Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today
reported results for the quarter and year ended December 31,
2018.
"We closed out another year of growth with solid
results in the fourth quarter and increased our Outlook for 2019,
demonstrating the strong fundamentals across our business," stated
Jay Brown, Crown Castle’s Chief Executive Officer. "We are excited
about the opportunity we see to leverage the unmatched portfolio of
more than 40,000 towers and 65,000 route miles of dense, high
capacity fiber that we have built and acquired over the past two
decades in the top U.S. markets where we see the greatest long-term
demand. We continue to believe our ability to offer towers,
small cells and fiber solutions, which are all integral components
of communications networks and are shared among multiple tenants,
provides us the best opportunity to generate significant growth
while delivering high returns for our shareholders. Further,
we believe that the U.S. is the best market for communications
infrastructure ownership, and we are pursuing that compelling
opportunity with our comprehensive offering. With the
positive momentum we continue to see in our towers and fiber
segments, we remain focused on investing in our business to
generate future growth and delivering dividend per share growth of
7% to 8% per year."
RESULTS FOR THE QUARTERThe
table below sets forth select financial results for the three month
period ended December 31, 2018 and 2017. For further
information, refer to the financial statements and non-GAAP,
segment and other calculation reconciliations included in this
press release.
(in millions) |
Actual |
Midpoint Q4 2018 Outlook(b) |
Actual Compared to Outlook |
Q4 2018 |
Q4 2017 |
Change |
% Change |
Site rental
revenues |
$1,209 |
$1,051 |
+$158 |
+15 |
% |
$1,194 |
+$15 |
Net income (loss) |
$213 |
$98 |
+$115 |
+117 |
% |
$214 |
-$1 |
Adjusted EBITDA(a) |
$816 |
$707 |
+$109 |
+15 |
% |
$825 |
-$8 |
AFFO(a)(c) |
$591 |
$512 |
+$79 |
+15 |
% |
$596 |
-$5 |
Weighted-average common
shares outstanding - diluted |
|
417 |
|
408 |
|
+9 |
+2 |
% |
416 |
+1 |
Note: Figures may not tie due to rounding.
(a) See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.(b) As issued on
October 17, 2018. (c) Attributable to CCIC common
stockholders.
HIGHLIGHTS FROM THE QUARTER
- Site rental revenues. Site rental
revenues grew approximately 15%, or $158 million, from fourth
quarter 2017 to fourth quarter 2018, inclusive of approximately $59
million in Organic Contribution to Site Rental Revenues, $82
million in contributions from acquisitions and other items, and a
$17 million increase in straight-lined revenues. The $59
million in Organic Contribution to Site Rental Revenues represents
approximately 5.6% growth, comprised of approximately 7.7% growth
from new leasing activity and contracted tenant escalations, net of
approximately 2.1% from tenant non-renewals. When compared to
the prior fourth quarter 2018 Outlook issued on October 17, 2018,
site rental revenues were approximately $15 million higher than
expected and included approximately $10 million of additional
straight-lined revenues primarily resulting from term extensions
associated with leasing activity.
- Net income. Net income for fourth
quarter 2018 was $213 million, compared to $98 million during the
same period a year ago.
- Adjusted EBITDA. When compared to the
prior fourth quarter 2018 Outlook, Adjusted EBITDA was impacted by
approximately $10 million of higher costs associated with the
combination of additional accruals for annual bonuses relating to
full year 2018 results and expenses related to certain natural
disasters that occurred during the fourth quarter. In
addition, Adjusted EBITDA was also impacted by approximately $5
million of lower services contribution that is now expected to
contribute to Adjusted EBITDA in 2019.
- Capital expenditures. Capital
expenditures during the quarter were $500 million, comprised of $18
million of land purchases, $30 million of sustaining capital
expenditures, $447 million of revenue generating capital
expenditures and $5 million of integration capital
expenditures. The revenue generating capital expenditures of
$447 million included $349 million attributable to Fiber and $98
million attributable to Towers.
- Common stock dividend. During the
quarter, Crown Castle paid common stock dividends of $1.125 per
common share, an increase of approximately 7% on a per share basis
compared to the same period a year ago.
RESULTS FOR THE YEARThe table
below sets forth select financial results for the year ended
December 31, 2018. For further information, refer to the
financial statements and non-GAAP and other calculation
reconciliations included in this press release.
(in millions) |
Actual |
Midpoint Full Year 2018 Outlook(b) |
Actual Compared to Outlook |
|
2018 |
|
2017 |
Change |
% Change |
Site rental
revenues |
$4,716 |
$3,669 |
+$1,047 |
+29 |
% |
$4,701 |
+$15 |
Net income (loss) |
$671 |
$445 |
+$226 |
+51 |
% |
$672 |
-$1 |
Adjusted EBITDA(a) |
$3,141 |
$2,482 |
+$659 |
+27 |
% |
$3,149 |
-$8 |
AFFO(a)(c) |
$2,274 |
$1,860 |
+$414 |
+22 |
% |
$2,278 |
-$5 |
Weighted-average common
shares outstanding - diluted |
|
415 |
|
383 |
|
+32 |
+8 |
% |
415 |
— |
Note: Figures may not tie due to rounding
(a) See reconciliation of this non-GAAP financial measure to net
income (loss) included herein. (b) As issued on October 17,
2018. (c) Attributable to CCIC common stockholders.
HIGHLIGHTS FROM THE YEAR
- Site rental revenues. Site rental
revenues grew approximately 29%, or $1,047 million, from full year
2017 to full year 2018, inclusive of approximately $207 million in
Organic Contribution to Site Rental Revenues, $767 million in
contributions from acquisitions and other items, and a $73 million
increase in straight-lined revenues. The $207 million in
Organic Contribution to Site Rental Revenues represents
approximately 5.6% growth, comprised of approximately 8.0% growth
from new leasing activity and contracted tenant escalations, net of
approximately 2.4% from tenant non-renewals.
- Capital expenditures. Capital
expenditures during the year were $1.7 billion, comprised of $56
million of land purchases, $105 million of sustaining capital
expenditures, $1.6 billion of revenue generating capital
expenditures and $13 million of integration capital
expenditures. The revenue generating capital expenditures of
$1.6 billion included approximately $1.2 billion attributable to
Fiber and approximately $350 million attributable to Towers.
- Common stock dividend. During the year,
Crown Castle paid common stock dividends of approximately $1.8
billion in the aggregate, or $4.275 per common share, an increase
of approximately 10% on a per share basis compared to the same
period a year ago.
"Our positive 2018 results and increased full
year 2019 Outlook reflect the strong underlying demand for our
communications infrastructure assets and our team's continued focus
on translating the robust growth in data demand into growth in
dividends per share," stated Dan Schlanger, Crown Castle's Chief
Financial Officer. "Looking back on 2018, we had a very
successful year. We delivered 10% growth in dividends per
share year over year, made significant investments in new fiber
assets in top markets where we see the greatest demand for small
cells and fiber solutions, substantially completed the integration
of our recent acquisitions, all while improving our financial
flexibility by proactively refinancing upcoming maturities and
increasing the average maturity of our debt. Looking forward,
we are excited about the growth trends across our business and the
long-term opportunity in front of Crown Castle as we continue to
target 7% to 8% annual growth in dividends per share."
OUTLOOKThis 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"). As previously
announced on October 17, 2018, the Outlook section of Crown
Castle's quarterly earnings releases now includes Outlook for full
year periods only.
The following table sets forth Crown Castle's
current Outlook for full year 2019:
(in millions) |
Full Year 2019 |
Site
rental revenues |
$4,939 to $4,984 |
Site
rental cost of operations(a) |
$1,438 to $1,483 |
Net
income (loss) |
$781 to $861 |
Adjusted EBITDA(b) |
$3,344 to $3,389 |
Interest expense and
amortization of deferred financing costs(c) |
$687 to $732 |
FFO(b)(d) |
$2,293 to $2,338 |
AFFO(b)(d) |
$2,413 to $2,458 |
Weighted-average common
shares outstanding - diluted(e) |
417 |
(a) Exclusive of depreciation, amortization and accretion. (b)
See reconciliation of this non-GAAP financial measure to net income
(loss) and definition included herein. (c) See reconciliation of
"components of current outlook for interest expense and
amortization of deferred financing costs" herein for a discussion
of non-cash interest expense. (d) Attributable to CCIC common
stockholders. (e) The assumption for full year 2019 diluted
weighted-average common shares outstanding is based on the diluted
common shares outstanding as of December 31, 2018. The
diluted weighted-average common shares outstanding does not include
any assumed conversion of preferred stock in the share count.
Full Year 2019 OutlookThe table below compares
the results for full year 2018, midpoint of the current full year
2019 Outlook and the midpoint of the previously provided full year
2019 Outlook for select metrics.
|
Midpoint of FY 2019 Outlook to FY 2018 Actual
Comparison |
|
|
(in
millions) |
CurrentFull Year2019 Outlook |
Full Year2018 Actual |
Change |
% Change |
Previous Full Year 2019 Outlook(d) |
Current Compared to Previous Outlook |
Site rental
revenues |
$4,962 |
$4,716 |
+$246 |
+5 |
% |
$4,921 |
+$41 |
Net income (loss) |
$821 |
$671 |
+$150 |
+22 |
% |
$778 |
+$43 |
Adjusted EBITDA(a) |
$3,367 |
$3,141 |
+$226 |
+7 |
% |
$3,326 |
+$41 |
AFFO(a)(b) |
$2,436 |
$2,274 |
+$162 |
+7 |
% |
$2,436 |
— |
Weighted-average common
shares outstanding - diluted(c) |
417 |
415 |
+2 |
— |
|
416 |
+1 |
(a) See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein. (b) Attributable to
CCIC common stockholders. (c) The assumption for full year 2019
diluted weighted-average common shares outstanding is based on the
diluted common shares outstanding as of December 31,
2018. For all periods presented, the diluted weighted-average
common shares outstanding does not include any assumed conversion
of preferred stock in the share count. (d) As issued on
October 17, 2018.
- When compared to the prior full year 2019 Outlook, the increase
to the expected growth in site rental revenues relates to the
expected increase in straight-lined revenues primarily resulting
from term extensions associated with leasing activity.
- At the midpoints, the expected Organic Contribution to Site
Rental Revenues from 2018 to 2019 represents 6.0% growth year over
year compared to 5.6% for full year 2018, comprised of
approximately 9.8% growth from new leasing activity and contracted
tenant escalations, net of approximately 3.8% from tenant
non-renewals.
- The chart below reconciles the components of expected growth in
site rental revenues from 2018 to 2019 of $223 million to $268
million, inclusive of expected Organic Contribution to Site Rental
Revenues during 2019 of $260 million to $300 million. A chart
accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/94746045-21ff-4713-950f-2f59af26b5d3
- The chart below reconciles the components of expected growth in
AFFO from 2018 to 2019 of $140 million to $185 million. A chart
accompanying this announcement is available
at http://www.globenewswire.com/NewsRoom/AttachmentNg/eda99c75-44bc-48ad-b874-c615d6c58676
- When compared to the prior full year 2019 Outlook, the Outlook
for AFFO is unchanged.
- Additional information is available in Crown Castle's quarterly
Supplemental Information Package posted in the Investors section of
its website.
CONFERENCE CALL DETAILSCrown
Castle has scheduled a conference call for Thursday, January 24,
2019, at 10:30 a.m. Eastern time to discuss its fourth quarter 2018
results. The conference call may be accessed by dialing
888-204-4368 and asking for the Crown Castle call (access code
3601569) 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, January 24,
2019, through 1:30 p.m. Eastern time on Wednesday, April 24, 2019,
and may be accessed by dialing 888-203-1112 and using access code
3601569. 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 CASTLECrown Castle
owns, operates and leases more than 40,000 cell towers and
approximately 65,000 route miles of fiber supporting small cells
and fiber solutions across every major U.S. market. This
nationwide portfolio of communications infrastructure connects
cities and communities to essential data, technology and wireless
service - bringing information, ideas and innovations to the people
and businesses that need them. For more information on Crown
Castle, please visit www.crowncastle.com.
Non-GAAP Financial Measures, Segment Measures and Other
Calculations
This press release includes presentations of
Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), Funds
from Operations ("FFO") and Organic Contribution to Site Rental
Revenues, 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")).
Our measures of Adjusted EBITDA, AFFO, FFO and
Organic Contribution to Site Rental Revenues may not be comparable
to similarly titled measures of other companies, including other
companies in the communications infrastructure sector or other real
estate investment trusts ("REITs"). Our definition of FFO is
consistent with guidelines from the National Association of Real
Estate Investment Trusts with the exception of the impact of income
taxes in periods prior to our REIT conversion in 2014.
In addition to the non-GAAP financial measures
used herein, we also provide Segment Site Rental Gross Margin,
Segment Services and Other Gross Margin and Segment Operating
Profit, which are key measures used by management to evaluate our
operating segments for purposes of making decisions about
allocating capital and assessing performance. These segment
measures are provided pursuant to GAAP requirements related to
segment reporting. In addition, we provide the components of
certain GAAP measures, such as capital expenditures.
Adjusted EBITDA, AFFO, FFO and Organic
Contribution to Site Rental Revenues are presented as additional
information because management believes these measures are useful
indicators of the financial performance of our business.
Among other things, management believes that:
- Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by removing the impact of our
capital structure (primarily interest charges from our outstanding
debt) and asset base (primarily depreciation, amortization and
accretion) from our financial results. Management also believes
Adjusted EBITDA is frequently used by investors or other interested
parties in the evaluation of the communications infrastructure
sector and other REITs to measure financial performance without
regard to items such as depreciation, amortization and accretion
which can vary depending upon accounting methods and the book value
of assets. In addition, Adjusted EBITDA is similar to the measure
of current financial performance generally used in our debt
covenant calculations. Adjusted EBITDA should be considered only as
a supplement to net income computed in accordance with GAAP as a
measure of our performance.
- AFFO is useful to investors or other interested parties in
evaluating our financial performance. Management believes that AFFO
helps investors or other interested parties meaningfully evaluate
our financial performance as it includes (1) the impact of our
capital structure (primarily interest expense on our outstanding
debt and dividends on our preferred stock) and (2) sustaining
capital expenditures, and excludes the impact of our (a) asset base
(primarily depreciation, amortization and accretion) and (b)
certain non-cash items, including straight-lined revenues and
expenses related to fixed escalations and rent free periods. GAAP
requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract.
Management notes that Crown Castle uses AFFO only as a performance
measure. AFFO should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance and should not be considered as an alternative to cash
flows from operations or as residual cash flow available for
discretionary investment.
- FFO is useful to investors or other interested parties in
evaluating our financial performance. Management believes that FFO
may be used by investors or other interested parties as a basis to
compare our financial performance with that of other REITs. FFO
helps investors or other interested parties meaningfully evaluate
financial performance by excluding the impact of our asset base
(primarily depreciation, amortization and accretion). FFO is not a
key performance indicator used by Crown Castle. FFO should be
considered only as a supplement to net income computed in
accordance with GAAP as a measure of our performance and should not
be considered as an alternative to cash flow from operations.
- Organic Contribution to Site Rental Revenues is useful to
investors or other interested parties in understanding the
components of the year-over-year changes in our site rental
revenues computed in accordance with GAAP. Management uses the
Organic Contribution to Site Rental Revenues to assess
year-over-year growth rates for our rental activities, to evaluate
current performance, to capture trends in rental rates, new leasing
activities and customer non-renewals in our core business, as well
to forecast future results. Organic Contribution to Site Rental
Revenues is not meant as an alternative measure of revenue and
should be considered only as a supplement in understanding and
assessing the performance of our site rental revenues computed in
accordance with GAAP.
We define our non-GAAP financial measures, segment measures and
other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define 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,
(gains) losses on foreign currency swaps, impairment of
available-for-sale securities, interest income, other (income)
expense, (benefit) provision for income taxes, cumulative effect of
a change in accounting principle, (income) loss from discontinued
operations and stock-based compensation expense.
Adjusted Funds from Operations. We define
Adjusted Funds from Operations as FFO before straight-lined
revenue, straight-lined 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) losses on
retirement of long-term obligations, net (gain) loss on interest
rate swaps, (gains) losses on foreign currency swaps, acquisition
and integration costs, and adjustments for noncontrolling
interests, and less sustaining capital expenditures (comprised of
maintenance capital expenditures and corporate capital
expenditures).
Funds from Operations. We define 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.
Organic Contribution to Site Rental Revenues. We
define the Organic Contribution to Site Rental Revenues as the sum
of the change in GAAP site rental revenues related to (1) new
leasing activity, including revenues from the construction of small
cells and the impact of prepaid rent, (2) escalators and less (3)
non-renewals of customer contracts.
Segment Measures
Segment Site Rental Gross Margin. We
define Segment Site Rental Gross Margin as segment site rental
revenues less segment site rental cost of operations, excluding
stock-based compensation expense and prepaid lease purchase price
adjustments recorded in consolidated site rental cost of
operations.
Segment Services and Other Gross Margin.
We define Segment Services and Other Gross Margin as segment
services and other revenues less segment services and other cost of
operations, excluding stock-based compensation expense recorded in
consolidated services and other cost of operations.
Segment Operating Profit. We define
Segment Operating Profit as segment site rental gross margin plus
segment services and other gross margin, less selling, general and
administrative expenses attributable to the respective segment.
All of these measurements of profit or loss are
exclusive of depreciation, amortization and accretion, which are
shown separately.
Other Calculations
Discretionary capital expenditures. We
define discretionary capital expenditures as those capital
expenditures made with respect to activities which we believe
exhibit sufficient potential to enhance long-term stockholder
value. They consist of expansion or development of existing
communications infrastructure, construction of new communications
infrastructure, and, to a lesser extent, purchases of land
interests (which primarily relate to land assets under towers as we
seek to manage our interests in the land beneath our towers) and
other capital projects.
Integration capital expenditures. We
define integration capital expenditures as those capital
expenditures made as a result of integrating acquired companies
into our business.
Sustaining capital expenditures. We define
sustaining capital expenditures as those capital expenditures not
otherwise categorized as either discretionary or integration
capital expenditures, such as (1) maintenance capital expenditures
on our communications infrastructure assets that enable our
customers' ongoing quiet enjoyment of the communications
infrastructure and (2) corporate capital expenditures.
The tables set forth below reconcile the
non-GAAP financial measures used herein to comparable GAAP
financial measures. The components in these tables may not
sum to the total due to rounding. The Company has changed its
presentation to millions and, as a result, any necessary rounding
adjustments have been made to prior year disclosed amounts.
Reconciliations of Non-GAAP Financial Measures, Segment
Measures and Other Calculations to Comparable GAAP Financial
Measures:
Reconciliation of Historical Adjusted
EBITDA:
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
(in millions) |
|
|
|
|
|
|
|
Net income (loss) |
$ |
213 |
|
|
$ |
98 |
|
|
$ |
671 |
|
|
$ |
445 |
|
Adjustments to increase (decrease) net income
(loss): |
|
|
|
|
|
|
|
Asset write-down charges |
8 |
|
|
7 |
|
|
26 |
|
|
17 |
|
Acquisition and integration costs |
9 |
|
|
34 |
|
|
27 |
|
|
61 |
|
Depreciation, amortization and accretion |
390 |
|
|
362 |
|
|
1,528 |
|
|
1,242 |
|
Amortization of prepaid lease purchase price
adjustments |
5 |
|
|
5 |
|
|
20 |
|
|
20 |
|
Interest expense and amortization of deferred
financing costs(a) |
164 |
|
|
160 |
|
|
642 |
|
|
591 |
|
(Gains) losses on retirement of long-term
obligations |
— |
|
|
— |
|
|
106 |
|
|
4 |
|
Interest income |
(2 |
) |
|
(6 |
) |
|
(5 |
) |
|
(19 |
) |
Other (income) expense |
(1 |
) |
|
2 |
|
|
(1 |
) |
|
(1 |
) |
(Benefit) provision for income taxes |
5 |
|
|
15 |
|
|
19 |
|
|
26 |
|
Stock-based compensation expense |
25 |
|
|
30 |
|
|
108 |
|
|
96 |
|
Adjusted EBITDA(b)(c) |
$ |
816 |
|
|
$ |
707 |
|
|
$ |
3,141 |
|
|
$ |
2,482 |
|
(a) See the reconciliation of "components of
historical interest expense and amortization of deferred financing
costs" herein for a discussion of non-cash interest expense.(b) See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definition of Adjusted
EBITDA.(c) The above reconciliation excludes line items included in
our definition which are not applicable for the periods shown.
Reconciliation of Current Outlook for Adjusted
EBITDA:
|
Full Year 2019 |
(in
millions) |
Outlook |
Net income (loss) |
$ |
781 |
|
to |
$ |
861 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
Asset
write-down charges |
$ |
35 |
|
to |
$ |
45 |
|
Acquisition and integration costs |
$ |
15 |
|
to |
$ |
25 |
|
Depreciation, amortization and accretion |
$ |
1,606 |
|
to |
$ |
1,646 |
|
Amortization of prepaid lease purchase price adjustments |
$ |
19 |
|
to |
$ |
21 |
|
Interest
expense and amortization of deferred financing costs(a) |
$ |
687 |
|
to |
$ |
732 |
|
(Gains)
losses on retirement of long-term obligations |
$ |
0 |
|
to |
$ |
0 |
|
Interest
income |
$ |
(7 |
) |
to |
$ |
(3 |
) |
Other
(income) expense |
$ |
(1 |
) |
to |
$ |
1 |
|
(Benefit)
provision for income taxes |
$ |
17 |
|
to |
$ |
25 |
|
Stock-based compensation expense |
$ |
111 |
|
to |
$ |
116 |
|
Adjusted EBITDA(b)(c) |
$ |
3,344 |
|
to |
$ |
3,389 |
|
(a) See the reconciliation of "components of
current outlook for interest expense and amortization of deferred
financing costs" herein for a discussion of non-cash interest
expense.(b) See "Non-GAAP Financial Measures, Segment Measures and
Other Calculations" herein for a discussion of our definition of
Adjusted EBITDA.(c) The above reconciliation excludes line items
included in our definition which are not applicable for the periods
shown.
Reconciliation of Historical FFO and
AFFO:
|
For the Three Months Ended |
|
For the Twelve Months Ended |
(in millions) |
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
Net income (loss) |
$ |
213 |
|
|
$ |
98 |
|
|
$ |
671 |
|
|
$ |
445 |
|
Real estate related depreciation, amortization
and accretion |
375 |
|
|
354 |
|
|
1,472 |
|
|
1,211 |
|
Asset write-down charges |
8 |
|
|
7 |
|
|
26 |
|
|
17 |
|
Dividends on preferred stock |
(28 |
) |
|
(30 |
) |
|
(113 |
) |
|
(30 |
) |
FFO(a)(b)(c)(d)(e) |
$ |
568 |
|
|
$ |
429 |
|
|
$ |
2,055 |
|
|
$ |
1,643 |
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
568 |
|
|
$ |
429 |
|
|
$ |
2,055 |
|
|
$ |
1,643 |
|
Adjustments to increase (decrease) FFO: |
|
|
|
|
|
|
|
Straight-lined revenue |
(20 |
) |
|
(3 |
) |
|
(72 |
) |
|
— |
|
Straight-lined expense |
21 |
|
|
23 |
|
|
90 |
|
|
93 |
|
Stock-based compensation expense |
25 |
|
|
30 |
|
|
108 |
|
|
96 |
|
Non-cash portion of tax provision |
3 |
|
|
12 |
|
|
2 |
|
|
9 |
|
Non-real estate related depreciation,
amortization and accretion |
15 |
|
|
8 |
|
|
56 |
|
|
31 |
|
Amortization of non-cash interest expense |
2 |
|
|
2 |
|
|
7 |
|
|
9 |
|
Other (income) expense |
(1 |
) |
|
2 |
|
|
(1 |
) |
|
(1 |
) |
(Gains) losses on retirement of long-term
obligations |
— |
|
|
— |
|
|
106 |
|
|
4 |
|
Acquisition and integration costs |
9 |
|
|
34 |
|
|
27 |
|
|
61 |
|
Maintenance capital expenditures |
(17 |
) |
|
(13 |
) |
|
(64 |
) |
|
(41 |
) |
Corporate capital expenditures |
(13 |
) |
|
(12 |
) |
|
(41 |
) |
|
(44 |
) |
AFFO(a)(b)(c)(d)(e) |
$ |
591 |
|
|
$ |
512 |
|
|
$ |
2,274 |
|
|
$ |
1,860 |
|
(a) |
See "Non-GAAP Financial
Measures, Segment Measures and Other Calculations" herein for a
discussion of our definitions of FFO and AFFO. |
(b) |
FFO and
AFFO are reduced by cash paid for preferred stock dividends during
the period in which they are paid. |
(c) |
Diluted
weighted-average common shares outstanding were 417 million, 408
million, 415 million and 383 million for the three months ended
December 31, 2018 and 2017, and the twelve months ended
December 31, 2018 and 2017, respectively. For all
periods presented, the diluted weighted-average common shares
outstanding does not include any assumed conversion of preferred
stock in the share count. |
(d) |
The above
reconciliation excludes line items included in our definition which
are not applicable for the periods shown. |
(e) |
Attributable to CCIC common stockholders. |
Reconciliation of Current Outlook for FFO and
AFFO:
|
Full Year 2019 |
(in millions) |
Outlook |
Net income (loss) |
$ |
781 |
|
to |
$ |
861 |
|
Real estate related
depreciation, amortization and accretion |
$ |
1,557 |
|
to |
$ |
1,577 |
|
Asset write-down
charges |
$ |
35 |
|
to |
$ |
45 |
|
Dividends on preferred
stock |
$ |
(113 |
) |
to |
$ |
(113 |
) |
FFO(a)(b)(c)(d)(e) |
$ |
2,293 |
|
to |
$ |
2,338 |
|
|
|
|
|
FFO (from above) |
$ |
2,293 |
|
to |
$ |
2,338 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
Straight-lined revenue |
$ |
(50 |
) |
to |
$ |
(30 |
) |
Straight-lined expense |
$ |
70 |
|
to |
$ |
90 |
|
Stock-based compensation expense |
$ |
111 |
|
to |
$ |
116 |
|
Non-cash
portion of tax provision |
$ |
(4 |
) |
to |
$ |
6 |
|
Non-real
estate related depreciation, amortization and accretion |
$ |
49 |
|
to |
$ |
69 |
|
Amortization of non-cash interest expense |
$ |
(2 |
) |
to |
$ |
8 |
|
Other
(income) expense |
$ |
(1 |
) |
to |
$ |
1 |
|
(Gains)
losses on retirement of long-term obligations |
$ |
0 |
|
to |
$ |
0 |
|
Acquisition and integration costs |
$ |
15 |
|
to |
$ |
25 |
|
Maintenance capital expenditures |
$ |
(80 |
) |
to |
$ |
(70 |
) |
Corporate
capital expenditures |
$ |
(45 |
) |
to |
$ |
(35 |
) |
AFFO(a)(b)(c)(d)(e) |
$ |
2,413 |
|
to |
$ |
2,458 |
|
(a) |
The assumption for full
year 2019 diluted weighted-average common shares outstanding is 417
million based on the diluted common shares outstanding as of
December 31, 2018. The diluted weighted-average common shares
outstanding does not include any assumed conversion of preferred
stock in the share count. |
(b) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion for our definitions of FFO
and AFFO. |
(c) |
FFO and
AFFO are reduced by cash paid for preferred stock dividends during
the period in which they are paid. |
(d) |
The above
reconciliation excludes line items included in our definition which
are not applicable for the periods shown. |
(e) |
Attributable to CCIC common stockholders. |
For Comparative Purposes -
Reconciliation of Previous Outlook for Adjusted
EBITDA:
|
Previously Issued |
|
Previously Issued |
|
Previously Issued |
|
Q4 2018 |
|
Full Year 2018 |
|
Full Year 2019 |
(in
millions) |
Outlook |
|
Outlook |
|
Outlook |
Net income (loss) |
$ |
201 |
|
to |
$ |
226 |
|
$ |
659 |
|
to |
$ |
684 |
|
|
$ |
738 |
|
to |
$ |
818 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Asset
write-down charges |
$ |
9 |
|
to |
$ |
11 |
|
$ |
27 |
|
to |
$ |
29 |
|
|
$ |
35 |
|
to |
$ |
45 |
|
Acquisition and integration costs |
$ |
8 |
|
to |
$ |
12 |
|
$ |
26 |
|
to |
$ |
30 |
|
|
$ |
15 |
|
to |
$ |
25 |
|
Depreciation, amortization and accretion |
$ |
381 |
|
to |
$ |
401 |
|
$ |
1,519 |
|
to |
$ |
1,539 |
|
|
$ |
1,609 |
|
to |
$ |
1,644 |
|
Amortization of prepaid lease purchase price adjustments |
$ |
4 |
|
to |
$ |
6 |
|
$ |
19 |
|
to |
$ |
21 |
|
|
$ |
19 |
|
to |
$ |
21 |
|
Interest
expense and amortization of deferred financing costs |
$ |
160 |
|
to |
$ |
170 |
|
$ |
638 |
|
to |
$ |
648 |
|
|
$ |
691 |
|
to |
$ |
736 |
|
(Gains)
losses on retirement of long-term obligations |
$ |
0 |
|
to |
$ |
0 |
|
$ |
106 |
|
to |
$ |
106 |
|
|
$ |
0 |
|
to |
$ |
0 |
|
Interest
income |
$ |
(2 |
) |
to |
$ |
0 |
|
$ |
(6 |
) |
to |
$ |
(4 |
) |
|
$ |
(7 |
) |
to |
$ |
(3 |
) |
Other
(income) expense |
$ |
(1 |
) |
to |
$ |
3 |
|
$ |
(1 |
) |
to |
$ |
3 |
|
|
$ |
(1 |
) |
to |
$ |
1 |
|
(Benefit)
provision for income taxes |
$ |
3 |
|
to |
$ |
8 |
|
$ |
16 |
|
to |
$ |
21 |
|
|
$ |
16 |
|
to |
$ |
24 |
|
Stock-based compensation expense |
$ |
23 |
|
to |
$ |
27 |
|
$ |
107 |
|
to |
$ |
111 |
|
|
$ |
111 |
|
to |
$ |
115 |
|
Adjusted EBITDA(a)(b) |
$ |
820 |
|
to |
$ |
830 |
|
$ |
3,144 |
|
to |
$ |
3,154 |
|
|
$ |
3,303 |
|
to |
$ |
3,348 |
|
(a) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" herein for a discussion of our
definition of Adjusted EBITDA.(b) The above reconciliation excludes
line items included in our definition which are not applicable for
the periods shown.
For Comparative Purposes -
Reconciliation of Previous Outlook for FFO and AFFO:
|
Previously Issued |
|
Previously Issued |
|
Previously Issued |
|
Q4 2018 |
|
Full Year 2018 |
|
Full Year 2019 |
(in millions) |
Outlook |
|
Outlook |
|
Outlook |
Net income (loss) |
$ |
201 |
|
to |
$ |
226 |
|
|
$ |
659 |
|
to |
$ |
684 |
|
|
$ |
738 |
|
to |
$ |
818 |
|
Real estate related
depreciation, amortization and accretion |
$ |
372 |
|
to |
$ |
382 |
|
|
$ |
1,469 |
|
to |
$ |
1,479 |
|
|
$ |
1,560 |
|
to |
$ |
1,580 |
|
Asset write-down
charges |
$ |
9 |
|
to |
$ |
11 |
|
|
$ |
27 |
|
to |
$ |
29 |
|
|
$ |
35 |
|
to |
$ |
45 |
|
Dividends on preferred
stock |
$ |
(28 |
) |
to |
$ |
(28 |
) |
|
$ |
(113 |
) |
to |
$ |
(113 |
) |
|
$ |
(113 |
) |
to |
$ |
(113 |
) |
FFO(a)(b)(c)(d) |
$ |
567 |
|
to |
$ |
577 |
|
|
$ |
2,055 |
|
to |
$ |
2,065 |
|
|
$ |
2,252 |
|
to |
$ |
2,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
567 |
|
to |
$ |
577 |
|
|
$ |
2,055 |
|
to |
$ |
2,065 |
|
|
$ |
2,252 |
|
to |
$ |
2,297 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
|
|
|
|
|
|
|
|
Straight-lined revenue |
$ |
(15 |
) |
to |
$ |
(5 |
) |
|
$ |
(67 |
) |
to |
$ |
(57 |
) |
|
$ |
(9 |
) |
to |
$ |
11 |
|
Straight-lined expense |
$ |
16 |
|
to |
$ |
26 |
|
|
$ |
85 |
|
to |
$ |
95 |
|
|
$ |
68 |
|
to |
$ |
88 |
|
Stock-based compensation expense |
$ |
23 |
|
to |
$ |
27 |
|
|
$ |
107 |
|
to |
$ |
111 |
|
|
$ |
111 |
|
to |
$ |
115 |
|
Non-cash
portion of tax provision |
$ |
(2 |
) |
to |
$ |
3 |
|
|
$ |
(4 |
) |
to |
$ |
1 |
|
|
$ |
(7 |
) |
to |
$ |
8 |
|
Non-real
estate related depreciation, amortization and accretion |
$ |
9 |
|
to |
$ |
19 |
|
|
$ |
50 |
|
to |
$ |
60 |
|
|
$ |
49 |
|
to |
$ |
64 |
|
Amortization of non-cash interest expense |
$ |
0 |
|
to |
$ |
4 |
|
|
$ |
5 |
|
to |
$ |
9 |
|
|
$ |
2 |
|
to |
$ |
12 |
|
Other
(income) expense |
$ |
(1 |
) |
to |
$ |
3 |
|
|
$ |
(1 |
) |
to |
$ |
3 |
|
|
$ |
(1 |
) |
to |
$ |
1 |
|
(Gains)
losses on retirement of long-term obligations |
$ |
0 |
|
to |
$ |
0 |
|
|
$ |
106 |
|
to |
$ |
106 |
|
|
$ |
0 |
|
to |
$ |
0 |
|
Acquisition and integration costs |
$ |
8 |
|
to |
$ |
12 |
|
|
$ |
26 |
|
to |
$ |
30 |
|
|
$ |
15 |
|
to |
$ |
25 |
|
Maintenance capital expenditures |
$ |
(20 |
) |
to |
$ |
(10 |
) |
|
$ |
(66 |
) |
to |
$ |
(56 |
) |
|
$ |
(85 |
) |
to |
$ |
(75 |
) |
Corporate
capital expenditures |
$ |
(30 |
) |
to |
$ |
(20 |
) |
|
$ |
(59 |
) |
to |
$ |
(49 |
) |
|
$ |
(40 |
) |
to |
$ |
(30 |
) |
AFFO(a)(b)(c)(d) |
$ |
591 |
|
to |
$ |
601 |
|
|
$ |
2,273 |
|
to |
$ |
2,283 |
|
|
$ |
2,413 |
|
to |
$ |
2,458 |
|
(a) |
Previously issued fourth
quarter 2018, full year 2018 and full year 2019 Outlook assumes
diluted weighted-average common shares outstanding as of
September 30, 2018 of approximately 416 million, 415 million
and 416 million, respectively. For all periods presented, the
diluted weighted-average common shares outstanding does not include
any assumed conversion of preferred stock in the share count. |
(b) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion for our definitions of FFO
and AFFO. |
(c) |
The
above reconciliation excludes line items included in our definition
which are not applicable for the periods shown. |
(d) |
Attributable to CCIC common stockholders. |
The components of changes in site rental
revenues for the quarters ended December 31, 2018 and 2017 are
as follows:
|
Three Months Ended December 31, |
(dollars in
millions) |
2018 |
|
2017 |
Components of changes
in site rental revenues(a): |
|
|
|
Prior year site rental
revenues exclusive of straight-lined revenues associated with fixed
escalators(b)(c) |
$ |
1,048 |
|
|
$ |
812 |
|
|
|
|
|
New
leasing activity(b)(c) |
60 |
|
|
42 |
|
Escalators |
21 |
|
|
20 |
|
Non-renewals |
(22 |
) |
|
(18 |
) |
Organic
Contribution to Site Rental Revenues(d) |
59 |
|
|
44 |
|
Straight-lined revenues associated with fixed escalators |
20 |
|
|
3 |
|
Acquisitions(e) |
82 |
|
|
192 |
|
Other |
— |
|
|
— |
|
Total GAAP site rental
revenues |
$ |
1,209 |
|
|
$ |
1,051 |
|
|
|
|
|
Year-over-year
changes in revenue: |
|
|
|
Reported GAAP site
rental revenues |
15.0 |
% |
|
|
Organic Contribution to
Site Rental Revenues(d)(f) |
5.6 |
% |
|
|
(a) |
Additional information
regarding Crown Castle's site rental revenues, including projected
revenue from customer licenses, tenant non-renewals, straight-lined
revenues and prepaid rent is available in Crown Castle's quarterly
Supplemental Information Package posted in the Investors section of
its website. |
(b) |
Includes
revenues from amortization of prepaid rent in accordance with
GAAP. |
(c) |
Includes
revenues from the construction of new small cell nodes, exclusive
of straight-lined revenues related to fixed escalators. |
(d) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein. |
(e) |
Represents
the initial contribution of recent acquisitions. The
financial impact of recent acquisitions is excluded from Organic
Contribution to Site Rental Revenues until the one-year anniversary
of the acquisition, with the exception of the impact of
Lightower. To be consistent with prior presentations of the
2018 Outlook for Organic Contributions to Site Rental Revenues, the
entire contribution to growth in site rental revenues in 2018
attributable to Lightower is included within acquisitions. |
(f) |
Calculated
as the percentage change from prior year site rental revenues,
exclusive of straight-lined revenues associated with fixed
escalations, compared to Organic Contribution to Site Rental
Revenues for the current period. |
The components of the changes in site rental revenues
for the years ending December 31, 2018 and 2019 are forecasted
as follows:
(dollars in
millions) |
Full Year 2018 |
|
Full Year2019 Outlook |
Components of changes
in site rental revenues(a): |
|
|
|
Prior year site rental
revenues exclusive of straight-lined revenues associated with fixed
escalators(b)(c) |
$ |
3,670 |
|
|
$ |
4,643 |
|
|
|
|
New
leasing activity(b)(c) |
|
213 |
|
|
350-380 |
Escalators |
|
83 |
|
|
85-95 |
Non-renewals |
|
(89 |
) |
|
(185)-(165) |
Organic
Contribution to Site Rental Revenues(d) |
|
207 |
|
|
260-300 |
Straight-lined revenues associated with fixed escalators |
|
72 |
|
|
30-50 |
Acquisitions(e) |
|
767 |
|
|
|
— |
Other |
|
— |
|
|
|
— |
Total GAAP site rental
revenues |
$ |
4,716 |
|
|
$4,939-$4,984 |
|
|
|
|
Year-over-year
changes in revenue: |
|
|
|
Reported GAAP site
rental revenues |
|
28.5 |
% |
|
5.2%(f) |
Organic Contribution to
Site Rental Revenues(d)(g) |
|
5.6 |
% |
|
6.0%(f) |
(a) |
Additional information
regarding Crown Castle's site rental revenues, including projected
revenue from customer licenses, tenant non-renewals, straight-lined
revenues and prepaid rent is available in Crown Castle's quarterly
Supplemental Information Package posted in the Investors section of
its website. |
(b) |
Includes
revenues from amortization of prepaid rent in accordance with
GAAP. |
(c) |
Includes
revenues from the construction of new small cell nodes, exclusive
of straight-lined revenues related to fixed escalators. |
(d) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein. |
(e) |
Represents
the contribution from recent acquisitions. The financial
impact of recent acquisitions is excluded from Organic Contribution
to Site Rental Revenues until the one-year anniversary of the
acquisition, with the exception of the impact of Lightower.
To be consistent with prior presentations of the 2018 Outlook for
Organic Contributions to Site Rental Revenues, the entire
contribution to growth in site rental revenues in 2018 attributable
to Lightower is included within acquisitions. |
(f) |
Calculated
based on midpoint of full year 2019 Outlook. |
(g) |
Calculated
as the percentage change from prior year site rental revenues,
exclusive of straight-lined revenues associated with fixed
escalations, compared to Organic Contribution to Site Rental
Revenues for the current period. |
Components of Historical Interest
Expense and Amortization of Deferred Financing Costs:
|
For the Three Months Ended |
(in millions) |
December 31, 2018 |
|
December 31, 2017 |
Interest expense on debt
obligations |
$ |
162 |
|
|
$ |
158 |
|
Amortization of
deferred financing costs and adjustments on long-term debt,
net |
5 |
|
|
5 |
|
Other, net |
(3 |
) |
|
(3 |
) |
Interest
expense and amortization of deferred financing costs |
$ |
164 |
|
|
$ |
160 |
|
Components of Current Outlook for
Interest Expense and Amortization of Deferred Financing
Costs:
|
Full Year 2019 |
(in millions) |
Outlook |
Interest expense on debt
obligations |
$ |
696 |
|
to |
$ |
716 |
|
Amortization of
deferred financing costs and adjustments on long-term debt,
net |
$ |
17 |
|
to |
$ |
22 |
|
Other, net |
$ |
(19 |
) |
to |
$ |
(14 |
) |
Interest
expense and amortization of deferred financing costs |
$ |
687 |
|
to |
$ |
732 |
|
Debt balances and maturity dates as of
December 31, 2018 are as follows:
(in
millions) |
Face Value |
|
Final Maturity |
Cash and cash
equivalents(a) |
$ |
277 |
|
|
|
|
|
|
Tower Revenue Notes,
Series 2015-1(b) |
300 |
|
May
2042 |
Tower Revenue Notes,
Series 2015-2(b) |
700 |
|
May
2045 |
Tower Revenue Notes,
Series 2018-1(b) |
250 |
|
July
2043 |
Tower Revenue Notes,
Series 2018-2(b) |
750 |
|
July
2048 |
3.849% Secured
Notes |
1,000 |
|
Apr.
2023 |
Secured Notes, Series
2009-1, Class A-1(c) |
13 |
|
Aug.
2019 |
Secured Notes, Series
2009-1, Class A-2(c) |
70 |
|
Aug.
2029 |
Capital leases and
other obligations |
227 |
|
Various |
Total secured
debt |
$ |
3,310 |
|
|
2016 Revolver |
1,075 |
|
June
2023 |
2016 Term Loan A |
2,356 |
|
June
2023 |
5.250% Senior
Notes |
1,650 |
|
Jan.
2023 |
4.875% Senior
Notes |
850 |
|
Apr.
2022 |
3.400% Senior
Notes |
850 |
|
Feb.
2021 |
4.450% Senior
Notes |
900 |
|
Feb.
2026 |
3.700% Senior
Notes |
750 |
|
June
2026 |
2.250% Senior
Notes |
700 |
|
Sept.
2021 |
4.000% Senior
Notes |
500 |
|
Mar.
2027 |
4.750% Senior
Notes |
350 |
|
May
2047 |
3.200% Senior
Notes |
750 |
|
Sept.
2024 |
3.650% Senior
Notes |
1,000 |
|
Sept.
2027 |
3.150% Senior
Notes |
750 |
|
July
2023 |
3.800% Senior
Notes |
1,000 |
|
Feb.
2028 |
Total unsecured
debt |
$ |
13,481 |
|
|
Total net
debt |
$ |
16,514 |
|
|
(a) |
Excludes restricted
cash. |
(b) |
The Senior
Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have
anticipated repayment dates in 2022 and 2025, respectively.
The Senior Secured Tower Revenue Notes, Series 2018-1 and 2018-2
have anticipated repayment dates in 2023 and 2028,
respectively. |
(c) |
The Senior
Secured Notes, Series 2009-1, Class A-1 principal amortizes during
the period beginning in January 2010 and ending in August 2019 and
the Senior Secured Notes, 2009-1, Class A-2 principal amortizes
during the period beginning in September 2019 and ending in August
2029. |
Net Debt to Last Quarter Annualized Adjusted EBITDA is
computed as follows:
(dollars in
millions) |
For the Three Months Ended December 31, 2018 |
Total face value of
debt |
$ |
16,791 |
|
Ending cash and cash
equivalents(a) |
277 |
|
Total Net Debt |
$ |
16,514 |
|
|
|
Adjusted EBITDA for the
three months ended December 31, 2018 |
$ |
816 |
|
Last quarter annualized
Adjusted EBITDA |
3,264 |
|
Net Debt to
Last Quarter Annualized Adjusted EBITDA |
5.1 |
x |
(a) |
Excludes restricted
cash. |
Components of Capital
Expenditures:
|
For the Three Months Ended |
(in millions) |
December 31, 2018 |
|
December 31, 2017 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
18 |
|
$ |
— |
|
$ |
— |
|
$ |
18 |
|
|
$ |
15 |
|
$ |
— |
|
$ |
— |
|
$ |
15 |
|
Communications infrastructure construction and
improvements |
98 |
|
349 |
|
— |
|
447 |
|
|
76 |
|
261 |
|
— |
|
337 |
|
Sustaining: |
|
|
|
|
|
|
|
|
|
Maintenance and corporate |
8 |
|
15 |
|
7 |
|
30 |
|
|
11 |
|
8 |
|
7 |
|
25 |
|
Integration |
— |
|
— |
|
5 |
|
5 |
|
|
— |
|
— |
|
— |
|
— |
|
Total |
$ |
124 |
|
$ |
364 |
|
$ |
11 |
|
$ |
500 |
|
|
$ |
101 |
|
$ |
268 |
|
$ |
7 |
|
$ |
377 |
|
Note: See "Non-GAAP Financial Measures, Segment Measures and
Other Calculations" herein for further discussion of our components
of capital expenditures.
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 our Outlook and
plans, projections, and estimates regarding (1) potential benefits,
returns, opportunities and customer and shareholder value which may
be derived from our business, assets, investments, acquisitions and
dividends, including on a long-and short-term basis, (2) our
strategy, strategic position, business model and capabilities and
the strength and fundamentals of our business, (3) our growth,
including growth in our cash flows and dividends per share,
long-term prospects and the trends impacting our business, (4) the
potential benefits and contributions which may be derived from our
recent acquisitions, including the contribution to or impact on our
financial or operating results, (5) leasing environment and
activity, including the contribution to our financial or operating
results therefrom, (6) our investments in our business and
communications infrastructure assets and the potential growth,
returns and benefits therefrom, (7) our dividends and our dividend
growth rate, including its driving factors, and targets, (8) the
strength of the US market, (9) our portfolio of assets,
including demand therefor, strategic position thereof and
opportunities created thereby, (10) benefits which may be
derived from refinancings, (11) cash flows, (12) tenant
non-renewals, including the impact thereof, (13) capital
expenditures, including sustaining and discretionary capital
expenditures, and the timing thereof, (14) straight-line
adjustments, (15) site rental revenues and estimated growth
thereof, (16) site rental cost of operations, (17) net income
(loss), (18) Adjusted EBITDA, including the impact of the
timing of certain components thereof, (19) expenses, including
interest expense and amortization of deferred financing costs, (20)
FFO, (21) AFFO and estimated growth thereof, (22) Organic
Contribution to Site Rental Revenues, (23) our weighted-average
common shares outstanding, including on a diluted basis,
(24) services contribution, including the timing thereof, and
(25) the utility of certain financial measures, including
non-GAAP financial measures. Such forward-looking statements
are subject to certain risks, uncertainties and assumptions
prevailing market conditions and the following:
• |
Our business depends on
the demand for our communications infrastructure, driven primarily
by demand for data, and we may be adversely affected by any
slowdown in such demand. Additionally, a reduction in the
amount or change in the mix of network investment by our customers
may materially and adversely affect our business (including
reducing demand for tenant additions and 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 such customers may materially decrease revenues or reduce
demand for our communications infrastructure and services. |
• |
The
expansion or 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. Additionally, we may fail to realize all of the
anticipated benefits of the Lightower acquisition, or those
benefits may take longer to realize than expected. |
• |
Our
fiber segment has expanded rapidly, and the fiber business model
contains certain differences from our towers business model,
resulting in different operational risks. If we do not
successfully operate our Fiber business model or identify or manage
the related operational risks, such operations may produce results
that are less than anticipated. |
• |
Failure
to timely and efficiently execute on our construction projects
could adversely affect our business. |
• |
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 our 6.875% 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 or
securities convertible into shares of our common stock may
adversely affect the market price of our common stock. |
• |
As a
result of competition in our industry, we may find it more
difficult to negotiate favorable rates on our new or renewing
tenant contracts. |
• |
New
technologies may reduce demand for our communications
infrastructure or negatively impact our revenues. |
• |
If we
fail to retain rights to our communications infrastructure,
including the land interests under our towers and the right-of-way
and other agreements related to our small cells and fiber
solutions, our business may be adversely affected. |
• |
Our
services business has historically experienced significant
volatility in demand, which reduces the predictability of our
results. |
• |
New
wireless technologies may not deploy or be adopted by customers as
rapidly or in the manner projected. |
• |
If we
fail to comply with laws or 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
communications infrastructure are demonstrated to cause negative
health effects, potential future claims could adversely affect our
operations, costs or revenues. |
• |
Certain
provisions of our restated certificate of incorporation, amended
and restated by-laws 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. |
• |
We may
be vulnerable to security breaches that could adversely affect our
business, operations, and reputation. |
• |
Future
dividend payments to our 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 U.S. 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. |
• |
If we
fail to pay scheduled dividends on our 6.875% 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. |
• |
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. |
• |
REIT
related 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. As used
in this release, the term "including," and any variation thereof,
means "including without limitation."
|
CROWN CASTLE
INTERNATIONAL CORP.CONDENSED CONSOLIDATED BALANCE
SHEET (UNAUDITED)(Amounts in millions, except par
values) |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
277 |
|
|
$ |
314 |
|
Restricted cash |
131 |
|
|
121 |
|
Receivables, net |
501 |
|
|
398 |
|
Prepaid
expenses |
172 |
|
|
162 |
|
Other
current assets |
148 |
|
|
139 |
|
Total
current assets |
1,229 |
|
|
1,134 |
|
Deferred site rental
receivables |
1,366 |
|
|
1,300 |
|
Property and equipment,
net |
13,676 |
|
|
12,933 |
|
Goodwill |
10,078 |
|
|
10,021 |
|
Other intangible
assets, net |
5,516 |
|
|
5,962 |
|
Long-term prepaid rent
and other assets, net |
920 |
|
|
879 |
|
Total
assets |
$ |
32,785 |
|
|
$ |
32,229 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
313 |
|
|
$ |
249 |
|
Accrued
interest |
148 |
|
|
132 |
|
Deferred
revenues |
498 |
|
|
457 |
|
Other
accrued liabilities |
351 |
|
|
339 |
|
Current
maturities of debt and other obligations |
107 |
|
|
115 |
|
Total
current liabilities |
1,417 |
|
|
1,292 |
|
Debt and other
long-term obligations |
16,575 |
|
|
16,044 |
|
Other long-term
liabilities |
2,759 |
|
|
2,554 |
|
Total liabilities |
20,751 |
|
|
19,890 |
|
Commitments and
contingencies |
|
|
|
CCIC stockholders'
equity: |
|
|
|
Common
stock, $0.01 par value; 600 shares authorized; shares issued and
outstanding: December 31, 2018—415 and December 31,
2017—406 |
4 |
|
|
4 |
|
6.875%
Mandatory Convertible Preferred Stock, Series A, $0.01 par value;
20 shares authorized; shares issued and outstanding: December 31,
2018—2 and December 31, 2017—2; aggregate liquidation value:
December 31, 2018—$1,650 and December 31, 2017—$1,650 |
— |
|
|
— |
|
Additional paid-in capital |
17,767 |
|
|
16,844 |
|
Accumulated other comprehensive income (loss) |
(5 |
) |
|
(4 |
) |
Dividends/distributions in excess of earnings |
(5,732 |
) |
|
(4,505 |
) |
Total
equity |
12,034 |
|
|
12,339 |
|
Total
liabilities and equity |
$ |
32,785 |
|
|
$ |
32,229 |
|
|
CROWN CASTLE
INTERNATIONAL CORP.CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED)(Amounts in millions,
except per share amounts) |
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net revenues: |
|
|
|
|
|
|
|
Site rental |
$ |
1,209 |
|
|
$ |
1,051 |
|
|
$ |
4,716 |
|
|
$ |
3,669 |
|
Services
and other |
210 |
|
|
187 |
|
|
707 |
|
|
687 |
|
Net
revenues |
1,419 |
|
|
1,238 |
|
|
5,423 |
|
|
4,356 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Costs of
operations (exclusive of depreciation, amortization and
accretion): |
|
|
|
|
|
|
|
Site
rental |
353 |
|
|
329 |
|
|
1,410 |
|
|
1,144 |
|
Services
and other |
135 |
|
|
110 |
|
|
437 |
|
|
420 |
|
Selling,
general and administrative |
145 |
|
|
127 |
|
|
563 |
|
|
426 |
|
Asset
write-down charges |
8 |
|
|
7 |
|
|
26 |
|
|
17 |
|
Acquisition and integration costs |
9 |
|
|
34 |
|
|
27 |
|
|
61 |
|
Depreciation, amortization and accretion |
390 |
|
|
362 |
|
|
1,528 |
|
|
1,242 |
|
Total
operating expenses |
1,040 |
|
|
969 |
|
|
3,991 |
|
|
3,310 |
|
Operating income
(loss) |
379 |
|
|
269 |
|
|
1,432 |
|
|
1,046 |
|
Interest expense and
amortization of deferred financing costs |
(164 |
) |
|
(160 |
) |
|
(642 |
) |
|
(591 |
) |
Gains (losses) on
retirement of long-term obligations |
— |
|
|
— |
|
|
(106 |
) |
|
(4 |
) |
Interest income |
2 |
|
|
6 |
|
|
5 |
|
|
19 |
|
Other income
(expense) |
1 |
|
|
(2 |
) |
|
1 |
|
|
1 |
|
Income (loss) before
income taxes |
218 |
|
|
113 |
|
|
690 |
|
|
471 |
|
Benefit (provision) for
income taxes |
(5 |
) |
|
(15 |
) |
|
(19 |
) |
|
(26 |
) |
Net income (loss) |
213 |
|
|
98 |
|
|
671 |
|
|
445 |
|
Dividends on preferred
stock |
(28 |
) |
|
(28 |
) |
|
(113 |
) |
|
(58 |
) |
Net income (loss)
attributable to CCIC common stockholders |
$ |
185 |
|
|
$ |
70 |
|
|
$ |
558 |
|
|
$ |
387 |
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to CCIC common stockholders, per common share: |
|
|
|
|
|
|
|
Net
income (loss) attributable to CCIC common stockholders, basic |
$ |
0.45 |
|
|
$ |
0.17 |
|
|
$ |
1.35 |
|
|
$ |
1.01 |
|
Net
income (loss) attributable to CCIC common stockholders,
diluted |
$ |
0.44 |
|
|
$ |
0.17 |
|
|
$ |
1.34 |
|
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
415 |
|
|
406 |
|
|
413 |
|
|
382 |
|
Diluted |
417 |
|
|
408 |
|
|
415 |
|
|
383 |
|
|
CROWN CASTLE INTERNATIONAL
CORP.CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED)(a)(In millions of dollars) |
|
Twelve Months Ended December 31, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
671 |
|
|
$ |
445 |
|
Adjustments to
reconcile net income (loss) to net cash provided by (used for)
operating activities: |
|
|
|
Depreciation, amortization and accretion |
1,528 |
|
|
1,242 |
|
(Gains)
losses on retirement of long-term obligations |
106 |
|
|
4 |
|
Amortization of deferred financing costs and other non-cash
interest |
7 |
|
|
9 |
|
Stock-based compensation expense |
103 |
|
|
92 |
|
Asset
write-down charges |
26 |
|
|
17 |
|
Deferred
income tax (benefit) provision |
2 |
|
|
15 |
|
Other
non-cash adjustments, net |
2 |
|
|
(2 |
) |
Changes
in assets and liabilities, excluding the effects of
acquisitions: |
|
|
|
Increase
(decrease) in liabilities |
276 |
|
|
176 |
|
Decrease
(increase) in assets |
(219 |
) |
|
45 |
|
Net cash
provided by (used for) operating activities |
2,502 |
|
|
2,043 |
|
Cash flows from
investing activities: |
|
|
|
Payments
for acquisitions, net of cash acquired |
(42 |
) |
|
(9,260 |
) |
Capital
expenditures |
(1,741 |
) |
|
(1,228 |
) |
Other
investing activities, net |
(12 |
) |
|
(5 |
) |
Net cash
provided by (used for) investing activities |
(1,795 |
) |
|
(10,493 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds
from issuance of long-term debt |
2,742 |
|
|
3,093 |
|
Principal
payments on debt and other long-term obligations |
(105 |
) |
|
(119 |
) |
Purchases
and redemptions of long-term debt |
(2,346 |
) |
|
— |
|
Borrowings under revolving credit facility |
1,820 |
|
|
2,820 |
|
Payments
under revolving credit facility |
(1,725 |
) |
|
(1,840 |
) |
Payments
for financing costs |
(31 |
) |
|
(29 |
) |
Net
proceeds from issuance of common stock |
841 |
|
|
4,221 |
|
Net
proceeds from issuance of preferred stock |
— |
|
|
1,608 |
|
Purchases
of common stock |
(34 |
) |
|
(23 |
) |
Dividends/distributions paid on common stock |
(1,782 |
) |
|
(1,509 |
) |
Dividends
paid on preferred stock |
(113 |
) |
|
(30 |
) |
Net cash
provided by (used for) financing activities |
(733 |
) |
|
8,192 |
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash |
(26 |
) |
|
(258 |
) |
Effect of
exchange rate changes on cash |
(1 |
) |
|
1 |
|
Cash, cash equivalents, and restricted cash at beginning of
period(a) |
440 |
|
|
697 |
|
Cash, cash
equivalents, and restricted cash at end of period(a) |
$ |
413 |
|
|
$ |
440 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Interest
paid |
619 |
|
|
547 |
|
Income
taxes paid |
17 |
|
|
16 |
|
(a) |
Effective January 1,
2018, the Company is required to explain the change in restricted
cash in addition to the change in cash and cash equivalents in its
condensed consolidated statement of cash flows. The Company
has applied this approach for all periods presented. |
|
CROWN CASTLE
INTERNATIONAL CORP.SEGMENT OPERATING RESULTS
(UNAUDITED)(In millions of dollars) |
SEGMENT OPERATING RESULTS |
|
Three Months Ended December 31, 2018 |
|
Three Months Ended December 31, 2017 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental
revenues |
$ |
798 |
|
|
$ |
411 |
|
|
|
|
$ |
1,209 |
|
|
$ |
741 |
|
|
$ |
310 |
|
|
|
|
$ |
1,051 |
|
Segment services and
other revenues |
202 |
|
|
8 |
|
|
|
|
210 |
|
|
176 |
|
|
11 |
|
|
|
|
187 |
|
Segment revenues |
1,000 |
|
|
419 |
|
|
|
|
1,419 |
|
|
917 |
|
|
321 |
|
|
|
|
1,238 |
|
Segment site rental
cost of operations |
207 |
|
|
138 |
|
|
|
|
345 |
|
|
212 |
|
|
106 |
|
|
|
|
318 |
|
Segment services and
other cost of operations |
127 |
|
|
5 |
|
|
|
|
132 |
|
|
98 |
|
|
10 |
|
|
|
|
108 |
|
Segment cost of
operations(a)(b) |
334 |
|
|
143 |
|
|
|
|
477 |
|
|
310 |
|
|
116 |
|
|
|
|
426 |
|
Segment site rental
gross margin(c) |
591 |
|
|
273 |
|
|
|
|
864 |
|
|
529 |
|
|
204 |
|
|
|
|
733 |
|
Segment services and
other gross margin(c) |
75 |
|
|
3 |
|
|
|
|
78 |
|
|
78 |
|
|
1 |
|
|
|
|
79 |
|
Segment selling,
general and administrative expenses(b) |
29 |
|
|
47 |
|
|
|
|
76 |
|
|
26 |
|
|
33 |
|
|
|
|
59 |
|
Segment operating
profit(c) |
637 |
|
|
229 |
|
|
|
|
866 |
|
|
581 |
|
|
172 |
|
|
|
|
753 |
|
Other selling, general
and administrative expenses(b) |
|
|
|
|
$ |
50 |
|
|
50 |
|
|
|
|
|
|
$ |
46 |
|
|
46 |
|
Stock-based
compensation expense |
|
|
|
|
25 |
|
|
25 |
|
|
|
|
|
|
30 |
|
|
30 |
|
Depreciation,
amortization and accretion |
|
|
|
|
390 |
|
|
390 |
|
|
|
|
|
|
362 |
|
|
362 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
164 |
|
|
164 |
|
|
|
|
|
|
160 |
|
|
160 |
|
Other (income) expenses
to reconcile to income (loss) before income taxes(d) |
|
|
|
|
19 |
|
|
19 |
|
|
|
|
|
|
42 |
|
|
42 |
|
Income (loss) before
income taxes |
|
|
|
|
|
|
$ |
218 |
|
|
|
|
|
|
|
|
$ |
113 |
|
(a) |
Exclusive of
depreciation, amortization and accretion shown separately. |
(b) |
Segment
cost of operations excludes (1) stock-based compensation expense of
$6 million and $8 million for the three months ended December 31,
2018 and 2017, respectively, and (2) prepaid lease purchase price
adjustments of $5 million for both of the three months ended
December 31, 2018 and 2017. Selling, general and administrative
expenses exclude stock-based compensation expense of $19 million
and $22 million for the three months ended December 31, 2018 and
2017, respectively. |
(c) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of segment
site rental gross margin, segment services and other gross margin
and segment operating profit. |
(d) |
See
condensed consolidated statement of operations for further
information. |
SEGMENT OPERATING RESULTS |
|
Twelve Months Ended December 31, 2018 |
|
Twelve Months Ended December 31, 2017 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental
revenues |
$ |
3,116 |
|
|
$ |
1,600 |
|
|
|
|
$ |
4,716 |
|
|
$ |
2,900 |
|
|
$ |
769 |
|
|
|
|
$ |
3,669 |
|
Segment services and
other revenues |
691 |
|
|
16 |
|
|
|
|
707 |
|
|
637 |
|
|
50 |
|
|
|
|
687 |
|
Segment revenues |
3,807 |
|
|
1,616 |
|
|
|
|
5,423 |
|
|
3,537 |
|
|
819 |
|
|
|
|
4,356 |
|
Segment site rental
cost of operations |
848 |
|
|
525 |
|
|
|
|
1,373 |
|
|
845 |
|
|
264 |
|
|
|
|
1,109 |
|
Segment services and
other cost of operations |
418 |
|
|
11 |
|
|
|
|
429 |
|
|
374 |
|
|
41 |
|
|
|
|
415 |
|
Segment cost of
operations(a)(b) |
1,266 |
|
|
536 |
|
|
|
|
1,802 |
|
|
1,219 |
|
|
305 |
|
|
|
|
1,524 |
|
Segment site rental
gross margin(c) |
2,268 |
|
|
1,075 |
|
|
|
|
3,343 |
|
|
2,055 |
|
|
505 |
|
|
|
|
2,560 |
|
Segment services and
other gross margin(c) |
273 |
|
|
5 |
|
|
|
|
278 |
|
|
263 |
|
|
9 |
|
|
|
|
272 |
|
Segment selling,
general and administrative expenses(b) |
110 |
|
|
179 |
|
|
|
|
289 |
|
|
94 |
|
|
89 |
|
|
|
|
183 |
|
Segment operating
profit(c) |
2,431 |
|
|
901 |
|
|
|
|
3,332 |
|
|
2,224 |
|
|
425 |
|
|
|
|
2,649 |
|
Other selling, general
and administrative expenses(b) |
|
|
|
|
$ |
191 |
|
|
191 |
|
|
|
|
|
|
$ |
167 |
|
|
167 |
|
Stock-based
compensation expense |
|
|
|
|
108 |
|
|
108 |
|
|
|
|
|
|
96 |
|
|
96 |
|
Depreciation,
amortization and accretion |
|
|
|
|
1,528 |
|
|
1,528 |
|
|
|
|
|
|
1,242 |
|
|
1,242 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
642 |
|
|
642 |
|
|
|
|
|
|
591 |
|
|
591 |
|
Other (income) expenses
to reconcile to income (loss) before income taxes(d) |
|
|
|
|
173 |
|
|
173 |
|
|
|
|
|
|
82 |
|
|
82 |
|
Income (loss) before
income taxes |
|
|
|
|
|
|
$ |
690 |
|
|
|
|
|
|
|
|
$ |
471 |
|
(a) |
Exclusive of
depreciation, amortization and accretion shown separately. |
(b) |
Segment
cost of operations excludes (1) stock-based compensation expense of
$25 million and $20 million for the twelve months ended December
31, 2018 and 2017, respectively, and (2) prepaid lease purchase
price adjustments of $20 million for both of the twelve months
ended December 31, 2018 and 2017. Selling, general and
administrative expenses exclude stock-based compensation expense of
$83 million and $76 million for the twelve months ended December
31, 2018 and 2017, respectively. |
(c) |
See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of segment
site rental gross margin, segment services and other gross margin
and segment operating profit. |
(d) |
See
condensed consolidated statement of operations for further
information. |
Contacts: Dan Schlanger, CFO |
|
Ben Lowe, VP & TreasurerCrown Castle
International Corp.713-570-3050 |
|
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