UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2015
Crown Castle International Corp.
(Exact name of registrant as specified in its charter)
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Delaware | | 001-16441 | | 76-0470458 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
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1220 Augusta Drive Suite 600 Houston, TX | |
77057 | |
(Address of principal executive offices) | | (Zip Code) | |
Registrant's telephone number, including area code: (713) 570-3000
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(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 22, 2015, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for the first quarter of 2015. The press release referred to certain supplemental information that was posted as a supplemental information package on the Company's website on April 22, 2015. The April 22, 2015 press release and supplemental information package are furnished herewith as Exhibit 99.1 and 99.2, respectively.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
As described in Item 2.02 of this Report, the following exhibits are furnished as part of this Current Report on Form 8-K:
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Exhibit No. | | Description |
99.1 | | Press Release dated April 22, 2015 |
99.2 | | Supplemental Information Package for the period ended March 31, 2015 |
The information in this Form 8-K and Exhibit 99.1 and 99.2 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| CROWN CASTLE INTERNATIONAL CORP. | |
| By: | /s/ E. Blake Hawk | |
| | Name: | E. Blake Hawk | |
| | Title: | Executive Vice President
and General Counsel | |
Date: April 22, 2015
EXHIBIT INDEX
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Exhibit No. | | Description |
99.1 | | Press Release dated April 22, 2015 |
99.2 | | Supplemental Information Package for the period ended March 31, 2015 |
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| | NEWS RELEASE April 22, 2015
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| Contacts: Jay Brown, CFO |
| Son Nguyen, VP - Corporate Finance |
FOR IMMEDIATE RELEASE | Crown Castle International Corp. |
| 713-570-3050 |
CROWN CASTLE REPORTS FIRST QUARTER 2015 RESULTS
AND RAISES OUTLOOK FOR 2015
April 22, 2015 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the quarter ended March 31, 2015.
"Our excellent first quarter results reflect the continued demand for our wireless infrastructure as US wireless carriers continue to make network investments to meet wireless consumer demand," stated Ben Moreland, Crown Castle's President and Chief Executive Officer. "We believe the US market, which represents approximately 96% of our total revenues, is the most attractive wireless market in the world for wireless investment. Wireless consumer demand is expected to increase significantly over the next several years, with one industry estimate projecting a seven-fold increase in US mobile data traffic between 2014 and 2019, driven by increased innovation and adoption of data-driven mobile devices and applications such as machine-to-machine connections and streaming video. The network density required to meet such demand aligns with our extensive mission-critical portfolio of towers and small cells, providing us with confidence in our ability to deliver on our stated goal of generating compounded annual growth in AFFO per share of 6% to 7% organically over the next five years. We believe the expected growth in AFFO per share, half of which is comprised of cash escalations on our tenant lease contracts, combined with our current dividend yield of approximately 4% represents an attractive long-term total return profile for shareholders."
CONSOLIDATED FINANCIAL RESULTS
Adjusted Funds from Operations ("AFFO") increased 10% to $383 million in the first quarter of 2015, compared to $349 million in the first quarter of 2014. AFFO per share increased 10% to $1.15 in the first quarter of 2015, compared to $1.05 in the first quarter of 2014. Adjusted EBITDA for the first quarter of 2015 increased $27 million, or 5%, to $554 million from $527 million in the same period in 2014.
Total revenues for the first quarter of 2015 increased 7% to $941 million from $876 million for the same period in 2014. Site rental revenues for the first quarter of 2015 increased $20 million, or 3%, to $768 million from $747 million for the same period in the prior year. Site rental gross margin, defined as site rental revenues less site rental
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News Release continued: | | Page 2 |
cost of operations, increased $8 million, or 1%, to $527 million in the first quarter of 2015 from $519 million in the same period in 2014.
Net income attributable to CCIC common stockholders for the first quarter of 2015 was $112 million, compared to $91 million of net income for the same period in 2014. Net income attributable to CCIC common stockholders per common share was $0.34 for the first quarter of 2015, compared to $0.27 per common share in the first quarter of 2014. Funds from Operations ("FFO") increased 11% to $373 million in the first quarter of 2015, compared to $338 million in the first quarter of 2014. FFO per share increased 11% to $1.12 in the first quarter of 2015, compared to $1.01 in the first quarter of 2014.
Adjusted EBITDA and AFFO for the first quarter of 2015 benefited from approximately $9 million in network services activity that was previously expected to occur in the second quarter of 2015. AFFO for the first quarter of 2015 also benefited from approximately $6 million in lower-than-expected sustaining capital expenditures. Ignoring the benefit from the timing of these two items, Adjusted EBITDA and AFFO for the first quarter would be at or higher than the midpoint of our previously provided first quarter 2015 Outlook. For full year 2015 Outlook, Crown Castle's expectations for network services gross margin contribution and sustaining capital expenditures remain substantially unchanged from the previously provided Outlook, reflecting differences in timing of events compared to Crown Castle's previously provided quarterly Outlook.
FINANCING AND INVESTING ACTIVITIES
During the first quarter of 2015, Crown Castle invested approximately $205 million in capital expenditures, comprised of $24 million of land purchases, $17 million of sustaining capital expenditures and $164 million of revenue generating capital expenditures. Revenue generating capital expenditures consisted of $96 million on existing sites and $68 million on the construction of new sites, primarily small cell construction activity.
On March 31, 2015, Crown Castle paid a quarterly common stock dividend of $0.82 per common share, or approximately $274 million in aggregate. Diluted common shares outstanding at March 31, 2015 were 333.9 million.
As of March 31, 2015, Crown Castle's outstanding debt had a weighted average coupon of 4.1% per annum and a weighted average maturity of six years. Further, Crown Castle's net debt (total debt less cash and cash equivalents) to first quarter annualized Adjusted EBITDA ratio was approximately 5.3x.
As of March 31, 2015, Crown Castle had approximately $240 million in cash and cash equivalents (excluding restricted cash) and approximately $1.4 billion of availability under its revolving credit facility.
"We had a terrific first quarter, allowing us to raise the midpoint of our full year 2015 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO," stated Jay Brown, Crown Castle's Chief Financial Officer. "During the quarter, we continued to make significant investments in small cells, which we believe furthers our leadership position in US wireless infrastructure and enhances our long-term growth in AFFO and dividends per share. We believe our disciplined approach to returning significant capital to shareholders through dividends and
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News Release continued: | | Page 3 |
investing in activities that we expect will enhance near and long-term results position Crown Castle to provide shareholders with compelling long-term total returns."
OUTLOOK
This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC"). The following Outlook is based on current expectations and assumptions and assumes a US dollar to Australian dollar exchange rate of 0.76 US dollars to 1.0 Australian dollar ("Exchange Rate") for second quarter 2015 and full year 2015.
As reflected in the table below, Crown Castle has increased the midpoint of its full year 2015 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO by approximately $7 million, $3 million, $3 million and $3 million, respectively. The increased midpoint of full year 2015 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO reflects the results from the first quarter of 2015 and includes the negative impact of approximately $8 million, $6 million, $6 million and $6 million, respectively, from a decrease in the Exchange Rate compared to the previously provided Outlook. The increase in full year 2015 Outlook assumes an increase of approximately $15 million in Organic Site Rental Revenue growth as compared to the previously provided Outlook.
On a sequential basis, the second quarter 2015 Outlook for site rental gross margin, Adjusted EBITDA and AFFO are expected to be impacted by certain seasonal or timing items. Repair and maintenance during the second quarter of 2015 is expected to be higher by approximately $4 million as compared to the first quarter, reflecting the seasonal nature of certain activities consistent with prior years. Additionally, the midpoint of second quarter 2015 Outlook for Adjusted EBITDA and AFFO assumes a decrease of approximately $20 million in network services gross margin contribution from the first quarter of 2015, driven primarily by the previously mentioned $9 million of network services activity in the first quarter of 2015 which was expected to occur in the second quarter of 2015. Further, compared to the midpoint of second quarter 2015 Outlook for AFFO, first quarter 2015 AFFO benefited from $6 million in lower-than-expected sustaining capital expenditures, which is now expected to be incurred during the remainder of 2015. The expected sequential movements in network services activity and sustaining capital expenditures is attributable to timing, as expectations for network services gross margin contribution and sustaining capital expenditures remain substantially unchanged from the previously provided full year 2015 Outlook.
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News Release continued: | | Page 4 |
The following table sets forth Crown Castle's current Outlook for second quarter 2015 and full year 2015: |
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(in millions, except per share amounts) | Second Quarter 2015 | Full Year 2015 |
Site rental revenues | $767 to $772 | $3,067 to $3,082 |
Site rental cost of operations | $242 to $247 | $967 to $982 |
Site rental gross margin | $523 to $528 | $2,091 to $2,106 |
Adjusted EBITDA | $531 to $536 | $2,145 to $2,160 |
Interest expense and amortization of deferred financing costs(a) | $133 to $138 | $531 to $546 |
FFO | $352 to $357 | $1,439 to $1,454 |
AFFO | $348 to $353 | $1,450 to $1,465 |
AFFO per share(b) | $1.04 to $1.06 | $4.34 to $4.39 |
Net income (loss) | $92 to $125 | $419 to $498 |
Net income (loss) per share - diluted(b) | $0.28 to $0.37 | $1.26 to $1.49 |
Net income (loss) attributable to CCIC common stockholders | $80 to $117 | $381 to $467 |
Net income (loss) attributable to CCIC common stockholders per share - diluted(b) | $0.24 to $0.35 | $1.14 to $1.40 |
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(a) | See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. |
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(b) | Based on 333.9 million diluted shares outstanding as of March 31, 2015. |
As previously disclosed, based on Sprint's stated intention to decommission its iDEN network and Crown Castle's contractual terms with Sprint, Crown Castle expects site rental revenues to be negatively impacted by approximately $60 million to $70 million in 2015. Additionally, during 2015, Crown Castle expects site rental revenues to be impacted by non-renewals of $35 million to $45 million as a result of the decommissioning of the LEAP, MetroPCS and Clearwire networks ("Acquired Networks") by AT&T, T-Mobile and Sprint, respectively.
Crown Castle currently expects potential non-renewals from the decommissioning of the Acquired Networks in aggregate to be approximately $200 million in current run-rate site rental revenues, the majority of which Crown Castle expects to occur between 2015 and 2018 at a rate of approximately 1% to 2% of consolidated site rental revenues in any given year. Depending on the eventual network deployment and decommissioning plans for the Acquired Networks, the impact and timing of such non-renewals may vary from Crown Castle's expectations. Additional information regarding non-renewals from carrier consolidation is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, April 23, 2015, at 10:30 a.m. Eastern Time. The conference call may be accessed by dialing 888-204-4517 and asking for the Crown Castle call (access code 8875858) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 1:30 p.m. Eastern Time on Thursday, April 23, 2015, through 1:30 p.m. Eastern Time on Wednesday, July 22, 2015, and may be accessed by dialing 888-203-1112
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News Release continued: | | Page 5 |
and using access code 8875858. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
ABOUT CROWN CASTLE
Crown Castle provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 14,000 small cell nodes supported by approximately 7,000 miles of fiber, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets. In addition, Crown Castle operates approximately 1,800 towers in Australia. For more information on Crown Castle, please visit www.crowncastle.com.
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Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
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Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA for the three months ended March 31, 2015 and 2014 is computed as follows:
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| For the Three Months Ended |
| March 31, 2015 | | March 31, 2014 |
(in millions) | | | |
Net income (loss) | $ | 125.1 |
| | $ | 102.8 |
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Adjustments to increase (decrease) net income (loss): | | | |
Asset write-down charges | 8.6 |
| | 2.7 |
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Acquisition and integration costs | 2.0 |
| | 5.7 |
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Depreciation, amortization and accretion | 258.1 |
| | 250.2 |
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Amortization of prepaid lease purchase price adjustments | 5.2 |
| | 3.9 |
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Interest expense and amortization of deferred financing costs(a) | 134.4 |
| | 146.4 |
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Interest income | (0.1 | ) | | (0.2 | ) |
Other income (expense) | 0.2 |
| | 2.7 |
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Benefit (provision) for income taxes | 3.3 |
| | (0.2 | ) |
Stock-based compensation expense | 17.4 |
| | 12.9 |
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Adjusted EBITDA(b) | $ | 554.3 |
| | $ | 527.0 |
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(a) | See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. |
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(b) | The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
Adjusted EBITDA for the quarter ending June 30, 2015 and the year ending December 31, 2015 are forecasted as follows:
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| Q2 2015 | | Full Year 2015 |
(in millions) | Outlook | | Outlook |
Net income (loss) | $92 to $125 | | $419 to $498 |
Adjustments to increase (decrease) net income (loss): | | |
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Asset write-down charges | $4 to $6 | | $19 to $29 |
Acquisition and integration costs | $0 to $3 | | $4 to $4 |
Depreciation, amortization and accretion | $256 to $261 | | $1,021 to $1,041 |
Amortization of prepaid lease purchase price adjustments | $4 to $6 | | $19 to $21 |
Interest expense and amortization of deferred financing costs(a) | $133 to $138 | | $531 to $546 |
Interest income | $(2) to $0 | | $(3) to $(1) |
Other income (expense) | $(1) to $2 | | $1 to $3 |
Benefit (provision) for income taxes | $1 to $5 | | $4 to $12 |
Stock-based compensation expense | $16 to $18 | | $66 to $71 |
Adjusted EBITDA(b) | $531 to $536 | | $2,145 to $2,160 |
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(a) | See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. |
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(b) | The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
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FFO and AFFO for the quarter ending June 30, 2015 and the year ending December 31, 2015 are forecasted as follows:
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| Q2 2015 | | Full Year 2015 |
(in millions, except share and per share amounts) | Outlook | | Outlook |
Net income | $92 to $125 | | $419 to $498 |
Real estate related depreciation, amortization and accretion | $252 to $255 | | $1,003 to $1,018 |
Asset write-down charges | $4 to $6 | | $19 to $29 |
Adjustment for noncontrolling interest(a) | $(3) to $1 | | $(13) to $(6) |
Dividends on preferred stock | $(11) to $(11) | | $(44) to $(44) |
FFO(c)(d) | $352 to $357 | | $1,439 to $1,454 |
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FFO (from above) | $352 to $357 | | $1,439 to $1,454 |
Adjustments to increase (decrease) FFO: | | |
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Straight-line revenue | $(40) to $(35) | | $(142) to $(127) |
Straight-line expense | $23 to $28 | | $88 to $103 |
Stock-based compensation expense | $16 to $18 | | $66 to $71 |
Non-cash portion of tax provision | $(9) to $(4) | | $(21) to $(6) |
Non-real estate related depreciation, amortization and accretion | $4 to $6 | | $18 to $23 |
Amortization of non-cash interest expense | $10 to $15 | | $30 to $41 |
Other (income) expense | $(1) to $2 | | $1 to $3 |
Acquisition and integration costs | $0 to $3 | | $4 to $4 |
Adjustment for noncontrolling interest(a) | $3 to $(1) | | $13 to $6 |
Capital improvement capital expenditures | $(12) to $(10) | | $(41) to $(36) |
Corporate capital expenditures | $(12) to $(10) | | $(40) to $(35) |
AFFO(c)(d) | $348 to $353 | | $1,450 to $1,465 |
Weighted average common shares outstanding — diluted(b)(e) | 333.9 | | 333.9 |
AFFO per share(c) | $1.04 to $1.06 | | $4.34 to $4.39 |
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(a) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
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(b) | Based on diluted shares outstanding as of March 31, 2015. |
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(c) | See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO. |
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(d) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
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(e) | The diluted weighted average common shares outstanding assumes no conversion of preferred stock in the share count. |
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Organic Site Rental Revenue growth for the year ending December 31, 2015 is forecasted as follows:
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| Midpoint of Full Year | | |
(in millions of dollars) | 2015 Outlook | | Full Year 2014 |
GAAP site rental revenues | $ | 3,075 |
| | $ | 3,007 |
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Site rental straight-line revenues | (135 | ) | | (197 | ) |
Other - Non-recurring | — |
| | (5 | ) |
Site Rental Revenues, as Adjusted(a)(c) | $ | 2,940 |
| | $ | 2,805 |
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Cash adjustments: | | | |
FX and other | 25 |
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New tower acquisitions and builds(b) | (19 | ) | | |
Organic Site Rental Revenues(a)(c)(d) | $ | 2,946 |
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Year-Over-Year Revenue Growth | | | |
GAAP site rental revenues | 2.3 | % | | |
Site Rental Revenues, as Adjusted | 4.8 | % | | |
Organic Site Rental Revenues(e)(f) | 5.0 | % | | |
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(a) | Includes amortization of prepaid rent. |
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(b) | The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build. |
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(c) | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
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(d) | See "Non-GAAP Financial Measures and Other Calculations" herein. |
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(e) | Year-over-year Organic Site Rental Revenue growth for the year ending December 31, 2015: |
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| Midpoint of Full Year 2015 Outlook |
New leasing activity | 5.6 | % |
Escalators | 3.4 | % |
Organic Site Rental Revenue growth, before non-renewals | 9.0 | % |
Non-renewals | (4.0 | )% |
Organic Site Rental Revenue growth | 5.0 | % |
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(f) | Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
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Organic Site Rental Revenue growth for the quarter ended March 31, 2015 is as follows:
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| Three Months Ended March 31, |
(in millions of dollars) | 2015 | | 2014 |
Reported GAAP site rental revenues | $ | 768 |
| | $ | 747 |
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Site rental straight-line revenues | (38 | ) | | (51 | ) |
Other - Non-recurring | — |
| | $ | (5 | ) |
Site Rental Revenues, as Adjusted(a)(c) | $ | 730 |
| | $ | 691 |
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Cash adjustments: | | | |
FX and other | 5 |
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New tower acquisitions and builds(b) | (6 | ) | | |
Organic Site Rental Revenues(a)(c)(d) | $ | 729 |
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Year-Over-Year Revenue Growth | | | |
Reported GAAP site rental revenues | 2.7 | % | | |
Site Rental Revenues, as Adjusted | 5.5 | % | | |
Organic Site Rental Revenues(e)(f) | 5.4 | % | | |
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(a) | Includes amortization of prepaid rent. |
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(b) | The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build. |
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(c) | Includes Site Rental Revenues, as Adjusted from the construction of new small cell nodes. |
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(d) | See "Non-GAAP Financial Measures and Other Calculations" herein. |
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(e) | Quarter-over-quarter Organic Site Rental Revenue growth for the quarter ending March 31, 2015: |
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| Three Months Ended March 31, 2015 |
New leasing activity | 6.2 | % |
Escalators | 3.4 | % |
Organic Site Rental Revenue growth, before non-renewals | 9.6 | % |
Non-renewals | (4.2 | )% |
Organic Site Rental Revenue Growth | 5.4 | % |
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(f) | Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period. |
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FFO and AFFO for the three months ended March 31, 2015 and 2014 are computed as follows:
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| For the Three Months Ended |
(in millions, except share and per share amounts) | March 31, 2015 | | March 31, 2014 |
Net income | $ | 125.1 |
| | $ | 102.8 |
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Real estate related depreciation, amortization and accretion | 252.7 |
| | 244.4 |
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Asset write-down charges | 8.6 |
| | 2.7 |
|
Adjustment for noncontrolling interest(a) | (2.3 | ) | | (1.3 | ) |
Dividends on preferred stock | (11.0 | ) | | (11.0 | ) |
FFO(b)(c) | $ | 373.1 |
| | $ | 337.7 |
|
Weighted average common shares outstanding — diluted(d) | 333.5 |
| | 333.0 |
|
FFO per share(b) | $ | 1.12 |
| | $ | 1.01 |
|
| | | |
FFO (from above) | $ | 373.1 |
| | $ | 337.7 |
|
Adjustments to increase (decrease) FFO: | | | |
Straight-line revenue | (38.0 | ) | | (50.8 | ) |
Straight-line expense | 25.3 |
| | 26.4 |
|
Stock-based compensation expense | 17.4 |
| | 12.9 |
|
Non-cash portion of tax provision | 0.8 |
| | (2.3 | ) |
Non-real estate related depreciation, amortization and accretion | 5.3 |
| | 5.8 |
|
Amortization of non-cash interest expense | 11.7 |
| | 20.9 |
|
Other (income) expense | 0.2 |
| | 2.7 |
|
Acquisition and integration costs | 2.0 |
| | 5.7 |
|
Adjustment for noncontrolling interest(a) | 2.3 |
| | 1.3 |
|
Capital improvement capital expenditures | (7.6 | ) | | (3.9 | ) |
Corporate capital expenditures | (9.4 | ) | | (7.6 | ) |
AFFO(b)(c) | $ | 383.3 |
| | $ | 348.7 |
|
Weighted average common shares outstanding — diluted(d) | 333.5 |
| | 333.0 |
|
AFFO per share(b) | $ | 1.15 |
| | $ | 1.05 |
|
| |
(a) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(b) | See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO. |
| |
(c) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(d) | The diluted weighted average common shares outstanding assumes no conversion of preferred stock in the share count. |
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|
| | |
News Release continued: | | Page 12 |
Other Calculations:
The components of interest expense and amortization of deferred financing costs for the three months ended March 31, 2015 and 2014 are as follows:
|
| | | | | | | |
| For the Three Months Ended |
(in millions) | March 31, 2015 | | March 31, 2014 |
Interest expense on debt obligations | $ | 122.7 |
| | $ | 125.5 |
|
Amortization of deferred financing costs | 5.6 |
| | 5.6 |
|
Amortization of adjustments on long-term debt | (0.9 | ) | | (1.0 | ) |
Amortization of interest rate swaps(a) | 7.5 |
| | 16.2 |
|
Other, net | (0.5 | ) | | — |
|
Interest expense and amortization of deferred financing costs | $ | 134.4 |
| | $ | 146.4 |
|
| |
(a) | Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
The components of interest expense and amortization of deferred financing costs for the quarter ending June 30, 2015 and the year ending December 31, 2015 are forecasted as follows:
|
| | | |
| Q2 2015 | | Full Year 2015 |
(in millions) | Outlook | | Outlook |
Interest expense on debt obligations | $123 to $125 | | $498 to $508 |
Amortization of deferred financing costs | $5 to $7 | | $21 to $23 |
Amortization of adjustments on long-term debt | $(1) to $0 | | $(4) to $(2) |
Amortization of interest rate swaps(a) | $6 to $8 | | $16 to $21 |
Other, net | $0 to $0 | | $(3) to $(1) |
Interest expense and amortization of deferred financing costs | $133 to $138 | | $531 to $546 |
| |
(a) | Relates to the amortization of interest rate swaps, all of which has been cash settled in prior periods. |
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CrownCastle.com
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| | |
News Release continued: | | Page 13 |
Debt balances and maturity dates as of March 31, 2015 are as follows:
|
| | | | | |
(in millions) | | | |
| Face Value | | Final Maturity |
Revolver | $ | 860.0 |
| | Nov. 2018/Jan 2019 |
Term Loan A | 641.8 |
| | Nov. 2018/Jan 2019 |
Term Loan B | 2,828.3 |
| | Jan. 2019/Jan. 2021 |
4.875% Senior Notes | 850.0 |
| | Apr. 2022 |
5.25% Senior Notes | 1,650.0 |
| | Jan. 2023 |
2012 Secured Notes(a) | 1,500.0 |
| | Dec. 2017/Apr. 2023 |
Senior Secured Notes, Series 2009-1(b) | 156.0 |
| | Various |
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(c) | 1,600.0 |
| | Various |
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(d) | 1,550.0 |
| | Various |
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(e) | 254.3 |
| | Nov. 2040 |
Capital Leases and Other Obligations | 180.9 |
| | Various |
Total Debt | $ | 12,071.3 |
| | |
Less: Cash and Cash Equivalents(f) | $ | 240.2 |
| | |
Net Debt | $ | 11,831.1 |
| | |
| |
(a) | The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2023. |
| |
(b) | The Senior Secured Notes, Series 2009-1 consist of $86.0 million of principal as of March 31, 2015 that amortizes during the period beginning January 2010 and ending in 2019, and $70.0 million of principal that amortizes during the period beginning in 2019 and ending in 2029. |
| |
(c) | The Senior Secured Tower Revenue Notes Series 2010-2 and 2010-3 have principal amounts of $350.0 million and $1.25 billion with anticipated repayment dates of 2017 and 2020, respectively. |
| |
(d) | The Senior Secured Tower Revenue Notes Series 2010-4, 2010-5 and 2010-6 have principal amounts of $250.0 million, $300.0 million and $1.0 billion with anticipated repayment dates of 2015, 2017 and 2020, respectively. |
| |
(e) | The WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes") were assumed in connection with the WCP acquisition. If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates in 2015, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence. |
| |
(f) | Excludes restricted cash. |
Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
|
| | | |
(in millions) | For the Three Months Ended March 31, 2015 |
Total face value of debt | $ | 12,071.3 |
|
Ending cash and cash equivalents | 240.2 |
|
Total Net Debt | $ | 11,831.1 |
|
| |
Adjusted EBITDA for the three months ended March 31, 2015 | $ | 554.3 |
|
Last quarter annualized adjusted EBITDA | 2,217.0 |
|
Net Debt to Last Quarter Annualized Adjusted EBITDA | 5.3 | x |
Sustaining capital expenditures for the three months ended March 31, 2015 and 2014 is computed as follows:
|
| | | | | | | |
| For the Three Months Ended |
(in millions) | March 31, 2015 | | March 31, 2014 |
Capital Expenditures | $ | 204.8 |
| | $ | 142.9 |
|
Less: Land purchases | 23.8 |
| | 20.4 |
|
Less: Wireless infrastructure construction and improvements | 164.0 |
| | 111.1 |
|
Sustaining capital expenditures | $ | 16.9 |
| | $ | 11.4 |
|
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CrownCastle.com
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News Release continued: | | Page 14 |
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements and information that are based on our management's current expectations. Such statements include, but are not limited to, plans, projections, Outlook and estimates regarding (1) demand for our wireless infrastructure and services, (2) carrier network investments and upgrades, and the benefits which may be derived therefrom, (3) our dividends, including our dividend plans, the amount and growth of our dividends, and the potential benefits therefrom, (4)wireless consumer demand, (5) our growth, (6) potential benefits, returns and shareholder value which may be derived from our business and assets, our investments, dividends and acquisitions, (7) leasing activity, including the impact of such leasing activity on our results and Outlook, (8) the US wireless market, (9) investments in small cells, including the potential benefits therefrom, (10) our strategy, (11) currency exchange rates, (12) non-renewal of leases and the timing and impact thereof, including with respect to the Acquired Networks, (13) the decommissioning of the iDEN network and the Acquired Networks, including the impact and timing thereof, (14) capital expenditures, including sustaining capital expenditures, (15) timing items, (16) repair and maintenance expense, (17) site rental revenues and Site Rental Revenues, as Adjusted, (18) site rental cost of operations, (19) site rental gross margin and network services gross margin, (20) Adjusted EBITDA, (21) interest expense and amortization of deferred financing costs, (22) FFO, including on a per share basis, (23) AFFO, including on a per share basis, (24) Organic Site Rental Revenues and Organic Site Rental Revenue growth, (25) net income (loss), including on a per share basis, (26) our common shares outstanding, including on a diluted basis, and (27) the utility of certain financial measures, including non-GAAP financial measures. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:
| |
• | Our business depends on the demand for wireless communications and wireless infrastructure, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services). |
| |
• | A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues or reduce demand for our wireless infrastructure and network services. |
| |
• | Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments and 4.50% Mandatory Convertible Preferred Stock limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated. |
| |
• | We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations. |
| |
• | Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock. |
| |
• | As a result of competition in our industry, including from some competitors with significantly more resources or less debt than we have, we may find it more difficult to achieve favorable rental rates on our new or renewing customer contracts. |
| |
• | The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks. If we do not successfully operate that business model or identify or manage those operational risks, such operations may produce results that are less than anticipated. |
| |
• | New technologies may significantly reduce demand for our wireless infrastructure and negatively impact our revenues. |
| |
• | New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected. |
| |
• | If we fail to retain rights to our wireless infrastructure, including the land under our sites, our business may be adversely affected. |
| |
• | Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results. |
| |
• | The expansion and development of our business, including through acquisitions, increased product offerings, or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results. |
| |
• | If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business. |
| |
• | If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues. |
| |
• | Certain provisions of our certificate of incorporation, bylaws and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders. |
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CrownCastle.com
|
| | |
News Release continued: | | Page 15 |
| |
• | We may be adversely affected by our exposure to changes in foreign currency exchange rates relating to our operations in Australia. |
| |
• | Future dividend payments to our common stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations. |
| |
• | Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the US Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash. |
| |
• | Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives. |
| |
• | If we fail to pay scheduled dividends on the 4.50% Mandatory Convertible Preferred Stock, in cash, common stock or any combination of cash and common stock, we will be prohibited from paying dividends on our Common Stock, which may jeopardize our status as a REIT. |
| |
• | We have limited experience operating as a REIT. Our failure to successfully operate as a REIT may adversely affect our financial condition, cash flow, the per share trading price of our common stock, or our ability to satisfy debt service obligations. |
| |
• | REIT ownership limitations and transfer restrictions may prevent or restrict certain transfers of our capital stock. |
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the SEC.
The Foundation for a Wireless World.
CrownCastle.com
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| | |
News Release continued: | | Page 16 |
|
| |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands, except share amounts) |
|
| | | | | | | |
| March 31,
2015 | | December 31,
2014 |
| | | |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 240,153 |
| | $ | 175,620 |
|
Restricted cash | 136,964 |
| | 147,411 |
|
Receivables, net | 292,565 |
| | 329,229 |
|
Prepaid expenses | 144,334 |
| | 155,070 |
|
Deferred income tax assets | 30,105 |
| | 29,961 |
|
Other current assets | 83,393 |
| | 94,211 |
|
Total current assets | 927,514 |
| | 931,502 |
|
Deferred site rental receivables | 1,292,630 |
| | 1,260,614 |
|
Property and equipment, net | 9,139,703 |
| | 9,148,311 |
|
Goodwill | 5,215,348 |
| | 5,210,091 |
|
Other intangible assets, net | 3,650,945 |
| | 3,715,700 |
|
Deferred income tax assets | 18,620 |
| | 20,914 |
|
Long-term prepaid rent, deferred financing costs and other assets, net | 860,717 |
| | 856,144 |
|
Total assets | $ | 21,105,477 |
| | $ | 21,143,276 |
|
| | | |
LIABILITIES AND EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 146,894 |
| | $ | 167,662 |
|
Accrued interest | 68,697 |
| | 66,943 |
|
Deferred revenues | 327,270 |
| | 348,338 |
|
Other accrued liabilities | 163,096 |
| | 202,657 |
|
Current maturities of debt and other obligations | 115,998 |
| | 113,335 |
|
Total current liabilities | 821,955 |
| | 898,935 |
|
Debt and other long-term obligations | 11,954,093 |
| | 11,807,526 |
|
Deferred income tax liabilities | 38,152 |
| | 39,889 |
|
Other long-term liabilities | 1,732,484 |
| | 1,659,698 |
|
Total liabilities | 14,546,684 |
| | 14,406,048 |
|
Commitments and contingencies |
| |
|
CCIC stockholders' equity: | | | |
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: March 31, 2015—333,761,959 and December 31, 2014—333,856,632 | 3,339 |
| | 3,339 |
|
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: March 31, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: March 31, 2015 and December 31, 2014—$977,500 | 98 |
| | 98 |
|
Additional paid-in capital | 9,503,335 |
| | 9,512,396 |
|
Accumulated other comprehensive income (loss) | 8,304 |
| | 15,820 |
|
Dividends/distributions in excess of earnings | (2,978,356 | ) | | (2,815,428 | ) |
Total CCIC stockholders' equity | 6,536,720 |
| | 6,716,225 |
|
Noncontrolling interest | 22,073 |
| | 21,003 |
|
Total equity | 6,558,793 |
| | 6,737,228 |
|
Total liabilities and equity | $ | 21,105,477 |
| | $ | 21,143,276 |
|
The Foundation for a Wireless World.
CrownCastle.com
|
| | |
News Release continued: | | Page 17 |
|
| |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts) |
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Net revenues: | | | |
Site rental | $ | 767,606 |
| | $ | 747,162 |
|
Network services and other | 173,395 |
| | 128,788 |
|
Net revenues | 941,001 |
| | 875,950 |
|
Operating expenses: | | | |
Costs of operations (exclusive of depreciation, amortization and accretion): | | | |
Site rental | 240,980 |
| | 228,076 |
|
Network services and other | 88,878 |
| | 72,874 |
|
General and administrative | 79,487 |
| | 64,849 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Acquisition and integration costs | 2,019 |
| | 5,659 |
|
Depreciation, amortization and accretion | 258,060 |
| | 250,191 |
|
Total operating expenses | 678,047 |
| | 624,382 |
|
Operating income (loss) | 262,954 |
| | 251,568 |
|
Interest expense and amortization of deferred financing costs | (134,439 | ) | | (146,400 | ) |
Interest income | 109 |
| | 173 |
|
Other income (expense) | (230 | ) | | (2,736 | ) |
Income (loss) before income taxes | 128,394 |
| | 102,605 |
|
Benefit (provision) for income taxes | (3,282 | ) | | 188 |
|
Net income (loss) | 125,112 |
| | 102,793 |
|
Less: Net income (loss) attributable to the noncontrolling interest | 2,325 |
| | 1,296 |
|
Net income (loss) attributable to CCIC stockholders | 122,787 |
| | 101,497 |
|
Dividends on preferred stock | (10,997 | ) | | (10,997 | ) |
Net income (loss) attributable to CCIC common stockholders | $ | 111,790 |
| | $ | 90,500 |
|
| | | |
Net income (loss) attributable to CCIC common stockholders, per common share: | | | |
Basic | $ | 0.34 |
| | $ | 0.27 |
|
Diluted | $ | 0.34 |
| | $ | 0.27 |
|
| | | |
Weighted-average common shares outstanding (in thousands): | | | |
Basic | 332,712 |
| | 332,034 |
|
Diluted | 333,485 |
| | 333,045 |
|
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CrownCastle.com
|
| | |
News Release continued: | | Page 18 |
|
| |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
|
| | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Cash flows from operating activities: | | | |
Net income (loss) | $ | 125,112 |
| | $ | 102,793 |
|
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | |
Depreciation, amortization and accretion | 258,060 |
| | 250,191 |
|
Amortization of deferred financing costs and other non-cash interest | 11,736 |
| | 20,881 |
|
Stock-based compensation expense | 15,244 |
| | 11,956 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Deferred income tax benefit (provision) | (800 | ) | | (2,332 | ) |
Other non-cash adjustments, net | (557 | ) | | (774 | ) |
Changes in assets and liabilities, excluding the effects of acquisitions: | | | |
Increase (decrease) in liabilities | 16,969 |
| | 23,278 |
|
Decrease (increase) in assets | 26,407 |
| | (46,443 | ) |
Net cash provided by (used for) operating activities | 460,794 |
| | 362,283 |
|
Cash flows from investing activities: | | | |
Payments for acquisition of businesses, net of cash acquired | (17,493 | ) | | (62,228 | ) |
Capital expenditures | (204,753 | ) | | (142,943 | ) |
Other investing activities, net | (514 | ) | | 952 |
|
Net cash provided by (used for) investing activities | (222,760 | ) | | (204,219 | ) |
Cash flows from financing activities: | | | |
Principal payments on debt and other long-term obligations | (31,497 | ) | | (27,739 | ) |
Purchases of capital stock | (29,372 | ) | | (21,417 | ) |
Borrowings under revolving credit facility | 230,000 |
| | 83,000 |
|
Payments under revolving credit facility | (65,000 | ) | | (89,000 | ) |
Payments for financing costs | (1,904 | ) | | (5,854 | ) |
Net decrease (increase) in restricted cash | 10,214 |
| | 14,743 |
|
Dividends/distributions paid on common stock | (273,685 | ) | | (116,829 | ) |
Dividends paid on preferred stock | (10,997 | ) | | (11,363 | ) |
Net cash provided by (used for) financing activities | (172,241 | ) | | (174,459 | ) |
Effect of exchange rate changes on cash | (1,260 | ) | | (6,462 | ) |
Net increase (decrease) in cash and cash equivalents | 64,533 |
| | (22,857 | ) |
Cash and cash equivalents at beginning of period | 175,620 |
| | 223,394 |
|
Cash and cash equivalents at end of period | $ | 240,153 |
| | $ | 200,537 |
|
Supplemental disclosure of cash flow information: | | | |
Interest paid | 120,949 |
| | 126,540 |
|
Income taxes paid | 2,498 |
| | 7,400 |
|
The Foundation for a Wireless World.
CrownCastle.com
Supplemental Information Package
and Non-GAAP Reconciliations
First Quarter • March 31, 2015
The Foundation for a Wireless World.
CrownCastle.com
Crown Castle International Corp.
First Quarter 2015
|
| |
TABLE OF CONTENTS |
| Page |
Company Overview | |
Company Profile | |
Strategy | |
Historical Dividend and AFFO per Share | |
Portfolio Footprint | |
Corporate Information | |
Research Coverage | |
Historical Common Stock Data | |
Portfolio and Financial Highlights | 7 |
Outlook | |
Financials & Metrics | |
Consolidated Balance Sheet | |
Consolidated Statement of Operations | |
Segment Operating Results | |
FFO and AFFO Reconciliations | |
Consolidated Statement of Cash Flows | |
Site Rental Revenue Growth | |
Site Rental Gross Margin Growth | |
Summary of Straight-Line, Prepaid Rent Activity, and Capital Expenditures | |
Lease Renewal and Lease Distribution | |
Customer Overview | |
Asset Portfolio Overview | |
Summary of Tower Portfolio by Vintage | |
Portfolio Overview | |
Ground Interest Overview | |
Ground Interest Activity | |
Small Cell Network Overview | |
Capitalization Overview | |
Capitalization Overview | |
Debt Maturity Overview | |
Liquidity Overview | |
Maintenance and Financial Covenants | |
Interest Rate Sensitivity | |
Appendix | |
Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook", "guide", "forecast", "estimate", "anticipate", "project", "plan", "intend", "believe", "expect", "likely", "predicted", and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the second quarter 2015 and full year 2015 .
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP measures, including FFO and AFFO, are provided in the Appendix to this Supplement.
As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Crown Castle International Corp. (to which the terms "Crown Castle," "CCIC," "we," "our," "our Company," "the Company" or "us" as used herein refer) owns, operates and leases shared wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and to a lesser extent, (2) distributed antenna systems, a type of small cell network ("small cells"), and (3) interests in land under third party towers in various forms ("third party land interests") (collectively, "wireless infrastructure"). Crown Castle offers significant wireless communications coverage in each of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages approximately 40,000 and 1,800 towers in the US and Australia, respectively.
Our core business is providing access, including space or capacity, to our wireless infrastructure via long-term contracts in various forms, including license, sublease and lease agreements (collectively, "leases"). Our wireless infrastructure can accommodate multiple customers for antennas or other equipment necessary for the transmission of signals for wireless communication devices. We seek to increase our site rental revenues by adding more tenants on our wireless infrastructure, which we expect to result in significant incremental cash flows due to our relatively fixed operating costs.
Effective January 1, 2014, Crown Castle commenced operating as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes as it relates to our towers and third party land interests, excluding our operations in Australia. In August 2014, we received a favorable private letter ruling from the IRS, which provides that the real property portion of our small cells and the related rents qualify as real property and rents from real property, respectively, under the rules governing REITs. We are evaluating the impact of this private letter ruling and, subject to board approval, we expect to take appropriate action to include at least some part of our small cells as part of the REIT during 2015.
Our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of wireless infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our stockholders in the form of dividends and (3) investing capital efficiently to grow long-term dividends per share. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. The key elements of our strategy are to:
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• | Grow cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by adding tenants on our wireless infrastructure through long-term leases as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing tenant installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in our site rental cash flows from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communication services industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns. |
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• | Return cash provided by operating activities to stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to stockholders. |
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• | Invest capital efficiently to grow long-term dividends per share. We seek to invest our capital available, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order): |
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◦ | purchase shares of our common stock from time to time; |
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◦ | acquire or construct wireless infrastructure; |
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◦ | acquire land interests under towers; |
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◦ | make improvements and structural enhancements to our existing wireless infrastructure; or |
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◦ | purchase, repay or redeem our debt. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Our strategy to create long-term stockholder value is based on our belief that additional demand for our wireless infrastructure will be created by the expected continued growth in the wireless communication services industry, which is predominately driven by the demand for wireless data services by consumers. We believe that such demand for our wireless infrastructure will continue, will result in growth of our cash flows due to new tenant additions on our existing wireless infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure.
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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HISTORICAL DIVIDEND AND AFFO PER SHARE (1) |
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U.S. FOOTPRINT | | AUSTRALIAN FOOTPRINT |
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(1) | See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Financial Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO. |
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(2) | Last quarter annualized ("LQA") calculated as the most recently completed quarterly period times four. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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GENERAL COMPANY INFORMATION |
Principal executive offices | 1220 Augusta Drive, Suite 600, Houston, TX 77057 |
Common shares trading symbol | CCI |
Stock exchange listing | New York Stock Exchange |
Fiscal year ending date | December 31 |
Fitch - Long Term Issuer Default Rating | BB |
Moody’s - Long Term Corporate Family Rating | Ba2 |
Standard & Poor’s - Long Term Local Issuer Credit Rating | BB+ |
Note: These credit ratings may not reflect the potential risks relating to the structure or trading of the Company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. The Company does not undertake any obligation to maintain the ratings or to advise of any change in the ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significances of the ratings can be obtained from each of the ratings agencies.
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EXECUTIVE MANAGEMENT TEAM |
Name | Age | Years with Company | Position |
W. Benjamin Moreland | 51 | 15 | President and Chief Executive Officer |
Jay A. Brown | 42 | 15 | Senior Vice President, Chief Financial Officer and Treasurer |
James D. Young | 53 | 9 | Senior Vice President and Chief Operating Officer |
E. Blake Hawk | 65 | 16 | Executive Vice President and General Counsel |
Patrick Slowey | 58 | 14 | Senior Vice President and Chief Commercial Officer |
Philip M. Kelley | 42 | 17 | Senior Vice President-Corporate Development and Strategy |
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BOARD OF DIRECTORS |
Name | Position | Committees | Age | Years as Director |
J. Landis Martin | Chairman | NCG(1) | 69 | 18 |
P. Robert Bartolo | Director | Audit, Compensation | 43 | 1 |
Cindy Christy | Director | NCG(1), Strategy | 49 | 7 |
Ari Q. Fitzgerald | Director | Compensation, Strategy | 52 | 12 |
Robert E. Garrison II | Director | Audit, Compensation | 73 | 9 |
Dale N. Hatfield | Director | NCG(1), Strategy | 77 | 13 |
Lee W. Hogan | Director | Audit, Compensation, Strategy | 70 | 13 |
Edward C. Hutcheson | Director | Strategy | 69 | 18 |
John P. Kelly | Director | Strategy | 57 | 14 |
Robert F. McKenzie | Director | Audit, Strategy | 71 | 19 |
W. Benjamin Moreland | Director | | 51 | 8 |
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(1) | Nominating & Corporate Governance Committee |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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RESEARCH COVERAGE |
Equity Research |
Bank of America David Barden (646) 855-1320 | Barclays Amir Rozwadowski (212) 526-4043 | Canaccord Genuity Greg Miller (212) 389-8128 |
Citigroup Michael Rollins (212) 816-1116 | Cowen and Company Colby Synesael (646) 562-1355 | Credit Suisse
Joseph Mastrogiovanni
(212) 325-3757 |
Evercore Partners
Jonathan Schildkraut
(212) 497-0864 | Goldman Sachs Brett Feldman
(212) 902-8156 | Jefferies
Mike McCormack
(212) 284-2516 |
JPMorgan
Philip Cusick
(212) 622-1444 | Macquarie
Kevin Smithen
(212) 231-0695 | Morgan Stanley
Simon Flannery
(212) 761-6432 |
New Street Research
Jonathan Chaplin
(212) 921-9876 | Nomura
Adam Ilkowitz
(212) 298-4121 | Oppenheimer & Co.
Timothy Horan
(212) 667-8137 |
Pacific Crest Securities
Michael Bowen
(503) 727-0721 | Raymond James
Ric Prentiss
(727) 567-2567 | RBC Capital Markets
Jonathan Atkin
(415) 633-8589 |
UBS
Batya Levi
(212) 713-8824 | Wells Fargo Securities, LLC
Jennifer Fritzsche
(312) 920-3548 | |
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Rating Agency |
Fitch John Culver (312) 368-3216 | Moody’s Phil Kibel (212) 553-1653 | Standard & Poor’s Scott Tan (212) 438-4162 |
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HISTORICAL COMMON STOCK DATA |
| Three Months Ended |
(in millions, except per share data) | 3/31/15 | 12/31/14 | 9/30/14 | 6/30/14 | 3/31/14 |
High price(1) | $ | 88.60 |
| $ | 83.27 |
| $ | 79.15 |
| $ | 75.69 |
| $ | 73.99 |
|
Low price(1) | $ | 77.81 |
| $ | 73.34 |
| $ | 70.73 |
| $ | 69.19 |
| $ | 66.10 |
|
Period end closing price(2) | $ | 82.54 |
| $ | 77.95 |
| $ | 78.89 |
| $ | 72.43 |
| $ | 71.62 |
|
Dividends paid per common share | $ | 0.82 |
| $ | 0.82 |
| $ | 0.35 |
| $ | 0.35 |
| $ | 0.35 |
|
Volume weighted average price for the period(1) | $ | 84.47 |
| $ | 78.33 |
| $ | 75.25 |
| $ | 72.72 |
| $ | 70.79 |
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Common shares outstanding - diluted, at period end | 334 |
| 334 |
| 334 |
| 334 |
| 334 |
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Market value of outstanding common shares, at period end(3) | $ | 27,549 |
| $ | 26,023 |
| $ | 26,339 |
| $ | 24,184 |
| $ | 23,905 |
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(1) | Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg. |
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(2) | Based on the period end closing price, adjusted for dividends, as reported by Bloomberg. |
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(3) | Period end market value of outstanding common shares is calculated as the product of (a) shares of common stock outstanding at period end and (b) closing share price at period end, adjusted for dividends, as reported by Bloomberg. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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SUMMARY PORTFOLIO HIGHLIGHTS |
(as of March 31, 2015) | U.S. | Australia |
Number of towers(1) | 39,663 |
| 1,777 |
|
Average number of tenants per tower | 2.2 |
| 2.4 |
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Remaining contracted customer receivables ($ in billions)(2) | $ | 21 |
| $ | 1 |
|
Weighted average remaining customer contract term (years)(3) | 7 |
| 11 |
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Percent of towers in the Top 50 / 100 Basic Trading Areas | 56% / 71% |
| Not Applicable |
|
Percent of ground leased / owned (by site rental gross margin) | 65% / 35% |
| 88% / 12% |
|
Weighted average maturity of ground leases (years)(4) | 31 |
| 19 |
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SUMMARY FINANCIAL HIGHLIGHTS |
| Three Months Ended March 31, |
(dollars in thousands, except per share amounts) | 2015 | | 2014 |
Operating Data: | | | |
Net revenues | | | |
Site rental | $ | 767,606 |
| | $ | 747,162 |
|
Network services and other | 173,395 |
| | 128,788 |
|
Net revenues | $ | 941,001 |
| | $ | 875,950 |
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Gross margin | | | |
Site rental | $ | 526,626 |
| | $ | 519,086 |
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Network services and other | 84,517 |
| | 55,914 |
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Total gross margin | $ | 611,143 |
| | $ | 575,000 |
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Net income (loss) attributable to CCIC common stockholders | $ | 111,790 |
| | $ | 90,500 |
|
Net income (loss) attributable to CCIC common stockholders per share - diluted | $ | 0.34 |
| | $ | 0.27 |
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Non-GAAP Data(5): | | | |
Adjusted EBITDA | $ | 554,254 |
| | $ | 526,983 |
|
FFO(6) | 373,145 |
| | 337,654 |
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AFFO | 383,326 |
| | 348,744 |
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AFFO per share | $ | 1.15 |
| | $ | 1.05 |
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Summary Cash Flow Data: | | | |
Net cash provided by (used for) operating activities | $ | 460,794 |
| | $ | 362,283 |
|
Net cash provided by (used for) investing activities(7) | (222,760 | ) | | (204,219 | ) |
Net cash provided by (used for) financing activities | (172,241 | ) | | (174,459 | ) |
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(1) | Includes towers and rooftops, excludes small cells and third-party land interests. |
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(2) | Excludes renewal terms at customers' opinion. |
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(3) | Excludes renewal terms at customers' option, weighted by site rental revenues. |
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(4) | Includes renewal terms at the Company's option, weighted by site rental gross margin. |
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(5) | See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" in the Appendix for a discussion of our definitions of FFO and AFFO. |
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(6) | Calculated to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. |
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(7) | Includes net cash used for acquisitions of approximately $17 million and $62 million for the three months ended March 31, 2015 and 2014, respectively. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED) |
| | Three Months Ended March 31, |
(dollars in thousands, except per share amounts) | | 2015 | | 2014 |
Other Data: | | | | |
Net debt to last quarter annualized Adjusted EBITDA | | 5.3 | x | | 5.4 | x |
Dividend per common share | | $ | 0.82 |
| | $ | 0.35 |
|
AFFO payout ratio(2) | | 71 | % | | 33 | % |
| | | | |
(dollars in thousands) | | March 31, 2015 | | December 31, 2014 |
Balance Sheet Data (at period end): | | | | |
Cash and cash equivalents | | $ | 240,153 |
| | $ | 175,620 |
|
Property and equipment, net | | 9,139,703 |
| | 9,148,311 |
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Total assets | | 21,105,477 |
| | 21,143,276 |
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Total debt and other long-term obligations | | 12,070,091 |
| | 11,920,861 |
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Total CCIC stockholders' equity | | 6,536,720 |
| | 6,716,225 |
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OUTLOOK FOR SECOND QUARTER 2015 AND FULL YEAR 2015 |
(dollars in millions, except per share amounts) | Second Quarter 2015 | Full Year 2015 |
Site rental revenues | $767 to $772 | $3,067 to $3,082 |
Site rental cost of operations | $242 to $247 | $967 to $982 |
Site rental gross margin | $523 to $528 | $2,091 to $2,106 |
Adjusted EBITDA(2) | $531 to $536 | $2,145 to $2,160 |
Interest expense and amortization of deferred financing costs(1) | $133 to $138 | $531 to $546 |
FFO(2) | $352 to $357 | $1,439 to $1,454 |
AFFO(2) | $348 to $353 | $1,450 to $1,465 |
AFFO per share(2)(3) | $1.04 to $1.06 | $4.34 to $4.39 |
Net income (loss) | $92 to $125 | $419 to $498 |
Net income (loss) per share - diluted(3) | $0.28 to $0.37 | $1.26 to $1.49 |
Net income (loss) attributable to CCIC common stockholders | $80 to $117 | $381 to $467 |
Net income (loss) attributable to CCIC common stockholders per share - diluted(3) | $0.24 to $0.35 | $1.14 to $1.40 |
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(1) | See the reconciliation of "components of interest expense and amortization of deferred financing costs" in the Appendix. |
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(2) | See reconciliations and definitions provided herein. |
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(3) | Based on 333.9 million diluted shares outstanding as of March 31, 2015. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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OUTLOOK FOR FULL YEAR 2015 SITE RENTAL REVENUE GROWTH |
(dollars in millions) | Midpoint of Full Year 2015 Outlook | Full Year 2014 |
Reported GAAP site rental revenues | $ | 3,075 |
| $ | 3,007 |
|
Site rental straight-line revenues | (135 | ) | (197 | ) |
Other - Non-recurring | — |
| (5 | ) |
Site Rental Revenues, as Adjusted(1)(3) | $ | 2,940 |
| $ | 2,805 |
|
Cash adjustments: | | |
FX and other | 25 |
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New tower acquisitions and builds(2) | (19 | ) | |
Organic Site Rental Revenues(1)(3)(4) | $ | 2,946 |
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Year-Over-Year Revenue Growth | | |
Reported GAAP site rental revenues | 2.3 | % | |
Site Rental Revenues, as Adjusted | 4.8 | % | |
Organic Site Rental Revenues(5) | 5.0 | % | |
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OUTLOOK FOR ORGANIC SITE RENTAL REVENUE GROWTH |
| Midpoint of Full Year 2015 Outlook |
New leasing activity | 5.6 | % |
Escalators | 3.4 | % |
Organic Site Rental Revenue Growth, before non-renewals | 9.0 | % |
Non-renewals | (4.0 | )% |
Organic Site Rental Revenue Growth(5) | 5.0 | % |
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OUTLOOK FOR FULL YEAR 2015 SITE RENTAL GROSS MARGIN GROWTH |
(dollars in millions) | Midpoint of Full Year 2015 Outlook | Full Year 2014 |
Reported GAAP site rental gross margin | $ | 2,099 |
| $ | 2,062 |
|
Straight line revenues and expenses, net | (39 | ) | (91 | ) |
Other - Non-recurring | — |
| (5 | ) |
Site Rental Gross Margin, as Adjusted(1)(3) | $ | 2,060 |
| $ | 1,966 |
|
Cash adjustments: |
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FX and other | 19 |
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New tower acquisitions and builds(2) | (16 | ) | |
Organic Site Rental Gross Margin(1)(3)(4) | $ | 2,063 |
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Year-Over-Year Gross Margin Growth | | |
Reported GAAP site rental gross margin | 1.8 | % | |
Site Rental Gross Margin, as Adjusted | 4.8 | % | |
Organic Site Rental Gross Margin(6) | 4.9 | % | |
Year-Over-Year Incremental Margin | | |
Reported GAAP site rental gross margin | 53.7 | % | |
Site Rental Gross Margin, as Adjusted | 69.4 | % | |
Organic Site Rental Gross Margin(7) | 68.6 | % | |
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(1) | Includes amortization of prepaid rent. |
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(2) | The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build. |
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(3) | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
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(4) | See definitions provided herein. |
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(5) | Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period. |
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(6) | Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period. |
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(7) | Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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CONSOLIDATED BALANCE SHEET (Unaudited) |
(dollars in thousands, except share amounts) | March 31,
2015 | | December 31,
2014 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 240,153 |
| | $ | 175,620 |
|
Restricted cash | 136,964 |
| | 147,411 |
|
Receivables, net | 292,565 |
| | 329,229 |
|
Prepaid expenses | 144,334 |
| | 155,070 |
|
Deferred income tax assets | 30,105 |
| | 29,961 |
|
Other current assets | 83,393 |
| | 94,211 |
|
Total current assets | 927,514 |
| | 931,502 |
|
Deferred site rental receivables | 1,292,630 |
| | 1,260,614 |
|
Property and equipment, net | 9,139,703 |
| | 9,148,311 |
|
Goodwill | 5,215,348 |
| | 5,210,091 |
|
Other intangible assets, net | 3,650,945 |
| | 3,715,700 |
|
Deferred income tax assets | 18,620 |
| | 20,914 |
|
Long-term prepaid rent, deferred financing costs and other assets, net | 860,717 |
| | 856,144 |
|
Total assets | $ | 21,105,477 |
| | $ | 21,143,276 |
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| | | |
LIABILITIES AND EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 146,894 |
| | $ | 167,662 |
|
Accrued interest | 68,697 |
| | 66,943 |
|
Deferred revenues | 327,270 |
| | 348,338 |
|
Other accrued liabilities | 163,096 |
| | 202,657 |
|
Current maturities of debt and other obligations | 115,998 |
| | 113,335 |
|
Total current liabilities | 821,955 |
| | 898,935 |
|
Debt and other long-term obligations | 11,954,093 |
| | 11,807,526 |
|
Deferred income tax liabilities | 38,152 |
| | 39,889 |
|
Other long-term liabilities | 1,732,484 |
| | 1,659,698 |
|
Total liabilities | 14,546,684 |
| | 14,406,048 |
|
Commitments and contingencies |
| |
|
CCIC stockholders' equity: | | | |
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: March 31, 2015—333,761,959 and December 31, 2014—333,856,632 | 3,339 |
| | 3,339 |
|
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: March 31, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: March 31, 2015 and December 31, 2014—$977,500 | 98 |
| | 98 |
|
Additional paid-in capital | 9,503,335 |
| | 9,512,396 |
|
Accumulated other comprehensive income (loss) | 8,304 |
| | 15,820 |
|
Dividends/distributions in excess of earnings | (2,978,356 | ) | | (2,815,428 | ) |
Total CCIC stockholders' equity | 6,536,720 |
| | 6,716,225 |
|
Noncontrolling interest | 22,073 |
| | 21,003 |
|
Total equity | 6,558,793 |
| | 6,737,228 |
|
Total liabilities and equity | $ | 21,105,477 |
| | $ | 21,143,276 |
|
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
| Three Months Ended March 31, |
(dollars in thousands, except share and per share amounts) | 2015 | | 2014 |
Net revenues: | | | |
Site rental | $ | 767,606 |
| | $ | 747,162 |
|
Network services and other | 173,395 |
| | 128,788 |
|
Net revenues | 941,001 |
| | 875,950 |
|
Operating expenses: | | | |
Costs of operations (exclusive of depreciation, amortization and accretion): | | | |
Site rental | 240,980 |
| | 228,076 |
|
Network services and other | 88,878 |
| | 72,874 |
|
General and administrative | 79,487 |
| | 64,849 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Acquisition and integration costs | 2,019 |
| | 5,659 |
|
Depreciation, amortization and accretion | 258,060 |
| | 250,191 |
|
Total operating expenses | 678,047 |
| | 624,382 |
|
Operating income (loss) | 262,954 |
| | 251,568 |
|
Interest expense and amortization of deferred financing costs | (134,439 | ) | | (146,400 | ) |
Interest income | 109 |
| | 173 |
|
Other income (expense) | (230 | ) | | (2,736 | ) |
Income (loss) before income taxes | 128,394 |
| | 102,605 |
|
Benefit (provision) for income taxes | (3,282 | ) | | 188 |
|
Net income (loss) | 125,112 |
| | 102,793 |
|
Less: Net income (loss) attributable to the noncontrolling interest | 2,325 |
| | 1,296 |
|
Net income (loss) attributable to CCIC stockholders | 122,787 |
| | 101,497 |
|
Dividends on preferred stock | (10,997 | ) | | (10,997 | ) |
Net income (loss) attributable to CCIC common stockholders | $ | 111,790 |
| | $ | 90,500 |
|
| | | |
Net income (loss) attributable to CCIC common stockholders, per common share: | | | |
Basic | $ | 0.34 |
| | $ | 0.27 |
|
Diluted | $ | 0.34 |
| | $ | 0.27 |
|
| | | |
Weighted-average common shares outstanding (in thousands): | | | |
Basic | 332,712 |
| | 332,034 |
|
Diluted | 333,485 |
| | 333,045 |
|
Crown Castle International Corp.
First Quarter 2015
|
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | | | | | | | |
SEGMENT OPERATING RESULTS |
| Three Months Ended March 31, 2015 |
(dollars in thousands) | CCUSA | | CCAL | | Consolidated Total |
Net Revenues | | | | | |
Site rental | $ | 731,380 |
| | $ | 36,226 |
| | $ | 767,606 |
|
Services | 169,091 |
| | 4,304 |
| | 173,395 |
|
Total net revenues | 900,471 |
| | 40,530 |
| | 941,001 |
|
| | | | | |
Operating expenses(1) | | | | | |
Site rental | 232,213 |
| | 8,767 |
| | 240,980 |
|
Services | 86,918 |
| | 1,960 |
| | 88,878 |
|
Total operating expenses | 319,131 |
| | 10,727 |
| | 329,858 |
|
| | | | | |
General and administrative | 74,056 |
| | 5,431 |
| | 79,487 |
|
| | | | | |
Adjusted EBITDA | $ | 529,300 |
| | $ | 24,954 |
| | $ | 554,254 |
|
|
| | | | | | | |
FFO AND AFFO RECONCILIATIONS |
| Three Months Ended March 31, |
(dollars in thousands, except share and per share amounts) | 2015 | | 2014 |
Net income | $ | 125,112 |
| | $ | 102,793 |
|
Real estate related depreciation, amortization and accretion | 252,732 |
| | 244,420 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Adjustment for noncontrolling interest(2) | (2,325 | ) | | (1,296 | ) |
Dividends on preferred stock | (10,997 | ) | | (10,997 | ) |
FFO(3)(4) | $ | 373,145 |
| | $ | 337,654 |
|
Weighted average common shares outstanding — diluted(5) | 333,485 |
| | 333,045 |
|
FFO per share(3) | $ | 1.12 |
| | $ | 1.01 |
|
| | | |
FFO (from above) | $ | 373,145 |
| | $ | 337,654 |
|
Adjustments to increase (decrease) FFO: | | | |
Straight-line revenue | (38,016 | ) | | (50,806 | ) |
Straight-line expense | 25,259 |
| | 26,380 |
|
Stock-based compensation expense | 17,424 |
| | 12,937 |
|
Non-cash portion of tax provision | 817 |
| | (2,332 | ) |
Non-real estate related depreciation, amortization and accretion | 5,328 |
| | 5,770 |
|
Amortization of non-cash interest expense | 11,736 |
| | 20,882 |
|
Other (income) expense | 230 |
| | 2,736 |
|
Acquisition and integration costs | 2,019 |
| | 5,659 |
|
Adjustment for noncontrolling interest(2) | 2,325 |
| | 1,296 |
|
Capital improvement capital expenditures | (7,570 | ) | | (3,860 | ) |
Corporate capital expenditures | (9,371 | ) | | (7,571 | ) |
AFFO(3)(4) | $ | 383,326 |
| | $ | 348,744 |
|
Weighted average common shares outstanding — diluted(5) | 333,485 |
| | 333,045 |
|
AFFO per share(3) | $ | 1.15 |
| | $ | 1.05 |
|
(1) Exclusive of depreciation, amortization and accretion.
| |
(2) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(3) | See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO. |
| |
(4) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(5) | The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count. |
Crown Castle International Corp.
First Quarter 2015
|
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | | | | | | | | |
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Cash flows from operating activities: | | | |
Net income (loss) | $ | 125,112 |
| | $ | 102,793 |
|
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | |
Depreciation, amortization and accretion | 258,060 |
| | 250,191 |
|
Amortization of deferred financing costs and other non-cash interest | 11,736 |
| | 20,881 |
|
Stock-based compensation expense | 15,244 |
| | 11,956 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Deferred income tax benefit (provision) | (800 | ) | | (2,332 | ) |
Other non-cash adjustments, net | (557 | ) | | (774 | ) |
Changes in assets and liabilities, excluding the effects of acquisitions: | | | |
Increase (decrease) in liabilities | 16,969 |
| | 23,278 |
|
Decrease (increase) in assets | 26,407 |
| | (46,443 | ) |
Net cash provided by (used for) operating activities | 460,794 |
| | 362,283 |
|
Cash flows from investing activities: | | | |
Payments for acquisition of businesses, net of cash acquired | (17,493 | ) | | (62,228 | ) |
Capital expenditures | (204,753 | ) | | (142,943 | ) |
Other investing activities, net | (514 | ) | | 952 |
|
Net cash provided by (used for) investing activities | (222,760 | ) | | (204,219 | ) |
Cash flows from financing activities: | | | |
Principal payments on debt and other long-term obligations | (31,497 | ) | | (27,739 | ) |
Purchases of capital stock | (29,372 | ) | | (21,417 | ) |
Borrowings under revolving credit facility | 230,000 |
| | 83,000 |
|
Payments under revolving credit facility | (65,000 | ) | | (89,000 | ) |
Payments for financing costs | (1,904 | ) | | (5,854 | ) |
Net decrease (increase) in restricted cash | 10,214 |
| | 14,743 |
|
Dividends/distributions paid on common stock | (273,685 | ) | | (116,829 | ) |
Dividends paid on preferred stock | (10,997 | ) | | (11,363 | ) |
Net cash provided by (used for) financing activities | (172,241 | ) | | (174,459 | ) |
Effect of exchange rate changes on cash | (1,260 | ) | | (6,462 | ) |
Net increase (decrease) in cash and cash equivalents | 64,533 |
| | (22,857 | ) |
Cash and cash equivalents at beginning of period | 175,620 |
| | 223,394 |
|
Cash and cash equivalents at end of period | $ | 240,153 |
| | $ | 200,537 |
|
Supplemental disclosure of cash flow information: | | | |
Interest paid | 120,949 |
| | 126,540 |
|
Income taxes paid | 2,498 |
| | 7,400 |
|
Crown Castle International Corp.
First Quarter 2015
|
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | | | |
SITE RENTAL REVENUE GROWTH |
| Three Months Ended March 31, |
(dollars in millions) | 2015 | | 2014 |
Reported GAAP site rental revenues | $ | 768 |
| | $ | 747 |
|
Site rental straight-line revenues | (38 | ) | | (51 | ) |
Other - Non-recurring | — |
| | (5 | ) |
Site Rental Revenues, as Adjusted(1)(3) | $ | 730 |
| | $ | 691 |
|
Cash adjustments: | | | |
FX and other | 5 |
| | |
New tower acquisitions and builds(2) | (6 | ) | | |
Organic Site Rental Revenues(1)(3)(4) | $ | 729 |
| | |
Year-Over-Year Revenue Growth | | | |
Reported GAAP site rental revenues | 2.7 | % | | |
Site Rental Revenues, as Adjusted | 5.5 | % | | |
Organic Site Rental Revenues(5) | 5.4 | % | | |
|
| |
ORGANIC SITE RENTAL REVENUE GROWTH |
| Three Months Ended March 31, |
| 2015 |
New leasing activity | 6.2% |
Escalators | 3.4% |
Organic Site Rental Revenue growth, before non-renewals | 9.6% |
Non-renewals | (4.2)% |
Organic Site Rental Revenue Growth(5) | 5.4% |
| |
(1) | Includes amortization of prepaid rent; see the table "Summary of Prepaid Rent Activity" on page 16 for further details. |
| |
(2) | The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build. |
| |
(3) | Includes Site Rental Revenues, as Adjusted from the construction of new small cells. |
| |
(4) | See definitions provided herein. |
| |
(5) | Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | | | |
SITE RENTAL GROSS MARGIN GROWTH |
| Three Months Ended March 31, |
(dollars in millions) | 2015 | | 2014 |
Reported GAAP site rental gross margin | $ | 527 |
| | $ | 519 |
|
Straight line revenues and expenses, net | (13 | ) | | (25 | ) |
Other - Non-recurring | — |
| | (5 | ) |
Site rental gross margin, as Adjusted(1)(2) | $ | 514 |
| | $ | 489 |
|
Cash adjustments: | | | |
FX and other | (4 | ) | | |
New tower acquisitions and builds(3) | (5 | ) | | |
Organic Site Rental Gross Margin(1)(2)(4) | $ | 505 |
| | |
Year-Over-Year Gross Margin Growth | | | |
Reported GAAP site rental gross margin | 1.5 | % | | |
Site Rental Gross Margin, as Adjusted | 5.1 | % | | |
Organic Site Rental Gross Margin(5) | 3.4 | % | | |
Year-Over-Year Incremental Margin | | | |
Reported GAAP site rental gross margin | 37.3 | % | | |
Site Rental Gross Margin, as Adjusted | 65.0 | % | | |
Organic Site Rental Gross Margin(6) | 43.7 | % | | |
| |
(1) | Includes amortization of prepaid rent. |
| |
(2) | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
| |
(3) | The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build. |
| |
(4) | See definitions provided herein. |
| |
(5) | Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period. |
| |
(6) | Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period. |
Crown Castle International Corp.
First Quarter 2015
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| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | | | |
SUMMARY OF SITE RENTAL STRAIGHT-LINE REVENUES AND EXPENSES(1) |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Total site rental straight-line revenue | $ | 38,016 |
| | $ | 50,806 |
|
Total site rental straight-line expenses | 25,259 |
| | 26,380 |
|
|
| | | | | | | |
SUMMARY OF PREPAID RENT ACTIVITY(2) |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Prepaid rent received | $ | 117,958 |
| | $ | 68,222 |
|
Amortization of prepaid rent | (34,470 | ) | | (19,086 | ) |
|
| | | | | | | |
SUMMARY OF CAPITAL EXPENDITURES |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Discretionary: | | | |
Purchases of land interests | $ | 23,817 |
| | $ | 20,396 |
|
Wireless infrastructure construction and improvements | 163,995 |
| | 111,116 |
|
Sustaining | 16,941 |
| | 11,431 |
|
Total | $ | 204,753 |
| | $ | 142,943 |
|
| |
(1) | In accordance with GAAP accounting, if payment terms call for fixed escalations, or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods. |
| |
(2) | Reflects prepaid rent received from long-term tenant contracts and the amortization thereof for GAAP revenue recognition purposes. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | | | | | | | | | | | |
PROJECTED REVENUE FROM EXISTING CUSTOMER CONTRACTS(1) |
| Remaining nine months | Years Ended December 31, |
(dollars in millions) | 2015 | 2016 | 2017 | 2018 | 2019 |
Site rental revenue (GAAP) | $ | 2,261 |
| $ | 3,016 |
| $ | 3,039 |
| $ | 3,061 |
| $ | 3,086 |
|
Site rental straight-line revenue | (95 | ) | (55 | ) | 14 |
| 68 |
| 123 |
|
Site Rental Revenues, as Adjusted | $ | 2,166 |
| $ | 2,961 |
| $ | 3,052 |
| $ | 3,129 |
| $ | 3,209 |
|
|
| | | | | | | | | | | | | | | |
PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2) |
| Remaining nine months | Years Ended December 31, |
(as of March 31, 2015; dollars in millions) | 2015 | 2016 | 2017 | 2018 | 2019 |
Ground lease expense (GAAP) | $ | 504 |
| $ | 677 |
| $ | 684 |
| $ | 690 |
| $ | 698 |
|
Site rental straight-line expense | (69 | ) | (81 | ) | (69 | ) | (58 | ) | (48 | ) |
Ground Lease Expense, as Adjusted | $ | 435 |
| $ | 596 |
| $ | 615 |
| $ | 632 |
| $ | 650 |
|
|
| | | | | | | | | | | | | | | |
ANNUALIZED CASH SITE RENTAL REVENUE AT TIME OF RENEWAL(3) |
| Remaining nine months | Years Ended December 31, |
(as of March 31, 2015; dollars in millions) | 2015 | 2016 | 2017 | 2018 | 2019 |
AT&T | $ | 15 |
| $ | 46 |
| $ | 21 |
| $ | 40 |
| $ | 36 |
|
Sprint(4) | 17 |
| 41 |
| 39 |
| 36 |
| 42 |
|
T-Mobile | 11 |
| 25 |
| 25 |
| 33 |
| 26 |
|
Verizon | 9 |
| 13 |
| 17 |
| 18 |
| 18 |
|
Optus | 1 |
| — |
| 2 |
| — |
| — |
|
VHA | 2 |
| 6 |
| 9 |
| 2 |
| — |
|
Telstra | 1 |
| 3 |
| 1 |
| 1 |
| 1 |
|
All Others Combined | 34 |
| 40 |
| 30 |
| 32 |
| 30 |
|
Total | $ | 90 |
| $ | 174 |
| $ | 143 |
| $ | 161 |
| $ | 153 |
|
| |
(1) | Based on existing contracts as of March 31, 2015. All contracts, except for Sprint contracts associated with the iDen network and contracts where non-renewal notices have been received, are assumed to renew for a new term at current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.76 US dollar to 1.0 Australian dollar. |
| |
(2) | Based on existing ground leases as of March 31, 2015. CPI-linked leases are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.76 US dollar to 1.0 Australian dollar. |
| |
(3) | Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenue from Existing Customer Contracts." |
| |
(4) | Excludes Sprint leases associated with the iDen network, which are assumed to not renew as reflected in the table "Projected Revenue from Existing Customer Contracts." |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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ESTIMATED REDUCTION TO SITE RENTAL REVENUES FROM NON-RENEWALS FROM LEAP, METROPCS AND CLEARWIRE NETWORK DECOMMISSIONING(1)(2) (dollars in millions) |
2015 | 2016 | 2017 | 2018 | Thereafter | Total |
$35-$45 | $60-$70 | $25-$35 | $20-$30 | $35-$45 | $175-$225 |
|
| | | | | | |
TOTAL SITE RENTAL REVENUES FROM LEAP, METROPCS AND CLEARWIRE BY LEASE MATURITY(1) |
(dollars in millions) | 2015 | 2016 | 2017 | 2018 | Thereafter | Total |
Towers Leasing | $70 | $70 | $45 | $30 | $45 | $260 |
Small Cells Leasing | $— | $5 | $5 | $5 | $80 | $95 |
Total | $70 | $75 | $50 | $35 | $125 | $355 |
|
| | | | |
HISTORICAL ANNUAL NON-RENEWALS AS PERCENTAGE OF SITE RENTAL REVENUES, AS ADJUSTED |
Years Ended December 31, |
2014 | 2013 | 2012 | 2011 | 2010 |
2.6% | 1.7% | 2.2% | 1.9% | 2.0% |
|
| | | |
CUSTOMER OVERVIEW |
(as of March 31, 2015) | Percentage of Q1 2015 LQA Site Rental Revenues | Weighted Average Current Term Remaining(3) | Long-Term Credit Rating (S&P / Moody’s) |
AT&T | 30% | 8 | BBB+ / Baa1 |
T-Mobile | 23% | 7 | BB |
Sprint | 19% | 6 | B+ / B1 |
Verizon | 16% | 8 | BBB+ / Baa1 |
Optus Communications | 2% | 14 | A+ / Aa3 |
VHA | 1% | 5 | A- / Baa1(4) |
Telstra | 1% | 15 | A / A2 |
All Others Combined | 8% | 4 | N/A |
Total / Weighted Average | 100% | 7 | |
| |
(1) | Figures are approximate and based on run-rate site rental revenues as of March 31, 2015. |
| |
(2) | Depending on the eventual network deployment and decommissioning plans of AT&T, T-Mobile and Sprint, the impact and timing of such renewals may vary from Crown Castle's expectations. |
| |
(3) | Weighted by site rental revenue contributions; excludes renewals at the customers' option. |
| |
(4) | Vodafone Hutchison Australia ("VHA") is a joint venture between Vodafone Group Plc and Hutchison Telecommunications Australia, a subsidiary of Hutchison Whompoa; Vodafone Group Plc is rated A- and Baa1 and Hutchison Whompoa is rated A- and A3 by S&P and Moody's, respectively, as of March 31, 2015. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| |
SUMMARY OF TOWER PORTFOLIO BY VINTAGE |
(as of March 31, 2015; dollars in thousands) | |
YIELD(1) | NUMBER OF TENANTS PER TOWER |
|
| |
LQA SITE RENTAL REVENUE PER TOWER | LQA SITE RENTAL GROSS MARGIN PER TOWER |
|
| |
INVESTED CAPITAL PER TOWER(2) | NUMBER OF TOWERS |
| |
(1) | Yield is calculated as LQA site rental gross margin divided by invested capital. |
| |
(2) | Reflects gross total assets, including incremental capital invested by the Company since time of acquisition or construction completion. Inclusive of invested capital related to land at the tower site. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY
OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | |
PORTFOLIO OVERVIEW(1) |
(as of March 31, 2015; dollars in thousands) |
NUMBER OF TOWERS | TENANTS PER TOWER | LQA SITE RENTAL REVENUE PER TOWER |
| |
(1) | Includes towers and rooftops, excludes small cells and third-party land interests. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY
OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | |
DISTRIBUTION OF TOWER TENANCY (as of March 31, 2015) |
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1) |
U.S. PORTFOLIO | AUSTRALIA PORTFOLIO |
|
| |
Average: 2.2 | Average: 2.4 |
| |
GEOGRAPHIC TOWER DISTRIBUTION (as of March 31, 2015)(1) |
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION | PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION |
| |
(1) | Includes towers and rooftops, excludes small cells and third-party land interests. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
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| | | | | | | | | | | | | | | | |
U.S. GROUND INTEREST OVERVIEW |
(as of March 31, 2015; dollars in millions) | LQA Site Rental Revenue | Percentage of U.S. LQA Site Rental Revenue | LQA Site Rental Gross Margin | Percentage of U.S. LQA Site Rental Gross Margin | Number of U.S. Towers(1) | Percentage of U.S. Towers | Weighted Average Term Remaining (by years)(2) |
Less than 10 years | $ | 338 |
| 13 | % | $ | 194 |
| 11 | % | 5,657 |
| 14 | % | |
10 to 20 years | 533 |
| 20 | % | 293 |
| 16 | % | 9,974 |
| 25 | % | |
Greater 20 years | 1,072 |
| 40 | % | 702 |
| 38 | % | 15,692 |
| 40 | % | |
Total leased | $ | 1,943 |
| 73 | % | $ | 1,189 |
| 65 | % | 31,323 |
| 79 | % | 31 |
|
| | | | | | | |
Owned | 710 |
| 27 | % | 652 |
| 35 | % | 8,340 |
| 21 | % | |
Total / Average | $ | 2,653 |
| 100 | % | $ | 1,841 |
| 100 | % | 39,663 |
| 100 | % | |
|
| | | | | | | | | | | | | | | | |
AUSTRALIA GROUND INTEREST OVERVIEW |
(as of March 31, 2015; dollars in millions) | LQA Site Rental Revenue | Percentage of Australia LQA Site Rental Revenue | LQA Site Rental Gross Margin | Percentage of Australia LQA Site Rental Gross Margin | Number of Australia Towers(1) | Percentage of Australia Towers | Weighted Average Term Remaining (by years)(2) |
Less than 10 years | $ | 42 |
| 30 | % | $ | 31 |
| 27 | % | 524 |
| 29 | % | |
10 to 20 years | 48 |
| 34 | % | 38 |
| 34 | % | 633 |
| 36 | % | |
Greater 20 years | 36 |
| 26 | % | 30 |
| 27 | % | 474 |
| 27 | % | |
Total leased | $ | 125 |
| 90 | % | $ | 99 |
| 88 | % | 1,631 |
| 92 | % | 19 |
|
| | | | | | | |
Owned | 14 |
| 10 | % | 14 |
| 12 | % | 146 |
| 8 | % | |
Total / Average | $ | 139 |
| 100 | % | $ | 113 |
| 100 | % | 1,777 |
| 100 | % | |
| |
(1) | Includes towers and rooftops, excludes small cells and third-party land interests. |
| |
(2) | Includes renewal terms at the Company’s option; weighted by site rental gross margin. |
Crown Castle International Corp.
First Quarter 2015
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | |
U.S. GROUND INTEREST ACTIVITY |
(dollars in millions) | Three Months Ended March 31, 2015 |
Ground Extensions Under Crown Castle Towers: | |
Number of ground leases extended | 459 |
|
Average number of years extended | 32 |
|
Percentage increase in consolidated cash ground lease expense due to extension activities(1) | 0.2 | % |
| |
Ground Purchases Under Crown Castle Towers: | |
Number of ground leases purchased | 115 |
|
Land lease purchases (including capital expenditures, acquisitions and capital leases) | $ | 34 |
|
Percentage of consolidated site rental gross margin from towers residing on land purchased | <1% |
|
|
| | | |
AUSTRALIA GROUND INTEREST ACTIVITY |
(dollars in millions) | Three Months Ended March 31, 2015 |
Ground Extensions Under Crown Castle Towers: | |
Number of ground leases extended | 15 |
|
Average number of years extended | 17 |
|
Percentage increase in consolidated cash ground lease expense due to extension activities(1) | Not Meaningful |
|
| |
Ground Purchases Under Crown Castle Towers: | |
Number of ground leases purchased | — |
|
Land lease purchases (including capital expenditures, acquisitions and capital leases) | $ | — |
|
Percentage of consolidated site rental gross margin from towers residing on land purchased | Not Meaningful |
|
|
| | | |
SMALL CELL NETWORK OVERVIEW |
Number of Nodes(3) (in thousands) | Miles of Fiber (in thousands) | Percentage of LQA Site Rental Revenues | Weighted Average Current Term Remaining for Customer Contracts(2) |
14 | 7 | 7% | 8 |
| |
(1) | Includes the impact from the amortization of lump sum payments. |
| |
(2) | Excludes renewal terms at customers’ option; weighted by site rental revenue. |
| |
(3) | Includes nodes currently in-process. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | | | | |
CAPITALIZATION OVERVIEW |
(dollars in millions) | Face Value as Reported 3/31/15 | Fixed vs. Floating | Secured vs. Unsecured | Interest Rate(1) | Net Debt to LQA EBITDA(2) | Maturity |
Cash | $ | 240 |
| | | | | |
| | | | | | |
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(3) | 1,600 |
| Fixed | Secured | 6.0% | | Various(8) |
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(3) | 1,550 |
| Fixed | Secured | 4.5% | | Various(8) |
2012 Secured Notes(4) | 1,500 |
| Fixed | Secured | 3.4% | | 2017/2023 |
Senior Secured Notes, Series 2009-1(5) | 156 |
| Fixed | Secured | 7.5% | | Various(8) |
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(6) | 254 |
| Fixed | Secured | 5.7% | | 2040 |
Subtotal | $ | 5,060 |
| | | 4.8% | 2.3x | |
Revolving Credit Facility(7) | 860 |
| Floating | Secured | 1.9% | | 2018/2019 |
Term Loan A | 642 |
| Floating | Secured | 1.9% | | 2018/2019 |
Term Loan B | 2,828 |
| Floating | Secured | 3.0% | | 2019/2021 |
Total CCOC Facility Debt | $ | 4,330 |
| | | 2.6% | 2.0x | |
4.875% Senior Notes | 850 |
| Fixed | Unsecured | 4.9% | | 2022 |
5.250% Senior Notes | 1,650 |
| Fixed | Unsecured | 5.3% | | 2023 |
Capital Leases & Other Debt | 181 |
| Various | Various | Various | | Various |
Total HoldCo and other Debt | $ | 2,681 |
| | | 5.1% | 1.2x | |
Total Net Debt | $ | 11,831 |
| | | 4.1% | 5.3x | |
Preferred Stock, at liquidation value | 978 |
| | | | | |
Market Capitalization(9) | 27,549 |
| | | | | |
Firm Value(10) | $ | 40,358 |
| | | | | |
| |
(1) | Represents the weighted-average stated interest rate. |
| |
(2) | Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA. |
| |
(3) | If the Senior Secured Tower Revenue Notes 2010-2, and 2010-3 and Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 ("2010 Tower Revenue Notes") are not paid in full on or prior to 2015, 2017 and 2020, as applicable, then Excess Cash Flow (as defined in the indenture) of the issuers (of such notes) will be used to repay principal of the applicable series and class of the 2010 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes. The Senior Secured Tower Revenue Notes, 2010-2, and 2010-3 consist of two series of notes with principal amounts of $350 million and $1.3 billion, having anticipated repayment dates in 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 consist of three series of notes with principal amounts of $250 million, $300 million and $1.0 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively. |
| |
(4) | The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2030. |
| |
(5) | The Senior Secured Notes, Series 2009-1 consist of $86 million of principal as of March 31, 2015 that amortizes through 2019, and $70 million of principal as of March 31, 2015 that amortizes during the period beginning in 2019 and ending in 2029. |
| |
(6) | The anticipated repayment date is 2015 for each class of the WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes"). If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence using the excess cash flows of the issuers of the WCP Securitized Notes. |
| |
(7) | As of March 31, 2015, the undrawn availability under the $2.2 billion Revolving Credit Facility is $1.4 billion. |
| |
(8) | Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration. |
| |
(9) | Market capitalization calculated based on $82.54 closing price and 333.8 million shares outstanding as of March 31, 2015. |
| |
(10) | Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
|
DEBT MATURITY OVERVIEW(1) |
|
| |
(1) | Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes capital leases and other obligations; amounts presented at face value net of repurchases held at CCIC. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | |
LIQUIDITY OVERVIEW |
(dollars in thousands) | March 31, 2015 |
Cash and cash equivalents(1) | $ | 240,153 |
|
Undrawn revolving credit facility availability(2) | 1,370,000 |
|
Restricted cash | 141,964 |
|
Debt and other long-term obligations | 12,070,091 |
|
Total equity | 6,558,793 |
|
| |
(1) | Exclusive of restricted cash. |
| |
(2) | Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, our credit agreement governing our senior credit facilities ("2012 Credit Facility"). |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | |
SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS |
Debt | Borrower / Issuer | Covenant(1) | Covenant Level Requirement | | As of March 31, 2015 |
Maintenance Financial Covenants(2) |
2012 Credit Facility | CCOC | Total Net Leverage Ratio | ≤ 5.50x | | 4.3x |
2012 Credit Facility | CCOC | Consolidated Interest Coverage Ratio | ≥ 2.50x | | 5.8x |
| | | | | |
Restrictive Negative Financial Covenants | | | | |
Financial covenants restricting ability to make restricted payments, including dividends |
4.875% Senior Notes | CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 7.00x | | 5.5x |
5.25% Senior Notes | CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 7.00x | | 5.5x |
2012 Credit Facility | CCOC | Total Net Leverage Ratio | ≤ 5.50x | | 4.3x |
| | | | | |
Financial covenants restricting ability to incur additional debt |
4.875% Senior Notes | CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 7.00x | | 5.5x |
5.25% Senior Notes | CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 7.00x | | 5.5x |
2012 Credit Facility | CCOC | Total Net Leverage Ratio | ≤ 5.50x | (3) | 4.3x |
2012 Credit Facility | CCOC | Holdings Leverage Ratio | ≤ 7.00x | (4) | 5.5x |
2012 Credit Facility | CCOC | Consolidated Interest Coverage Ratio | ≥ 2.50x | | 5.8x |
2012 Secured Notes | CC Holdings GS V LLC and Crown Castle GS III Corp. | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 3.50x | | 3.9x |
| | | | | |
Financial covenants restricting ability to make investments |
2012 Credit Facility | CCOC | Total Net Leverage Ratio | ≤ 5.50x | | 4.3x |
| |
(1) | As defined in the respective debt agreement. |
| |
(2) | Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2012 Credit Facility. |
| |
(3) | Applicable for debt issued at CCOC or its subsidiaries. |
| |
(4) | Applicable for debt issued at CCIC or its subsidiaries. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | |
SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS (CONTINUED) |
Debt | Borrower / Issuer | Covenant(1) | Covenant Level Requirement | | As of March 31, 2015 |
Restrictive Negative Financial Covenants |
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released |
2010 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (2) | 3.9x |
WCP Securitized Notes | Certain WCP Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (2) | 1.4x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (2) | 4.7x |
| | | | | |
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture |
2010 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.00x | (3) | 3.9x |
WCP Securitized Notes | Certain WCP Subsidiaries | Debt Service Coverage Ratio | ≥ 1.50x | (3) | 1.4x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.34x | (3) | 4.7x |
| |
(1) | As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR". |
| |
(2) | The 2010 Tower Revenue Notes, WCP Securitized Notes, and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.15x or 1.15x, in each case as described under the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, or 2009 Securitized Notes, respectively. |
| |
(3) | Rating Agency Confirmation (as defined in the respective debt agreement) is also required. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
|
| | | | | | | | | |
INTEREST RATE SENSITIVITY(1) |
| Remaining nine months, | Years Ended December 31, |
(as of March 31, 2015; dollars in millions) | 2015 | 2016 | 2017 |
Fixed Rate Debt: | | | |
Face Value of Principal Outstanding(2) | $ | 7,560 |
| $ | 7,551 |
| $ | 7,291 |
|
Current Interest Payment Obligations(3) | 277 |
| 368 |
| 367 |
|
Effect of 0.125% Change in Interest Rates(4) | <1 |
| 1 |
| 1 |
|
Floating Rate Debt: | | | |
Face Value of Principal Outstanding(2) | $ | 4,330 |
| $ | 4,319 |
| $ | 4,307 |
|
Current Interest Payment Obligations(5) | 87 |
| 127 |
| 150 |
|
Effect of 0.125% Change in Interest Rates(6) | 2 |
| 4 |
| 5 |
|
| |
(1) | Excludes capital lease and other obligations. |
| |
(2) | Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases. |
| |
(3) | Interest expense calculated based on current interest rates. |
| |
(4) | Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps. |
| |
(5) | Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of March 31, 2015. Calculation takes into account any LIBOR floors in place and assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s net leverage ratio. |
| |
(6) | Interest expense calculated based on current interest rates using forward LIBOR assumptions until the stated maturity date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Non-GAAP Financial Measures and Other Calculations
This Supplement includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less non controlling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gains (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO payout ratio. Dividends per common share divided by AFFO per share.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Site Rental Gross Margins, as Adjusted. Crown Castle defines Site Rental Gross Margins, as Adjusted, as site rental gross margin as reported less straight-line revenues and straight-line expenses.
Organic Site Rental Gross Margins. Crown Castle defines Organic Site Rental Gross Margins as site rental gross margins, as reported less straight-line revenues, straight-line expenses, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Ground Lease Expense, as Adjusted. Crown Castle defines Ground Lease Expense, as Adjusted as ground lease expense, as reported, less straight line ground lease expense.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile non-GAAP financial measures to comparable GAAP financial measures and provide certain other calculations. The components in these tables may not sum to the total due to rounding.
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Adjusted EBITDA for the three months ended March 31, 2015 and 2014 is computed as follows:
|
| | | | | | | |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Net income (loss) | $ | 125,112 |
| | $ | 102,793 |
|
Adjustments to increase (decrease) net income (loss): | | | |
Asset write-down charges | 8,623 |
| | 2,733 |
|
Acquisition and integration costs | 2,019 |
| | 5,659 |
|
Depreciation, amortization and accretion | 258,060 |
| | 250,191 |
|
Amortization of prepaid lease purchase price adjustments | 5,174 |
| | 3,895 |
|
Interest expense and amortization of deferred financing costs(1) | 134,439 |
| | 146,400 |
|
Interest income | (109 | ) | | (173 | ) |
Other income (expense) | 230 |
| | 2,736 |
|
Benefit (provision) for income taxes | 3,282 |
| | (188 | ) |
Stock-based compensation expense | 17,424 |
| | 12,937 |
|
Adjusted EBITDA(2) | $ | 554,254 |
| | $ | 526,983 |
|
Adjusted EBITDA for the three months ended March 31, 2015 is computed as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2015 |
(dollars in thousands) | CCUSA | | CCAL | | Eliminations | | Consolidated Total |
Net income (loss) | $ | 114,785 |
| | $ | 10,327 |
| | $ | — |
| | $ | 125,112 |
|
Adjustments to increase (decrease) net income (loss): | | | | | | | |
Asset write-down charges | 8,555 |
| | 68 |
| | — |
| | 8,623 |
|
Acquisition and integration costs | 2,016 |
| | 3 |
| | — |
| | 2,019 |
|
Depreciation, amortization and accretion | 251,806 |
| | 6,254 |
| | — |
| | 258,060 |
|
Amortization of prepaid lease purchase price adjustments | 5,174 |
| | — |
| | — |
| | 5,174 |
|
Interest expense and amortization of deferred financing costs(1) | 134,439 |
| | 3,051 |
| | (3,051 | ) | | 134,439 |
|
Interest income | (56 | ) | | (53 | ) | | — |
| | (109 | ) |
Other income (expense) | (2,827 | ) | | 6 |
| | 3,051 |
| | 230 |
|
Benefit (provision) for income taxes | (1,434 | ) | | 4,716 |
| | — |
| | 3,282 |
|
Stock-based compensation expense | 16,842 |
| | 582 |
| | — |
| | 17,424 |
|
Adjusted EBITDA(2) | $ | 529,300 |
| | $ | 24,954 |
| | $ | — |
| | $ | 554,254 |
|
| |
(1) | See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein. |
| |
(2) | The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Adjusted EBITDA for the quarter ending June 30, 2015 and the year ending December 31, 2015 is forecasted as follows:
|
| | | |
| Q2 2015 | | Full Year 2015 |
(dollars in millions) | Outlook | | Outlook |
Net income (loss) | $92 to $125 | | $419 to $498 |
Adjustments to increase (decrease) net income (loss): | | | |
Asset write-down charges | $4 to $6 | | $19 to $29 |
Acquisition and integration costs | $0 to $3 | | $4 to $4 |
Depreciation, amortization and accretion | $256 to $261 | | $1,021 to $1,041 |
Amortization of prepaid lease purchase price adjustments | $4 to $6 | | $19 to $21 |
Interest expense and amortization of deferred financing costs(1) | $133 to $138 | | $531 to $546 |
Interest income | $(2) to $0 | | $(3) to $(1) |
Other income (expense) | $(1) to $2 | | $1 to $3 |
Benefit (provision) for income taxes | $1 to $5 | | $4 to $12 |
Stock-based compensation expense | $16 to $18 | | $66 to $71 |
Adjusted EBITDA(2) | $531 to $536 | | $2,145 to $2,160 |
The components of interest expense and amortization of deferred financing costs for the quarters ending March 31, 2015 and 2014 are as follows:
|
| | | | | | | |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Interest expense on debt obligations | $ | 122,703 |
|
| $ | 125,519 |
|
Amortization of deferred financing costs | 5,619 |
| | 5,641 |
|
Amortization of adjustments on long-term debt | (881 | ) | | (955 | ) |
Amortization of interest rate swaps(3) | 7,491 |
| | 16,182 |
|
Other, net | (493 | ) | | 13 |
|
Interest expense and amortization of deferred financing costs | $ | 134,439 |
| | $ | 146,400 |
|
The components of interest expense and amortization of deferred financing costs for the quarter ending June 30, 2015 and the year ending December 31, 2015 are forecasted as follows:
|
| | | |
| Q2 2015 | | Full Year 2015 |
(dollars in millions) | Outlook | | Outlook |
Interest expense on debt obligations | $123 to $125 | | $498 to $508 |
Amortization of deferred financing costs | $5 to $7 | | $21 to $23 |
Amortization of adjustments on long-term debt | $(1) to $0 | | $(4) to $(2) |
Amortization of interest rate swaps(3) | $6 to $8 | | $16 to $21 |
Other, net | $0 to $0 | | $(3) to $(1) |
Interest expense and amortization of deferred financing costs | $133 to $138 | | $531 to $546 |
| |
(1) | See the reconciliation of “components of interest expense and amortization of deferred financing costs” herein. |
| |
(2) | The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
| |
(3) | Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FFO and AFFO for the three months ended March 31, 2015 and 2014 are computed as follows:
|
| | | | | | | |
| Three Months Ended March 31, |
(dollars in thousands, except share and per share amounts) | 2015 | | 2014 |
Net income | $ | 125,112 |
| | $ | 102,793 |
|
Real estate related depreciation, amortization and accretion | 252,732 |
| | 244,420 |
|
Asset write-down charges | 8,623 |
| | 2,733 |
|
Adjustment for noncontrolling interest(1) | (2,325 | ) | | (1,296 | ) |
Dividends on preferred stock | (10,997 | ) | | (10,997 | ) |
FFO(3) | $ | 373,145 |
| | $ | 337,654 |
|
| | | |
FFO (from above) | $ | 373,145 |
| | $ | 337,654 |
|
Adjustments to increase (decrease) FFO: | | | |
Straight-line revenue | (38,016 | ) | | (50,806 | ) |
Straight-line expense | 25,259 |
| | 26,380 |
|
Stock-based compensation expense | 17,424 |
| | 12,937 |
|
Non-cash portion of tax provision | 817 |
| | (2,332 | ) |
Non-real estate related depreciation, amortization and accretion | 5,328 |
| | 5,770 |
|
Amortization of non-cash interest expense | 11,736 |
| | 20,882 |
|
Other (income) expense | 230 |
| | 2,736 |
|
Acquisition and integration costs | 2,019 |
| | 5,659 |
|
Adjustment for noncontrolling interest(1) | 2,325 |
| | 1,296 |
|
Capital improvement capital expenditures | (7,570 | ) | | (3,860 | ) |
Corporate capital expenditures | (9,371 | ) | | (7,571 | ) |
AFFO(2)(3) | $ | 383,326 |
| | $ | 348,744 |
|
Weighted average common shares outstanding — diluted(4) | 333,485 |
| | 333,045 |
|
AFFO per share(2) | $ | 1.15 |
| | $ | 1.05 |
|
| |
(1) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(2) | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO. |
| |
(3) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(4) | The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FFO and AFFO for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 are computed as follows:
|
| | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands of dollars, except share and per share amounts) | 2014 | | 2013 | | 2012 | | 2011 | | 2010 |
Net income | $ | 398,774 |
| | $ | 93,901 |
| | $ | 200,888 |
| | $ | 171,460 |
| | $ | (311,259 | ) |
Real estate related depreciation, amortization and accretion | 992,643 |
| | 761,070 |
| | 601,372 |
| | 531,869 |
| | 522,514 |
|
Asset write-down charges | 15,040 |
| | 14,863 |
| | 15,548 |
| | 22,285 |
| | 13,687 |
|
Adjustment for noncontrolling interest(1) | (8,261 | ) | | (3,790 | ) | | (12,304 | ) | | (383 | ) | | 319 |
|
Dividends on preferred stock | (43,988 | ) | | — |
| | (2,481 | ) | | (19,487 | ) | | (19,879 | ) |
FFO(3)(4) | $ | 1,354,208 |
| | $ | 866,043 |
| | $ | 803,023 |
| | $ | 705,744 |
| | $ | 205,381 |
|
| | | | | | | | | |
FFO (from above) | $ | 1,354,208 |
| | $ | 866,043 |
| | $ | 803,023 |
| | $ | 705,744 |
| | $ | 205,381 |
|
Adjustments to increase (decrease) FFO: | | | | | | | | | |
Straight-line revenue | (196,598 | ) | | (218,631 | ) | | (251,327 | ) | | (199,969 | ) | | (161,716 | ) |
Straight-line expense | 105,376 |
| | 80,953 |
| | 54,069 |
| | 39,025 |
| | 38,759 |
|
Stock-based compensation expense | 60,164 |
| | 41,788 |
| | 47,382 |
| | 35,991 |
| | 39,965 |
|
Non-cash portion of tax provision(2) | (20,359 | ) | | 191,729 |
| | (106,742 | ) | | 4,970 |
| | (29,033 | ) |
Non-real estate related depreciation, amortization and accretion | 20,421 |
| | 13,145 |
| | 21,220 |
| | 21,082 |
| | 18,257 |
|
Amortization of non-cash interest expense | 80,854 |
| | 99,244 |
| | 109,337 |
| | 102,944 |
| | 85,454 |
|
Other (income) expense | (11,862 | ) | | 3,872 |
| | 5,392 |
| | 5,577 |
| | 603 |
|
Gains (losses) on retirement of long-term obligations | 44,629 |
| | 37,127 |
| | 131,974 |
| | — |
| | 138,367 |
|
Net gain (loss) on interest rate swaps | — |
| | — |
| | — |
| | — |
| | 286,435 |
|
Acquisition and integration costs | 35,042 |
| | 26,005 |
| | 18,298 |
| | 3,310 |
| | 2,102 |
|
Adjustment for noncontrolling interest(1) | 8,261 |
| | 3,790 |
| | 12,304 |
| | 383 |
| | (319 | ) |
Capital improvement capital expenditures | (32,227 | ) | | (19,312 | ) | | (21,647 | ) | | (13,965 | ) | | (14,795 | ) |
Corporate capital expenditures | (51,772 | ) | | (28,409 | ) | | (15,459 | ) | | (9,429 | ) | | (9,531 | ) |
AFFO(3)(4) | $ | 1,396,139 |
| | $ | 1,097,347 |
| | $ | 807,823 |
| | $ | 695,661 |
| | $ | 599,931 |
|
Weighted average common shares outstanding — diluted(5) | 333,265 |
| | 299,293 |
| | 291,270 |
| | 285,947 |
| | 286,764 |
|
AFFO per share(3) | $ | 4.19 |
| | $ | 3.67 |
| | $ | 2.77 |
| | $ | 2.43 |
| | $ | 2.09 |
|
| |
(1) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(2) | Adjusts the income tax provision to reflect our estimate of the cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes. As a result income tax expense (benefit) is lower by the amount of the adjustment. |
| |
(3) | See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO. |
| |
(4) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(5) | The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FFO and AFFO for the three months ended June 30, 2014 and 2013 are computed as follows:
|
| | | | | | | |
| Three Months Ended June 30, |
(in thousands of dollars, except share and per share amounts) | 2014 | | 2013 |
Net income | $ | 35,357 |
| | $ | 53,376 |
|
Real estate related depreciation, amortization and accretion | 249,484 |
| | 188,039 |
|
Asset write-down charges | 3,136 |
| | 3,097 |
|
Adjustment for noncontrolling interest(1) | (1,348 | ) | | (1,017 | ) |
Dividends on preferred stock | (10,997 | ) | | — |
|
FFO(3)(4) | $ | 275,632 |
| | $ | 243,496 |
|
| | | |
FFO (from above) | $ | 275,632 |
| | $ | 243,496 |
|
Adjustments to increase (decrease) FFO: | | | |
Straight-line revenue | (52,134 | ) | | (56,919 | ) |
Straight-line expense | 27,416 |
| | 20,572 |
|
Stock-based compensation expense | 18,212 |
| | 9,608 |
|
Non-cash portion of tax provision(2) | (2,553 | ) | | 34,747 |
|
Non-real estate related depreciation, amortization and accretion | 4,751 |
| | 2,612 |
|
Amortization of non-cash interest expense | 20,604 |
| | 20,551 |
|
Other (income) expense | 6,063 |
| | (507 | ) |
Gains (losses) on retirement of long-term obligations | 44,629 |
| | 577 |
|
Acquisition and integration costs | 19,197 |
| | 7,215 |
|
Adjustment for noncontrolling interest(1) | 1,348 |
| | 1,017 |
|
Capital improvement capital expenditures | (4,469 | ) | | (2,399 | ) |
Corporate capital expenditures | (8,171 | ) | | (7,694 | ) |
AFFO(3)(4) | $ | 350,526 |
| | $ | 272,877 |
|
Weighted average common shares outstanding — diluted(5) | 333,081 |
| | 292,706 |
|
AFFO per share(3) | $ | 1.05 |
| | $ | 0.93 |
|
| |
(1) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(2) | Adjusts the income tax provision to reflect our estimate of the cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes. As a result income tax expense (benefit) is lower by the amount of the adjustment. |
| |
(3) | See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO. |
| |
(4) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(5) | The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FFO and AFFO for the quarter ending June 30, 2015 and the year ending December 31, 2015 are forecasted as follows:
|
| | | |
| Q2 2015 | | Full Year 2015 |
(in millions of dollars, except share and per share amounts) | Outlook | | Outlook |
Net income | $92 to $125 | | $419 to $498 |
Real estate related depreciation, amortization and accretion | $252 to $255 | | $1,003 to $1,018 |
Asset write-down charges | $4 to $6 | | $19 to $29 |
Adjustment for noncontrolling interest(1) | $(3) to $1 | | $(13) to $(6) |
Dividends on preferred stock | $(11) to $(11) | | $(44) to $(44) |
FFO(3)(4) | $352 to $357 | | $1,439 to $1,454 |
| | | |
FFO (from above) | $352 to $357 | | $1,439 to $1,454 |
Adjustments to increase (decrease) FFO: | | | |
Straight-line revenue | $(40) to $(35) | | $(142) to $(127) |
Straight-line expense | $23 to $28 | | $88 to $103 |
Stock-based compensation expense | $16 to $18 | | $66 to $71 |
Non-cash portion of tax provision | $(9) to $(4) | | $(21) to $(6) |
Non-real estate related depreciation, amortization and accretion | $4 to $6 | | $18 to $23 |
Amortization of non-cash interest expense | $10 to $15 | | $30 to $41 |
Other (income) expense | $(1) to $2 | | $1 to $3 |
Acquisition and integration costs | $0 to $3 | | $4 to $4 |
Adjustment for noncontrolling interest(1) | $3 to $(1) | | $13 to $6 |
Capital improvement capital expenditures | $(12) to $(10) | | $(41) to $(36) |
Corporate capital expenditures | $(12) to $(10) | | $(40) to $(35) |
AFFO(3)(4) | $348 to $353 | | $1,450 to $1,465 |
Weighted-average common shares outstanding—diluted(2)(5) | 333.9 | | 333.9 |
AFFO per share(3) | $1.04 to $1.06 | | $4.34 to $4.39 |
| |
(1) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| |
(2) | Based on 333.9 million diluted shares outstanding as of March 31, 2015. |
| |
(3) | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO. |
| |
(4) | FFO and AFFO are reduced by cash paid for preferred stock dividends. |
| |
(5) | The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count. |
Crown Castle International Corp.
First Quarter 2015
|
| | | | |
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Net Debt to Last Quarter Annualized Adjusted EBITDA calculation: |
| | | | | | |
| Three Months Ended March 31, |
(dollars in millions) | 2015 | 2014 |
Total face value of debt | $ | 12,071.3 |
| $ | 11,618.3 |
|
Ending cash and cash equivalents | 240.2 |
| 199.9 |
|
Total Net Debt | $ | 11,831.1 |
| $ | 11,418.4 |
|
| | |
Adjusted EBITDA for the three months ended March 31, | $ | 554.3 |
| $ | 527.0 |
|
Last quarter annualized Adjusted EBITDA | 2,217.0 |
| 2,108.0 |
|
Net Debt to Last Quarter Annualized Adjusted EBITDA | 5.3 | x | 5.4 | x |
Cash Interest Coverage Ratio Calculation: |
| | | | | | | |
| Three Months Ended March 31, |
(dollars in thousands) | 2015 | | 2014 |
Adjusted EBITDA | $ | 554,254 |
| | $ | 526,983 |
|
Interest expense on debt obligations | 122,703 |
| | 125,519 |
|
Interest Coverage Ratio | 4.5 | x | | 4.2 | x |
AFFO Payout Ratio Calculation: |
| | | |
| Three Months Ended March 31, |
(per share) | 2015 |
Dividend per share | $ | 0.82 |
|
AFFO per share | $ | 1.15 |
|
AFFO Payout Ratio | 71 | % |
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