Earnings Call Presentation

Transcription

1 Earnings Call Presentation Zayo Group Holdings, Inc. Fiscal Year 2016 Q1 NYSE:

2 Safe Harbor Information 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 or Form 10-K filed with the Securities and Exchange Commission ( SEC ) on September 18, We caution you not to place undue reliance on these forwardlooking 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 2 2

3 Dan Caruso Chairman & Chief Executive Officer 3

4 FY 1Q16 Highlights Another consecutive quarter of revenue and adjusted EBITDA growth 7% organic recurring revenue growth with leading indicators pointing to 8% Record net installs driven by historically low churn of 1.1% Revenue visibility enhanced with installation pipeline (backlog) and revenue under contract reaching $14M and $6.2B respectively Significant progress on major network & colo expansion projects Strong bookings of $6.4M with attractive capital profile (average payback of 12 months) 4

5 Zayo Vision & Mission Vision: Amass fiber, data center, and structure assets and unleash their value by providing exceptional communications infrastructure services Mission: Accelerate our customers capabilities to bring freedom and prosperity to the world by providing enormous high-quality bandwidth 5

6 Our track record What we do Our assets Zayo at a Glance International Network Unique Metro Fiber Datacenters People 6,938,000 fiber miles 87,273 route miles 18,528 buildings 152 avg metro fiber count 45 zcolo Datacenters >500k billable sf 1,867 employees 133 QBHC Products 50% bandwidth infrastructure 48% cloud & connectivity 2% other Customers 6.7k customers 55% of rev from enterprise & content 45% carriers & wireless Leading Fiber & Datacenter Consolidator 34 acquisitions to date 6 since 2014 $ Financial 1 $1.5B revenue $862M adjusted EBITDA Levered free cash flow 10% of revenue Track Record 24 consecutive quarters of sequential revenue growth (all since reporting) 2 $1.1B invested equity since 2007 inception >$6.25B equity value today 3 ; >5x return 1 September-15 quarter annualized 2 Including Zayo Group, LLC operating subsidiary 3 Based on last month average close price FY2015 Q4 Earnings Presentation 6

7 Cloud & Connectivity Physical Infrastructure Q1 Segment & Product Split 1 % Revenue % EBITDA % of Adj. UFCF Dark Fiber Leased raw fiber 30% 37% 70% Mobile Infrastructure Tower/small cell backhaul 7% 8% -39% Interconnect-Oriented Colo Space, power & interconnects 13% 11% 11% Subtotal 50% 56% 42% Wavelengths Ethernet 1G, 2.5G, 10G & 100G waves Switched & dedicated service 19% 16% 8% 11% 11% 20% IP Services SONET Cloud Services Internet access & transit Legacy carrier-grade service Infrastructure-as-a- Service Subtotal 8% 8% 13% 6% 6% 15% 3% 2% 1% 48% 43% 56% 1 Based on quarter ended Sep-15 Physical Infrastructure & Cloud & Connectivity segment results; revenue FY2015 from Q4 Earnings Other segment Presentation represents 2% of total revenue 7

8 Q1 Financial Highlights ($M) $400 $350 Revenue $321 $362 $367 $9 $8 $300 $10 $250 $200 $150 $100 $50 $311 $353 $359 $0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Recurring Other 9% QoQ annualized total EBITDA growth 12% QoQ annualized recurring EBITDA growth 98% of revenue is recurring 5% QoQ annualized total revenue growth 7% QoQ annualized recurring revenue growth Adjusted EBITDA ($M) $250 58% 59% 58% 57% 59% 58% 58% 59% $183 $200 $7 $150 $100 $50 $211 $215 $7 $5 $0 $176 $204 $211 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Associated with Other Revenue Excluding Associated with Other Revenue Adjusted EBITDA Margin 8

9 Q1 Financial Highlights Cont. ($M) $200 $150 $100 $50 Purchases of Property & Equipment $115 $4 $6 $156 $159 $5 $8 $3 $7 >90% of capex growth-related net AFFO 1 of $127M or 35% of revenue $36M of quarterly levered free cash flow $0 ($M) $200 $150 $100 $50 $0 $105 $143 $150 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Growth Maintenance Other Net AFFO (capturing churn replacement) % of Revenue 26% 30% 24% 20% 26% 32% 32% 35% $63 $116 $127 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 1 Includes churn replacement capex plus ~2% implied growth 2 Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities ($M) $350 $250 $150 $50 ($50) ($150) ($250) Levered FCF % of Revenue 19% 24% 25% 1% -2% 11% 11% 10% $3 $39 $36 ($115) ($156) ($159) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Purchases of PP&E Cash Flow From Operations LFCF 9 2

10 MRR and MAR MRR and MAR MRR and MAR Q1 Operational Highlights ($M) $7.0 $6.0 $5.0 Gross Installations $5.4 $1 $6.3 $6.0 $1 $1 ($M) $0.0 ($1.0) ($2.0) Churn Processed ($3) ($3) ($3) $4.0 $3.0 $2.0 ($3.0) ($4.0) ($5.0) ($1) ($1) ($1) ($3.9) ($4.0) ($3.8) $1.0 $0.0 $4 $5 $5 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 ($6.0) ($7.0) Churn % = -1.4% -1.3% -1.3% -1.3% -1.2% -1.3% -1.2% -1.1% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Upgrades / Price Increase / Replacement Installations from New Services Hard Disconnects Upgrades / Price Decrease / Replacement ($M) $7.0 $6.0 Net Installations 2 nd highest gross install quarter at $6.0M $5.0 lowest churn % quarter in last 2 years $4.0 $3.0 $2.0 $1.0 $1.5 $2.2 $2.2 record net installs of $2.2M net installs imply 8% annualized recurring revenue growth rate 1 $0.0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 1 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.24M * 4 = $8.96M), divided by the beginning of quarter run-rate $117.4M = 7.6% 10

11 Q1 Operational Highlights Cont. ($M) $150 $100 Last day of quarter run-rate (MRR+MAR) $103.7 $117.4 $119.8 $50 8% QoQ annualized revenue run-rate growth $0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 ($M) $20 Service Activation Pipeline record service activation pipeline represents 12% of revenue run-rate 46 months average remaining contract term $15 $10 $5 $13.7 $14.0 $11.3 $5.1 $7.4 $8.4 $0 $6.1 $6.3 $5.7 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Delivery date after 6 months Delivery date within the next 6 months Implied Average Days to Install 11

12 MRR and MAR Q1 Operational Highlights Cont. Bookings Stratification ($M) $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $5.8 $0.4 $1.4 $6.8 $0.3 $6.4 $0.3 $2.0 $1.7 continued strong bookings: $6.4M in bookings is 3 rd highest in history ~70% of bookings have <12 month payback $2.0 $1.0 $0.0 $4.0 $4.5 $4.4 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 <12 Month Payback and Positive IRR >12 Month Payback and Positive IRR Speculative Projects <5% associated with speculative projects Contract Value vs. Capex on Bookings ($M) $750 total contract value associated with bookings is greater than 3x the capex committed average payback of 12 months reflecting attractive capital profile $550 $350 $150 ($50) ($250) ($450) $545 $515 $404 ($227) ($134) ($253) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Contract Value Capex & Upfront Expenditures Payback Months 12

13 MRR and MAR Thousands MRR and MAR Thousands Q1 Commercial Highlights Strong quarter of on-net follow-on sales ($M) $5.0 $4.0 $3.0 $2.0 $1.0 Payback months= ZCC Bookings $3.6 $3.7 $2.7 strong and consistent ZCC bookings momentum lower capex, leveraging network deployed on large ZPI projects weighted towards smaller, on-net sales $0.0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 ($M) $5.0 Payback months= ZPI Bookings ZPI bookings of $2.6M have 10 month average payback, reflecting strong on-net sales and few large, long payback projects $4.0 $3.0 $2.0 $2.9 $3.2 $2.6 $1.0 $0.0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 13

14 Q1 Commercial Highlights Cont. Fortune 500 customer sale leveraging existing metro footprint Legend Existing Fiber New Build Existing Conduit customer replacing lit network with more scalable, higher bandwidth solution leveraged existing dark fiber infrastructure, minimizing capex 14

15 Q1 Commercial Highlights Cont. UCHealth selects Zayo for holistic bandwidth infrastructure Ft. Collins Boulder Denver Colorado Springs comprehensive services, including colocation, waves and dark fiber network enables technologically advanced delivery of healthcare, including real-time, high-definition (HD) medicine leverages existing Denver datacenters and dense (largely FTT funded) fiber footprint 15

16 Q1 Commercial Highlights Cont. Fortune 500 customer deployment of nationwide 6x100g Wavelengths Existing 100G Route Legend customer needed a nationwide dedicated high-bandwidth network to support growing business requirements zayo leveraged existing 100G wave backbone to meet aggressive delivery schedule 16

17 Organizational Changes Reorganizing strategic & reporting segments current reporting segments Physical Infrastructure Cloud & Connectivity Strategic product groups no change Metro & Intercity Dark Fiber Mobile Infrastructure Group zcolo Cloud Ethernet IP Waves Sonet new reporting segments starting FY16Q2 Dark Fiber Solutions Dave Jones Colocation & Cloud Infrastructure Greg Friedman Network Connectivity Max Clauson co-coo Chris Morley will manage the 3 reporting segments co-coo Matt Erickson will manage Global Sales and Customer Success 1 1 Includes sales, solutions engineering, strategic markets and alliances, IT, tranzact, customer service and security 17

18 Viatel Pending Acquisition Transforms Zayo into pan-european bandwidth infrastructure provider ~7,500 km intercity dark fiber-capable network transforms Zayo s Frankfurt-London- Amsterdam-Paris network from leased to owned fiber >900 km of metro fiber in 14 markets including Germany bandwidth infrastructure product mix ~ 95M enterprise value reflects inherent asset value and high pre-synergy multiple (36x) post-synergy multiple (10.5x) expected to be realized rapidly signed on Nov 10; expected close by Dec 31 18

19 Ken desgarennes Chief Financial Officer 19

20 Q1 Financial Results ($ in millions) Revenue Three Months Ended September 30, December 31, March 31, June 30, September 30, Zayo Cloud & Connectivity Zayo Physical Infrastructure Other Corporate/Intercompany Elimination (0.0) Zayo Group Holdings Revenue $320.6 $323.9 $340.7 $361.9 $366.8 Annualized revenue growth 32% 4% 21% 25% 5% Pro-forma annualized revenue growth 1 7% 4% 6% 5% 5% Operating income/(loss) (39.5) Net Earnings/(loss) (110.5) 3.8 (53.7) 5.1 (15.2) EPS (basic and diluted) 0.02 (0.22) 0.02 (0.06) EBITDA Zayo Cloud & Connectivity Zayo Physical Infrastructure Other Corporate/Intercompany Elimination (0.0) (0.0) 0.1 (0.0) (0.0) Zayo Group Holdings Adjusted EBITDA $183.0 $189.7 $199.0 $210.9 $215.4 Annualized Adjusted EBITDA growth 28% 15% 20% 24% 9% Pro-forma annualized Adjusted EBITDA growth 1 16% 15% 10% 7% 9% Adjusted EBITDA margin 57% 59% 58% 58% 59% 2 1 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 closed 2 Sep-15 EPS is based on million weighted average shares outstanding for the quarter; million FY2015 shares Q4 Earnings were outstanding Presentation 9/30/15 20

21 Equity: Waiver & Buyback Stockholder agreement waiver public float/ unrestricted currently restricted 73.7M pre-2009 investors waive restrictions on remaining 156M shares minimize long-term overhang and multiple friction events 89.0M 156.2M 82.5M post-2009 investors & management 82.5M of current pre-waiver restricted shares held by post-2009 investors and management Share repurchase program associated volatility may cause shares to be undervalued Size authorized $500M will take advantage of market conditions to buy back shares Term Six Months FY2015 Q4 Earnings Presentation 21

22 Equity: Stock-Based Comp Performance oriented stock-based compensation Stock Based Compensation ($M) $150 $125 $100 $75 $50 $25 $0 ($25) ($50) N/A N/A N/A N/A 0.1%- 1.0% $ %- 0.7% 0.2%- 0.8% $42.9 $46.1 $20 $27 $123 $23 $20 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Pre-IPO Plan Post-IPO RSU Dilution % Range 0.2%- 0.9% post-ipo RSU plans based primarily on measured equity IRR and share price performance pre-ipo plan non-dilutive to current shares outstanding FY2015 Q4 Earnings Presentation 22

23 Balance Sheet ($ in millions) September 30, September 30, Consolidated Balance Sheet Data Cash and cash equivalents Property and equipment, net 2,896 3,349 Total assets 4,974 6,166 Long-term debt and capital lease including current portion 3,177 3,704 Total Stockholders' equity 294 1,244 ample liquidity including ~$440M of revolver capacity $1.1B of net operating loss carry forwards 4.4x gross leverage >75% fixed rate incl. rate swap >50% is unsecured ($M) $4,000 $3,000 $2,000 $1,000 $0 Debt Schedule 1 Interest Rate % L % 6.375% $350 $1,430 $1,643 $ Principal value; excludes capital lease obligations FY2015 Q4 Earnings Presentation 23

24 Consolidation 34 closed acquisitions totaling $4.6 billion remain active & opportunistic CY15 consistent with historical pace of acquisitions Viatel signed & scheduled to close before year-end focused on fiber and datacenter targets targeting both North America & Europe ample debt capacity for additional deals signed, pending close Note: Acquisitions shown on the Calendar Year in which the transactions were closed FY2015 Q4 Earnings Presentation 24

25 Q&A For detailed Supplemental Earnings Information presentation, please visit: investors.zayo.com

26 reconciliations

27 Non-GAAP Financial Measures The 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 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 and liquidity, and we use levered free cash flow as a measure to evaluate cash generated through normal operating activities. 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. In addition to these measures, we use levered free cash flow as a measure to evaluate cash generated through normal operating activities. 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

28 Non-GAAP Financial Measures (cont.) 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

29 Non-GAAP Financial Measures (cont.) 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 acquisition, 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

30 Net (Loss)/Income to Adjusted EBITDA ($ in millions) Fiscal Year Fiscal Year Fiscal Year September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, Total Total 2015 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) Earnings/(loss) from discontinued operations (1.7) (0.8) (1.1) 1.3 (2.3) Interest expense Provision/(benefit) for income taxes (4.4) (18.4) 4.6 (8.8) 2.7 Depreciation and amortization Transaction costs Stock-based compensation (6.0) Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) (16.8) Non-cash loss on investments 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 Purchases of property and equipment 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 FY2015 Q4 Earnings Presentation 30

31 Segment Data Reconciliation Net (Loss)/Earnings to Adjusted EBITDA ($ in millions) Three Months Ended September 30, 2015 Zayo Physical Infrastructure Zayo Cloud and Connectivity Zayo Other Corporate / Intercompany Elimination Zayo Group Holdings Net earnings/(loss) ($13.0) $10.9 $1.2 ($14.3) ($15.2) Interest expense Benefit for income taxes Depreciation and amortization expense Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency gain on intercompany loans 0.0 (0.1) Non-cash loss on investments Adjusted EBITDA $120.6 $93.1 $1.7 $0.0 $215.4 FY2015 Q4 Earnings Presentation 31

32 Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF ($ in millions) Fiscal Year 2014 Fiscal Year 2015 Fiscal Year 2016 September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, Net cash provided by continuing operating activities: $97.1 $142.3 $159.0 $168.1 $118.2 $123.7 $168.5 $195.0 $195.2 Cash paid for income taxes Cash paid for interest, net of capitalized interest Non-liquidating distribution to common unit holders Excess tax benefit from stock-based compensation Transaction costs Provision for bad debts (0.4) (0.4) (0.8) (0.3) (0.6) (0.3) (0.4) (0.6) (0.6) Additions to deferred revenue (24.0) (23.4) (65.2) (51.2) (43.2) (40.9) (39.5) (25.5) (49.7) Amortization of deferred revenue Other changes in operating assets and liabilities (5.8) 2.0 (15.0) Adjusted EBITDA Purchases of property and equipment (86.7) (88.3) (90.9) (94.9) (115.3) (129.5) (130.1) (155.5) (159.2) Unlevered Free Cash Flow Additions to deferred revenue Amortization of deferred revenue (12.6) (13.6) (14.2) (15.2) (17.3) (17.3) (18.3) (19.2) (20.4) Adjusted Unlevered Free Cash Flow $80.3 $83.2 $125.8 $112.2 $93.7 $83.8 $90.1 $61.7 $85.5 Reconciliation of levered free cash flow: Net cash provided by continuing operating activities: $97.1 $142.3 $159.0 $168.1 $118.2 $123.7 $168.5 $195.0 $195.2 Purchases of property and equipment ($86.7) ($88.3) ($90.9) ($94.9) ($115.3) ($129.5) ($130.1) ($155.5) ($159.2) Levered free cash flow: $10.4 $54.0 $68.1 $73.2 $2.9 ($5.8) $38.4 $39.5 $36.0 FY2015 Q4 Earnings Presentation 32

33 AFFO & Net AFFO Reconciliation ($ in millions) September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, Total Total 2015 Earnings/(loss) from continuing operations ($29.1) ($37.6) ($42.7) ($72.2) ($181.6) ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2) Depreciation and Amortization Expense $81.0 $81.7 $84.2 $91.3 $338.2 $96.0 $96.9 $100.1 $113.2 $406.2 $117.1 Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) (16.8) Stock-based compensation (6.0) Transaction costs Loss on extinguishment of debt Non-cash loss on investments Amortization of deferred revenue (12.6) (13.6) (14.2) (15.2) (55.6) (17.3) (17.3) (18.3) (19.2) (72.1) (20.4) Maintenance capital expenditures (5.1) (4.9) (4.9) (5.2) (20.1) (5.7) (5.7) (5.8) (7.5) (24.7) (7.0) AFFO Upfront customer payments on <12 mo payback of new sales Capital expenditures for <12 mo payback net new sales (24.4) (44.1) (14.5) (39.4) (122.7) (45.4) (17.8) (50.6) (25.9) (139.7) (36.8) Capital expenditures for network capacity (15.7) (17.4) (20.0) (23.8) (76.9) (20.6) (33.7) (42.7) (21.5) (118.5) (22.8) Net AFFO $69.9 $71.2 $85.7 $69.8 $296.2 $63.0 $85.0 $107.5 $116.2 $371.7 $127.0 FY2015 Q4 Earnings Presentation 33