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Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers...

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Earnings Call Presentation Zayo Group Holdings, Inc. Fiscal Year 2016 Q4 NYSE: ZAYO @ZayoGroup
Transcript
Page 1: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Earnings Call Presentation

Zayo Group Holdings, Inc.

Fiscal Year 2016 Q4NYSE: ZAYO@ZayoGroup

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2

Safe HarborInformation contained in this presentation that is not historical by nature constitutes “forward-looking statements”

which can be identified by the use of forward-looking terminology such as “believes,” “expects,” “plans,”

“intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates” or the negatives thereof, other

variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that

future results expressed or implied by the forward-looking statements will be achieved and actual results may

differ materially from those contemplated by the forward-looking statements. Such statements are based on

management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could

cause actual results to differ materially from those expressed or implied by the forward-looking statements.

These risks and uncertainties include, but are not limited to, those relating to Zayo Group Holdings, Inc.’s (“the

Company” or “ZGH”) financial and operating prospects, current economic trends, future opportunities, ability to

retain existing customers and attract new ones, outlook of customers, and strength of competition and pricing.

In addition, there is risk and uncertainty in the Company’s acquisition strategy including our ability to integrate

acquired companies and assets. Specifically there is a risk associated with our recent acquisitions, and the

benefits thereof, including financial and operating results and synergy benefits that may be realized from these

acquisitions and the timeframe for realizing these benefits. Other factors and risks that may affect our business

and future financial results are detailed in the “Risk Factors” section of our Annual Report on Form 10-K to be

filed with the Securities and Exchange Commission (“SEC”). We caution you not to place undue reliance on

these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to

publicly update or revise forward-looking statements to reflect events or circumstances after releasing this

supplemental information or to reflect the occurrence of unanticipated events, except as required by law.

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

presentation, pricing supplement and a glossary of terms used throughout. All of which can be found under the

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

2

Page 3: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Dan Caruso Chairman & Chief Executive Officer

3

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4

FY 4Q16 Highlights

material progress on Allstream integration - continue to report as Zayo Canada

closed Clearview data center acquisition – full quarter included here

continued consecutive quarter revenue & aEBITDA growth

7% pro forma recurring revenue growth; 7% constant currency (CC)

record net installs of $2.4M, driven by growing gross installs and consistent churn

of 1.1%

net bookings of $6.4M; below expectations

improved pricing and extended term of debt

1 Financial and operating metrics exclude Zayo Canada

1

Page 5: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Zayo at a Glance

8,778,822 fiber miles

112,660 route miles

3,224 employees

175 QBHC

Customers *

6.8k customers

54% of rev from enterprise & content

46% carriers & wireless

Products*

38% Dark Fiber Solutions

45% Network Connectivity

16% Colo & Cloud Infrastructure

1% Other

International Network Unique Metro Fiber Datacenters

Leading Fiber &

Data Center Consolidator

38 acquisitions to date

6 since Jan 2015

Growth

5

Ou

r assets

Wh

at

we d

oTra

ck

reco

rd

61 zColo data centers

>668k billable sf

People

Financial1

$

1 Quarter ended Jun-16 annualized2 Every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary3 Based on average closing price for month of Jun-16

24,282 buildings

152 avg metro fiber count

~$2.0B revenue

~$1.0B adjusted EBITDA

Value Creation

27 consecutive quarters of

sequential revenue growth2

$1.1B invested equity since

2007 inception

>$6.7B equity value3

>6x return

* Excludes Zayo Canada

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FY2015 Q4 Earnings Presentation 61 Based on quarter ended Jun-16

1

Segments & ProductsSegment Strategic Product Group Revenue

Adjusted

EBITDA

EBITDA

Margin

Adjusted

UFCF

Adjusted

UFCF Margin

Dark Fiber $117.9 $86.7 $40.6

Mobile Infrastructure $29.0 $20.2 -$29.4

Segment Total $146.9 $106.9 73% $11.2 8%

Wavelengths $76.0 $37.2 $10.2

Ethernet $44.1 $24.1 $13.8

IP Services $34.4 $19.2 $9.8

Sonet $20.8 $11.0 $11.0

Segment Total $175.3 $91.5 52% $44.8 26%

Interconnect-Oriented Colo $53.1 $27.4 $6.8

Cloud Services $10.5 $4.4 $1.6

Segment Total $63.6 $31.8 50% $8.4 13%

Canada $117.2 $27.0 23% -$0.9 -1%

Professional Services $4.3 $0.6 15% $0.6 15%

Segments Total $121.5 $27.6 23% -$0.3 0%

Total $507.3 $257.8 51% $64.1 13%

Dark

Fib

er

Solu

tions

Netw

ork

Connectivity

Colo

cation &

Clo

ud

Infr

astr

uctu

re

Canada a

nd

Oth

er

Segm

ents

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7

($M)Revenue

Q4 Financial Highlights

($M)

Adjusted EBITDA

Associated with Other Revenue

Excluding Associated with Other Revenue

Adjusted EBITDA Margin

7

7% QoQ annualized pro forma recurring

revenue growth

7% in CC1

12% QoQ annualized pro forma recurring

adjusted EBITDA growth

$353 $377 $386

$9 $5 $4

$362 $382 $390

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Recurring Other

$204 $222 $229

$7 $3 $2 $211

$225 $231

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

$0

$50

$100

$150

$200

$250

$300

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

1CC: constant currency

EXCLUDES ZAYO CANADA

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8

($156) ($174)($177)

$195 $192$159

$39 $18 ($18)

1% -2% 11% 11% 10% -7% 5% -5%

($250)

($150)

($50)

$50

$150

$250

$350

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Purchases of PP&E Cash Flow From Operations LFCF1 Includes churn replacement capex plus 0.2% implied growth2 Quarter ended Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities3 Quarter ended Dec-15 includes $54M of semi-annual interest payments and $17M of deferred interest from Jun-15 quarter senior notes offerings4 Quarter ended Jun-16 LFCF includes $23.2M outflow related to debt refinancing activities. Excluding this impact, LFCF would be $5.2M

Q4 Financial Highlights Cont.Purchases of Property & Equipment($M)

Net AFFO(capturing churn replacement) % of Revenue

Levered FCF($M)

($M)

8

% of Revenue

2 3

net AFFO1 of $112M or 29% of revenue

approximately LFCF breakeven

$143 $166 $167

$8

$6 $5$5

$1 $6 $156 $174 $177

$0

$50

$100

$150

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Growth Maintenance Other

$116 $67

$112

20% 26% 32% 32% 35% 27% 18% 29%

$0

$50

$100

$150

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

EXCLUDES ZAYO CANADA

0.4% 4.2%0.3% 0.2% 3.9% 1.6% 2.3%

Implied revenue growth:

0.2%

4

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9

Q4 Operational Highlights

Net Installations

($M)

MR

R a

nd M

AR

MR

R a

nd M

AR

($2.9) ($2.6) ($3.3)

($1.1)($1.1)

($0.8)

($4.0)($3.7)

($4.1)

-1.3% -1.2% -1.3% -1.2% -1.1% -1.2% -1.0% -1.1%($7.0)

($6.0)

($5.0)

($4.0)

($3.0)

($2.0)

($1.0)

$0.0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Hard Disconnects

Upgrades / Price Decrease / Replacement

Churn % = $5.0 $4.6 $5.4

$1.3$1.2

$1.1

$6.3$5.9

$6.5

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Upgrades / Price Increase / Replacement

Installations from New Services

Gross Installations Churn Processed($M)

$2.2 $2.1 $2.4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

MR

R a

nd

MA

R

($M)

91 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.387M * 4 = $9.548M), divided by the beginning of quarter run-rate $125.8 = 7.6%

churn stabilizing in 1.0% to 1.3% range

net installs imply 8% annualized

recurring revenue growth rate1

EXCLUDES ZAYO CANADA

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10

Q4 Operational Highlights Cont.

$117.4$125.8

$127.8

$0

$50

$100

$150

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

($M)Last day of quarter run-rate

(MRR+MAR)

$6.3 $6.9 $7.2

$7.4 $8.7 $8.2

$13.7 $15.6 $15.5

93 90 95 96 100 98 109 102

$0

$5

$10

$15

$20

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Delivery date after 6 months

Delivery date within the next 6 months

Implied Average Days to Install

Service Activation Pipeline

10

($M)

5% QoQ PF annualized revenue run-rate growth

7% in CC

service activation pipeline represents 12% of

revenue run-rate

48 months average remaining contract term

EXCLUDES ZAYO CANADA

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11

$4.5 $4.9 $4.1

$2.0$1.6

$1.9

$0.3 $0.4$0.4

$6.8 $7.0$6.4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

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

Speculative Projects

Q4 Operational Highlights Cont.

$515 $392$344

($253) ($218)($165)

35 15 38 33 12 42 31 16

($450)

($250)

($50)

$150

$350

$550

$750

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Contract Value Capex & Upfront Expenditures Payback Months

Contract Value vs. Capex on Bookings

($M)

Net New Sales (Bookings) Stratification

MR

R a

nd M

AR

($M)

11

strong bookings despite lack of large projects

and unusual cancel

~64% of bookings have <12 month payback

total bookings contract value 2x the

associated committed capex

average payback of 16 months

EXCLUDES ZAYO CANADA

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12

Zayo Canada – Financial TargetsJun-16 performance ahead of plan

12Actual Jun-16 US$ amounts based on 0.78 US Dollar FX rate1 Dec-15 quarter results adjusted to exclude two non-recurring items totaling $0.3M of quarterly revenue and adjusted EBITDA

$96

$113 $117

$0

$50

$100

$150

Dec-15 Mar-16 Jun-16 Sep-16

Allstream Revenue($M)

$18

$18

$27

$0

$10

$20

$30

$40

$50

Dec-15 Mar-16 Jun-16 Sep-16

Adjusted EBITDA($M)

$11

$15

$0

$10

$20

$30

$40

$50

Dec-15 Mar-16 Jun-16 Sep-16

Purchases of PP&E($M)

$7$3

$17

$0

$10

$20

$30

$40

$50

Dec-15 Mar-16 Jun-16 Sep-16

Unlevered Free Cash Flow (UFCF)($M)

1 1

1

16% 19% 23%

Adjusted EBITDA Margin

1

$10

Page 13: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

1 Changes represent net cost overruns/underruns associated with the initial anchor tenant contract2 Some projects may have been booked over multiple quarters 3 The Midwest Mobile Infrastructure project was canceled in the June-16 quarter and will be removed from this list in future periods. This cancel resulted in a $38M reduction to estimated

Capital Expenditures, a $3M decrease to expected Upfront Charges and a $0.2M decrease to Net New Sales (Bookings) in the June—16 quarter. 13

Major Network Expansionone new >$20M project signed in Jun-16 quarter

includes one unusually large

cancel order in Jun-16 quarter

projects represent ~30% of

capex in last 3 quarters…

but only 2-3% of Gross Installs

($M)

Geography SPG

Booking

Qtr2

Estimated Capital

Expenditures

NetNew Sales (Bookings)

MRR & MAR

Upfront

Charges

West Mobile Infrastructure Mar-14 $58 $0.4 $38

Midwest Dark Fiber Sep-14 $75 $0.1 $0

Southwest Dark Fiber Sep-14 $22 $0.1 $0

West Mobile Infrastructure Mar-15 $39 $0.4 $32

South Mobile Infrastructure Mar-15 $189 $0.6 $25

SouthWest Dark Fiber Mar-15 $24 $0.2 $0

Midwest Mobile Infrastructure Jun-15 $88 $0.4 $21

Northwest Mobile Infrastructure Jun-15 $61 $0.6 $0

Southeast Mobile Infrastructure Dec-15 $98 $0.3 $6

Midwest3 Mobile Infrastructure Dec-15 $38 $0.2 $3

South Mobile Infrastructure Dec-15 $36 $0.2 $3

South Mobile Infrastructure Mar-16 $75 $0.2 $2

South Dark Fiber Jun-16 $34 $0.3 $30

Cumulative Changes 1 $9 $0.0 $0

Total $808 $3.7 $156

Capital

Expenditures Gross Installs

Upfront

Received

Actual Through Jun-16 $215 $0.5 $47

Percentage of Committed 27% 13% 30%

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14

Commercial Highlights

14

penetration of dark fiber continues to expand

deal connects 153 sites, including

2 datacenters

618 mile solution includes:

562 miles existing and planned

network

56 miles new construction

additionally…

1,178 mile Texas school district

win leverages FTT build in Dallas

122 sites

Denver Public Schools

dark fiber provides schools with the bandwidth, security and control

necessary to meet today’s and plan for tomorrow’s connectivity needs

Page 15: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

15

Commercial Highlights Cont.

15

follow-on sales leverage organic expansions and acquired assets

Dark Fiber /

National Carrier

long haul dark fiber

follow on sale to recent

network expansions

>3,000 route miles

~$197k MRR&MAR

>12 month payback

ELAN & DIA /

Media

nationwide solution leverages

Zayo’s leading network

34 sites connected

~$75k MRR&MAR

<12 month payback

Note: Maps are shown for illustrative purposes

Colo & IP /

Managed Networks Operator

global IP backbone

connectivity + colo space

Dallas

7 major markets connected

~$5k MRR&MAR

<12 month payback

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16

Commercial Highlights Cont.

16

follow-on sales leverage organic expansions and acquired assets

complex international

ELAN solution leverages

Viatel assets

5 international sites

3 year contract

>12 month payback

Dark Fiber & Waves /

Cloud Storage

metro dark fiber ring +

longhaul waves utilize

recent network expansions

7 locations in major metros

~$120k MRR&MAR

<12 month payback

Note: Maps are shown for illustrative purposes

ELAN /

CDN Infrastructure

100G Wavelengths /

Global Carrier

new 100G coherent

solution built on acquired

Viatel assets

4 locations

3 year contract

>12 month payback

Page 17: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Ken desGarennes Chief Financial Officer

17

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FY2015 Q4 Earnings Presentation

($ in millions)

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

2015 2015 2015 2016 2016

Revenue

Zayo Dark Fiber Solutions 135.3 135.0 137.7 144.3 146.9

Zayo Network Connectivity 163.0 167.0 168.7 172.5 175.3

Zayo Colocation & Cloud Infrastructure 57.6 58.3 58.5 60.3 63.6

Zayo Canada 0.0 0.0 0.0 96.1 117.2

Other 6.0 6.5 4.7 4.8 4.3

Zayo Group Holdings Revenue $361.9 $366.8 $369.6 $478.0 $507.3

Annualized revenue growth 25% 5% 3% 117% 25%

Pro-forma annualized revenue growth1 5% 5% 3% 2% 9%

Operating income/(loss) 54.7 52.1 58.7 57.5 72.0

Net Earnings/(loss) 5.1 (15.2) (10.8) (19.3) (30.9)

EPS (basic and diluted) 0.02 (0.06) (0.04) (0.08) (0.13)

Adjusted EBITDA

Zayo Dark Fiber Solutions 96.8 96.6 99.1 103.9 106.9

Zayo Network Connectivity 85.0 88.7 89.9 89.2 91.5

Zayo Colocation & Cloud Infrastructure 27.8 28.4 29.0 30.2 31.8

Zayo Canada 0.0 0.0 0.0 18.2 27.0

Other 1.3 1.7 0.9 1.3 0.6

Zayo Group Holdings Adjusted EBITDA $210.9 $215.4 $218.9 $242.8 $257.8

Annualized Adjusted EBITDA growth 24% 9% 7% 44% 25%

Pro-forma annualized Adjusted EBITDA

growth1 7% 9% 7% 13% 18%

Adjusted EBITDA margin 58% 59% 59% 51% 51%

Three Months Ended

Q4 Financial Results

181 Pro forma annualized growth for revenue and Adjusted EBITDA are calculated as if the acquisitions occurred on the first day of the quarter preceding the respective quarter in which the acquisitions closed2 Jun-16 EPS is based on 242.2 million weighted average shares outstanding for the quarter; 242.6 million shares were outstanding on 6/30/2016

2

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FY2015 Q4 Earnings Presentation

Equity

19

incremental

public float

as of Zayo

F3Q Call

private equity post-2009

investors

pre-2009

Estimated Shareholder Base1

significant progress to date in reducing "PE overhang"

243M shares outstanding2

1 Based on latest available 13F filings and company estimates

2 Shares outstanding as of 8/19/2016

float at

IPO

incremental

public float

since Zayo

F3Q Call

management

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FY2015 Q4 Earnings Presentation

$1,837

$1,430

$900

$0

$1,000

$2,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

pro forma for refinancing activity

Balance Sheet

6.375%6.000%L+2753

ample liquidity including $442M of

revolver capacity

$1.2B of net operating loss carry

forwards

20

($M)

Interest Rate

Debt Schedule1

4.0x gross leverage2

April refinancing extends term and

creates ~$6M annual interest savings

July term loan repricing creates~$3M annual interest savings

1 Principal value; excludes capital lease obligations

2 As of June 30, 2016 and based on LQA EBITDA

3 Rate post July-16 repricing

($ in millions) June 30, June 30,

2015 2016

Consolidated Balance Sheet Data

Cash and cash equivalents 309 171

Property and equipment, net 3,299 4,080

Total assets 6,095 6,728

Long-term debt and capital lease

obligations, including current portion3,701 4,136

Total Stockholders' equity 1,211 1,219

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FY2015 Q4 Earnings Presentation

$23

$14 $14

$20 $20

$42.9$33.5 $33.4

($50)

($25)

$0

$25

$50

$75

$100

$125

$150

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Pre-IPO Plan Post-IPO RSU Actual Dilution1

Stock-Based Comp

21

performance oriented stock-based compensation

post-IPO RSU plans based primarily

on measured equity IRR and share

price performance

pre-IPO plan non-dilutive to current

shares outstanding

($M)

Stock Based Compensation

157 309N/A N/A N/A N/A 2,228

1 Dilution represents the actual dilution for shares vested and delivered during the quarter

Share Dilution (000s)

0.1% 0.1%N/A N/A N/A N/A 0.9%Dilution %

421

0.2%

Page 22: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

For detailed Supplemental Earnings Information presentation, please visit:

investors.zayo.com

Q&A

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Segment-Level Results

Page 24: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

24

$1,907 $1,960

$1,816 $1,672 $1,914

$2,322

$1,666 $1,938

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

$107.4 $109.0 $111.3 $113.4 $115.4 $117.4 $122.4 $124.7

$0.2 $0.3 $0.2 $0.3 $0.3 $0.3 $0.2 $0.2 $13.3 $13.4 $14.3 $14.9 $15.7 $16.6

$18.7 $19.4 $6.4 $7.0 $7.6 $6.7 $3.6 $3.5

$3.0 $2.6 $127.4 $129.7 $133.5 $135.3 $135.0 $137.7

$144.3 $146.9

$0

$25

$50

$75

$100

$125

$150

$175

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

MRR Usage MAR Other Revenue

millions

Revenue Stratification

$134 $9 $157 $141 $10 $181 $114 $19

$0

$25

$50

$75

$100

$125

$150

$175

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Estimated Capital and Upfront

Expenditures associated with Net

New Sales (Bookings) less Upfront

Chargesmillions

Zayo Dark Fiber Solutions revenue stratification & operational data

thousands

($945) ($818)($993) ($836) ($761)

($1,017)($716)

($755)

-0.8% -0.7% -0.8% -0.7% -0.6% -0.8% -0.5% -0.5%($4,500)

($4,000)

($3,500)

($3,000)

($2,500)

($2,000)

($1,500)

($1,000)

($500)

$0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Churn ProcessedGross Installations

MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$962 $1,141

$824 $837

$1,153 $1,305

$949 $1,183

10% 11% 8% 8% 11% 12% 8% 10%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Implied Recurring Revenue Growth1=

Net Installationsthousands

MR

R a

nd

MA

RChurn % =

$1,956 $1,239 $2,272 $2,136 $1,668 $2,165 $1,733 $1,212

$531

$212

$546 $484

$330

$373

$423

$572

$2,488

$1,450

$2,818 $2,619

$1,998

$2,538

$2,155

$1,784

$439M $101M $429M $392M $256M $357M $245M $206M

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Net Sales - MRR

Net Sales - MAR

Contract Value =

Net New Sales (Bookings)

thousands

MR

R a

nd

MA

R

24

Segment Information

1 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate

EXCLUDES ZAYO CANADA

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25

$58 $70 $73 $79 $94 $109 $110 $108

46% 54% 55% 58% 69% 79% 76% 73%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Purchases of Property and Equipment

$85 $90 $93 $97 $97 $99 $104 $107

67% 69% 69% 72% 72% 72% 72% 73%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Adjusted EBITDA

$20 $35 $32 $56 $54 $76 $62 $76

16% 27% 24% 41% 40% 55% 43% 52%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Net Capital1

$52 $41 $46 $26 $26 $7 $23 $11

40% 31% 35% 19% 20% 5% 16% 8%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsAdj Unlevered Free Cash Flow3

$27 $20 $20 $18 $3

($10) ($6) ($1)

21% 15% 15% 13% 2% -7% -4% 0%

($25)

$0

$25

$50

$75

$100

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsUnlevered Free Cash Flow2

1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue”

25

Segment InformationZayo Dark Fiber Solutions cash flow stratification

EXCLUDES ZAYO CANADA

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26

$2,942 $3,017 $2,988

$3,307 $3,381 $3,230 $3,318 $3,458

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

$153.1 $154.0 $154.2 $156.3 $159.2 $161.6 $165.2 $168.1

$1.8 $2.4 $2.2 $1.9 $1.8 $2.5 $2.1 $1.8 $3.4 $3.4 $3.4 $3.5 $3.8 $3.9 $4.1 $4.1 $1.9 $1.9 $3.2 $1.4

$2.2 $0.7 $1.1 $1.2 $160.2 $161.7 $163.0 $163.0 $167.0 $168.7 $172.5 $175.3

$0

$25

$50

$75

$100

$125

$150

$175

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

MRR Usage MAR Other Revenue

millions

Revenue Stratification

$2,735 $3,017 $3,125 $3,148 $3,259 $2,800 $3,703 $3,404

$57

$177 $95 $107 $164

$147

$87

$114

$2,792

$3,194 $3,220 $3,255 $3,423

$2,947

$3,790 $3,518

$90M $106M $103M $100M $119M $86M $115M $98M

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Net Sales - MRR

Net Sales - MAR

Contract Value =

Net New Sales (Bookings)

thousands

MR

R a

nd

MA

R

thousands

($2,458)($2,587)($2,595)

($2,263)($2,308)($2,435) ($2,502)

($2,668)

-1.6% -1.6% -1.6% -1.4% -1.4% -1.5% -1.5% -1.5%($4,500)

($4,000)

($3,500)

($3,000)

($2,500)

($2,000)

($1,500)

($1,000)

($500)

$0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Churn ProcessedGross Installations

MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$484 $430 $393

$1,044 $1,073 $795 $816 $790

4% 3% 3% 8% 8% 6% 6% 5%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Net Installationsthousands

MR

R a

nd

MA

RChurn % =

$32 $41 $35 $35 $40 $39 $46 $41

$0

$25

$50

$75

$100

$125

$150

$175

$200

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Estimated Capital and Upfront

Expenditures associated with Net

New Sales (Bookings) less Upfront

Chargesmillions

26

Segment InformationZayo Network Connectivity revenue stratification & operational data

1 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate

Implied Recurring Revenue Growth1=

EXCLUDES ZAYO CANADA

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27

$46 $53 $47 $49 $47 $48 $44 $46

29% 32% 29% 30% 28% 29% 26% 26%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Purchases of Property and Equipment

$83 $86 $86 $85 $89 $90 $89 $92

52% 53% 53% 52% 53% 53% 52% 52%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Adjusted EBITDA

$40 $47 $47 $48 $38 $45 $37 $43

25% 29% 29% 29% 22% 27% 21% 24%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Net Capital1

$40 $35 $35 $34 $47 $41 $48 $45

25% 22% 22% 21% 28% 24% 28% 26%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsAdj Unlevered Free Cash Flow3

$37 $33 $39 $36 $42 $42 $45 $45

23% 20% 24% 22% 25% 25% 26% 26%

$0

$25

$50

$75

$100

$125

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsUnlevered Free Cash Flow2

1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue” 27

Segment InformationZayo Network Connectivity cash flow stratification

EXCLUDES ZAYO CANADA

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28

$517 $489

$1,069

$1,189

$680

$783 $842

$1,045

$0

$250

$500

$750

$1,000

$1,250

$1,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

$25.5 $25.8 $34.9 $54.5 $55.4 $55.2 $57.3 $59.8

$0.6 $0.8

$1.3

$2.2 $2.2 $2.3 $2.5 $2.8

$0.4 $0.4

$0.6

$0.8 $0.8 $0.9 $0.9 $0.9

$0.3 $0.0

$1.9

$0.1

($0.1)

$0.1

($0.4)

$0.1

$26.9 $27.0

$38.5

$57.6 $58.3 $58.5 $60.3 $63.6

($20)

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

MRR Usage MAR Other Revenue

millions

Revenue Stratification

$2 $18 $31 $13 $14 $23 $24 $26

$0

$20

$40

$60

$80

$100

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Estimated Capital and Upfront

Expenditures associated with Net

New Sales (Bookings) less Upfront

Chargesmillions

thousands

($301) ($262)

($475)

($700)($613) ($629)

($442)

($637)

-1.2% -1.0% -1.3% -1.3% -1.1% -1.1% -0.8% -1.0%($1,500)

($1,250)

($1,000)

($750)

($500)

($250)

$0

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Churn ProcessedGross Installations

MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$216 $227

$594 $489

$67 $154

$399 $408

10% 10% 27% 11% 1% 3% 8% 8%

$0

$250

$500

$750

$1,000

$1,250

$1,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Net Installationsthousands

MR

R a

nd

MA

RChurn % =

$452 $536 $852 $831 $847 $1,187 $901 $1,024

$37 $35

$80 $51 $72

$64

$68

$70

$489 $570

$932 $882 $918

$1,251

$970

$1,093

$15M $19M $31M $23M $30M $30M $31M $39M

$0

$250

$500

$750

$1,000

$1,250

$1,500

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

Net Sales - MRR

Net Sales - MAR

Contract Value =

Net New Sales (Bookings)

thousands

MR

R a

nd

MA

R

28

Segment InformationZayo Colo and Cloud Infrastructure revenue stratification & operational data

Implied Recurring Revenue Growth1=

1 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate

EXCLUDES ZAYO CANADA

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29

$11 $7 $10 $27 $19 $15 $20 $24

40% 27% 26% 47% 33% 26% 32% 37%

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Purchases of Property and Equipment

$13 $13 $20 $28 $28 $29 $30 $32

50% 50% 51% 48% 49% 50% 50% 50%

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Adjusted EBITDA

$12 $6 $12 $26 $18 $15 $18 $23

44% 24% 30% 46% 30% 25% 30% 35%

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millions

Net Capital1

$1 $7 $7 $1 $10 $14 $12 $8

4% 24% 19% 1% 17% 23% 19% 13%

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsAdj Unlevered Free Cash Flow3

$2 $6 $9 $1 $9 $14 $11 $8

9% 23% 24% 1% 16% 24% 18% 13%

$0

$20

$40

$60

$80

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

% of Revenue

millionsUnlevered Free Cash Flow2

1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue”

29

Segment InformationZayo Colo and Cloud Infrastructure cash flow stratification

EXCLUDES ZAYO CANADA

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Reconciliations

Page 31: Earnings Call Presentation€¦ · 6 since Jan 2015 Growth 5 assets do record 61 zColo data centers >668k billable sf People Financial1 $ ... Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Presentation of Certain Consolidated Pro-forma Financial DataAcquisitions have been, and are expected to continue to be, a component of the Company’s strategy. In this presentation, the Company sets forth its pro-forma

annualized revenue growth rate and pro-forma annualized Adjusted EBITDA growth rates for the current fiscal quarter. The adjustments reflected in our pro-forma

amounts have not been prepared with a view towards complying with Article 11 of Regulation S-X. These pro-forma measures are intended to provide additional

information regarding such rates of growth on a more comparable basis than would be provided without such pro-forma adjustments.

Non-GAAP Financial MeasuresThe Company provides financial measures that are not defined under generally accepted accounting principles in the United States, or GAAP, including Adjusted

EBITDA, Adjusted EBITDA Margin, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, adjusted funds from operations, and net

adjusted funds from operations.

Adjusted EBITDA, as defined below and in our Segment Reporting note to our consolidated financial statements and notes thereto, is the primary measure used by

our Chief Operating decision maker to evaluate segment operating performance. Adjusted EBITDA is defined as earnings/(loss) from continuing operations before

interest, income taxes, depreciation, and amortization (“EBITDA”) adjusted to exclude acquisition or disposal-related transaction costs, losses on extinguishment of

debt, stock-based compensation, unrealized foreign currency gains/ (losses) on intercompany loans, and non-cash income/(loss) on equity and cost method

investments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Unlevered free cash flow is defined as Adjusted EBITDA minus

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

equipment, net of stimulus grants, plus additions to deferred revenue, less non-cash monthly amortized revenue. Levered free cash flow is defined as operating

cash flow minus purchases of property and equipment, net of stimulus grants. Adjusted funds from operations (“AFFO”) is defined as earnings/(loss) from

continuing operations before depreciation and amortization, unrealized foreign currency gains/(losses) on intercompany loans, stock-based compensation,

acquisition or disposal-related transaction costs, losses on extinguishment of debt, non-cash income/(loss) on equity and cost investments, non-cash monthly

amortized revenue, less cash payments related to maintenance capital expenditures. Net AFFO is defined as AFFO plus upfront customer payments from less

than twelve month payback on net new sales less cash payments related to capital expenditures for (i) less than twelve month payback on net new sales and (ii)

network capacity. These measures are not measurements of our financial performance under GAAP and should not be considered in isolation or as alternatives to

net income, net cash flows provided by operating activities, total net cash flows or any other performance measures derived in accordance with GAAP or as

alternatives to net cash flows from operating activities or total net cash flows as measures of our liquidity.

We use Adjusted EBITDA to evaluate our operating performance. In addition to Adjusted EBITDA, management uses unlevered free cash flow, which measures

the ability of Adjusted EBITDA to cover capital expenditures. Adjusted EBITDA is a performance rather than cash flow measure. Correlating our capital

expenditures to our Adjusted EBITDA does not imply that we will be able to fund such capital expenditures solely with cash from operations. These metrics are

among the primary measures used by management for planning and forecasting future periods. We believe the presentation of Adjusted EBITDA is relevant and

useful for investors because it allows investors to view results in a manner similar to the method used by management and make it easier to compare our results

with the results of other companies that have different financing and capital structures. We believe that the presentation of levered free cash flow is relevant and

useful to investors because it provides a measure of cash available to pay the principal on our debt and pursue acquisitions of businesses or other strategic

investments or uses of capital. We believe the presentation of AFFO and Net AFFO is useful to investors by providing measures presented by certain datacenter

and cellular tower REITs (and some non-REITs) with which we are sometimes compared.

31

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We also monitor Adjusted EBITDA because our subsidiaries have debt covenants that restrict their borrowing capacity that are based on a leverage ratio, which

utilizes a modified EBITDA, as defined in our credit agreement and the indentures governing our notes. The modified EBITDA is consistent with our definition of

Adjusted EBITDA; however, it includes the pro forma Adjusted EBITDA of and expected cost synergies from the companies acquired by us during the quarter for

which the debt compliance certification is due. Adjusted EBITDA results, along with the quantitative and qualitative information, are also utilized by management

and our Compensation Committee, as an input for determining incentive payments to employees.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results of operations and

operating cash flows as reported under GAAP. For example, Adjusted EBITDA:

-does not reflect capital expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments;

- does not reflect changes in, or cash requirements for, our working capital needs;

- does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and

- does not reflect cash required to pay income taxes.

Unlevered free cash flow and adjusted unlevered free cash flow have limitations as analytical tools and should not be considered in isolation from, or as a

substitute for, analysis of our results as reported under GAAP. For example, unlevered free cash flow:

- does not reflect changes in, or cash requirements for, our working capital needs;

- does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and

- does not reflect cash required to pay income taxes.

Levered free cash flow, AFFO, and Net AFFO have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of

our results as reported under GAAP. For example, levered free cash flow, AFFO, and Net AFFO:

- does not reflect principal payments on debt;

- does not reflect principal payments on capital lease obligations;

- does not reflect dividend payments, if any; and

- does not reflect the cost of acquisitions.

Our computation of Adjusted EBITDA, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, AFFO, and Net AFFO may not be

comparable to other similarly titled measures computed by other companies because all companies do not calculate these measures in the same fashion.

Because we have acquired numerous entities since our inception and incurred transaction costs in connection with each acquisi tion, borrowed money in order to

finance our operations and acquisitions, and used capital and intangible assets in our business, and because the payment of income taxes is necessary if we

generate taxable income after the utilization of our net operating loss carryforwards, any measure that excludes these items has material limitations. As a result of

these limitations, these measures should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a

measure of our liquidity. See “Reconciliation of Non-GAAP Financial Measures” for a quantitative reconciliation of Adjusted EBITDA, AFFO, and Net AFFO to net

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

provided by operating activities.

Annualized revenue and annualized Adjusted EBITDA are derived by multiplying the total revenue and Adjusted EBITDA, respectively, for the most recent

quarterly period by four. Our computations of annualized revenue and annualized Adjusted EBITDA may not be representative of our actual annual results.

Measures referred to as being calculated on a constant currency basis are intended to present the relevant information assuming a constant exchange rate

between the two periods being compared. Such metrics are calculated by applying the currency exchange rates used in the preparation of the prior period financial

results to the subsequent period results.

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

throughout is available under the investor section of the Company’s website at http://www.zayo.com/investors. 32

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3333

Consolidated Historical Reconciliations –

Without Zayo Canada

($ in millions)

Consolidated Zayo Canada

Consolidated

Excluding Zayo

Canada

Net (loss)/income ($30.9) $4.1 ($35.0)

Interest expense 57.4 2.1 55.3

Provision/(benefit) for income taxes (13.1) 0.0 (13.1)

Depreciation and amortization 148.3 17.2 131.1

Transaction costs 4.0 2.8 1.2

Stock-based compensation 33.4 0.8 32.6

Loss on extinguishment of debt 33.8 0.0 33.8

Foreign currency loss/(gain) on intercompany loans 24.9 0.0 24.9

Non-cash loss on investments 0.0 0.0 0.0

Adjusted EBITDA $257.8 $27.0 $230.8

Purchases of property and equipment 187.4 10.0 177.4

Unlevered Free Cash Flow $70.4 $17.0 $53.4

June 30,

2016

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FY2015 Q4 Earnings Presentation

ReconciliationNet (Loss)/Income to Adjusted EBITDA

34

($ in millions)

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

2013 2013 2014 2014 Total 2014 2014 2015 2015 Total 2015 2015 2016 2016 Total

Net (loss)/income ($27.4) ($36.8) ($41.6) ($73.5) ($179.3) ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2) ($10.8) ($19.3) ($30.9) ($76.2)

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

Interest expense 51.5 50.3 49.1 52.6 203.5 46.9 53.4 60.7 53.0 214.0 53.8 51.2 57.7 57.4 220.1

Provision/(benefit) for income taxes 9.3 8.4 9.5 10.1 37.3 9.4 (4.4) (18.4) 4.6 (8.8) 2.7 11.1 7.8 (13.1) 8.5

Depreciation and amortization 81.0 81.7 84.2 91.3 338.2 96.0 96.9 100.1 113.2 406.2 117.1 113.7 137.2 148.3 516.3

Transaction costs 0.6 0.2 0.0 4.5 5.3 3.4 1.3 1.5 0.0 6.2 0.0 3.3 14.2 4.0 21.5

Stock-based compensation 42.9 57.0 65.2 88.6 253.7 123.1 (6.0) 40.7 42.9 200.7 46.1 42.9 33.5 33.4 155.9

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 1.9 0.0 30.9 54.9 8.5 94.3 0.0 0.0 0.0 33.8 33.8

Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) 14.7 13.3 13.2 (16.8) 24.4 10.7 7.1 11.1 24.9 53.8

Non-cash loss on investments 0.0 1.9 0.0 0.0 0.0 0.0 0.5 0.0 0.4 0.9 0.2 0.4 0.6 0.0 1.2

Adjusted EBITDA, from continuing operations $155.6 $161.7 $165.2 $171.1 $653.6 $183.0 $189.7 $199.0 $210.9 $782.6 $215.4 $218.9 $242.8 $257.8 $934.9

Purchases of property and equipment 86.7 88.3 90.9 94.9 360.8 115.3 129.5 130.1 155.5 530.4 159.2 172.4 185.1 187.4 704.1

Unlevered Free Cash Flow $68.9 $73.4 $74.3 $76.2 $292.8 $67.7 $60.2 $68.9 $55.4 $252.2 $56.2 $46.5 $57.7 $70.4 $230.8

Fiscal Year

2015

Fiscal Year

2016

Fiscal Year

2014

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FY2015 Q4 Earnings Presentation

Reconciliation

35

Segment Net (Loss)/Earnings to Adjusted EBITDA

($ in millions)

Zayo Dark Fiber

Solutions

Zayo Network

Connectivity

Zayo Cloud and

Connectivity

Services Zayo Canada Zayo Other

Corporate/Interco

mpany Elimination

Zayo Group

Holdings

Net (loss)/income $3.6 $21.1 ($11.7) $4.1 ($0.2) ($47.8) ($30.9)

Interest expense 24.5 17.2 11.9 2.1 0.0 1.7 $57.4

Provision/(benefit) for income taxes 0.0 0.0 0.0 0.0 0.0 (13.1) ($13.1)

Depreciation and amortization 65.2 39.2 26.2 17.2 0.5 0.0 $148.3

Transaction costs 0.5 0.4 0.3 2.8 0.0 0.0 $4.0

Stock-based compensation 13.1 14.0 5.2 0.8 0.3 0.0 $33.4

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 0.0 33.8 $33.8

Foreign currency loss/(gain) on intercompany loans (0.2) (0.4) 0.0 0.0 0.0 25.5 $24.9

Non-cash loss on investments 0.2 0.0 (0.1) 0.0 0.0 (0.1) ($0.0)

Adjusted EBITDA $106.9 $91.5 $31.8 $27.0 $0.6 $0.0 $257.8

Three months ended June 30, 2016

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FY2015 Q4 Earnings Presentation

($ in millions)

Consolidated Zayo Canada

Consolidated

Excluding Zayo

Canada

Net cash provided by continuing operating activities: $176.2 $16.8 $159.4

Cash paid for income taxes 2.6 0.0 2.6

Cash paid for interest, net of capitalized interest 83.5 0.0 83.5

Non-liquidating distribution to common unit holders 0.0 0.0 0.0

Excess tax benefit from stock-based compensation 0.0 0.0 0.0

Transaction costs 4.0 2.8 1.2

Provision for bad debts (0.8) 0.1 (0.9)

Additions to deferred revenue (38.6) (2.4) (36.2)

Amortization of deferred revenue 44.9 20.3 24.6

Other changes in operating assets and liabilities (14.0) (10.6) (3.4)

Adjusted EBITDA 257.8 27.0 230.8

Purchases of property and equipment (187.4) (10.0) (177.4)

Unlevered Free Cash Flow 70.4 17.0 53.4

Additions to deferred revenue 38.6 2.4 36.2

Amortization of deferred revenue (44.9) (20.3) (24.6)

Adjusted Unlevered Free Cash Flow $64.1 ($0.9) $65.0

Reconciliation of levered free cash flow:

Net cash provided by continuing operating activities: $176.2 $16.8 $159.4

Purchases of property and equipment ($187.4) ($10.0) ($177.4)

Levered free cash flow: ($11.2) $6.8 ($18.0)

June 30, 2016

Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without

Zayo Canada

36

Reconciliation

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FY2015 Q4 Earnings Presentation

AFFO & Net AFFO – without Zayo Canada

37

Reconciliation

($ in millions)

Consolidated Zayo Canada

Consolidated

Excluding

Canada

Earnings/(loss) from continuing operations ($30.9) $4.1 ($35.0)

Depreciation and Amortization Expense 148.3 17.2 131.1

Foreign currency loss/(gain) on intercompany loans 24.9 0.0 24.9

Stock-based compensation 33.4 0.8 32.6

Transaction costs 4.0 2.8 1.2

Loss on extinguishment of debt 33.8 0.0 33.8

Non-cash loss on investments 0.0 0.0 0.0

Amortization of deferred revenue (44.9) (20.3) (24.6)

Maintenance capital expenditures (5.6) (0.6) (5.0)

AFFO 163.0 4.0 159.0

Upfront customer payments on <12 mo payback of new sales 30.6 1.6 29.0

Capital expenditures for <12 mo payback net new sales (38.8) (8.8) (30.0)

Capital expenditures for network capacity (46.4) (0.7) (45.7)

Net AFFO $108.4 ($3.9) $112.3

June 30, 2016

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3838

Pro Forma Growth Reconciliations – June 2016 (Supporting FY16Q4 Pro

Forma Growth excluding Zayo Canada)1,2

Reconciliation

($ in millions) Zayo Allstream

Purchase

accounting and

other

adjustments

Pro-forma

without

Allstream

Revenue 507.3$ 117.2$ (0.4)$ 389.7$

Operating costs and expenses

Operating costs, excluding depreciation and amortization 182.7 67.1 - 115.6

Selling, general and administrative expenses 104.3 26.9 - 77.4

Depreciation and amortization 148.3 17.2 - 131.1

Operating income/(loss) 72.0 6.0 (0.4) 65.6

Other income/(expense)

Interest expense (57.4) (2.1) - (55.3)

Loss on extinguishment of debt (33.8) - - (33.8)

Foreign currency loss on intercompany loans (24.9) - - (24.9)

Other (expense)/income, net 0.1 0.2 - (0.1)

Total other expense, net (116.0) (1.9) - (114.1)

(Loss)/income before provision for income taxes (44.0) 4.1 (0.4) (48.5)

(Benefit)/provision for income taxes (13.1) - 1.4 (11.7)

Net (loss)/income $ (30.9) $ 4.1 $ (1.8) $ (36.8)

Add back non-EBITDA items included in net (loss)/income

Depreciation and amortization 148.3 17.2 - 131.1

Interest expense 57.4 2.1 - 55.3

Provision for income taxes (13.1) - 1.4 (11.7)

Loss on extinguishment of debt 33.8 - - 33.8

Unrealized loss/(gain) on intercompany loans 24.9 - - 24.9

Transaction costs 4.0 2.8 - 1.2

Stock-based compensation 33.4 0.8 - 32.6

Non-cash loss on investments - - - -

Adjusted EBITDA $ 257.8 $ 27.0 $ (0.4) $ 230.4

Historical

(in millions)

Three Months ended June 30, 2016

1 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases

2 Includes the financial results of the acquired Allstream business during the three months ended June 30, 2016 and purchase accounting adjustments for acquisitions (excluding Allstream)

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3939

Pro Forma Growth Reconciliations – March 2016 (Supporting FY16Q4 Pro

Forma Growth excluding Zayo Canada)1,2

Reconciliation

Zayo Clearview Allstream

Purchase

accounting and

other

adjustments

Pro-forma

without

Allstream

Revenue 478.0$ 2.3$ 96.1$ (0.3)$ 383.9$

Operating costs and expenses

Operating costs, excluding depreciation and amortization 170.8 1.1 46.5 - 125.4

Selling, general and administrative expenses 112.5 0.5 42.3 - 70.7

Depreciation and amortization 137.2 - 13.0 - 124.2

Operating income/(loss) 57.5 0.7 (5.7) (0.3) 63.6

Other income/(expense)

Interest expense (57.7) - (0.1) - (57.6)

Foreign currency loss on intercompany loans (11.1) - - - (11.1)

Other (expense)/income, net (0.2) - 0.2 - (0.4)

Total other expense, net (69.0) - 0.1 - (69.1)

(Loss)/income before provision for income taxes (11.5) 0.7 (5.6) (0.3) (5.5)

Provision for income taxes 7.8 - - (0.1) 7.7

Net (loss)/income $ (19.3) $ 0.7 $ (5.6) $ (0.2) $ (13.2)

Add back non-EBITDA items included in net (loss)/income

Depreciation and amortization 137.2 - 13.0 - 124.2

Interest expense 57.7 - 0.1 - 57.6

Provision for income taxes 7.8 - - (0.1) 7.7

Unrealized loss on intercompany loans 11.1 - - - 11.1

Transaction costs 14.2 - 10.6 - 3.6

Stock-based compensation 33.5 - 0.1 - 33.4

Non-cash loss on investments 0.6 - - - 0.6

Adjusted EBITDA $ 242.8 $ 0.7 $ 18.2 $ (0.3) $ 225.0

Three Months ended March 31, 2016

Historical

(in millions)

1 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases

2 Includes historical financial results and related adjustments for acquisitions completed prior to June 30, 2016

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4040

Pro Forma Growth Reconciliations – March 2016 (Supporting FY16Q4 Pro

Forma Growth)1,2

Reconciliation

Zayo Clearview Allstream

Purchase

accounting and

other

adjustments

Pro-Forma

with

Allstream

Revenue 478.0$ 2.3$ 15.7$ (0.5)$ 495.4$

Operating costs and expenses

Operating costs, excluding depreciation and amortization 170.8 1.1 7.6 (0.1) 179.4

Selling, general and administrative expenses 112.5 0.5 6.9 - 119.9

Depreciation and amortization 137.2 - 2.1 0.1 139.4

Operating income/(loss) 57.5 0.7 (0.9) (0.5) 56.7

Other income/(expense)

Interest expense (57.7) - - (3.8) (61.5)

Loss on extinguishment of debt - - - - -

Foreign currency (loss)/gain on intercompany loans (11.1) - 0.1 - (11.0)

Other (expense)/income, net (0.2) - - - (0.2)

Total other expense, net (69.0) - 0.1 (3.8) (72.7)

(Loss)/income before provision for income taxes (11.5) 0.7 (0.8) (4.3) (16.0)

Provision/(benefit) for income taxes 7.8 - (0.1) (1.6) 6.1

Net (loss)/income $ (19.3) $ 0.7 $ (0.7) $ (2.7) (22.0)$

Add back non-EBITDA items included in net (loss)/income

Depreciation and amortization 137.2 - 2.1 0.1 139.4

Interest expense 57.7 - - 3.8 61.5

Provision/(benefit) for income taxes 7.8 - (0.1) (1.6) 6.1

Foreign currency loss/(gain) on intercompany loans 11.1 - (0.1) - 11.0

Transaction costs 14.2 - 1.7 - 15.9

Stock-based compensation 33.5 - - - 33.5

Non-cash loss on investments 0.6 - - - 0.6

Adjusted EBITDA $ 242.8 $ 0.7 $ 2.9 $ (0.4) $ 245.9

Three Months ended March 31, 2016

Historical

(in millions)

1 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases

2 Includes historical financial results and related adjustments for acquisitions completed prior to June 30, 2016

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Thank You

investors.zayo.com


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