Earnings Call Presentation Zayo Group Holdings, Inc. Fiscal Year 2017 Q1 NYSE: ZAYO @ZayoGroup
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 ). We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after releasing this supplemental information or to reflect the occurrence of unanticipated events, except as required by law. In addition to this presentation and our filings with the SEC, the Company provides a supplemental earnings presentation, pricing supplement and a glossary of terms used throughout. All of which can be found under the investor section of the Company s website at http://www.zayo.com/investors. 2 2
Dan Caruso Chairman & Chief Executive Officer 3
FY 1Q17 Highlights 1 continued consecutive quarter revenue & aebitda growth 1 4% pro forma recurring revenue growth; 7% constant currency (CC) record net bookings of $7.2M net installs of $2.3M, driven by $6.5M in gross installs and churn of 1.1% announced largest mobile infrastructure deal in company history announced acquisition of Santa Clara data center & expansion of Chicago data center footprint 1 Financial and operating metrics exclude Zayo Canada 4
Track record What we do Our assets Zayo at a Glance International Network Unique Metro Fiber Datacenters People 8,887,451 fiber miles 114,492 route miles 25,263 buildings 148 avg metro fiber count 62 zcolo data centers >682k billable sf 3,126 employees 174 QBHC Products * 38% Dark Fiber Solutions 45% Network Connectivity 16% Colo & Cloud Infrastructure 1% Other Customers * 6.8k customers 53% of rev from enterprise & content 47% carriers & wireless Leading Fiber & Data Center Consolidator 39 acquisitions to date 7 since Jan 2015 * Excludes Zayo Canada Financial 1 $ ~$2.0B revenue ~$1.0B adjusted EBITDA Growth 28 consecutive quarters of sequential revenue growth 2 Value Creation $1.1B invested equity since 2007 inception $7.2B equity value 3 >6x return 1 Quarter ended Sep-16 annualized 2 Every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary. Excludes Zayo Canada 3 Based on average closing price for month of Sep-16 5
Segments 1 Segments Dark Fiber Solutions Network Connectivity Colocation & Cloud Infrastructure Canada and Other Segment Total Revenue $148.4 $175.6 $64.1 $116.8 $504.9 Revenue % of Total 29% 35% 13% 23% 100% Adjusted EBITDA $108.2 $91.6 $32.2 $28.6 $260.6 EBITDA Margin 73% 52% 50% 25% 52% EBITDA % of Total 42% 35% 12% 11% 100% Capital Expenditures $128.1 $48.9 $28.0 $3.3 $208.3 Capital Expenditures % of Total 62% 23% 13% 2% 100% Adjusted UFCF -$6.0 $41.6 $3.7 $26.4 $65.7 Adjusted UFCF Margin -4% 24% 6% 23% 13% Adjusted UFCF % of Total -9% 63% 6% 40% 100% Net Installs $1.1 $0.7 $0.4 -$0.1 $2.1 Net Installs % of Total 53% 33% 20% -5% 100% Implied Growth Rate on Net Installs 9% 5% 8% -1% 5% Net Sales (Bookings) $2.5 $3.6 $1.1 $1.0 $8.2 1 Based on quarter ended Sep-16 FY2015 Q4 Earnings Presentation 6
Q1 Financial Highlights EXCLUDES ZAYO CANADA $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 $367 $8 $359 Revenue $390 $393 $4 $3 $386 $390 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Recurring Other 6% QoQ annualized pro forma recurring adjusted EBITDA growth 4% QoQ annualized pro forma recurring revenue growth 7% in CC 1 $300 $250 $200 $150 $100 $50 59% 59% 59% 59% 59% $215 $5 $211 Adjusted EBITDA $231 $233 $2 $1 $229 $232 $0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Associated with Other Revenue Excluding Associated with Other Revenue Adjusted EBITDA Margin 1 CC: constant currency 7
EXCLUDES ZAYO CANADA Q1 Financial Highlights Cont. $250 $200 $150 Purchases of Property & Equipment $177 $159 $3 $7 $205 $5 $5 $7 $6 net AFFO of $110M or 28% of revenue approximately LFCF breakeven $100 $50 $150 $167 $194 $0 $200 $150 $100 $50 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Growth Maintenance Other Net AFFO (capturing churn replacement) % of Revenue 35% 27% 18% 29% 28% Implied revenue growth: 2.3% 0.4% 4.2% $127 0.2% 0.0% $112 $110 4 % of Revenue $350 10% -7% 5% -5% 2% $250 $150 $50 ($50) ($150) $195 $159 $36 Levered FCF $213 $8 ($18) ($159) ($177) ($205) $0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 ($250) 1 Quarter ended Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities 2 Quarter ended Dec-15 includes $54M of semi-annual interest payments and $17M of deferred interest from Jun-15 quarter senior notes offerings 3 Quarter ended Jun-16 LFCF includes $23.2M outflow related to debt refinancing activities. Excluding this impact, LFCF would be $5.2M 4 Quarter ended Sep-16 increase in PP&E driven by continued investment in major network expansion projects 1 2 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Purchases of PP&E Cash Flow From Operations LFCF 3 8
MRR and MAR MRR and MAR MRR and MAR Q1 Operational Highlights EXCLUDES ZAYO CANADA $7.0 $6.0 $5.0 $6.0 $1.1 Gross Installations $6.5 $6.5 $1.1 $1.1 $0.0 ($1.0) ($2.0) ($2.8) Churn Processed ($3.3) ($3.2) $4.0 $3.0 $2.0 $4.9 $5.4 $5.4 ($3.0) ($4.0) ($5.0) ($1.0) ($3.8) ($0.8) ($1.0) ($4.1) ($4.2) $1.0 $0.0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 ($6.0) ($7.0) Churn % = -1.1% -1.2% -1.0% -1.1% -1.1% Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Upgrades / Price Increase / Replacement Installations from New Services Hard Disconnects Upgrades / Price Decrease / Replacement $7.0 Net Installations $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $2.2 $2.4 $2.3 consistent 1.1% churn net installs imply 7% annualized recurring revenue growth rate 1 $0.0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 1 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.255M * 4 = $9.02M), divided by the beginning of quarter run-rate $127.8 = 7.1% 9
EXCLUDES ZAYO CANADA Q1 Operational Highlights Cont. $150 $119.8 Last day of quarter run-rate (MRR+MAR) $127.8 $129.4 $100 $50 $0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 service activation pipeline represents 13% of revenue run-rate 50 months average remaining contract term $20 $15 $10 $5 Service Activation Pipeline 100 98 109 102 105 $15.5 $16.2 $14.0 $8.2 $9.5 $8.4 $5.7 $7.2 $6.7 $0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Delivery date after 6 months Delivery date within the next 6 months Implied Average Days to Install 10
MRR and MAR EXCLUDES ZAYO CANADA Q1 Operational Highlights Cont. $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 Net New Sales (Bookings) Stratification $6.4 $6.4 $7.2 $0.4 $0.3 $0.2 $1.7 $1.9 $2.6 record bookings of $7.2M ~59% of bookings have <12 month payback $2.0 $4.4 $4.3 $4.2 $1.0 $0.0 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 1 <12 Month Payback and Positive IRR >12 Month Payback and Positive IRR Speculative Projects total bookings contract value >2x the associated committed capex average payback of 26 months $750 $550 $350 $150 ($50) ($250) ($450) Contract Value vs. Capex on Bookings 12 42 31 16 26 $562 $404 $344 ($134) ($165) ($222) Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 1 Jun-16 $0.2M cancelled Mobile Infrastructure project corrected to fall into Speculative Projects Contract Value Capex & Upfront Expenditures Payback Months 11
Zayo Canada Financial Targets Sep-16 performance update 2 $150 $100 $50 $0 Allstream Revenue $117 $113 $112 $96 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 $50 $40 $30 $20 $10 $0 $18 1 1 Adjusted EBITDA 16% 19% 23% $18 $27 25% $28 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 $50 Purchases of PP&E $50 Unlevered Free Cash Flow (UFCF) $40 $40 $30 $20 $10 $0 $15 $11 $10 $3 1 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 $30 $20 $10 $0 $24 $17 $3 $7 3 1 3 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 1 Dec-15 quarter results adjusted to exclude two non-recurring items totaling $0.3M of quarterly revenue and adjusted EBITDA 2 Actual Jun-16 US$ based on 0.78 US Dollar FX rate, actual Sep-16 US$ based on 0.77 US Dollar FX rate, Dec-16 forecast US$ based on 0.77 US Dollar FX rate 3 Sep-16 capital expenditures were lower (and UFCF was higher) due to timing of payments 12
Major Network Expansion one new >$20M project signed in Sep-16 quarter Geography SPG Booking Qtr 2 Estimated Capital Expenditures NetNew Sales (Bookings) MRR & MAR 3 Upfront Charges West Mobile Infrastructure Mar-14 $58 $0.4 $38 Midwest Dark Fiber Sep-14 $75 $0.1 $0 Southwest Dark Fiber Sep-14 $22 $0.1 $0 West Mobile Infrastructure Mar-15 $39 $0.4 $32 South Mobile Infrastructure Mar-15 $189 $0.6 $25 Southwest Dark Fiber Mar-15 $24 $0.2 $0 Midwest Mobile Infrastructure Jun-15 $88 $0.4 $21 Northwest Mobile Infrastructure Jun-15 $61 $0.6 $0 Southeast Mobile Infrastructure Dec-15 $98 $0.3 $6 South Mobile Infrastructure Dec-15 $36 $0.2 $3 South Mobile Infrastructure Mar-16 $75 $0.2 $2 South Dark Fiber Jun-16 $34 $0.3 $30 National Mobile Infrastructure Sep-16 $64 $0.9 $3 Cumulative Changes 1 $9 $0.0 $0 Total $872 $4.7 $159 large, national mobile infrastructure project announced in quarter projects represent 34% of capex in Sep-16 quarter but only 8% of Gross Installs Capital Expenditures Gross Installs Upfront Received Actual Through Sep-16 $284 $1.0 $55 Percentage of Committed 33% 21% 35% 1 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 13
Commercial Highlights national dark fiber-to-the-tower deal leverages Zayo s broad metro fiber footprint National FTT Deal leverages existing footprint to add 1,800+ sites across 26 markets >50% of sites expected to be within 500 ft of existing network new construction route miles estimated at ~225 deal illustrates second tenant economics optimized price per node leads to better economics for both customer and Zayo PNW/NorCal 331 new sites 1 new market SW/Rocky Mtn. 606 new sites 1 new market Midwest 200 new sites 1 new market NE 229 new sites no new markets SE 439 new sites 3 new markets Zayo FTT/SC Markets 14
Commercial Highlights Cont. increased tenancy on Sacramento SLC route illustrates shared infrastructure model Sacramento SLC Longhaul Dark Fiber 970 mile route announced in early 2015 with anchor customer route completed on schedule in Dec-15 and 25% under budget 12 follow-on customers signed (all customers have installed) 29% aggregate cash flow yield 15
Commercial Highlights Cont. follow-on sales leverage organic expansions and acquired assets Ethernet / Location Intelligence Company Waves / National CDN Provider Waves / Financial Services Ethernet solution leverages both Allstream and Viatel >20 locations in North & South America and Europe ~$36k MRR&MAR <12 month payback Note: Maps are shown for illustrative purposes 20 x 10G wave backbone network that connects most tier 1 cities >3,000 route miles ~$38k MRR&MAR >12 month payback Multi-point wave network leverages Geo acquisition 10 diverse routes up to 40G waves ~$92k MRR&MAR >12 month payback 16
Ken desgarennes Chief Financial Officer 17
Q1 Financial Results 2 ($M, Except per Share Amounts) Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 2 Zayo Group Holdings Revenue $366.8 $369.6 $478.0 $507.3 $504.9 Annualized revenue growth 5% 3% 117% 25% -2% Pro-forma annualized revenue growth 1 5% 3% 2% 9% -2% Operating income/(loss) 52.1 58.7 57.5 72.0 87.0 Net Earnings/(loss) (15.2) (10.8) (19.3) (30.9) 15.7 EPS (basic and diluted) (0.06) (0.04) (0.08) (0.13) 0.06 Zayo Group Holdings Adjusted EBITDA $215.4 $218.9 $242.8 $257.8 $260.6 Annualized Adjusted EBITDA growth 9% 7% 44% 25% 4% Pro-forma annualized Adjusted EBITDA growth 1 9% 7% 13% 18% 5% Adjusted EBITDA margin 59% 59% 51% 51% 52% 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-16 EPS is based on 242.6 and 244.0 million weighted average shares outstanding for basic and FY2015 diluted, Q4 respectively, Earnings Presentation for the quarter; 243.1 million shares were outstanding on 9/30/2016 18
Balance Sheet Sep-15 Sep-16 Consolidated Balance Sheet Data Cash and cash equivalents 346 193 Property and equipment, net 3,349 4,169 Total assets 6,166 6,834 Long-term debt and capital lease obligations, including current portion 3,704 4,140 Total Stockholders' equity 1,243 1,256 ample liquidity including $442M of revolver capacity $1.2B of net operating loss carry forwards Debt Schedule 1 Interest Rate L+275 6.000% 6.375% 4.0x gross leverage 2 July term loan repricing created ~$3M annual interest savings $2,000 $1,000 $1,837 $1,430 $900 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 pro forma for refinancing activity 1 Principal value; excludes capital lease obligations 2 As of September 30, 2016 and based on LQA EBITDA FY2015 Q4 Earnings Presentation 19
Stock-Based Comp performance oriented stock-based compensation Stock Based Compensation Share Dilution (000s) 2,228 157 309 421 470 Dilution % $75 $50 $25 $0 0.9% 0.1% 0.1% 0.2% 0.2% $46 $33 $32 $27 $20 $28 $20 $14 $4 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 post-ipo RSU plans based primarily on measured equity IRR and share price performance pre-ipo plan non-dilutive to current shares outstanding Pre-IPO Plan Post-IPO RSU Actual Dilution 1 1 Dilution represents the actual dilution for shares vested and delivered during the quarter FY2015 Q4 Earnings Presentation 20
Q&A For detailed Supplemental Earnings Information presentation, please visit: investors.zayo.com
Reconciliations
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. 23
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 http://www.zayo.com/investors. 24
Consolidated Historical Reconciliations Without Zayo Canada ($ in millions) Consolidated September 30, 2016 Consolidated Excluding Zayo Zayo Canada Canada Net (loss)/income $15.7 $10.5 $5.2 Interest expense $53.3 1.7 51.6 Provision/(benefit) for income taxes $6.6 0.0 6.6 Depreciation and amortization $138.5 10.5 128.0 Transaction costs $3.0 2.8 0.2 Stock-based compensation $32.0 1.8 30.2 Loss on extinguishment of debt $0.0 0.0 0.0 Foreign currency loss/(gain) on intercompany loans $11.2 0.2 11.0 Non-cash loss on investments $0.3 0.0 0.3 Adjusted EBITDA $260.6 $27.5 $233.1 Purchases of property and equipment 208.3 3.3 205.0 Unlevered Free Cash Flow $52.3 $24.2 $28.1 FY2015 Q4 Earnings Presentation 25
Reconciliation Net (Loss)/Income to Adjusted EBITDA ($ in millions) Fiscal Year Fiscal Year Fiscal Year 2015 2016 2017 September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, 2014 2014 2015 2015 Total 2015 2015 2016 2016 Total 2016 Net (loss)/income ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2) ($10.8) ($19.3) ($30.9) ($76.2) $15.7 Interest expense 46.9 53.4 60.7 53.0 214.0 53.8 51.2 57.7 57.4 $220.1 53.3 Provision/(benefit) for income taxes 9.4 (4.4) (18.4) 4.6 (8.8) 2.7 11.1 7.8 (13.1) $8.5 6.6 Depreciation and amortization 96.0 96.9 100.1 113.2 406.2 117.1 113.7 137.2 148.3 $516.3 138.5 Transaction costs 3.4 1.3 1.5 0.0 6.2 0.0 3.3 14.2 4.0 $21.5 3.0 Stock-based compensation 123.1 (6.0) 40.7 42.9 200.7 46.1 42.9 33.5 33.4 $155.9 32.0 Loss on extinguishment of debt 0.0 30.9 54.9 8.5 94.3 0.0 0.0 0.0 33.8 $33.8 0.0 Foreign currency loss/(gain) on intercompany loans 14.7 13.3 13.2 (16.8) 24.4 10.7 7.1 11.1 24.9 $53.8 11.2 Non-cash loss on investments 0.0 0.5 0.0 0.4 0.9 0.2 0.4 0.6 0.0 $1.2 0.3 Adjusted EBITDA, from continuing operations $183.0 $189.7 $199.0 $210.9 $782.6 $215.4 $218.9 $242.8 $257.8 $934.9 $260.6 Purchases of property and equipment 115.3 129.5 130.1 155.5 530.4 159.2 172.4 185.1 187.4 $704.1 208.3 Unlevered Free Cash Flow $67.7 $60.2 $68.9 $55.4 $252.2 $56.2 $46.5 $57.7 $70.4 $230.8 $52.3 FY2015 Q4 Earnings Presentation 26
Reconciliation Segment Net (Loss)/Earnings to Adjusted EBITDA ($ in millions) Zayo Dark Fiber Solutions Zayo Network Connectivity Three months ended September 30, 2016 Zayo Cloud and Connectivity Services Zayo Canada Zayo Other Corporate/Interco mpany Elimination Net (loss)/income $8.8 $24.8 ($9.1) $10.5 $0.3 ($19.6) $15.7 Interest expense 22.6 16.1 11.3 1.7 0.0 1.6 53.3 Provision/(benefit) for income taxes 0.0 0.0 0.0 0.0 0.0 6.6 6.6 Depreciation and amortization 64.7 37.0 25.7 10.5 0.6 0.0 138.5 Transaction costs 0.1 0.1 0.0 2.8 0.0 0.0 3.0 Stock-based compensation 12.0 13.7 4.3 1.8 0.2 0.0 32.0 Foreign currency loss/(gain) on intercompany loans (0.1) (0.1) 0.0 0.2 0.0 11.2 11.2 Non-cash loss on investments 0.1 0.0 0.0 0.0 0.0 0.2 0.3 Adjusted EBITDA $108.2 $91.6 $32.2 $27.5 $1.1 $0.0 $260.6 Zayo Group Holdings FY2015 Q4 Earnings Presentation 27
Reconciliation Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without Zayo Canada ($ in millions) Consolidated September 30, 2016 Zayo Canada Consolidated Excluding Zayo Canada Net cash provided by continuing operating activities: $232.8 $20.2 $212.6 Cash paid for income taxes 1.9 0.0 1.9 Cash paid for interest, net of capitalized interest 13.2 0.0 13.2 Excess tax benefit from stock-based compensation 0.0 0.0 0.0 Transaction costs 3.0 2.8 0.2 Provision for bad debts (0.9) (0.3) (0.6) Additions to deferred revenue (40.9) (2.6) (38.3) Amortization of deferred revenue 27.5 1.6 25.9 Other changes in operating assets and liabilities 24.0 5.8 18.2 Adjusted EBITDA 260.6 27.5 233.1 Purchases of property and equipment (208.3) (3.3) (205.0) Unlevered Free Cash Flow 52.3 24.2 28.1 Additions to deferred revenue 40.9 2.6 38.3 Amortization of deferred revenue (27.5) (1.6) (25.9) Adjusted Unlevered Free Cash Flow $65.7 $25.2 $40.5 Reconciliation of levered free cash flow: Net cash provided by continuing operating activities: $232.8 $20.2 $212.6 Purchases of property and equipment ($208.3) ($3.3) ($205.0) Levered free cash flow: $24.5 $16.9 $7.6 FY2015 Q4 Earnings Presentation 28
Reconciliation AFFO & Net AFFO without Zayo Canada ($ in millions) Consolidated September 30, 2016 Zayo Canada Consolidated Excluding Canada Earnings/(loss) from continuing operations $15.7 $10.5 $5.2 Depreciation and Amortization Expense 138.5 10.5 128.0 Foreign currency loss/(gain) on intercompany loans 11.2 0.2 11.0 Stock-based compensation 32.0 1.8 30.2 Transaction costs 3.0 2.8 0.2 Loss on extinguishment of debt 0.0 0.0 0.0 Non-cash loss on investments 0.3 0.0 0.3 Amortization of deferred revenue (27.5) (1.6) (25.9) Maintenance capital expenditures (7.1) (0.4) (6.7) AFFO 166.1 23.8 142.3 Upfront customer payments on <12 mo payback of new sales 32.1 1.0 31.1 Capital expenditures for <12 mo payback net new sales (34.4) (5.7) (28.7) Capital expenditures for network capacity (37.7) (3.0) (34.7) Net AFFO $126.1 $16.1 $110.0 FY2015 Q4 Earnings Presentation 29
Reconciliation Pro Forma Growth Reconciliations June 2016 (Supporting FY17Q1 Pro Forma Growth excluding Zayo Canada) 1,2 Three Months ended June 30, 2016 Historical ($ in millions) Zayo Allstream Purchase accounting and other adjustments (in millions) Revenue $ 507.3 $ 117.2 (0.4) Pro-forma without Allstream $ $ 389.7 Operating costs and expenses Operating costs, excluding depreciation and amortization 182.7 67.1-115.6 Selling, general and administrative expenses 104.3 26.9-77.4 Depreciation and amortization 148.3 17.2-131.1 Operating income/(loss) 72.0 6.0 (0.4) 65.6 Other income/(expense) Interest expense (57.4) (2.1) - (55.3) Loss on extinguishment of debt (33.8) - - (33.8) Foreign currency loss on intercompany loans (24.9) - - (24.9) Other (expense)/income, net 0.1 0.2 - (0.1) Total other expense, net (116.0) (1.9) - (114.1) (Loss)/income before provision for income taxes (44.0) 4.1 (0.4) (48.5) (Benefit)/provision for income taxes (13.1) - 1.4 (11.7) Net (loss)/income $ (30.9) $ 4.1 $ (1.8) $ (36.8) Add back non-ebitda items included in net (loss)/income Depreciation and amortization 148.3 17.2-131.1 Interest expense 57.4 2.1-55.3 Provision for income taxes (13.1) - 1.4 (11.7) Loss on extinguishment of debt 33.8 - - 33.8 Unrealized loss/(gain) on intercompany loans 24.9 - - 24.9 Transaction costs 4.0 2.8-1.2 Stock-based compensation 33.4 0.8-32.6 Non-cash loss on investments - - - - Adjusted EBITDA $ 257.8 $ 27.0 $ (0.4) $ 230.4 1 A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases 2 Includes the financial results of the acquired Allstream business during the three months ended June 30, 2016 and purchase accounting adjustments for acquisitions (excluding Allstream) 30
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