Earnings Call Presentation
Zayo Group Holdings, Inc.
Fiscal Year 2016 Q4NYSE: ZAYO@ZayoGroup
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
Dan Caruso Chairman & Chief Executive Officer
3
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
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
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% $64.1 13%
Dark
Fib
er
Solu
tions
Netw
ork
Connectivity
Colo
cation &
Clo
ud
Infr
astr
uctu
re
Canada a
nd
Oth
er
Segm
ents
7
($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
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
$200
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
EXCLUDES ZAYO CANADA
0.4% 4.2%0.3% 0.2% 3.9% 1.6% 2.3%
Implied revenue growth:
0.2%
4
9
Q4 Operational Highlights
Net Installations
($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
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
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
($M)
11
strong bookings despite lack of large projects
and unusual cancel
~64% of bookings have <12 month payback
total bookings contract value 2x the
associated committed capex
average payback of 16 months
EXCLUDES ZAYO CANADA
12
Zayo Canada – Financial TargetsJun-16 performance ahead of plan
12Actual Jun-16 US$ 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
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%
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
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
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
~$120k MRR&MAR
<12 month payback
Note: Maps are shown for illustrative purposes
ELAN /
CDN Infrastructure
100G Wavelengths /
Global Carrier
new 100G coherent
solution built on acquired
Viatel assets
4 locations
3 year contract
>12 month payback
Ken desGarennes Chief Financial Officer
17
FY2015 Q4 Earnings Presentation
($ 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
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
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
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%
For detailed Supplemental Earnings Information presentation, please visit:
investors.zayo.com
Q&A
Segment-Level Results
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
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
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
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
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
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
Reconciliations
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
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
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 $53.4
June 30,
2016
FY2015 Q4 Earnings Presentation
ReconciliationNet (Loss)/Income to Adjusted EBITDA
34
($ 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 $230.8
Fiscal Year
2015
Fiscal Year
2016
Fiscal Year
2014
FY2015 Q4 Earnings Presentation
Reconciliation
35
Segment Net (Loss)/Earnings to Adjusted EBITDA
($ 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 $257.8
Three months ended June 30, 2016
FY2015 Q4 Earnings Presentation
($ 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 ($18.0)
June 30, 2016
Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without
Zayo Canada
36
Reconciliation
FY2015 Q4 Earnings Presentation
AFFO & Net AFFO – without Zayo Canada
37
Reconciliation
($ 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) $112.3
June 30, 2016
3838
Pro Forma Growth Reconciliations – June 2016 (Supporting FY16Q4 Pro
Forma Growth excluding Zayo Canada)1,2
Reconciliation
($ 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)
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
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
Thank You
investors.zayo.com