very fruitful for unity.
In the future.
Got it thank you.
Thank you.
And our next question comes from Michael Rollins with Citi. Your line is now open.
Thanks, and good morning.
Two questions first on the guidance.
Revenue and EBITDA <unk> ticked up a little bit.
<unk> looks unchanged if you could just unpack a little bit more of that.
Pluses and minuses in that transition.
Income statement to the peso guy.
And then secondly, you talked about the opportunity to Delever over time with the cash that the.
Business can produce.
Would that be the base case for investors that.
In the absence of any larger transformative transactions.
That unit is aspiring to delever to a certain.
Financial net debt target range. Thank you.
Hey, Michael This is Paul Thanks, so much for your question.
Yes, just some differences.
Particularly in terms of cash cash revenue and translating from EBITDA too.
From a revenue and adjusted EBITDA to <unk>.
The between.
Between the quarters. So I think that's the primary difference.
That youre seeing there thats a couple of other minor things and we can get you some more detail on that Michael.
If you'd like but I think that just the differences between cash cash revenue and noncash revenue is a major contributor to the difference there.
So just a quickly follow up on that so they should benefit in the short term straight line or deferred revenue.
And over time that converts into cash revenue. So therefore, you're getting the benefit in the income statement.
I was just curious if it was more that or if there's just other offsetting items to a change in the cash income statement contributors versus like interest or some other items like that.
Yes.
<unk>.
Without getting into too much too much detail there I think that a lot of a lot of those cash differences do come in when Youre looking at straight.
Straight line revenue I think youre exactly exactly right, there and those differences coming in as you.
Have that role and off with new new contracts are old contracts. So I think thats the largest contributor so I think youre right on target there.
And Michael It's Kenny with respect to your question about some of the longer term outlook we provided.
I doubt, we will ever get down to two and a half to three five times leverage simply because that's probably under leveraged relative to.
And optimal capital structure for our business, what we're really trying to demonstrate is the ability to do that if we chose to I think more likely we would use that cash to either pay a higher dividend or invest more in the business, especially given the trends that we're seeing in the business and the trends that we're seeing in the <unk>.
Industry or some combination of those of those things and I think that's a great.
Place for us to be to have the optionality to either invest pay a dividend or deleverage or some combination.
And by the way that also sets you up for doing more opportunistic bolt on M&A.
With a better balance sheet and more liquidity, so that that obviously would factor in and with respect to this being the base case I think this is the base case.
M&A for US has always been opportunistic, especially transformative M&A.
I think in in doing M&A, it's always important to have the ability to be patient.
And in order to be patients you have to have a good business, that's performing well and you have to have a good balance sheet and a good runway for liquidity and we certainly have all of those things.
Thanks.
Thank you.
And our next question comes from Frank Louthan with Raymond James Your line is now open.
Great. Thank you in your slides you talked about the 275 buildings that you passed what percentage of those are realistic targets. How do you get business from and Whats. Your current penetration and then what do you do when you're trying to increase that penetration going forward.
Hey, Frank I would say all of them are are.
Accessible and that's really the point, we do a lot of work both with our own.
Data and outside sources, where it's useful to.
Just two.
Pinpoint our network and opportunities near that network, so anything on that list.
By the way that's a that's a list we share with our customers. It's out there for the industry to see so we wont cut.
Customers and potential customers to see that and therefore call us when when there's when theres opportunities in those buildings. So that's a real number.
That we're executing on and I would say with respect to market share we look at it by market.
And we've got some markets, where we're approaching maybe 10% market share, but the vast majority.
In the vast majority of our metro markets were well below 5%. So we're really an insurgent a share taker.
And just feel really excited about the opportunity that we have going forward to continue continue taking share in the near term.
Alright, great and talked about some other infrastructure players are seeing some of your escalators go up as inflation has gone up are you, having any similar conversations with new customers.
Or when you're renewing leases about raising some of the escalators to compensate for that.
Yes.
<unk> escalators have always been important to.
Include whenever we can and.
And especially our long term dark fiber contracts that has such a long life.
But in.
In the current market in current times escalators or even more more important so yes that's.
We're putting even more focus on making sure.
Our contracts have escalators that can continue to.
Protect our rubbish.
Revenue stream and insulate it from kind of inflationary pressures going forward and as Kenny mentioned in our in our comments we.
Do have.
Some of those escalators are our fixed rates, but some of those escalators are tied to CPI, which is particularly valuable.
Time like 2022, when we've had such an increase.
And the.
CPI year over year. So that's been a nice thing for for us to have those built in whenever we can and we will continue to put an increased focus on that in a time like this for sure.
Alright, great. That's really helpful and if you can make sure the operator in terms of my Mic off this time that'd be great.
Yeah.
Yes.
Yes.
Thank you.
And our next question comes from David Barden with Bank of America. Your line is now open.
Hey, guys. Thanks, so much hey, Frank make sure Youre dogs are.
Quieted down there please.
So.
I guess I've got three questions. So the first one could be.
Paul can you remind us just the 2022 termination income that youre expecting from the T mobile merger and what the one timers contributed to Q and then what you kind of think is leftover for 2023 that we should be thinking about I think you mentioned that.
In the prepared remarks the second.
I guess would be Kenny.
Now that you guys have broken through that.
Covenant barrier could you give us a timetable.
And some criteria.
Either execution or cash flow generation or leverage criteria that you think would be would help us inform a decision about.
Revisiting the dividend payout policy and then I guess my last question would be.
There was a window there is a window to refinance your highest coupon debt 772025.
It started in kind of the mid first quarter and a quarter ago. It would have been call. It a six ish percent.
Type of coupon to refinance it.
Now.
Probably north of seven.
So you didn't do that.
Similarly for a reason.
One speculation is that the reason why youre not coming back to the market.
Is that this dispute with Windstream about the lease renewal term.
And the 2027 arbitration is impacting your decision making around capital markets access. So I was wondering if you could kind of.
Revisit that topic too. Please thank you so much.
I think David Paul will take your first question so.
Yes.
We've been mentioning for a while that.
Sprint churn is going to.
Peak in 2022, so it's definitely having an <unk>.
Impact on the the.
The financials. This year. So we wanted to provide a little bit more color on that.
You guys in our comments this time.
Yes.
Like I said in my remarks.
We expect.
We expect Etfs in 2023 to be less than in 2020 twos.
'twenty two like I said, the peak year, and we're expecting that to be about $12 million to $13 million less than what it is this year. So this year.
<unk>.
This year.
If you look at our debt.
Our page, there's a breakdown <unk> fiber revenue you can see the $61 million.
Core nonrecurring that we're projecting at UF for 2023 about $25 million of that is expected to be related to <unk> and the vast majority of that is associated with the sprint deal.
Comms.
So.
Yes.
That amount would really kind of be cut close to in half if you.
Look out towards 'twenty, three 'twenty three for our expectations.
I don't know the exact number for the second quarter I think you asked that we can get you that.
David later, but it's definitely a contributor too.
To the quarter.
I do have the.
Got the number here.
About 7% about $7 million contribution to the second quarter.
Hum Etfs were from a revenue standpoint.
Great.
And David with respect to your other two questions on the dividend, obviously thats a board level decision.
So I don't want to put any parameters around that to get ahead of them but.
Certainly had a robust disc.
A discussion with the board about it last week and will at the board meeting and we will continue to have that in the coming.
Months quarters.
<unk>.
Right now we're paying 90%.
Taxable income.
Most Reits pay 100%.
There's tax savings associated with that there is certainly would be for us and so that's an incremental consideration that im sure Youre youre thinking about aware of but beyond that I don't want to put any.
<unk> put any guardrails around it in and get ahead of the board in any way, but it's great to have that covenant cleared.
They have the flexibility to pull that lever on capital allocation.
They choose to.
With respect to your last question I don't agree with your conclusion, we certainly did not finance.
Our refinance some of the debt that you mentioned, but theres a lot of factors that go into that.
We won't go into all the ones that we considered for starters we've got.
Really nice runway.
We need to refinance those large maturities.
And we actively manage that and actively.
Discuss with our advisors, including a whole host of financing opportunities and.
I can assure you that the renewal.
The issue was not.
Our concern for us in fact in some ways.
As you know we didn't choose to have this public spat.
But the fact that we are at.
Actually caused us to put our disclosure out there and I think a lot of investors and lenders creditors took comfort in seeing that disclosure. So I think it's actually probably the opposite of.
Of your of your speculation with respect to any concerns there so and look longer term going back to our prepared remarks at the end about our longer term trajectory in terms of the cash flow generating opportunities in the business. We just feel very confident about the balance sheet and liquidity.
How that gives us a terrific runway to continue fueling the growth in the business.
Alright, great. Thanks, Kenny appreciate it thanks Paul.
The problem.
Thank you.
And our next question comes from Simon Flannery with Morgan Stanley . Your line is now open.
Great. Thank you very much good morning.
Paul coming back to the fiber, perhaps you could just give us a sense of what the recurring revenue trends are I think you. Your model suggests it's pretty stable for this year, but any sense of how that looked this quarter and I know that dish has been a big part of your optimism for for 'twenty. Three what are you seeing from <unk>.
Right now they gave us an update on their call yesterday about continuing to expand to.
15000 towers to hit their June 'twenty three guidance. So is that starting to flow through to some of your markets or is that more of a 'twenty three factor and then Kenny you talked about being patient with with some M&A. You've also talked about potentially exploring a separation to highlight the value of the non windstream revenue.
Cash flow streams could you update us on your thoughts there. Thank you.
Sure Simon.
Started in terms of recurring revenue recurring revenue growth is really as expected and even a little bit better than expected revenue recurring revenues came in a little bit above our our projections for the second quarter and part of that as Kenny mentioned was.
Was contribution from from dish, the only contribution to that but this.
Made a meaningful contribution to that so we're continuing to expect that.
Mid single digit growth in recurring revenue.
Some pieces of it are growing even faster can you mentioned our enterprise.
Recurring revenue grew.
Double digits, 11% I think over.
Year over year so.
We're seeing nice growth in our recurring revenue business, which is really what we put.
The majority of our focus on building over the long long term.
And as we look out into next year like I said in my comments, we expect that same sort of growth to continue so very pleased with.
With that installs were the highest.
They've ever been for in the second quarter, we had a record record quarter. Both in the wireless part of our business and enterprise part of our business as well so.
Installs as an MLR.
Monthly recurring revenue number so that's all about recurring revenue coming on to the business and churn continues to remain low so the.
The outflow of recurring revenue out of the <unk> backdoor continues to remain really.
Really low for the business kind of industry, leading we think in terms of our churn performance. So.
We see nice trends, there and we see those trends continuing.
So.
Simon on your last question look we the reason we.
Focused on.
Yes.
Developing a plan to separate.
Our business is because we believe theres a conglomerate discount associated with our stock.
And its weighed down by the.
The windstream part of our business.
And so.
When you when you look at that.
And when we look at the trends and.
The industry, including in the last quarter and this year they continue to reinforce that that view.
And by that I mean, when we look at private market.
Multiples related to fiber to the fiber to the home businesses those multiples continue to.
That view.
And by that I mean, when we look at private market.
Multiples related to fiber to the fiber to the home businesses.
Multiples continue to improve.
And obviously, our Windstream business is an important part of our fiber to the home provider and so were emboldened by.
The operating.
Trends in the industry and the multiples associated with those businesses and feel that's another area, where it's important for us to be smart and patient about unlocking that value.
And with respect to commercial fiber, which is our bread and butter. That's the core core part of our business. We've also seen those multiples elevate where there were a couple of private market transactions announced during the quarter.
Are multiples were.
EBITDA multiples, we're well north of 20 times EBITDA in fact approaching 30 times EBITDA.
So we feel like that the markets, whether it be private or public, but mostly private are putting.
The appropriate intrinsic valuation upon our piece parts.
So as a result, we believe it's important to be able to separate those assets and unlock that value for our shareholders in the event there is transformative M&A opportunities.
So I think maybe coming full circle to your question, we wouldn't separate our assets unless it were in the context of.
<unk> transformative M&A transaction or at least that's what we're what we're contemplating today.
Great. Thank you and anything more on dish.
Over the next several quarters when you really expect that to start scaling yes, yes, sorry, we missed that one look I think this was more active than we expected in the first half of the year.
And a lot of that was to help them hit their first targeted.
Targeted date with the FCC, but candidly most of the markets. They were targeting were not unity markets. I mean, they were more tier one in nature as you as you know Simon.
And we're generally more in the tier two ish markets and so now they're moving on to the second.
Targeted date of mid year next year, and we actually think there's going to be more we know theyre going to be more.
Opportunities for us in our markets and so as a result, we do think the second half of this year and probably the first half of next year in particular are going to be very busy.
Great. Thanks, a lot.
Sure.
Thank you I would now like to turn the conference back to Kenny Gunderman for closing remarks.
Thank you. We appreciate your interest in Uniti group and look forward to updating you further.
Joining us today.
This concludes today's conference call.
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