Supplemental Earnings Information

Transcription

1 Supplemental Earnings Information Zayo Group Holdings, Inc. Fiscal Year 28 Q NYSE:

2 Forward-Looking Statements Information contained in this supplemental 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 -K and most recent Form -Q filed with the Securities and Exchange Commission. 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. Presentation of Certain Consolidated Pro-forma Financial Data Acquisitions have been, and are expected to continue to be, a component of the Company s strategy. In this Supplemental Earnings Information under Foreign Exchange Impact & Exposure, 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 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 and are not presented as a measure of our pro-forma financial performance. 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, 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 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 less purchases of property and equipment, net of stimulus grants. Adjusted unlevered free cash flow is defined as Adjusted EBITDA less 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 net cash provided by operating activities less purchases of property and equipment, net of stimulus grants. Adjusted funds from operations ( AFFO ) is defined as earnings/(loss) from 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. 2

3 Non-GAAP Financial Measures (continued) 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 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 Historical Financial data & Reconciliation 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 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 Other Notes Components may not sum due to rounding. Metrics throughout this supplemental earnings information presentation exclude Allstream unless specifically labeled. 3

4 Financial and Operational Highlights 4

5 Track record What we do Our assets Zayo at a Glance International Network Unique Metro Fiber Datacenters People,724,9 fiber miles 26,65 route miles 3,73 buildings 4 avg metro fiber count 5 zcolo data centers 95k billable sf 3,647 employees 266 QBHC Products 38% Fiber Solutions % Colocation 23% Transport 27% Enterprise Networks Customers 8.8k customers 55% of rev from enterprise & content 45% carriers & wireless Leading Fiber & Data Center Consolidator 4 acquisitions to date Financial 2 $ ~$2.6B revenue ~$.27B adjusted EBITDA Growth 32 consecutive quarters of sequential revenue growth 3 Value Creation $.B invested equity since 27 inception $8.5B equity value 4 >7x return Excludes Allstream segment; QBHC figure also includes Business Development employees in Fiber Solutions and Colocation segments as well as Inside Sales 2 Sep7q annualized 3 every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary. excludes Allstream 4 based on average closing price for month of Sep7q 5

6 Stratification of Revenue EXCLUDES ALLSTREAM Revenue Stratification $6 $38.9 $39. $392.7 $398.8 $4 $369.6 $5. $4.5 $4.4 $3. $5.6 $2.5 $23.8 $24.6 $25.9 $26.5 $6.5 $6.6 $6.4 $6. $6.7 $3 $47.9 $3.7 $29.6 $7. 9. $55.8 $6.6 $2.7 $3.7 $32.4 $6.4 $6. $6 $4 $3 MRR and MAR on the Last Day of the Quarter $2 $336.4 $347. $354.6 $357.3 $36.7 $43.7 $464.4 $474.5 Dec5q Mar6q $2 $23.5 $25.8 $27.8 $29.4 $3.3 $64.3 $67.7 $7.8 Dec5q Mar6q MRR Usage MAR Other Revenue $6 Other Revenue $6 MAR $6 IRU and Upfront Charges $4 $4 $4 $3 $2 $ $3 $2 $ $2.5 $23.8 $24.6 $25.9 $26.5 $29.6 $3.7 $32.4 $3 $2 $ $4.6 $52.6 $35.9 $5.4 $49.8 $36.8 $4.4 $4.9 $5. $4.5 $4.4 $3. $5.6 $3.7 $6.6 $2.7 Dec5q Mar6q Dec5q Mar6q Dec5q Mar6q The change in MRR and MAR on the last day of the quarter is equal to the net installations in the period plus or minus any effects of fluctuations in foreign exchange rates 6

7 Net AFFO AFFO $2 35% 34% 4% 36% 38% 35% 32% 33% $5 $29 $29 $59 $42 $5 $63 $63 $72 Dec5q Mar6q Plus: <2 month payback net sales $ $ $9 $8 $7 $6 $5 $4 $3 $2 $ $4.3 $4.9 $4.3 $4.2 $3.5 $4.7 $5.3 $5.5 Dec5q Mar6q EXCLUDES ALLSTREAM Less: Churn processed ($) ($4.2) ($3.7) ($4.) ($4.2) ($4.7) ($5.6) ($5.9) ($6.) ($2) ($3) ($4) ($5) ($6) ($7) ($8) ($9) ($) ($) Dec5q Mar6q Implied Annualized Revenue Growth.4% 4.2%.2%.% -4.% -2.9% -.6% -.7% $2 Less: CapEx from <2 mo. payback net sales and Network Capacity CapEx $2 Plus: Upfront customer payments on <2 mo. payback net sales $2 Net AFFO 27% 8% 29% 28% 27% 26% 27% 3% $5 $5 $5 $7 $72 $76 $42 $34 $46 $63 $66 $6 $58 $35 $45 $34 $3 $8 $3 $3 $3 $38 $29 $2 $26 $27 Dec5q Mar6q $4 $ $29 $3 $23 $2 $3 $7 Dec5q Mar6q $98 $67 $2 $ $7 $23 $36 $62 Dec5q Mar6q CapEx from <2mo. payback net sales Network Capacity Implied revenue growth calculation based on the last day of prior quarter MRR. Does not include amortized revenue 7

8 MRR and MAR MRR and MAR Installation and Churn Processed EXCLUDES ALLSTREAM Installation and Churn Processed $9. Gross Installations. Churn Processed $8. $7. $6. $5. $4. $3. $2. $ $5. $ $4.6 $ $6.5 $ $5.4 $5.4 $5.6 $7. $7.3 $ $6.2 $5.9 $6. ($.) ($2.) ($3.) ($4.) ($5.) ($6.) ($7.) ($3.) (.6) (.) (.3) ($4.2) ($2.6) (.7) (.) (.4) ($3.7) ($3.3) ($3.2) (.5) (.6) (.) (.3) (.2) (.2) ($4.) ($4.2) ($3.7) (.6) (.) (.3) ($4.7) ($4.) ($4.3) (.9) (.2) (.3) ($5.6) ($.3) (.) (.3) ($5.9) ($4.8) ($.) (.) (.2) ($6.) $.. Dec5q Mar6q ($8.) ($9.) Churn % = -.2% -.% -.% -.% -.2% -.2% -.2% -.2% Dec5q Mar6q New Services Upgrades Price Increases Replacement Services Hard Disconnects Upgrades Negative Price Changes Replacement Services 8

9 MRR Contract Value MRR MRR MRR Price Changes and Renewals EXCLUDES ALLSTREAM $4, $2, $, $8, $6, Price Increases Price increases as % of MRR = $4, $, Price decreases as % of MRR = 7% 8% % 9% % % 8% % $2, $8, -24% -33% -24% -24% -3% -35% -4% -35% $73 $783 $, $6, $599 $854 $697 $774 $673 $67 $8, $4, $6, Renewals (Where there is no price change) $2, Price Decreases $4, $2, Dec5q Mar6q Price Increases MRR before Price Increases $4, $2, $4,5 $3,684 $3,254 $3,552 $4,24 $2,776 $2,92 $3,43 Dec5q Mar6q ($2,) ($4,) ($625) ($67) ($474) ($6) ($646) ($93) ($,27)($,4) Dec5q Mar6q Price Decreases MRR before Price Decreases $, Price Changes Net of Price Increases and Price Decreases $2 Net Contract Value Associated with Price Changes and Renewals $8, $6 $6, $4, $2, ($2,) ($4,) $88 $99 $97 $29 ($72) ($26) ($488) ($85) Dec5q Mar6q $2 $8 $4 $9. $84. $72.2 $66.5 $69. $73.3 $58.6 $55.5 Dec5q Mar6q Net Contract Value associated with Price Decreases Net Contract Value associated with Renewals Net Contract Value associated with Price Increases 9

10 MRR and MAR Service Activation EXCLUDES ALLSTREAM Service Activation $2 $6 Implied Avg days to Install = Service Activation Pipeline $6.2 $6.4 $6.8 $7. $5.6 $5.5 $4.6 $4.4 $2 $8 $4 Dec5q Mar6q

11 Stratification of Net New Sales (Bookings) EXCLUDES ALLSTREAM Net New Sales (Bookings) Stratification December 3, March 3, June 3, September 3, December 3, March 3, June 3, September 3, Network capacity Estimated Capital Expenditures ($ in ) $4.6 $34.2 $45.7 $34.7 $45. $33.9 $3.8 $3.5 2% 2. <2 Month Payback and Positive IRR Net New Sales (Bookings) (MRR and MAR) ($ in ) $4,283 $4,923 $4,343 $4,232 $3,527 $4,688 $5,287 $5,467 67% Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) ($.3) $27.6 $. ($2.3) ($2.4) $5.7 ($3.4) ($2.5) Estimated Capital Expenditures ($ in ) $29.8 $37.6 $3. $28.7 $2. $26.2 $27.3 $49.6 7% Estimated Payback Period (in months) 6 Contract Value of Net New Sales (Bookings) ($ in ) $229.4 $29. $2.8 $7.3 $69.6 $22.6 $22.5 $ >2 Month Payback and Positive IRR Net New Sales (Bookings) (MRR and MAR) ($ in ) $,63 $,639 $,852 $2,57 $,58 $2,2 $,883 $,647 27% Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) $48.2 $43.2 $4.8 $5. $4.2. $4.3 $29. Estimated Capital Expenditures ($ in ) $6.8 $6.7 $86.3 $7.9 $47.5 $55.5 $47.3 $35. 36% Estimated Payback Period (in months) Contract Value of Net New Sales (Bookings) ($ in ) $7.2 $27.2 $4.4 $358.5 $94.6 $7.9 $99.3 $ Speculative Projects Net New Sales (Bookings) (MRR and MAR) ($ in ) $889 $42 $243 $49 $22 $22 $334 $56 6% Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) Three Months Ended $65.3 $78.5 ($2.) $2.4 $4.6 $2. $8.9 $5.6 Estimated Capital Expenditures ($ in ) $79. $8.9.2 $36.9 $27.6 $2.8 $5. $8.4 26% Estimated Payback Period (in months) n/a n/a n/a n/a n/a n/a n/a n/a Contract Value of Net New Sales (Bookings) ($ in ) $37.3 $ $33.3 $9.7 $9.7 $.6 $2.3 Average % of eight prior quarters

12 Major Network Expansion no new >$2M projects signed in Sep7q Geography SPG Booking Qtr 2 Estimated Capital Expenditures NetNew Sales (Bookings) MRR & MAR 3 Upfront Charges West Mobile Infrastructure Mar4q $58.4 $38 Midwest Dark Fiber Sep4q $75. Southwest Dark Fiber Mar5q $22. West Mobile Infrastructure Mar5q $39.4 $32 South Mobile Infrastructure Mar5q $89.6 $25 Southwest Dark Fiber Mar5q $24.2 Midwest Mobile Infrastructure Jun5q $88.4 $2 Northwest Mobile Infrastructure Jun5q $6.6 Southeast Mobile Infrastructure Dec5q $98.3 $6 South Mobile Infrastructure Dec5q $36.2 $3 South Mobile Infrastructure Mar6q $75.2 $2 South Dark Fiber Jun6q $34.3 $3 National Mobile Infrastructure Sep6q $64.9 $3 West Dark Fiber Dec6q $27. $4 Cumulative Changes -$. Total $889 $4.8 $72 6% of capital commitments spent through Sep7q 44% of installs realized Capital Expenditures Gross Installs Upfront Received Actual Through Sep7q $53 $2. $94 Percentage of Committed 6% 44% 54% changes represent net cost overruns/underruns associated with the initial anchor tenant contract 2 some projects may have been booked over multiple quarters 3 MRR+MAR per site varies due to factors such as distance between site and existing network 2

13 Towers & Small Cells Headcount Mobile Infrastructure and Employee Data Mobile Infrastructure & Employee Data EXCLUDES ALLSTREAM Total FTT Towers & Small Cells Number of Employees 6, 3,4 3,478 3,83 3,932 4,392 4, 2, 8,,424 4,23,856,66 4,335 3,759 5,57 5,526 5,426 5,56 5,2 3, 2,,949,985,966,964 2, ,952 2, , , 6,2 6,52 6,9 7,57 7,952 8,387 8,776 9,8, Dec5q Mar6q In Service Under Construction Dec5q Mar6q # of Non-QBHC # of QBHC Jun7q Total FTT Towers and Small Cells restated 3

14 Foreign Exchange Impact & Exposure Foreign Exchange Impact & Exposure ($ in ) Three Months Ended September 3,27 FOREIGN EXCHANGE IMPACT Revenue Zayo Communications Infrastructure Zayo Communications Infrastructure With Allstream Pro-forma Annualized Revenue Growth 4% 3% Variance ($5.3) ($8.7) Pro-forma annualized constant currency revenue growth 2 % -3% Adjusted EBITDA, from continuing operations: Pro-forma Annualized Adjusted EBITDA Growth 7% 7% Variance ($.8) ($2.7) Pro-forma annualized constant currency adjusted EBITDA growth 2 4% 4% FOREIGN EXCHANGE EXPOSURE Percentage of Revenue British Pound ( ) 6% 5% Euro ( ) 3% 2% Canadian Dollar (CAD) % 6% Total non-us Dollar 9% 23% Pro-forma Acquisition Adjusted growth rates reflective of the KIO acquisition 2 Constant currency is based on the average US Dollar to British Pound, Euro and Canadian Dollar foreign exchange rates for the base comparative periods 4

15 Inorganic Activity 5

16 Weighted Average Multiple = 9.5x Pre-Synergy and 6.6x Post Synergy ZGH Acquisition History Close Date Purchase Price Estimated Estimated Adjusted Adjusted EBITDA LQA Revenue LQA EBITDA LQA Pre-Synergy Multiple Planned Synergies + Synergies Post Synergy Multiple (in unless noted) Memphis Networx Jul $5.4 $.2 7.7x. $.2 7.7x PPL Aug x x IFW Sep (.7) NM. (.7) NM Onvoy Nov x x Voicepipe Nov-7 N/A N/A N/A N/A N/A N/A N/A Citynet Feb x x NTI May x x Ctel Tri-State Mkts Jul (.) NM NM CFS Sep x x Citynet Retail Sep (.3) NM. (.3) NM Adesta Sep (.2) NM. (.2) NM NTI (California) May-9 N/A N/A N/A N/A N/A N/A N/A Fibernet Sep x x AGL Networks Jul x x Dolphini Sep-.2. (.) NM. (.) NM AFS Oct x x 36* Dec x x Marquisnet Dec x x Arialink May x x AboveNet Jul-2 2, x x Fibergate Aug x x USCarrier Oct x x First Telecom Services Dec x 3.3..x LiteCast Dec x x Core NAP May x x Corelink Aug (.6) NM x Access Communications Oct x x Fiberlink Oct x x CoreXchange Mar x x 2 2 Geo May x x 3 3 Neo Telecoms Jul x x AtlantaNAP Jul x x IdeaTek Jan x x 4 Latisys Feb x x 5 Viatel Dec x x Stream Dallas Data Center Dec x x 6 6 Allstream Jan x x Clearview Apr x x Santa Clara Data Center Oct x..2.x Sum/Weighted Avg $5,94.2 $,635.7 $ x $234.8 $ x Revenue and Adjusted EBITDA (adjusted for estimated purchase accounting adjustments) recognized by the acquired entity during the last quarterly period immediately preceding the respective acquisition date multiplied by 4 2 Geo reflects GBP-USD FX rate of Neo Telecoms reflects Euro-USD FX rate of Adjusted EBITDA reflects lease adjustment of.8m reflecting Dec-4 purchase of Denver facility 5 Viatel reflects Euro-USD FX rate of.95 6 Allstream reflects CAD-USD FX rate of.73 6

17 Segment Level Results 7

18 MRR and MAR MRR and MAR MRR and MAR MRR and MAR Segment Information Zayo Fiber Solutions revenue stratification & operational data Revenue Stratification $2 $72.2 $74. $77.5 $79.6 $2.4 $.8 $3.6.7 $75 $2. $2.2 $2.9 $23.4 $ $9.9 $95.5 $3. $3.6 $25.4 $ $25 $75 $25 $49.5 $5.9 $5.8 $55.4 $62. $65.5 Contract Value = Net New Sales (Bookings) $66M $258M $2,339 $2,55 $547 $473 $,79 $2,77 Dec5q Mar6q Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges $5 ($6) MRR Usage MAR Other Revenue Net Sales - MRR Net Sales - MAR 45 4 Gross Installations -5 Churn Processed Net Installations Implied Recurring Revenue Growth = % 8% $2,65 $2, ($,2)($,68) Churn % = -.6% -.6% Dec5q Mar6q 5 5 $,63 $,278 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate 8

19 Segment Information Zayo Fiber Solutions cash flow stratification Adjusted EBITDA Purchases of Property and Equipment Net Capital $75 $75 $75 $5 79% 79% 79% 77% 78% 79% $5 62% 75% 74% 67% 62% 55% $5 43% 34% $25 $25 $25 $75 $75 $75 $25 $25 $25 $35 $38 $4 $38 $5 $54 $6 $3 $3 $2 $8 $7 $8 $67 Unlevered Free Cash Flow 2 $75 7% 4% 6% % 7% 24% $5 Adj Unlevered Free Cash Flow 3 $75 22% 3% $5 $25 $25 $75 $75 $25 $25 $43 $6 $29 $7 $ $8 $32 $47 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 9

20 MRR and MAR MRR and MAR MRR and MAR MRR and MAR Segment Information Zayo Colocation revenue stratification & operational data Revenue Stratification Net New Sales (Bookings) Contract Value = 5 $28M $34M Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges $ $6 $4.4 $5.2 $52.5 $ $.3.9 $. $.2 $.3 $2.3 $2.5 $2. $.8 $56.7 $58.4 $..9 $.4 $.3 $.8 $ $72 $38 $823 $3 6 4 $ $46.9 $47.5 $48.5 $49. $52.6 $54.2 $663 $79 $8 $2 MRR Usage MAR Other Revenue Net Sales - MRR Net Sales - MAR 5 Gross Installations Churn Processed Net Installations Implied Recurring Revenue Growth = 5 5% 6% $734 $ ($57) ($59) $27 $269-5 Churn % = -.% -.9% Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate 2

21 Segment Information Zayo Colocation cash flow stratification Adjusted EBITDA Purchases of Property and Equipment Net Capital $8 $8 $8 52% 5% 52% 54% 52% 5% 4% 45% 44% 44% 38% 48% 34% 47% $6 $6 $6 $4 $4 $4 $2 $2 $2 $26 $26 $28 $29 $29 $29 $2 $23 $23 $24 $22 $28 $9 $27 Unlevered Free Cash Flow 2 $8 % 7% 8% 9% 4% 3% Adj Unlevered Free Cash Flow 3 $8 5% % $6 $6 $4 $4 $2 $2 $6 $3 $4 $5 $8 $2 $9 $ 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 2

22 MRR and MAR MRR and MAR MRR and MAR MRR and MAR Segment Information Zayo Transport revenue stratification & operational data Revenue Stratification $5 $7.4 $9. $25 $.5 $7. $6. $6.4 $2.9 $2.9 $.3. $.2 $. $2.9 $3. $2.9 $2.8 $.3 $.7 $.8 $.4 $75 Contract Value = Net New Sales (Bookings) $65M $5M $2,92 $2,26 $34 $ Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges 5 $25 ($25) () $.5 $.4 $.8 $6.6 $4.9 $6.8 (.) (.4) ($.6) ($.7) 5 $,958 $2, $35 $35 MRR Usage MAR Other Revenue Net Sales - MRR Net Sales - MAR 3 Gross Installations Churn Processed Net Installations Implied Recurring Revenue Growth = 25 % % 25 $2, $, ($2,28) ($,723) 5 ($36) $55-3 Churn % = -.9% -.4% -5 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate 22

23 Segment Information Zayo Transport cash flow stratification Adjusted EBITDA 42% 42% 42% 4% 42% 43% Purchases of Property and Equipment 3% 32% 35% 36% 3% 28% Net Capital 27% 28% $75 $75 $75 $25 $25 $25 $45 $45 $45 $46 $49 $52 $33 $34 $37 $4 $36 $34 $3 $33 Unlevered Free Cash Flow 2 2% % 7% 5% % 5% Adj Unlevered Free Cash Flow 3 3% 3% $75 $75 $25 $25 $2 $ $7 $6 $3 $8 $5 $6 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 23

24 MRR and MAR MRR and MAR MRR and MAR MRR and MAR Segment Information Zayo Enterprise Networks revenue stratification & operational data Revenue Stratification $5 $36.6 $37.7 $2.7.7 $.9 $.9 $25 $5.2 $4.4 $4.7.8 $.3 $.2 $2.2 $.4 $.9 $.9 $.9 $.9 $.9 $.6 $.7 $.6 $.6 $75 Net New Sales (Bookings) Contract Value = 3 $64M $5M 25 $2,329 $65 $2,85 2 $ Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges 5 75 $25 ($25) () $9.3 $9.5 $9.4 $7.5 $32.7 $35.9 ($.3) 5 $2,264 $, $8 $6 MRR Usage MAR Other Revenue Net Sales - MRR Net Sales - MAR 3 Gross Installations Churn Processed Net Installations Implied Recurring Revenue Growth = 25 2% -4% 25 $2,94 $2, ($2,24) 5 $ ($2,693) -3 Churn % = -.5% -2.% -5 ($45) Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate 24

25 Segment Information Zayo Enterprise Networks cash flow stratification Adjusted EBITDA Purchases of Property and Equipment Net Capital 35% 35% 35% 38% 37% 36% 2% 8% 8% 9% 9% 5% 6% 5% $75 $75 $75 $25 $25 $25 $4 $4 $4 $47 $5 $24 $2 $2 $23 $26 $2 $22 $2 Unlevered Free Cash Flow 2 3% 7% 7% 2% 9% 2% Adj Unlevered Free Cash Flow 3 2% 2% $75 $75 $25 $25 $6 $2 $2 $24 $26 $29 $27 $28 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

26 Appendix 26

27 Historical Financial Data & Reconciliations 27

28 Consolidated Historical Financial Data Consolidated Financial Data Fiscal Year Fiscal Year ($ in ) September 3, December 3, March 3, June 3, September 3, Total 27 Revenue $55.2 $638. $2,99.8 $643.5 Annualized revenue growth -2% % 34% 64% 3% Operating income $87. $9.7 $9.7 $5.4 $373.8 $95.4 Net income $5.7 $9.8 $27. $23.2 $85.7 $23.2 WIP Adjusted EBITDA $26.6 $263.4 $282. $3.8 $,6.8 $36.6 Purchases of property and equipment $28.3 $23.6 $28.3 $25.3 $835.5 $93.4 Unlevered Free Cash Flow $52.3 $49.8 $73.7 $5.5 $28.3 $23.2 Annualized EBITDA growth 4% 4% 28% 4% 7% Adjusted EBITDA margin 52% 52% 5% 49% 49% 28

29 Consolidated Historical Financial Data Without Allstream Consolidated Financial Data Three September Months Ended 3, June 3, Consolidated Consolidated Excluding Revenue Consolidated Consolidated $643.5 Allstream Segment $27.7 Allstream Excluding Allstream $55.8 Revenue $638. $ ($ in in ) Annualized revenue growth 3% 64% 32% 5% WIP Operating Operating income income/(loss) $95.4 $5.4 $5.4 $5.7 $89.7 $8. Net Net income/(loss) $23.2 $23.2 $.7 $.9 $.3 $.5 Adjusted EBITDA, from continuing operations $36.6 $3.8 $3.8 $3. $28.8 $285.8 Purchases of property and equipment Unlevered Free Cash Flow (Deficit) $23.2 $5.5 $27.3 $25.5 $8. $95.9 Annualized EBITDA growth 7% 4% 32% 7% Adjusted EBITDA margin 49% 49% 55% 29

30 Consolidated Historical Reconciliations Consolidated Financial Data ($ in ) Fiscal Year Fiscal Year September 3, December 3, March 3, June 3, September 3, Total 27 Net income $5.7 $9.8 $27. $23.2 $85.7 $23.2 Interest expense Provision for income taxes Depreciation and amortization WIP Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans (3.9) (4.4).3 (.8) Non-cash loss on investments Adjusted EBITDA $26.6 $263.4 $282. $3.8 $,6.8 $36.6 Purchases of property and equipment $ Unlevered Free Cash Flow $52.3 $49.8 $73.7 $5.5 $28.3 $23.2 3

31 Consolidated Historical Reconciliations Without Allstream Consolidated Financial Data ($ in ) Consolidated WIP September 3, 27 Allstream Consolidated Excluding Allstream Net income $23.2 $.7 $.5 Interest expense $ Provision for income taxes $ Depreciation and amortization $ Transaction costs $ Stock-based compensation $ Loss on extinguishment of debt $ Foreign currency gain on intercompany loans ($.8). (.8) Non-cash loss on investments... Adjusted EBITDA $36.6 $3.8 $285.8 Purchases of property and equipment Unlevered Free Cash Flow $23.2 $27.3 $95.9 3

32 Segment Data Reconciliation: Net (Loss)/Earnings to Adjusted EBITDA Segment Data Reconciliation ($ in ) Three months ended September 3, 27 Fiber Solutions zcolo Transport WIP Enterprise Networks Allstream Corporate/Interco mpany Elimination Net income/(loss) $4.7 ($7.2) $4.5 $8.7 $.7.8 $23.2 Interest expense Provision for income taxes Depreciation and amortization Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency gain on intercompany loans..... (.8) (.8) Non-cash loss on investments Adjusted EBITDA $54.2 $29.4 $5.6 $49.5 $3.8 $. $36.6 Zayo Group Holdings A reconciliation of previous quarters legacy segment information can be found in our historical earnings supplements found on our website at 32

33 Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF Consolidated Financial Data ($ in ) Fiscal Year Fiscal Year September 3, December 3, March 3, June 3, September 3, Net cash provided by operating activities $232.8 $69.7 $262.4 $244.9 $268.8 Cash paid for income taxes Cash paid for interest, net of capitalized interest Transaction costs Provision for bad debts (.9) (.5) (.7) (.6) (.8) Additions to deferred revenue (4.9) (43.4) (72.4) (43.8) (4.5) Amortization of deferred revenue Other changes in operating assets and liabilities (3.4) (7.7) Adjusted EBITDA Purchases of property and equipment (28.3) (23.6) (28.3) (25.3) (93.4) Unlevered Free Cash Flow Additions to deferred revenue Amortization of deferred revenue (27.5) (28.) (29.9) (32.) (32.8) Adjusted Unlevered Free Cash Flow $65.7 $65. $6.2 $7.2 $3.9 Reconciliation of levered free cash flow: Net cash provided by operating activities $232.8 $69.7 $262.4 $244.9 $268.8 Purchases of property and equipment ($28.3) ($23.6) ($28.3) ($25.3) ($93.4) Levered free cash flow $24.5 ($43.9) $54. $39.6 $75.4 Amortization of deferred revenue is equal to monthly amortized revenue (MAR) 33

34 Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF Without Allstream Consolidated Financial Data ($ in ) Consolidated September 3, 27 Allstream Consolidated Excluding Allstream Net cash provided by operating activities $268.8 $9.8 $249. Cash paid for income taxes.4..4 Cash paid for interest, net of capitalized interest Transaction costs Provision for bad debts (.8) (.) (.7) Additions to deferred revenue (4.5) 2.2 (42.7) Amortization of deferred revenue Other changes in operating assets and liabilities (7.7) 6.4 (4.) Adjusted EBITDA Purchases of property and equipment (93.4) (3.5) (89.9) Unlevered Free Cash Flow Additions to deferred revenue 4.5 (2.2) 42.7 Amortization of deferred revenue (32.8) (.4) (32.4) Adjusted Unlevered Free Cash Flow $3.9 $24.7 $6.2 Reconciliation of levered free cash flow: Net cash provided by operating activities $268.8 $9.8 $249. Purchases of property and equipment ($93.4) ($3.5) ($89.9) Levered free cash flow $75.4 $6.3 $59. Amortization of deferred revenue is equal to monthly amortized revenue (MAR) 34

35 AFFO & Net AFFO Reconciliation AFFO & Net AFFO Reconciliation Fiscal Year 27 Fiscal Year 28 September 3, December 3, March 3, June 3, September 3, Net income $5.7 $9.8 $27. $23.2 $23.2 Depreciation and Amortization Expense Foreign currency loss/(gain) on intercompany loans (3.9) (4.4) (.8) Stock-based compensation Transaction costs Loss on extinguishment of debt Non-cash loss on investments Amortization of deferred revenue (27.5) (28.) (29.9) (32.) (32.8) Maintenance capital expenditures (7.) (7.5) (7.2) (7.) (6.6) AFFO $66. $73.9 $8.3 $89. $98.2 Upfront customer payments on <2 mo payback of new sales Capital expenditures for <2 mo payback net new sales (34.4) (23.7) (27.4) (29.) (5.5) Capital expenditures for network capacity (37.7) (47.8) (34.5) (3.8) (3.5) Net AFFO $26. $26.4 $4. $6.2 $

36 AFFO & Net AFFO Reconciliation Without Allstream AFFO & Net AFFO Reconciliation ($ in ) Consolidated September 3, 27 Allstream Consolidated Excluding Allstream Net income $23.2 $.7 $.5 Depreciation and Amortization Expense Foreign currency loss/(gain) on intercompany loans (.8). (.8) Stock-based compensation Transaction costs Loss on extinguishment of debt Non-cash loss on investments... Amortization of deferred revenue (32.8) (.4) (32.4) Maintenance capital expenditures (6.6). (6.6) AFFO Upfront customer payments on <2 mo payback of new sales Capital expenditures for <2 mo payback net new sales (5.5) (.9) (49.6) Capital expenditures for network capacity (3.5). (3.5) Net AFFO $86.6 $24.9 $6.7 36

37 Pro-forma Growth Reconciliations June 27(Supporting FY7Q4 Pro-forma Growth including Allstream) Pro-forma Growth Reconciliation, 2 Three Months ended June 3, 27 Zayo Historical KIO Purchase accounting and other adjustments Pro-Forma with Allstream (in ) Revenue $ 638. $.3 $ - $ Operating costs and expenses Operating costs, excluding depreciation and amortization $ Selling, general and administrative expenses $ 7.4 Depreciation and amortization $ 8.5 Operating income/(loss) 5.4 (.) (.) $ 5.2 Other income/(expense) Interest expense (7.5) - - $ (7.5) Loss on extinguishment of debt (3.7) - - $ (3.7) Foreign currency gain on intercompany loans $ 4.4 Other expense, net (.4) - - $ (.4) Total other expense, net (7.2) - - $ (7.2) Income/(loss) before provision for income taxes 34.2 (.) (.) $ 34. Provision/(benefit) for income taxes. - (.) $.9 Net income/(loss) $ 23.2 $ (.) $ - $ 23. Add back non-ebitda items included in net income/(loss) Depreciation and amortization $ 8.5 Interest expense $ 7.5 Provision/(benefit) for income taxes. - (.) $.9 Loss on extinguishment of debt $ 3.7 Foreign currency gain on intercompany loans (4.4) - - $ (4.4) Transaction costs $ 2.9 Stock-based compensation $ 2. Non-cash loss on investments $.5 Adjusted EBITDA $ 3.8 $ - $ - $ 3.8 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes the financial results of the acquired ELI and KIO businesses during the three months ended June 3, 27 and purchase accounting adjustments 37

38 Pro-forma Growth Reconciliations September 27(Supporting FY8Q Pro-forma Growth including Allstream) Pro-forma Growth Reconciliation, 2 Three Months ended September 3, 27 Zayo Historical KIO Purchase accounting and other adjustments Pro-Forma with Allstream (in ) Revenue $ $ - $ - $ Operating costs and expenses Operating costs, excluding depreciation and amortization Selling, general and administrative expenses Depreciation and amortization Operating income/(loss) Other income/(expense) Interest expense Loss on extinguishment of debt Foreign currency gain on intercompany loans Other expense, net Total other expense, net Income/(loss) before provision for income taxes Provision/(benefit) for income taxes Net income/(loss) $ - $ - $ - Add back non-ebitda items included in net income/(loss) Depreciation and amortization Interest expense Provision/(benefit) for income taxes Loss on extinguishment of debt Foreign currency gain on intercompany loans Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA $ 36.6 $ - $ - $ 36.6 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes the financial results of the acquired ELI and KIO businesses during the three months ended September 3, 27 and purchase accounting adjustments 38