Zayo — REITweek 2018 Investor Conference
33 slides from Zayo's conference presentation, Jun 5, 2018
Slide 1: REITweek 2018 Investor Conference
REITweek2018 InvestorConference June 2018 NYSE: ZAYO @ZayoGroup
Slide 2: Non-GAAP measure definitions
non-cash income/(loss) on equity and cost method investments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Unlevered free cash flow is defined as Adjusted EBITDA less purchases of property and equipment, net of stimulus grants. Adjusted unlevered free cash flow is defined
Slide 3: Limitations of non-GAAP measures
Unlevered free cash flow and adjusted unlevered free cash flow have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, unlevered free cash flow: ● ● ● does not reflect changes in, or cas
Slide 4: Mission
mission accelerate our customers’ capabilities to advance freedom and prosperity by providing enormous, high-quality bandwidth zayo 4
Slide 5: Vision
vision amass fiber and data center assets, then unleash their value by providing exceptional communications infrastructure services zayo 5
Slide 6: Zayo Investment Thesis
6 Multiple Growth Drivers for Bandwidth – Fiber is critical infrastructure Leading Bandwidth Infrastructure Asset – Provides strong competitive moat Disciplined Infrastructure Strategy – Drives best-in-class economics Operating and M&A Excellence – Results in a platform for growth Capable, Experienc
Slide 7: Zayo at a glance: network, fiber, data centers, people
International Network Unique Metro Fiber Datacenters People data centers le sf 274 QBHC1 Customers1 Products1 40% Fiber Solutions 11% Colocation 22% Transport 26% Enterprise Networks Leading Fiber & 48% Carrier Data Center Consolidator 15% Finance & Professional Services 43 acquisitions to date 14%
Slide 8: Zayo Positioned to Benefit from Key Trends in Bandwidth/Data Usage
8 Zayo Strategically Positioned to Benefit from Key Trends in Bandwidth/Data Usage north American internet traffic per month 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 9: Serving the largest and most sophisticated bandwidth infrastructure users
Serving the largest & most sophisticated bandwidth infrastructure users customer mix vertical targets1 public, health & utilities 10% cloud, software & infrastructure 13% media, content & commerce finance & professional services 15% carrier 48% carrier Finance & professional services media, content
Slide 10: Acquisition History
Acquisition History ~$6.7B1 43 acquisitions since 2007 totaling 1 As of March 31, 2018 10 2007 founded 2012 23 acquisitions & counting 2014 zayo ipo 2017 zayo’s global reach
Slide 11: Expansive US and International Fiber Footprint
Expansive US and International Fiber Footprint Global Network LEGEND zColo DC + Dark + Lit Network e zColo DC + Lit POP e Dark + Lit Network eUtPOP 11 tokyo hong kong Singapore Sydney
Slide 12: Key Data Center Facilities
51 global sites 943k sq. ft. 12 +Key Data Center Facilities zayo seattle 12201 tukwila Chicagoland 1808 b&c swift 0ak brook Newark 165 halsey nyc 60 hudon London westgate estate straines road, feltham paris 19/21 rue poissoniere velizy 16 avenue de l’europe nyc 111 8 th ashburn 21631 & 21635 red rum
Slide 13: Dense Metro and Regional Fiber
San Francisco Metro 13 Chicago Metro New York City Metro ILLINOIS - CHICAGO SAN FRANCISCO NEW YORK - NEW JERSEY Dense Metro and Regional Fiber LEGEND EXISTING NETWORK PLANNED NETWORK new York city metro Chicago metro san Francisco metro
Slide 14: European Metro Markets
14 Amsterdam Metro Paris Metro London Metro FRANCE - PARIS NETHERLANDS - AMSTERDAM UNITED KINGDOM - LONDON European Metro Markets LEGEND EXISTING NETWORK PLANNED NETWORK London metro paris metro Amsterdam metro
Slide 15: Organized Into Distinct Segments
Organized Into Distinct Segments Communications Infrastructure Total Enterprise Networks Fiber Solutions Colo Transport Other Allstream Segments ) $117.2 18,o /l$tream $210.3 32,c $59.6 9 o $138.8 21 ·C $5.8 L·c $531.7 82 c $117.7 181' Revenue Revenue % of Total Adjusted EBITDA EBITDA Margin EBITDA
Slide 16: Revenue and EBITDA
EXCLUDES ALLSTREAM Revenue and EBITDA Revenue Recurring revenue business model High margins allow for additional investment and growth Revenue ($M) ($M) $600.0 $400.0 $200.0 $0.0 Mar17q Jun17q Sep17q Dec17q Mar18q $470.9 $509.1 $515.8 $522.6 $531.7 ($M) aEBITDA Margin aEBITDA 55% 55% 55% 56% 55% $30
Slide 17: Strong Bookings Momentum
EXCLUDES ALLSTREAM Strong Bookings Momentum Net New Sales (Bookings) Stratification $8.5m Record Positive IRR Bookings demonstrate leveraging of breadth and depth of fiber network ($M) $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 Mar17q Jun17q Sep17q Dec17q Mar18q $4.7 $5.3 $5.5 $5.7 $6.1 $2.0 $1.9 $1.6 $1.9 $3.2
Slide 18: Net Installs on cusp of 6-8% growth
EXCLUDES ALLSTREAM Net Installs on cusp of 6-8%growth Net Installations Implied Annual Growth from Net Installs 1 4% 3% 3$ 4% 5% ($M) $4.0 $3.0 $2.0 $1.0 $0.0 ---------$3.4m required for 8% implied growth $1.5 $1.4 $1.2 $1.6 $2.3 Mar17q Jun17q Sep17q Dec17q Mar18q Meaningful progress against our gro
Slide 19: Cash Flow and Capital Expenditures
EXCLUDES ALLSTREAM Cash Flow Capital Expenditures CapEx $206 $201 $190 $191 $193 ($M) $250 $200 $150 $100 $50 $0 Mar17q Jun17q Sep17q Dec17q Mar18q $72 $47 $43 $22 $77 $134 $154 $147 $169 $116 Net Capital Upfront payments from customers aUFCF ($M) $200 $150 $100 $50 $0 Mar17q Jun17q Sep17q Dec17q Ma
Slide 20: While Zayo is a C-corp, many peers are REITs
While Zayo is a c-corp,manyofits communications infrastructure peers are REITS 20
Slide 21: Majority of Zayo's infrastructure is leasing infrastructure
Majority of Zayo’s business infrastructure is leasing infrastructure Dark fiber infrastructure Colocation space Dedicated lit solutions 21
Slide 22: Conforming AFFO Definition
Conforming AFFO Definition While the final method of calculating AFFO will not be known until closer to a potential conversion, three simple modifications can help the current definition conform AFFO Walk – LTM AFFO / Share $4.00 $3.00 $2.00 $1.00 $0.00 $3.07 $0.24 $0.05 $0.53 $3.89 LTM AFFO (as rep
Slide 23: REIT Conversion Evaluation
REIT Conversion Evaluation Continue Evaluation of Potential REIT Conversion Believe it likely that a path to REIT conversion exists In direct conversations with IRS to obtain clarity and support for position Assessing what changes may be required to financial systems and reporting Will begin to exec
Slide 24: Q&A
Q&A investors.zayo.com
Slide 25: Historical Financial Data & Reconciliations
HISTORICAL FINANCIAL DATA & RECONCILIATIONS zayo
Slide 26: Consolidated Historical Financial Data
Consolidated Historical Financial Data Consolidated Financial Data Consolidated Financial Data ($ in millions) Fiscal Year 2017 2018 September 30, 2016 December 31, 2016 March 31, 2017 June 30, 2017 Total September 30, 2017 December 31, 2017 March 31, 2018 Revenue $504.9 $506.7 $ 550.2 $638.0 $2,199
Slide 27: Consolidated Historical Financial Data - Without Allstream
Consolidated Historical Financial Data - Without Allstream Consolidated Financial Data ($ in millions) March 31, 2018 Consolidated Allstream Consolidated Excluding Allstream Revenue $649.4 $111.7 $531.7 Annualized revenue growth -2% 1% Operating income $105.3 ($4.9) $110.2 Net income $23.4 ($8.6) $3
Slide 28: Consolidated Historical Reconciliations
Consolidated Historical Reconciliations Consolidated Financial Data 28 consolidated financial data ($ in millions) net income interest expense provision for income taxes depreciation and amortization transaction costs stock based compensation loss on extinguishment of debt foreign currency loss/(gai
Slide 29: Consolidated Historical Reconciliations - Without Allstream
Consolidated Historical Allstream Reconciliations - Without Consolidated Financial Data 29 consolidated financial data ($ in millions) march 31, 2018 net income interest expense provision for income taxes depreciation and amortization transaction costs stock-based compensation foreign currency gain
Slide 30: Segment Data Reconciliation - Net Income to Adjusted EBITDA
Segment Data Reconciliation - Net (Loss)/Earnings to Adjusted EBITDA Segment Data Reconciliation 1 1 A reconciliation of previous quarters’ legacy segment information can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases 30 segment da
Slide 31: Cash from Operating Activities to UFCF, Adjusted UFCF and LFCF
Cash from Operating UFCF and LFCF Activities to UFCF, Adjusted Consolidated Financial Data 1 Amortization of deferred revenue is equal to Monthly Amortized Revenue 31 consolidated financial data ($ in millions) fiscal year 2017 2018 september 30, December 31, march 31, june 30, 2017 2016 net cash pr
Slide 32: Cash from Operating Activities to UFCF - Without Allstream
Cash from Operating Activities to UFCF, Adjusted UFCF and LFCF - Without Allstream Consolidated Financial Data 1 Amortization of deferred revenue is equal to Monthly Amortized Revenue 32 consolidated financial data ($ in millions) march 31, 2018 consolidated allstream consolidated excluding allstrea
Slide 33: AFFO Reconciliation
AFFO Reconciliation Consolidated Financial Data Quarter Ended 12 Months Ended June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 March 31, 2018 Net income $23.2 $23.2 $11.5 $23.4 $81.3 Depreciation and Amortization Expense 181.3 184.1 195.9 191.2 752.5 Foreign currency loss/(gain) on
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