UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________________________

FORM 10-Q

_______________________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-36708

_______________________________________________________________

Uniti Group Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________

Maryland	46-5230630
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2101 Riverfront Drive, Suite A Little Rock, Arkansas	72202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (501) 850-0820

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	UNIT	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ o No x

As of October 27, 2022, the registrant had 237,200,050 shares of common stock, $0.0001 par value per share, outstanding.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities law. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: our expectations regarding the settlement we have entered into with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”); the future prospects and financial health of Windstream; our expectations about our ability to maintain our status as a real estate investment trust (a “REIT”); our expectations regarding the effect of the COVID-19 pandemic on our results of operations and financial condition, including the potential need to perform an interim goodwill analysis and report an impairment charge related thereto; our expectations regarding the future growth and demand of the telecommunication industry, future financing plans, business strategies, growth prospects, operating and financial performance, and our future liquidity needs and access to capital; expectations regarding future deployment of fiber strand miles and small cell networks and recognition of revenue related thereto; expectations regarding levels of capital expenditures; expectations regarding the deductibility of goodwill for tax purposes; expectations regarding reclassification of accumulated other comprehensive income (loss) related to derivatives to interest expense; expectations regarding the amortization of intangible assets; and expectations regarding the payment of dividends.

Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

•the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;

•adverse impacts of the COVID-19 pandemic, inflation and rising interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets;

•the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;

•the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;

•the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;

•our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;

•our ability to access debt and equity capital markets;

•the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;

•our ability to retain our key management personnel;

•changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs;

•covenants in our debt agreements that may limit our operational flexibility;

•the possibility that we may experience equipment failures, natural disasters, cyber attacks or terrorist attacks for which our insurance may not provide adequate coverage;

•the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;

•other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and

2

•additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, as well as those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (the “SEC”).

Forward-looking statements speak only as of the date of this Quarterly Report. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

3

Uniti Group Inc.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Uniti Group Inc.
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Income	6
	Condensed Consolidated Statements of Comprehensive Income	7
	Condensed Consolidated Statements of Shareholders’ Deficit	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11
	1.Organization and Description of Business	11
	2.Basis of Presentation and Summary of Significant Accounting Policies	11
	3.Revenues	14
	4.Leases	15
	5.Investments in Unconsolidated Entities	17
	6.Fair Value of Financial Instruments	17
	7.Property Plant and Equipment	19
	8.Derivative Instruments and Hedging Activities	19
	9.Goodwill and Intangible Assets and Liabilities	22
	10.Notes and Other Debt	22
	11.Earnings Per Share	24
	12.Segment Information	25
	13.Commitments and Contingencies	28
	14.Accumulated Other Comprehensive Loss	31
	15.Capital Stock	31
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
	1.Overview	32
	2.Results of Operations	34
	3.Non-GAAP Financial Measures	48
	4.Liquidity and Capital Resources	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	57
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	59
Signatures		60

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Uniti Group Inc.

Condensed Consolidated Balance Sheets

	(Unaudited)
(Thousands, except par value)	September 30, 2022		December 31, 2021
Assets:
Property, plant and equipment, net	$	3,693,581	$	3,508,939
Cash and cash equivalents	43,394		58,903
Accounts receivable, net	41,317		38,455
Goodwill	385,878		601,878
Intangible assets, net	342,291		364,630
Straight-line revenue receivable	62,137		41,323
Operating lease right-of-use assets, net	86,212		80,271
Other assets	83,762		38,900
Investment in unconsolidated entities	38,990		64,223
Deferred income tax assets, net	33,444		11,721
Total Assets	$	4,811,006	$	4,809,243
Liabilities and Shareholders' Deficit:
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	137,019	$	86,868
Settlement payable (Note 13)	248,117		239,384
Intangible liabilities, net	169,765		177,786
Accrued interest payable	57,848		109,826
Deferred revenue	1,197,375		1,134,236
Derivative liability, net	822		10,413
Dividends payable	658		1,264
Operating lease liabilities	64,681		57,355
Finance lease obligations	15,569		15,348
Notes and other debt, net	5,179,327		5,090,537
Total liabilities	7,071,181		6,923,017
Commitments and contingencies (Note 13)
Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.0001 par value, 500,000 shares authorized; issued and outstanding: 235,741 shares at September 30, 2022 and 234,779 at December 31, 2021	24		23
Additional paid-in capital	1,227,905		1,214,830
Accumulated other comprehensive loss	(688)		(9,164)
Distributions in excess of accumulated earnings	(3,489,718)		(3,333,481)
Total Uniti shareholders' deficit	(2,262,477)		(2,127,792)
Noncontrolling interests:
Operating partnership units	2,052		13,893
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding	250		125
Total shareholders' deficit	(2,260,175)		(2,113,774)
Total Liabilities and Shareholders' Deficit	$	4,811,006	$	4,809,243

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Uniti Group Inc.

Condensed Consolidated Statements of Income

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands, except per share data)	2022		2021		2022		2021
Revenues:
Leasing	$	208,623	$	199,485	$	618,878	$	590,478
Fiber Infrastructure	74,480		67,262		226,234		217,035
Total revenues	283,103		266,747		845,112		807,513
Costs and Expenses:
Interest expense, net	97,731		94,793		290,280		341,762
Depreciation and amortization	73,516		70,530		217,276		211,165
General and administrative expense	26,863		25,077		75,818		75,800
Operating expense (exclusive of depreciation and amortization)	36,291		34,167		108,184		105,436
Goodwill impairment (Note 2)	216,000		—		216,000		—
Transaction related and other costs	2,375		1,063		7,324		5,624
Gain on sale of real estate	(94)		—		(344)		(442)
Gain on sale of operations	(176)		—		(176)		(28,143)
Other (income) expense, net	74		283		(8,254)		8,758
Total costs and expenses	452,580		225,913		906,108		719,960
(Loss) income before income taxes and equity in earnings from unconsolidated entities	(169,477)		40,834		(60,996)		87,553
Income tax (benefit) expense	(13,056)		(2,244)		(10,183)		283
Equity in earnings from unconsolidated entities	(672)		(604)		(1,696)		(1,549)
Net (loss) income	(155,749)		43,682		(49,117)		88,819
Net (loss) income attributable to noncontrolling interests	(70)		316		135		984
Net (loss) income attributable to shareholders	(155,679)		43,366		(49,252)		87,835
Participating securities' share in earnings	(226)		(283)		(897)		(864)
Dividends declared on convertible preferred stock	(5)		(3)		(15)		(8)
Net (loss) income attributable to common shareholders	$	(155,910)	$	43,080	$	(50,164)	$	86,963
(Loss) income per common share:
Basic	$	(0.66)	$	0.18	$	(0.21)	$	0.37
Diluted	$	(0.66)	$	0.17	$	(0.21)	$	0.37
Weighted-average number of common shares outstanding:
Basic	235,739		233,513		235,483		232,269
Diluted	235,739		264,421		235,483		232,540

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Uniti Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2022		2021		2022		2021
Net (loss) income	$	(155,749)	$	43,682	$	(49,117)	$	88,819
Other comprehensive income:
Interest rate swap termination	2,829		2,830		8,488		8,488
Other comprehensive income	2,829		2,830		8,488		8,488
Comprehensive (loss) income	(152,920)		46,512		(40,629)		97,307
Comprehensive (loss) income attributable to noncontrolling interest	(69)		338		147		1,089
Comprehensive (loss) income attributable to shareholders	$	(152,851)	$	46,174	$	(40,776)	$	96,218

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Uniti Group Inc.

Condensed Consolidated Statements of Shareholders’ Deficit

(unaudited)

	For the Three Months Ended September 30,
(Thousands, except share data)	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings		Noncontrolling Interest - OP Units		Noncontrolling Interest - Non- voting Preferred Shares		Total Shareholders' Deficit
	Shares	Amount		Shares	Amount
Balance at June 30, 2021	—	$	—	231,804,921	$	23	$	1,153,707	$	(14,792)	$	(3,341,371)	$	68,868	$	125	$	(2,133,440)
Net income	—	—		—	—		—		—		43,366		316		—		43,682
Other comprehensive income	—	—		—	—		—		2,808		—		22		—		2,830
Common stock dividends declared ($0.15 per share)	—	—		—	—		—		—		(35,681)		—		—		(35,681)
Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(141)		—		(141)
Exchange of noncontrolling interest	—	—		2,528,199	—		50,395		—		—		(50,395)		—		—
Payments related to tax withholding for stock-based compensation	—	—		—	—		(10)		—		—		—		—		(10)
Stock-based compensation	—	—		123,050	—		4,166		—		—		—		—		4,166
Issuance of common stock - employee stock purchase plan	—	—		39,186	—		353		—		—		—		—		353
Balance at September 30 2021	—	—		234,495,356	23		1,208,611		(11,984)		(3,333,686)		18,670		125		(2,118,241)
Balance at June 30, 2022	—	$	—	235,699,513	$	24	$	1,224,427	$	(3,516)	$	(3,298,455)	$	2,072	$	250	$	(2,075,198)
Net loss	—	—		—	—		—		—		(155,679)		(70)		—		(155,749)
Other comprehensive income	—	—		—	—		—		2,828		—		1		—		2,829
Common stock dividends declared ($0.15 per share)	—	—		—	—		—		—		(35,584)		—		—		(35,584)
Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		49		—		49
Payments related to tax withholding for stock-based compensation	—	—		—	—		2		—		—		—		—		2
Stock-based compensation	—	—		1,201	—		3,151		—		—		—		—		3,151
Issuance of common stock - employee stock purchase plan	—	—		40,530	—		325		—		—		—		—		325
Balance at September 30, 2022	—	—		235,741,244	24		1,227,905		(688)		(3,489,718)		2,052		250		(2,260,175)

	For the Nine Months Ended September 30,
(Thousands, except share data)	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings		Noncontrolling Interest - OP Units		Noncontrolling Interest - Non- voting Preferred Shares		Total Shareholders' Deficit
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	—	$	—	231,261,958	$	23	$	1,209,141	$	(20,367)	$	(3,330,455)	$	69,157	$	125	$	(2,072,376)
Cumulative effect adjustment for adoption of new accounting standard	—	—		—	—		(59,908)		—		14,598		—		—		(45,310)
Net income	—	—		—	—		—		—		87,835		984		—		88,819
Other comprehensive income	—	—		—	—		—		8,383		—		105		—		8,488
Common stock dividends declared ($0.45 per share)	—	—		—	—		—		—		(105,664)		—		—		(105,664)
Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(1,181)		—		(1,181)
Exchange of noncontrolling interest	—	—		2,528,199	—		50,395		—		—		(50,395)		—		—
Payments related to tax withholding for stock-based compensation	—	—		—	—		(2,652)		—		—		—		—		(2,652)
Stock-based compensation	—	—		630,249	—		10,963		—		—		—		—		10,963
Issuance of common stock - employee stock purchase plan	—	—		74,950	—		672		—		—		—		—		672
Balance at September 30 2021	—	—		234,495,356	23		1,208,611		(11,984)		(3,333,686)		18,670		125		(2,118,241)
Balance at December 31, 2021	—	$	—	234,779,247	$	23	$	1,214,830	$	(9,164)	$	(3,333,481)	$	13,893	$	125	$	(2,113,774)
Net (loss) income	—	—		—	—		—		—		(49,252)		135		—		(49,117)
Other comprehensive income	—	—		—	—		—		8,476		—		12		—		8,488
Common stock dividends declared ($0.45 per share)	—	—		—	—		—		—		(106,860)		—		—		(106,860)
Distributions to noncontrolling interest declared	—	—		—	—		—		—		—		(111)		—		(111)
Cumulative non-voting convertible preferred stock	—	—		—	—		—		—		(125)		—		125		—
Exchange of noncontrolling interest	—	—		244,682	—		7,257		—		—		(11,877)		—		(4,620)
Payments related to tax withholding for stock-based compensation	—	—		—	—		(4,434)		—		—		—		—		(4,434)
Stock-based compensation	—	—		647,461	1		9,663		—		—		—		—		9,664
Issuance of common stock - employee stock purchase plan	—	—		69,854	—		589		—		—		—		—		589
Balance at September 30, 2022	—	—		235,741,244	24		1,227,905		(688)		(3,489,718)		2,052		250		(2,260,175)

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

Uniti Group Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended September 30,
(Thousands)	2022		2021
Cash flow from operating activities
Net (loss) income	$	(49,117)	$	88,819
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	217,276		211,165
Amortization of deferred financing costs and debt discount	13,510		13,723
Loss on debt extinguishment	—		43,369
Interest rate swap termination	8,488		8,488
Deferred income taxes	(21,723)		(2,270)
Equity in earnings of unconsolidated entities	(1,696)		(1,549)
Distributions of cumulative earnings from unconsolidated entities	2,959		2,933
Cash paid for interest rate swap settlement	(9,591)		(9,291)
Straight-line revenues and amortization of below-market lease intangibles	(31,066)		(22,455)
Stock-based compensation	9,664		10,963
Change in fair value of contingent consideration	—		21
Goodwill impairment (see Note 2)	216,000		—
Gain on sale of unconsolidated entity (see Note 5)	(7,923)		—
Gain on sale of real estate	(344)		(442)
Gain on sale of operations	(176)		(28,143)
Loss (gain) on asset disposals	902		(232)
Accretion of settlement obligation	8,733		13,006
Other	(126)		97
Changes in assets and liabilities:
Accounts receivable	(2,863)		23,938
Other assets	7,756		(150)
Accounts payable, accrued expenses and other liabilities	(75,556)		1,363
Net cash provided by operating activities	285,107		353,353
Cash flow from investing activities
Capital expenditures	(292,666)		(276,010)
Proceeds from sale of unconsolidated entity (see Note 5)	32,527		—
Proceeds from sale of real estate, net of cash	575		1,034
Proceeds from sale of operations	541		62,113
Proceeds from sale of other equipment	338		1,143
Net cash used in investing activities	(258,685)		(211,720)
Cash flow from financing activities
Repayment of debt	—		(1,660,000)
Proceeds from issuance of notes	—		1,680,000
Dividends paid	(107,362)		(105,941)
Payments of settlement payable	—		(73,516)
Payments of contingent consideration	—		(2,979)
Distributions paid to noncontrolling interest	(217)		(1,700)
Payment for exchange of noncontrolling interest	(4,620)		—
Borrowings under revolving credit facility	180,000		290,000
Payments under revolving credit facility	(105,000)		(220,000)
Finance lease payments	(887)		(1,745)
Payments for financing costs	—		(25,755)
Payment of tender premium	—		(25,800)
Employee stock purchase program	589		672
Payments related to tax withholding for stock-based compensation	(4,434)		(2,652)
Net cash used in financing activities	(41,931)		(149,416)
Net increase in cash and cash equivalents	(15,509)		(7,783)
Cash and cash equivalents at beginning of period	58,903		77,534
Cash and cash equivalents at end of period	$	43,394	$	69,751
Non-cash investing and financing activities:
Property and equipment acquired but not yet paid	$	12,751	$	22,586
Tenant capital improvements	120,239		140,996

9

The accompanying notes are an integral part of these condensed consolidated financial statements.

10

Uniti Group Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Organization and Description of Business

Uniti Group Inc. (the “Company,” “Uniti,” “we,” “us,” or “our”) was incorporated in the state of Maryland on September 4, 2014. We are an independent internally managed real estate investment trust (“REIT”) engaged in the acquisition, construction and leasing of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data centers. We manage our operations focused on our two primary lines of business: Uniti Fiber and Uniti Leasing.

The Company operates through a customary “up-REIT” structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”) that we control as general partner. The up-REIT structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of September 30, 2022, we are the sole general partner of the Operating Partnership and own approximately 99.96% of the partnership interests in the Operating Partnership.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and/or controlled subsidiaries, including the Operating Partnership. Under the Accounting Standards Codification 810, Consolidation (“ASC 810”), the Operating Partnership is considered a variable interest entity and is consolidated in the Condensed Consolidated Financial Statements of Uniti Group Inc. because the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.

ASC 810 provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 25, 2022, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March 22, 2022 (the “Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our Annual Report.

Concentration of Credit Risks—Prior to September 2020, we were party to a long-term exclusive triple-net lease (the “Master Lease”) with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which a substantial portion of our real property was leased to Windstream and from which a substantial portion of our leasing revenues were derived. On September 18, 2020, Uniti and Windstream

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bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. Revenue under the Windstream Leases provided 66.4% and 67.6% of our revenue for the nine months ended September 30, 2022 and 2021, respectively. Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to pay dividends and service debt if Windstream were to default under the Windstream Leases or otherwise experiences operating or liquidity difficulties and becomes unable to generate sufficient cash to make payments to us.

Prior to its emergence from bankruptcy on September 21, 2020, Windstream was a publicly traded company subject to the periodic filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Windstream’s historic filings through their quarter ended June 30, 2020 can be found at www.sec.gov. Additionally, the Windstream audited financial statements as of December 31, 2021, and for the year ended December 31, 2021, as of December 31, 2020 and for the period from September 22, 2020 to December 31, 2020 and for the period from January 1, 2020 to September 21, 2020 and for the year ended December 31, 2019 are included as an exhibit to our Annual Report. On September 22, 2020, Windstream filed a Form 15 to terminate all filing obligations under Sections 12(g) and 15(d) under the Exchange Act. Windstream filings are not incorporated by reference in this Quarterly Report on Form 10-Q.

We monitor the credit quality of Windstream through numerous methods, including by (i) reviewing credit ratings of Windstream by nationally recognized credit agencies, (ii) reviewing the financial statements of Windstream that are required to be delivered to us pursuant to the Windstream Leases, (iii) monitoring news reports regarding Windstream and its business, (iv) conducting research to ascertain industry trends potentially affecting Windstream, (v) monitoring Windstream’s compliance with the terms of the Windstream Leases and (vi) monitoring the timeliness of its payments under the Windstream Leases.

As of the date of this Quarterly Report on Form 10-Q, Windstream is current on all lease payments. We note that in August 2020, Moody’s Investor Service assigned a B3 corporate family rating with a stable outlook to Windstream in connection with its post-emergence exit financing. At the same time, S&P Global Ratings assigned Windstream a B- issuer rating with a stable outlook. Both ratings remain current as of the date of this filing. In order to assist us in our continuing assessment of Windstream’s creditworthiness, we periodically receive certain confidential financial information and metrics from Windstream.

Goodwill—As of September 30, 2022 and December 31, 2021, all of our goodwill is included in our Fiber Infrastructure segment. Goodwill is recognized for the excess of purchase price over the fair value of net assets of businesses acquired. Goodwill is reviewed for impairment on an annual basis during the fourth quarter. Application of the goodwill impairment test requires significant judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. In accordance with ASC 350-20, Intangibles-Goodwill and Other, we evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount (a “Triggering Event”). On the occurrence of a Triggering Event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit must be compared with its carrying value.

In performing the quantitative assessment of goodwill, we estimate the fair value of our fiber reporting unit using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market data of comparable businesses, and acquisition multiples paid in recent transactions. Inherent in our preparation of cash flow projections are significant assumptions and estimates derived from a review of our operating results and business plans, which include expected revenue and expense growth rates, capital expenditure plans and discount rate. In determining these assumptions, we consider our ability to execute on our plans, future economic conditions, interest rates and other market data. Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in future periods. Small changes in these assumptions or estimates could materially affect our cash flow projections, and therefore could affect the likelihood and amount of potential impairment in future periods. Potential events that could negatively impact these assumptions or estimates may include customer losses or poor execution of our business plans, which impact revenue growth, cost escalation impacting margin, the level of capital expenditures required to sustain our growth and market factors, including stock price fluctuations and increased interest rates, impacting our discount rate. For example, if we were to experience a significant delay in our permitting process in the construction of our fiber networks, the timing of effected cash flows could impact long term growth rates and negatively impact the income approach, leading to potential impairment. As a result, should our expectations of average projected revenue growth percentage, average projected EBITDA margin percentage and/or average projected capital expenditures as a percentage of revenue change, we may experience future impairment to goodwill (while other assumptions remain constant). Furthermore, a deterioration in market factors such as stock prices or increased interest rates

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and/or declines in acquisition multiples utilized in the market approach could affect the likelihood and amount of potential impairment. We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each methodology in the determination of the concluded fair value. If the carrying amount of a reporting unit's net assets is less than its fair value, no impairment exists. If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of (Loss) Income not to exceed the carrying amount of goodwill.

In connection with the preparation of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022, the Company identified a Triggering Event and, therefore, performed a qualitative and quantitative goodwill impairment test. The Triggering Event was a result of macroeconomic and financial market factors, specifically increased interest rates, impacting our discount rate. As a result of this interim assessment of goodwill, we concluded that the fair value of the Fiber Infrastructure reporting unit, estimated using a combination of the income approach and market approach, is less than its carrying amount. Accordingly, we recorded a $216.0 million goodwill impairment charge in the Fiber Infrastructure reporting unit during the three months ended September 30, 2022.

Reclassifications—Certain prior year asset and liability categories and related amounts have been reclassified to conform with current year presentation.

Recently Adopted Accounting Pronouncements

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange (“ASU 2021-04”). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2021-04 effective January 1, 2022, and there was no impact on our consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments (“ASU 2021-05”), which requires lessors to classify leases as operating leases if they (1) have variable lease payments that do not depend on a reference index or rate, and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. ASU 2021-05 is effective for all entities which have previously adopted Topic 842 for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2021-05 effective January 1, 2022, and there was no impact on our consolidated financial statements.

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Note 3. Revenues

Disaggregation of Revenue

The following table presents our revenues disaggregated by revenue stream.

	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2022		2021		2022		2021
Revenue disaggregated by revenue stream
Revenue from contracts with customers
Fiber Infrastructure
Lit backhaul	$	19,969	$	19,381	$	59,344	$	67,404
Enterprise and wholesale	21,423		20,863		63,359		63,190
E-Rate and government	15,245		13,505		48,026		48,795
Other	703		839		2,076		2,479
Fiber Infrastructure	$	57,340	$	54,588	$	172,805	$	181,868
Leasing	1,201		1,070		3,553		3,237
Total revenue from contracts with customers	58,541		55,658		176,358		185,105
Revenue accounted for under leasing guidance
Leasing	207,422		198,415		615,325		587,241
Fiber Infrastructure	17,140		12,674		53,429		35,167
Total revenue accounted for under leasing guidance	224,562		211,089		668,754		622,408
Total revenue	$	283,103	$	266,747	$	845,112	$	807,513

At September 30, 2022 and December 31, 2021, lease receivables were $23.8 million and $19.4 million, respectively, and receivables from contracts with customers were $17.2 million and $14.7 million, respectively.

Contract Assets (Unbilled Revenue) and Liabilities (Deferred Revenue)

Contract assets primarily consist of unbilled construction revenue where we are utilizing our costs incurred as the measure of progress of satisfying our performance obligation. Contract assets are reported within accounts receivable, net on our Condensed Consolidated Balance Sheets. When the contract price is invoiced, the related unbilled receivable is reclassified to trade accounts receivable, where the balance will be settled upon the collection of the invoiced amount. Contract liabilities are generally comprised of upfront fees charged to the customer for the cost of establishing the necessary components of the Company’s network prior to the commencement of use by the customer. Fees charged to customers for the recurring use of the Company’s network are recognized during the related periods of service. Upfront fees that are billed in advance of providing services are deferred until such time the customer accepts the Company’s network and then are recognized as service revenues ratably over a period in which substantive services required under the revenue arrangement are expected to be performed, which is the initial term of the arrangement. During the three and nine months ended September 30, 2022, we recognized revenues of $2.6 million and $5.6 million, respectively, which was included in the December 31, 2021 contract liabilities balance.

The following table provides information about contract assets and contract liabilities accounted for under ASC 606.

(Thousands)	Contract Assets		Contract Liabilities
Balance at December 31, 2021	$	4,066	$	9,099
Balance at September 30, 2022	$	391	$	11,061

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Transaction Price Allocated to Remaining Performance Obligations

Performance obligations within contracts to stand ready to provide services are typically satisfied over time or as those services are provided. Contract liabilities primarily relate to deferred revenue from upfront customer payments. The deferred revenue is recognized, and the liability reduced, over the contract term as the Company completes the performance obligation. As of September 30, 2022, our future revenues (i.e., transaction price related to remaining performance obligations) under contract accounted for under ASC 606 totaled $564.2 million, of which $464.1 million is related to contracts that are currently being invoiced and have an average remaining contract term of 2.4 years, while $100.1 million represents our backlog for sales bookings which have yet to be installed and have an average contract term of 6.0 years. We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.

Note 4. Leases

Lessor Accounting

We lease communications towers, ground, colocation, and dark fiber to tenants under operating leases. Our leases have initial lease terms ranging from less than one year to 35 years, most of which include options to extend or renew the leases for less than one year to 20 years (based on the satisfaction of certain conditions as defined in the lease agre