Earnings Call Presentation

Transcription

1 Earnings Call Presentation Zayo Group Holdings, Inc. Fiscal Year 2017 Q3 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 on Form 10-K filed with the Securities and Exchange Commission ( SEC ) and updates to risk factors as included in our Quarterly Report 10-Q filed with the SEC on February 9, 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 and a glossary of terms used throughout. All of which can be found under the investor section of the Company s website at 2

3 Dan Caruso Chairman & Chief Executive Officer

4 Zayo at a Glance International Network 10,057,299 fiber miles 121,923 route miles ,402 buildings 150 avg metro fiber count Datacenters People 44 zcolo data centers >867k billable sf 3,899 employees 227 QBHC1 Products1 38% Fiber Solutions 11% Colocation 23% Transport 26% Enterprise Networks Customers1 7.5k customers 55% of rev from enterprise & content 45% of rev from carriers & wireless Leading Fiber & Data Center Consolidator 40 acquisitions to date Financial2 Growth Value Creation 30 consecutive quarters of sequential revenue growth3 $1.1B invested equity since 2007 inception $8.0B equity value4 >7x return ~$2.2B revenue ~$1.1B adjusted EBITDA 1 Unique Metro Fiber excludes Allstream Mar17q annualized every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary. Excludes Allstream based on average closing price for month of Mar-17 8 since Jan

5 Context Electric Lightwave (ELI) acquisition closed on March 1, 2017 aggressive integration of ELI; in parallel, Canada and Europe snapping into a unified global structure the transition to a post-ipo executive team is largely complete March investor call established targets for Dec17q; update provided in this deck as previously indicated, the ELI close and integration create a challenge to produce a detailed earnings supplement for Mar17q; nonetheless, most info is provided the headwinds associated with these transformations are expected to ease going forward 5

6 FY 3Q17 Highlights continued consecutive quarter revenue & aebitda growth 3%1 pro forma annualized recurring revenue growth; 3%1 constant currency (CC) net bookings of $6.9M1 representing recovery from $5.2M Dec16q bookings the payback period of 181 months, contract value of $320M1, and net capital of $113M1 associated with net bookings were strong relative to prior quarters gross installs of $7.1M1 churn of 1.2%1, resulting in net installs of $1.5M1 and implied organic growth rate of 4%1 record Adj UFCF of $116M, representing 21% of revenue unlike Dec16q, Mar17q metrics include Communications Infrastructure portion of Canada and ELI (for month of March) 1 includes Electric Lightwave CI but excludes Allstream 6

7 Zayo Group Segments global Business Segment structure established in Mar17q Communications Infrastructure Fiber Solutions Colo Transport Enterprise Networks Shared Sales & Customer Service Allstream Voice & SMB Zayo Group is a holding company of multiple portfolio businesses, with a Communications Infrastructure theme majority of alignment into new Segments completed in Mar17q management s focus is on sum-of-the-parts value creation orange means Segment 7

8 Executive Team transition to post IPO team is largely complete Dan Caruso, Chairman & CEO Ken desgarennes CFO Matt Steinfort Corporate Strategy, Development, & Administration substantially more experience across multiple dimensions: global management of large organizations product portfolio general management Andrew Crouch, President & COO Communications Infrastructure1 Jack Waters TJ Karklins Max Clauson Mike Strople Ed Morche Sandi Mays Fiber Solutions & CTO Colo Transport Enterprise Networks Sales CIO & Service blue means new to Zayo 1 outside of Communications Infrastructure, Zayo also added Ray Lahoud to lead the Allstream segment 8

9 EXCLUDES ALLSTREAM Bookings bookings rebounded nicely from Dec16q quarter Net New Sales (Bookings) Stratification Mar17q includes Canadian CI business + 1 ELI month Fiber Solutions remains lower than earlier performance levels Colo on par with prior quarters combination of Enterprise Networks and Transport is higher than in past, due in part to inclusion of Canadian CI business Prior Segmentation New Segmentation 99

10 Major Network Expansion no new >$20M projects signed in Mar17q 47% of capital commitments spent through Mar17q 33% of installs realized changes represent net cost overruns/underruns associated with the initial anchor tenant contract some projects may have been booked over multiple quarters MRR+MAR per site varies due to factors such as distance between site and existing network 10

11 EXCLUDES ALLSTREAM Customer Size bookings diversified across a broader set of customers Net New Sales (Bookings) to Very Large Customers1 Mar17q includes Canadian CI business + 1 ELI month Zayo has ~50 customers that are defined as Very Large Customers1 that make up 46% of our recurring revenue, many of which are carriers Net New Sales (Bookings) to All Other Customers bookings from Very Large Customers were stronger than Dec16q, but still lag historical performance bookings from All Other Customers rebounded beyond historical performance, accounting for greater portion of total 1 Very Large Customers defined as >$300K Monthly Recurring Revenue 11

12 EXCLUDES ALLSTREAM Deal Size bookings improvement driven by smaller deals Net New Sales (Bookings) Large Deals >10k MRR Mar17q includes Canadian CI business + 1 ELI month bookings from large deals remain below the pre-dec16q average Net New Sales (Bookings) Deals < 10k MRR bookings from smaller deals are above the pre-dec16q average 12

13 EXCLUDES ALLSTREAM Bookings Profile high quality bookings Contract Value vs. Capex on Bookings1 Capex & Upfront Expenditures are low relative to recent quarters total bookings contract value >2x the associated committed capex average payback of 18 months 1 Mar17q includes CI from Canada & 1 month of CI from ELI 13

14 EXCLUDES ALLSTREAM 2017 Sales Execution Plan establish sales and marketing as a core competency Bookings Target 1 Increase QBHC 3 2 Assumes 1.1% Churn Leverage Tranzact includes ELI CI but excludes Allstream Segment excludes Canada, ELI, and Business Development employees in Fiber Solutions and Colocation includes Canada, ELI, and Business Development employees in Fiber Solutions and Colocation bolster leadership with strong sales and marketing backgrounds Andrew Crouch Ed Morche Intensify Vertical Coverage Webscale Wireless Cable TV PTTs Finance Healthcare Media, Gaming & Adtech Datacenters, Cloud & Software Manufacturing / Transportation Federal / Public Sector 14

15 6 Geographic Fiber Regions each run by a seasoned executive maximize value creation of local fiber assets end-to-end ownership of product, service and customer lifecycle Jack Waters business development QBHC staffed in region North America Fiber Solutions Western Europe East Randy Dunbar West Dan Stoll Central Randy Brogle Mountain Kay Henze Europe Annette Murphy South Brady Adams 15

16 Colo interplay between colo and network continues to be a focus TJ Karklins Colo Existing Facility Existing Facility: Organic Expansion New Facility: Acquisition New Facility: Expansion edge colo for proximity to customers datacenter colo for enterprises tuck-in M&A customer deals enable expansions in attractive markets 110k square feet added over past 12 months 52k square feet in development 16

17 EXCLUDES ALLSTREAM Revenue and Adj EBITDA 1 Revenue 3% QoQ annualized pro forma recurring revenue growth 3% in constant currency Adjusted EBITDA 2% QoQ annualized pro forma recurring adjusted EBITDA growth 1 for this and subsequent slides, Mar17q includes CI from Canada & 1 month of CI from ELI 17

18 EXCLUDES ALLSTREAM CAPEX and Cash Flow Purchases of Property & Equipment PP&E in line with prior two quarters, even after inclusion of Canada and ELI CI Adj. Unlevered Free Cash of 20% of revenue Levered FCF Positive Adjusted Unlevered FCF 1 Levered FCF Jun16q LFCF includes $23.2M outflow related to debt refinancing activities. Excluding this impact, LFCF would be $5.2M 18

19 EXCLUDES ALLSTREAM Net Installs Gross Installations Churn Processed Net Installations churn of 1.2% net installs imply 4% annualized recurring revenue growth rate1 1 implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($1.438M * 4 = $5.75M), divided by the beginning of quarter run-rate $149.3 = 3.9%. Net Installs used for this calculation excludes ELI 19

20 Net Installs remain below Zayo s aspirations record gross installs aided by inclusion of Canada and ELI CI gross installs tempered by Dec16q low bookings churn of 1.2% was in line with 1.1% to 1.3% guidance, though higher than recent history prior to Dec16q; expected to remain at this level for minimum of one to two quarters Canada CI churn was $1.1M; Net Installs were -$0.4M internal distractions over prior year and heightened industry consolidation likely contributed to elevated churn service quality is strong and believed not to be a factor in higher churn 20

21 Segments 1 Implied Growth Rate excludes ELI 21

22 Targets being updated today Update 1 Financial Targets for Dec17q (3/17/17) Update 2 Report Mar17q Results & update Dec17q Targets Update 3 Report Jun17q Results & update Dec17q Targets Update 4 Report Sep17q Results & update Dec17q Targets Update 5 Report Dec17q Results Provided today 22

23 Guidance projected Dec17q annualized aebitda remains ~$1.3B Dec17q LQA aebitda Target $M 1,334 1, , no change to target shared in March visibility still limited given recent March 1 ELI close Dec16q Zayo+ELI1 Actual 1 ELI based on single month Mar17q ELI Full Quarter Impact Growth & Synergy Dec17q Forecast 23

24 Recap and update of Dec17q Targets segment targets consistent with prior guidance Fiber Solutions Colo Transport Enterprise Networks Allstream Total aebitda % of total 47% No change 49% 10% No change 10% 17% No change 16% 17% No change 17% 9% No change 8% $1.33B LQA No change $1.13B LQA Organic Revenue Growth Rate1,2 ~10% No change 6% HSD No change 4% LSD No change -1% L/MSD No change 1% Negative No change n/a3 MSD ex Allstream No change 3% ex Allstream aebitda Margin ~80% No change 77% 50-55% 52-55% 54% ~45% No change 41% 35-40% No change 38% 20-25% No change 28% ~50% No change 51% Adj. Unlevered Free Cash Flow Margin 25-30% No change 30% 15-20% No change 15% 20-25% No change 3% ~20% No change 24% 15-20% No change 25% ~25% No change 21% Communications Infrastructure: ~90% of EBITDA As presented on 3/17/17 Updated forecast for Dec17q Mar17q Actual HSD= High Single Digits, MSD=Mid Single Digits, LSD= Low Single Digits Growth Rate pro forma for acquisition of ELI Allstream segment growth not comparable due to seasonally high Usage revenue LFCF: become consistently run-rate positive during calendar 2017 No change $54M 24

25 Commercial Highlights data center expansion driven by anchor customer deal West Coast Data Center Expansion - Webscale Company adds >17k square feet and 2MW of colo space and power success-based expansion anchored by large webscale customer total contract value ~$13M, includes 750kW of committed power >12 month payback on-net, tethered by Zayo to international cable landing 25

26 Commercial Highlights Cont. international solutions demonstrate flexibility to solve sophisticated challenges U.S. / London / Singapore Global WAN - Multinational Retailer U.S. / trans-european / trans-asian Global ELAN - International Law firm solutions provide Transatlantic and Transpacific global connectivity highlights capabilities of Global Reach program Global Reach sales up 35%+ QoQ attractive economics despite off-net components both deals <12 month payback utilizes access to undersea cables 26

27 Commercial Highlights Cont. follow-on sales leverage organic expansions and acquired assets Waves / Colocation Provider Dark Fiber / Webscale Cloud Provider IP & Colocation / IaaS Provider nationwide 100G solution leverages breadth of network high fiber count, diverse, multi-point ring topology comprehensive solution includes IP connectivity & colocation 90%+ on-net nominal capex invested 5 year term ~$72k MRR&MAR ~$75k MRR&MAR ~$47k MRR&MAR >12 month payback <12 month payback <12 month payback Note: maps are shown for illustrative purposes 27

28 Observations transformation of Zayo and industry is a source of challenges and opportunities Operational Execution post-ipo management team is more global and seasoned in operating a large scale platform sales and marketing competency increasingly important, as Zayo has opportunity to leverage more assets and products across more verticals re-energized geographic focus required to maximize value creation from deep and dense fiber networks Industry Dynamics active and potential consolidations are short term headwind but long term tailwind uncertain path to certain 5G requires thoughtful navigation cloud & datacenter strategies being developed by most enterprises edge and direct connect strategies prevalent across content, cloud, and SaaS 28

29 Ken desgarennes Chief Financial Officer

30 Q3 Financial Results 1 2 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 Mar17q EPS is based on and million weighted average shares outstanding for basic and diluted, respectively, for the quarter; million shares were outstanding on 3/31/

31 Balance Sheet ample liquidity including $442M of revolver capacity including estimate of Electric Lightwave contribution, >$1.7B of net operating loss carryforwards Debt Schedule1 gross leverage of 4.5x2 Interest Rate April refinancing activity reduced floating rate exposure on $570M of debt 1 2 principal value; excludes capital lease obligations based on Zayo LQA EBITDA adjusted for a full quarter of ELI and pro forma gross debt outstanding 31

32 Stock-Based Comp performance oriented stock-based compensation Stock Based Compensation pre-ipo plan vesting was completed in Dec16q 1 dilution represents the actual dilution for shares vested and delivered during the quarter 32

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

34 Appendix

35 EXCLUDES ALLSTREAM Stratification of Revenue Revenue Stratification Other Revenue 1 MRR & MAR on Last Day of Quarter1 MAR IRU & Upfront Charges 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 35

36 EXCLUDES ALLSTREAM Q3 Operational Highlights Cont. Net New Sales (Bookings) Stratification1 bookings of $6.9M $0.2M one month bookings contribution from Electric Lightwave Contract Value vs. Capex on Bookings1 total bookings contract value >2x the associated committed capex average payback of 18 months 1 Dec16q and earlier exclude Zayo Canada 36

37 EXCLUDES ALLSTREAM Stratification of Net New Sales (Bookings) 37

38 EXCLUDES ALLSTREAM Net AFFO AFFO Less: CapEx from <12mo. payback net sales and Network Capacity Capex 1 Plus: <12 month payback net sales Plus: Upfront customer payments on <12 mo. payback net sales implied revenue growth calculation based on the last day of prior quarter MRR. Does not include amortized revenue Less: Churn processed Net AFFO 38

39 EXCLUDES ALLSTREAM Service Activation and Revenue Under Contract Service Activation Pipeline 1 Revenue Under Contract1 revenue under contract and average remaining contract term in process of being updated for acquired (ELI) and transitioned (Zayo Canada) business 39

40 EXCLUDES ALLSTREAM & ELECTRIC LIGHTWAVE Price Changes & Renewals Price Increases Price Changes Net of Price Increases and Price Decreases Renewals (where there is no price change) Price Decreases Net Contract Value Associated with Price Changes and Renewals 40

41 EXCLUDES ALLSTREAM Mobile Infrastructure and Employee Data Total FTT Towers & Small Cells1 1 2 Dec16q FTT Towers & Small Cells were restated; Mar17q does not include Electric Lightwave beginning in Mar17q, QBHC includes Business Development resources in Fiber and Colocation segments Number of Employees2 41

42 KIO Networks San Diego Datacenter Acquisition On May 1, 2017, the Company completed the $12 million cash acquisition of KIO Networks San Diego data centers. The two data centers, located at World Trade Drive and 9606 Aero Drive, total more than 100,000 square feet of space and 2 megawatts (MW) of critical, IT power, with additional power available. 1 Annualized Revenue and Adjusted EBITDA are based the operating results of KIO Networks San Diego for the three months ended March 31,

43 Weighted Average Multiple = 9.1x Pre-Synergy and 6.6x Post Synergy 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 Geo reflects GBP-USD FX rate of Neo Telecoms reflects Euro-USD FX rate of Adjusted EBITDA reflects lease adjustment of $0.8M reflecting Dec-14 purchase of Denver facility Viatel reflects Euro-USD FX rate of Allstream reflects CAD-USD FX rate of

44 Foreign Exchange Impact & Exposure 1 pro-forma growth rates reflective of the ELI 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 44

45 Reconciliations

46 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 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 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 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. 46

47 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 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 47

48 Consolidated Historical Reconciliations Without Allstream Segment 48

49 Reconciliation Net (Loss)/Income to Adjusted EBITDA 49

50 Reconciliation segment Net Income/(Loss) to Adjusted EBITDA 50

51 Reconciliation cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without Allstream segment 51

52 Reconciliation AFFO & Net AFFO - without Allstream Segment 52

53 Reconciliation Pro Forma Growth Reconciliations - December 2016 (Supporting FY17Q3 Pro Forma Growth including Allstream Segment)1,2 1 2 a reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at includes the financial results of the acquired Eli business during the three months ended December 31, 2016, and related purchase accounting adjustments 53

54 Reconciliation Pro Forma Growth Reconciliations - March 2017 (Supporting FY17Q3 Pro Forma Growth including Allstream Segment)1,2 1 2 a reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at includes the financial results of the acquired Eli business during the two months ended February 28, 1017, and related purchase accounting adjustments 54

55 Thank You investors.zayo.com