Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today
reported results for the quarter ended June 30, 2019, and
raised its full year 2019 Outlook as reflected in the table below:
(in
millions) |
Midpoint of CurrentFull Year2019 Outlook |
Full Year2018Actual |
% Change |
Previous FullYear 2019Outlook(c) |
CurrentCompared toPrevious Outlook |
Site rental
revenues |
$4,965 |
$4,716 |
+5 |
% |
$4,962 |
|
+$3 |
Net income (loss) |
$926 |
$671 |
+38 |
% |
$821 |
|
+$105 |
Net income (loss) per
share—diluted(a) |
$1.95 |
$1.34 |
+46 |
% |
$1.70 |
|
+$0.25 |
Adjusted EBITDA(b) |
$3,408 |
$3,141 |
+9 |
% |
$3,367 |
|
+$41 |
AFFO(a)(b) |
$2,479 |
$2,274 |
+9 |
% |
$2,436 |
|
+$43 |
AFFO per share(a)(b) |
$5.94 |
$5.48 |
+8 |
% |
$5.85 |
|
+$0.09 |
- Attributable to CCIC common stockholders.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" included herein for further information and
reconciliation of this non-GAAP financial measure to net income
(loss).
- As issued on April 17, 2019.
"We delivered terrific results in the second
quarter that exceeded our expectations and reflect the strong
demand for our unmatched portfolio of towers, small cells and fiber
assets," stated Jay Brown, Crown Castle’s Chief Executive
Officer. "We 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. We remain
excited about our ability to continue to generate attractive growth
and returns for our shareholders as we remain focused on delivering
dividend per share growth of 7% to 8% per year.
"We entered 2019 with momentum building on the
tower side of the business, and I am excited that we are
experiencing even higher levels of tower activity than we expected,
which is driving an increase to our full year 2019 Outlook.
Our current tower leasing activity is our highest in more than a
decade, and we believe this level of activity will carry into next
year. Additionally, we are constructing small cells for our
customers as they invest in their current networks while beginning
5G deployments. The significant increase in small cell
deployments is straining the response time of municipalities and
utilities, resulting in longer construction timelines than we
previously experienced. These pressures are most acute in
several top markets where we are seeing the highest volume of
activity. Due to the elongated construction timelines, we now
expect to deploy approximately 10,000 small cells in 2019, which is
at the low end of our prior expected range of 10,000 to 15,000, but
approximately 30% more than what we delivered last year. We
expect the increase in tower activity, offset by longer small cell
timelines, to generate higher expected AFFO per share growth of 8%
for 2019, up from our prior Outlook of 7% growth and at the high
end of our long-term growth target."
RESULTS FOR THE QUARTER
The table below sets forth select financial results for the
three month period ended June 30, 2019 and 2018.
(in millions) |
Q2 2019 |
Q2 2018 |
Change |
% Change |
Site rental
revenues |
$1,238 |
$1,169 |
|
+$69 |
+6 |
% |
Net income (loss) |
$246 |
$180 |
|
+$66 |
+37 |
% |
Net income (loss) per share—diluted(a) |
$0.52 |
$0.36 |
|
+$0.16 |
+44 |
% |
Adjusted EBITDA(b) |
$857 |
$769 |
|
+$88 |
+11 |
% |
AFFO(a)(b) |
$619 |
$546 |
|
+$73 |
+13 |
% |
AFFO per share(a)(b) |
$1.48 |
$1.31 |
|
+$0.17 |
+13 |
% |
- Attributable to CCIC common stockholders.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" included herein for further information and
reconciliation of this non-GAAP financial measure to net income
(loss).
HIGHLIGHTS FROM THE QUARTER
- Site rental revenues. Site rental
revenues grew approximately 6%, or $69 million, from second quarter
2018 to second quarter 2019, inclusive of approximately $66 million
in Organic Contribution to Site Rental Revenues and a $3 million
increase in straight-lined revenues. The $66 million in
Organic Contribution to Site Rental Revenues represents
approximately 5.7% growth, comprised of approximately 9.5% growth
from new leasing activity and contracted tenant escalations, net of
approximately 3.8% from tenant non-renewals.
- Net income. Net income for the second
quarter 2019 was $246 million, compared to $180 million during the
same period a year ago.
- Capital expenditures. Capital
expenditures during the quarter were $518 million, comprised of $10
million of land purchases, $30 million of sustaining capital
expenditures, $475 million of revenue generating capital
expenditures and $4 million of integration capital
expenditures. The revenue generating capital expenditures of
$475 million includes $359 million attributable to Fiber and $116
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.
- Financing activities. During the
quarter, Crown Castle increased the commitments under its Senior
Unsecured Revolving Credit Facility to $5.0 billion and extended
the maturity date on its Senior Unsecured Credit Facility to June
2024.
"The momentum we see in our business has
translated into solid financial results, allowing us to increase
our full year 2019 Outlook," stated Dan Schlanger, Crown Castle's
Chief Financial Officer. "The increased Outlook reflects how
well positioned Crown Castle is to translate the positive long-term
trends creating demand for our communications infrastructure into
growth in cash flows in both the near- and long-term. Looking
forward, we are excited about the opportunity we see to generate
compelling total returns for our shareholders through a combination
of dividends and growth, while at the same time making significant
investments in our business that we believe will generate
attractive returns longer term and support future 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").
The following table sets forth Crown Castle's
current Outlook for full year 2019:
(in millions) |
Full Year 2019 |
Site rental revenues |
$4,950 |
to |
$4,980 |
Site rental cost of operations(a) |
$1,442 |
to |
$1,472 |
Net income (loss) |
$896 |
to |
$956 |
Adjusted EBITDA(b) |
$3,393 |
to |
$3,423 |
Interest expense and
amortization of deferred financing costs(c) |
$674 |
to |
$704 |
FFO(b)(d) |
$2,363 |
to |
$2,393 |
AFFO(b)(d) |
$2,464 |
to |
$2,494 |
Weighted-average common shares
outstanding - diluted(e) |
418 |
- Exclusive of depreciation, amortization and accretion.
- See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.
- 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.
- Attributable to CCIC common stockholders.
- The assumption for full year 2019 diluted weighted-average
common shares outstanding is based on the diluted common shares
outstanding as of June 30, 2019. The diluted
weighted-average common shares outstanding does not include any
assumed conversion of preferred stock in the share count.
The 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 2018Actual Comparison |
|
|
(in
millions) |
CurrentFull Year2019 Outlook |
Full Year2018 Actual |
Change |
% Change |
PreviousFull Year2019Outlook(d) |
CurrentComparedto PreviousOutlook |
Site rental revenues |
$4,965 |
$4,716 |
|
+$249 |
+5 |
% |
$4,962 |
|
+$3 |
Net income (loss) |
$926 |
$671 |
|
+$255 |
+38 |
% |
$821 |
|
+$105 |
Net income (loss) per
share—diluted(a)(c) |
$1.95 |
$1.34 |
|
+$0.61 |
+46 |
% |
$1.70 |
|
+$0.25 |
Adjusted EBITDA(b) |
$3,408 |
$3,141 |
|
+$267 |
+9 |
% |
$3,367 |
|
+$41 |
AFFO(a)(b) |
$2,479 |
$2,274 |
|
+$205 |
+9 |
% |
$2,436 |
|
+$43 |
AFFO per share(a)(b)(c) |
$5.94 |
$5.48 |
|
+$0.46 |
+8 |
% |
$5.85 |
|
+$0.09 |
Weighted-average common shares outstanding - diluted(c) |
|
418 |
|
415 |
|
+3 |
+1 |
% |
|
417 |
|
+1 |
- Attributable to CCIC common stockholders.
- See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.
- The assumption for full year 2019 diluted weighted-average
common shares outstanding is based on the diluted common shares
outstanding as of June 30, 2019. For all periods
presented, the diluted weighted-average common shares outstanding
does not include any assumed conversion of preferred stock in the
share count.
- As issued on April 17, 2019.
- The increase to the midpoint of the full year 2019 Outlook for
site rental revenues, Adjusted EBITDA and AFFO primarily reflects a
higher expected contribution from straight-lined revenues and an
increase in the expected services contribution, both of which
relate to the higher expected new leasing activity from towers in
2019 as compared to the midpoint of the prior full year 2019
Outlook.
- The increase in the midpoint of the full year 2019 Outlook for
AFFO also reflects a reduction in the expected full year financing
costs.
- The chart below reconciles the components of expected growth in
site rental revenues from 2018 to 2019 of $234 million to $264
million, inclusive of expected Organic Contribution to Site Rental
Revenues during 2019 of $245 million to $275 million.Chart
1: https://www.globenewswire.com/NewsRoom/AttachmentNg/341bbf30-61ab-4cbf-a86a-e699e2379ba3
- When compared to the previous full year 2019 Outlook, the
reduction in the expected Organic Contribution to Site Rental
Revenues reflects an increase in the expected contribution from
towers, offset by lower expected contribution from both small cells
and fiber solutions.
- New leasing activity is expected to contribute $345 million to
$375 million to 2019 Organic Contribution to Site Rental Revenues,
consisting of new leasing activity from towers of $135 million to
$145 million (prior Outlook was $120 million to $130 million),
small cells of $65 million to $75 million (prior Outlook was $70 to
$80 million), and fiber solutions of $145 million to $155 million
(prior Outlook was $160 million to $170 million).
- The lower expected new leasing activity from small cells is the
result of longer construction timelines than previously
experienced, while the lower expected new leasing activity from
fiber solutions is the result of lower bookings activity than
previously expected.
- The impact of non-renewals on 2019 Organic Contribution to Site
Rental Revenues is expected to be $170 million to $190 million,
representing an increase of approximately $5 million at the
midpoints when compared to the prior Outlook. This increase
is tied to non-renewal activity on towers that is occurring earlier
in the year than previously expected.
- The chart below reconciles the components of expected growth in
AFFO from 2018 to 2019 of $190 million to $220 million.Chart
2: https://www.globenewswire.com/NewsRoom/AttachmentNg/942d6d9d-1c73-4c36-8b72-73148223bbf8
- The increase in the full year Outlook for AFFO growth reflects
the increase in the expected services contribution tied to higher
tower leasing activity, a reduction in expected full year financing
costs resulting from lower floating interest rates and recent
financing activities, offset by the reduction in Organic
Contribution to Site Rental Revenues and higher expenses primarily
related to additional incentive compensation resulting from the
improved full year Outlook.
- 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, July 18, 2019,
at 10:30 a.m. Eastern time to discuss its second quarter 2019
results. The conference call may be accessed by dialing
800-353-6461 and asking for the Crown Castle call (access code
2932521) at least 30 minutes prior to the start time. The
conference call may also be accessed live over the Internet at
investor.crowncastle.com. Supplemental materials for the call
have been posted on the Crown Castle website at
investor.crowncastle.com.
A telephonic replay of the conference call will
be available from 1:30 p.m. Eastern time on Thursday, July 18,
2019, through 1:30 p.m. Eastern time on Wednesday, October 16,
2019, and may be accessed by dialing 888-203-1112 and using access
code 2932521. An audio archive will also be available on the
company's website at 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 75,000 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.
Contacts: Dan Schlanger, CFO |
Ben Lowe, VP & Treasurer |
Crown Castle International Corp. |
713-570-3050 |
Non-GAAP Financial Measures, Segment Measures and Other
Calculations
This press release includes presentations of
Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including
per share amounts, Funds from Operations ("FFO"), including per
share amounts 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 non-GAAP financial measures 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.
Our non-GAAP financial measures 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, including per share amounts, 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, including per share amounts, 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 tenant 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).
AFFO per share. We define AFFO per share as AFFO
divided by diluted weighted-average common shares outstanding.
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.
FFO per share. We define FFO per share as FFO
divided by the diluted weighted-average common shares
outstanding.
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 tenant 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. Additionally, certain costs are shared
across segments and are reflected in our segment measures through
allocations that management believes to be reasonable.
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 (including capital expenditures
related to (1) enhancing communications infrastructure assets in
order to add new tenants for the first time or support subsequent
tenant equipment augmentations, or (2) modifying the structure of a
communications infrastructure asset to accommodate additional
tenants), 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
tenants' 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.
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 |
|
June 30, 2019 |
|
June 30, 2018 |
|
December 31,2018 |
(in millions) |
|
|
|
|
|
Net income (loss) |
$ |
246 |
|
|
$ |
180 |
|
|
$ |
671 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
|
|
Asset write-down charges |
6 |
|
|
6 |
|
|
26 |
|
Acquisition and integration costs |
2 |
|
|
8 |
|
|
27 |
|
Depreciation, amortization and accretion |
393 |
|
|
379 |
|
|
1,528 |
|
Amortization of prepaid lease purchase price adjustments |
5 |
|
|
5 |
|
|
20 |
|
Interest expense and amortization of deferred financing
costs(a) |
169 |
|
|
158 |
|
|
642 |
|
(Gains) losses on retirement of long-term obligations |
1 |
|
|
3 |
|
|
106 |
|
Interest income |
(1 |
) |
|
(1 |
) |
|
(5 |
) |
Other (income) expense |
— |
|
|
— |
|
|
(1 |
) |
(Benefit) provision for income taxes |
4 |
|
|
5 |
|
|
19 |
|
Stock-based compensation expense |
32 |
|
|
26 |
|
|
108 |
|
Adjusted EBITDA(b)(c) |
$ |
857 |
|
|
$ |
769 |
|
|
$ |
3,141 |
|
- See the reconciliation of "components of historical interest
expense and amortization of deferred financing costs" herein for a
discussion of non-cash interest expense.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definition of Adjusted
EBITDA.
- 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) |
$896 |
|
to |
|
$956 |
Adjustments to increase
(decrease) net income (loss): |
|
|
|
|
|
Asset write-down charges |
$23 |
|
to |
|
$33 |
Acquisition and integration costs |
$11 |
|
to |
|
$21 |
Depreciation, amortization and accretion |
$1,576 |
|
to |
|
$1,611 |
Amortization of prepaid lease purchase price adjustments |
$19 |
|
to |
|
$21 |
Interest expense and amortization of deferred financing
costs(a) |
$674 |
|
to |
|
$704 |
(Gains) losses on retirement of long-term obligations |
$2 |
|
to |
|
$2 |
Interest income |
$(8) |
|
to |
|
$(4) |
Other (income) expense |
$2 |
|
to |
|
$4 |
(Benefit) provision for income taxes |
$16 |
|
to |
|
$24 |
Stock-based compensation expense |
$112 |
|
to |
|
$120 |
Adjusted EBITDA(b)(c) |
$3,393 |
|
to |
|
$3,423 |
- 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.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definition of Adjusted
EBITDA.
- 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 Six Months Ended |
|
For the Twelve Months Ended |
(in millions) |
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
|
December 31, 2018 |
Net income (loss) |
$ |
246 |
|
|
$ |
180 |
|
|
$ |
456 |
|
|
$ |
294 |
|
|
$ |
671 |
|
Real estate related
depreciation, amortization and accretion |
379 |
|
|
367 |
|
|
759 |
|
|
726 |
|
|
1,472 |
|
Asset write-down charges |
6 |
|
|
6 |
|
|
12 |
|
|
9 |
|
|
26 |
|
Dividends on preferred
stock |
(28 |
) |
|
(28 |
) |
|
(57 |
) |
|
(57 |
) |
|
(113 |
) |
FFO(a)(b)(c)(d)(e) |
$ |
602 |
|
|
$ |
525 |
|
|
$ |
1,169 |
|
|
$ |
973 |
|
|
$ |
2,055 |
|
Weighted-average common sharesoutstanding—diluted(c) |
|
418 |
|
|
|
416 |
|
|
|
417 |
|
|
|
413 |
|
|
|
415 |
|
FFO per share(a)(b)(c)(d)(e) |
$ |
1.44 |
|
|
$ |
1.26 |
|
|
$ |
2.80 |
|
|
$ |
2.36 |
|
|
$ |
4.95 |
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
602 |
|
|
$ |
525 |
|
|
$ |
1,169 |
|
|
$ |
973 |
|
|
$ |
2,055 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
|
|
|
|
|
|
Straight-lined revenue |
(23 |
) |
|
(20 |
) |
|
(40 |
) |
|
(36 |
) |
|
(72 |
) |
Straight-lined expense |
24 |
|
|
23 |
|
|
47 |
|
|
47 |
|
|
90 |
|
Stock-based compensation expense |
32 |
|
|
26 |
|
|
61 |
|
|
52 |
|
|
108 |
|
Non-cash portion of tax provision |
(4 |
) |
|
(7 |
) |
|
1 |
|
|
(3 |
) |
|
2 |
|
Non-real estate related depreciation, amortization and
accretion |
14 |
|
|
12 |
|
|
28 |
|
|
27 |
|
|
56 |
|
Amortization of non-cash interest expense |
— |
|
|
1 |
|
|
1 |
|
|
4 |
|
|
7 |
|
Other (income) expense |
— |
|
|
— |
|
|
1 |
|
|
1 |
|
|
(1 |
) |
(Gains) losses on retirement of long-term obligations |
1 |
|
|
3 |
|
|
2 |
|
|
74 |
|
|
106 |
|
Acquisition and integration costs |
2 |
|
|
8 |
|
|
6 |
|
|
14 |
|
|
27 |
|
Maintenance capital expenditures |
(22 |
) |
|
(18 |
) |
|
(38 |
) |
|
(31 |
) |
|
(64 |
) |
Corporate capital expenditures |
(8 |
) |
|
(8 |
) |
|
(13 |
) |
|
(17 |
) |
|
(41 |
) |
AFFO(a)(b)(c)(d)(e) |
$ |
619 |
|
|
$ |
546 |
|
|
$ |
1,225 |
|
|
$ |
1,104 |
|
|
$ |
2,274 |
|
Weighted-average common sharesoutstanding—diluted(c) |
|
418 |
|
|
|
416 |
|
|
|
417 |
|
|
|
413 |
|
|
|
415 |
|
AFFO per share(a)(b)(c)(d)(e) |
$ |
1.48 |
|
|
$ |
1.31 |
|
|
$ |
2.94 |
|
|
$ |
2.67 |
|
|
$ |
5.48 |
|
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of FFO and
AFFO.
- FFO and AFFO are reduced by cash paid for preferred stock
dividends during the period in which they are paid.
- Diluted weighted-average common shares outstanding were 418
million, 416 million, 417 million, 413 million and 415 million for
the three months ended June 30, 2019 and 2018, the six months
ended June 30, 2019 and 2018 and the twelve months ended
December 31, 2018, 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.
- The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
- Attributable to CCIC common stockholders.
Reconciliation of Current Outlook for FFO and
AFFO:
|
Full Year 2019 |
(in millions) |
Outlook |
Net income (loss) |
$896 |
|
to |
|
$956 |
Real estate related
depreciation, amortization and accretion |
$1,528 |
|
to |
|
$1,548 |
Asset write-down charges |
$23 |
|
to |
|
$33 |
Dividends on preferred
stock |
$(113) |
|
to |
|
$(113) |
FFO(a)(b)(c)(d)(e) |
$2,363 |
|
to |
|
$2,393 |
Weighted-average common shares outstanding—diluted(a) |
|
|
418 |
|
FFO per share(a)(b)(c)(d)(e) |
$5.66 |
|
to |
|
$5.73 |
|
|
|
|
|
|
FFO (from above) |
$2,363 |
|
to |
|
$2,393 |
Adjustments to increase
(decrease) FFO: |
|
|
|
|
|
Straight-lined revenue |
$(74) |
|
to |
|
$(54) |
Straight-lined expense |
$81 |
|
to |
|
$101 |
Stock-based compensation expense |
$112 |
|
to |
|
$120 |
Non-cash portion of tax provision |
$(6) |
|
to |
|
$9 |
Non-real estate related depreciation, amortization and
accretion |
$48 |
|
to |
|
$63 |
Amortization of non-cash interest expense |
$(5) |
|
to |
|
$5 |
Other (income) expense |
$2 |
|
to |
|
$4 |
(Gains) losses on retirement of long-term obligations |
$2 |
|
to |
|
$2 |
Acquisition and integration costs |
$11 |
|
to |
|
$21 |
Maintenance capital expenditures |
$(90) |
|
to |
|
$(75) |
Corporate capital expenditures |
$(46) |
|
to |
|
$(31) |
AFFO(a)(b)(c)(d)(e) |
$2,464 |
|
to |
|
$2,494 |
Weighted-average common shares outstanding—diluted(a) |
|
|
418 |
|
AFFO per share(a)(b)(c)(d)(e) |
$5.90 |
|
to |
|
$5.97 |
- The assumption for full year 2019 diluted weighted-average
common shares outstanding is 418 million based on the diluted
common shares outstanding as of June 30, 2019. The diluted
weighted-average common shares outstanding does not include any
assumed conversion of preferred stock in the share count.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion for our definitions of FFO
and AFFO.
- FFO and AFFO are reduced by cash paid for preferred stock
dividends during the period in which they are paid.
- The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
- Attributable to CCIC common stockholders.
For Comparative Purposes - Reconciliation of Previous
Outlook for Adjusted EBITDA:
|
Previously Issued |
|
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 |
$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(a)(b) |
$3,344 |
|
to |
|
$3,389 |
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definition of Adjusted
EBITDA.
- 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 |
|
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) |
$2,293 |
|
to |
|
$2,338 |
Weighted-average common shares outstanding—diluted(a) |
|
417 |
|
FFO per share(a)(b)(c)(d) |
$5.50 |
|
to |
|
$5.60 |
|
|
|
|
|
|
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) |
$2,413 |
|
to |
|
$2,458 |
Weighted-average common shares outstanding—diluted(a) |
|
417 |
|
AFFO per share(a)(b)(c)(d) |
$5.80 |
|
to |
|
$5.90 |
- Previously issued full year 2019 Outlook assumes diluted
weighted-average common shares outstanding as of March 31,
2019 of approximately 417 million. The diluted
weighted-average common shares outstanding does not include any
assumed conversion of preferred stock in the share count.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion for our definitions of FFO
and AFFO.
- The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
- Attributable to CCIC common stockholders.
The components of changes in site rental revenues for
the quarters ended June 30, 2019 and 2018 are as
follows:
|
Three Months Ended June 30, |
(dollars in millions) |
2019 |
|
2018 |
Components of changes in site
rental revenues(a): |
|
|
|
Prior year site rental revenues exclusive of straight-lined
revenues associated with fixed escalators(b)(c) |
$ |
1,149 |
|
|
$ |
870 |
|
|
|
|
|
New leasing activity(b)(c) |
89 |
|
|
51 |
|
Escalators |
21 |
|
|
20 |
|
Non-renewals |
(44 |
) |
|
(22 |
) |
Organic Contribution to Site Rental Revenues(d) |
66 |
|
|
49 |
|
Straight-lined revenues associated with fixed escalators |
23 |
|
|
20 |
|
Acquisitions(e) |
— |
|
|
231 |
|
Other |
— |
|
|
— |
|
Total GAAP site rental
revenues |
$ |
1,238 |
|
|
$ |
1,169 |
|
|
|
|
|
Year-over-year changes
in revenue: |
|
|
|
Reported GAAP site rental
revenues |
5.9 |
% |
|
|
Organic Contribution to Site
Rental Revenues(d)(f) |
5.7 |
% |
|
|
- Additional information regarding Crown Castle's site rental
revenues, including projected revenue from tenant 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.
- Includes revenues from amortization of prepaid rent in
accordance with GAAP.
- Includes revenues from the construction of new small cell
nodes, exclusive of straight-lined revenues related to fixed
escalators.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein.
- 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.
- 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 year ending December 31, 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 |
|
345-375 |
Escalators |
83 |
|
85-95 |
Non-renewals |
(89) |
|
(190)-(170) |
Organic Contribution to Site Rental Revenues(d) |
207 |
|
245-275 |
Straight-lined revenues associated with fixed escalators |
72 |
|
54-74 |
Acquisitions(e) |
767 |
|
— |
Other |
— |
|
— |
Total GAAP site rental
revenues |
$4,716 |
|
$4,950-$4,980 |
|
|
|
|
Year-over-year changes
in revenue: |
|
|
|
Reported GAAP site rental
revenues |
|
|
5.3%(f) |
Organic Contribution to Site
Rental Revenues(d)(g) |
|
|
5.6%(f) |
- Additional information regarding Crown Castle's site rental
revenues, including projected revenue from tenant 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.
- Includes revenues from amortization of prepaid rent in
accordance with GAAP.
- Includes revenues from the construction of new small cell
nodes, exclusive of straight-lined revenues related to fixed
escalators.
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein.
- 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.
- Calculated based on midpoint of full year 2019 Outlook.
- 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) |
June 30, 2019 |
|
June 30, 2018 |
Interest expense on debt obligations |
$ |
169 |
|
|
$ |
157 |
|
Amortization of deferred
financing costs and adjustments on long-term debt, net |
5 |
|
|
5 |
|
Other, net |
(5 |
) |
|
(4 |
) |
Interest expense and
amortization of deferred financing costs |
$ |
169 |
|
|
$ |
158 |
|
Components of Current Outlook for
Interest Expense and Amortization of Deferred Financing
Costs:
|
Full Year 2019 |
(in millions) |
Outlook |
Interest expense on debt obligations |
$683 |
|
to |
|
$693 |
Amortization of deferred
financing costs and adjustments on long-term debt, net |
$17 |
|
to |
|
$22 |
Other, net |
$(22) |
|
to |
|
$(17) |
Interest expense and
amortization of deferred financing costs |
$674 |
|
to |
|
$704 |
Debt balances and maturity dates as of
June 30, 2019 are as follows:
(in millions) |
Face Value |
|
Final Maturity |
Cash, cash equivalents and restricted cash |
$ |
429 |
|
|
|
|
|
|
Tower Revenue Notes, Series
2015-1(a) |
300 |
|
May 2042 |
Tower Revenue Notes, Series
2015-2(a) |
700 |
|
May 2045 |
Tower Revenue Notes, Series
2018-1(a) |
250 |
|
July 2043 |
Tower Revenue Notes, Series
2018-2(a) |
750 |
|
July 2048 |
3.849% Secured Notes |
1,000 |
|
Apr. 2023 |
Secured Notes, Series 2009-1,
Class A-2(b) |
70 |
|
Aug. 2029 |
Finance leases and other
obligations |
235 |
|
Various |
Total secured
debt |
$ |
3,305 |
|
|
2016 Revolver |
485 |
|
June 2024 |
2016 Term Loan A |
2,341 |
|
June 2024 |
2019 Commercial Paper
Notes(c) |
500 |
|
Various |
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 |
4.300% Senior Notes |
600 |
|
Feb. 2029 |
5.200% Senior Notes |
400 |
|
Feb. 2049 |
Total unsecured
debt |
$ |
14,376 |
|
|
Total net
debt |
$ |
17,252 |
|
|
- 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.
- The Senior Secured Notes, 2009-1, Class A-2 principal amortizes
during the period beginning in September 2019 and ending in August
2029.
- The maturities of the 2019 Commercial Paper Notes may vary but
may not exceed 397 days from the date of issue.
Net Debt to Last Quarter Annualized Adjusted EBITDA is
computed as follows:
(dollars in millions) |
For the Three Months Ended June 30, 2019 |
Total face value of debt |
$ |
17,681 |
|
Ending cash, cash equivalents
and restricted cash |
429 |
|
Total Net Debt |
$ |
17,252 |
|
|
|
Adjusted EBITDA for the three
months ended June 30, 2019 |
$ |
857 |
|
Last quarter annualized
Adjusted EBITDA |
3,428 |
|
Net Debt to Last
Quarter Annualized Adjusted EBITDA(a) |
5.0 |
x |
- For purposes of calculating Net Debt to Last Quarter Annualized
Adjusted EBITDA, we have changed our calculation of ending cash and
cash equivalents to include restricted cash and as such, our
calculation is not comparable to similar calculations previously
provided. Our restricted cash is predominately comprised of
the cash rental receipts held in reserve in accordance with certain
of our debt instruments; any excess of such required reserve
balances are subsequently released to us each month. If we
would have excluded restricted cash from our calculation for the
second quarter of 2019, our Net Debt to Last Quarter Annualized
Adjusted EBITDA would have been 5.1x.
Components of Capital
Expenditures:
|
For the Three Months Ended |
(in millions) |
June 30, 2019 |
|
June 30, 2018 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
10 |
|
$ |
— |
|
$ |
— |
|
$ |
10 |
|
|
$ |
10 |
|
$ |
— |
|
$ |
— |
|
$ |
10 |
|
Communications infrastructure construction and improvements |
116 |
|
359 |
|
— |
|
475 |
|
|
77 |
|
279 |
|
— |
|
356 |
|
Sustaining: |
|
|
|
|
|
|
|
|
|
Maintenance and corporate |
10 |
|
12 |
|
8 |
|
30 |
|
|
11 |
|
11 |
|
4 |
|
26 |
|
Integration |
— |
|
— |
|
4 |
|
4 |
|
|
— |
|
— |
|
1 |
|
1 |
|
Total |
$ |
136 |
|
$ |
371 |
|
$ |
11 |
|
$ |
518 |
|
|
$ |
98 |
|
$ |
289 |
|
$ |
5 |
|
$ |
393 |
|
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,
growth, returns, opportunities and tenant and shareholder value
which may be derived from our business, assets, investments,
acquisitions and dividends, (2) our strategy, strategic position,
business model and capabilities, the strength of our business and
fundamentals of our business and industry, including spending by
our major customers on network improvements and investments in 5G,
(3) our long-term prospects and the trends impacting our
business, (4) the potential benefits and contributions which may be
derived from our acquisitions, including the contribution to or
impact on our financial or operating results, (5) leasing
environment and activity, including growth thereof and the
contribution to our financial or operating results therefrom, (6)
our small cell deployment and the corresponding driving factors,
(7) our investments in our business and the potential growth,
returns and benefits therefrom, (8) our dividends and our dividend
(including on a per share basis) growth rate, including its driving
factors, and targets, (9) our portfolio of assets, including
demand therefor, strategic position thereof and opportunities
created thereby, (10) financing costs and benefits which may be
derived from our financing activities, (11) cash flows, including
growth thereof, (12) tenant non-renewals, including the
impact and timing thereof, (13) incentive compensation
amounts, (14) capital expenditures, including sustaining and
discretionary capital expenditures, and the timing thereof, (15)
straight-line adjustments, (16) site rental revenues and estimated
growth thereof, (17) site rental cost of operations, (18) net
income (including on a per share basis) and estimated growth
thereof, (19) Adjusted EBITDA, including the impact of the
timing of certain components thereof and estimated growth thereof,
(20) expenses, including interest expense and amortization of
deferred financing costs, (21) FFO (including on a per share basis)
and estimated growth thereof, (22) AFFO (including on a per
share basis) and estimated growth thereof and corresponding
driving factors, (23) Organic Contribution to Site Rental Revenues,
(24) our weighted-average common shares outstanding (including on a
diluted basis) and estimated growth thereof, (25) services
contribution, including the timing thereof, and (26) 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 tenants may materially and adversely
affect our business (including reducing demand for our
communications infrastructure or services).
- A substantial portion of our revenues is derived from a small
number of tenants, and the loss, consolidation or financial
instability of any of such tenants 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.
- 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
tenants 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 or other unforeseen
events that could adversely affect our operations, business, 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. Our
filings with the SEC are available through the SEC website at
www.sec.gov or through our investor relations website at
investor.crowncastle.com. We use our investor relations website to
disclose information about us that may be deemed to be material. We
encourage investors, the media and others interested in us to visit
our investor relations website from time to time to review
up-to-date information or to sign up for e-mail alerts to be
notified when new or updated information is posted on the site.
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) |
|
|
June 30, 2019 |
|
December 31, 2018 |
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
288 |
|
|
$ |
277 |
|
Restricted cash |
136 |
|
|
131 |
|
Receivables, net |
591 |
|
|
501 |
|
Prepaid expenses(a) |
111 |
|
|
172 |
|
Other current assets |
168 |
|
|
148 |
|
Total current assets |
1,294 |
|
|
1,229 |
|
Deferred site rental
receivables |
1,391 |
|
|
1,366 |
|
Property and equipment,
net |
14,151 |
|
|
13,676 |
|
Operating lease right-of-use
assets(a) |
6,053 |
|
|
— |
|
Goodwill |
10,078 |
|
|
10,078 |
|
Other intangible assets,
net(a) |
5,074 |
|
|
5,516 |
|
Long-term prepaid rent and
other assets, net(a) |
106 |
|
|
920 |
|
Total assets |
$ |
38,147 |
|
|
$ |
32,785 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
337 |
|
|
$ |
313 |
|
Accrued interest |
166 |
|
|
148 |
|
Deferred revenues |
503 |
|
|
498 |
|
Other accrued liabilities(a) |
305 |
|
|
351 |
|
Current maturities of debt and other obligations |
98 |
|
|
107 |
|
Current portion of operating lease liabilities(a) |
289 |
|
|
— |
|
Total current liabilities |
1,698 |
|
|
1,417 |
|
Debt and other long-term
obligations |
17,471 |
|
|
16,575 |
|
Operating lease
liabilities(a) |
5,427 |
|
|
— |
|
Other long-term
liabilities(a) |
2,028 |
|
|
2,759 |
|
Total liabilities |
26,624 |
|
|
20,751 |
|
Commitments and
contingencies |
|
|
|
CCIC stockholders'
equity: |
|
|
|
Common stock, $0.01 par value; 600 shares authorized; shares issued
and outstanding: June 30, 2019—416 and December 31,
2018—415 |
4 |
|
|
4 |
|
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par
value; 20 shares authorized; shares issued and outstanding: June
30, 2019—2 and December 31, 2018—2; aggregate liquidation
value: June 30, 2019—$1,650 and December 31, 2018—$1,650 |
— |
|
|
— |
|
Additional paid-in capital |
17,801 |
|
|
17,767 |
|
Accumulated other comprehensive income (loss) |
(5 |
) |
|
(5 |
) |
Dividends/distributions in excess of earnings |
(6,277 |
) |
|
(5,732 |
) |
Total equity |
11,523 |
|
|
12,034 |
|
Total liabilities and equity |
$ |
38,147 |
|
|
$ |
32,785 |
|
- Effective January 1, 2019, we adopted new guidance on the
recognition, measurement, presentation and disclosure of
leases. The new guidance requires lessees to recognize a
lease liability, initially measured at the present value of the
lease payments for all leases, and a corresponding right-of-use
asset. The accounting for lessors remained largely unchanged from
previous guidance. As a result of the new guidance for
leases, on the effective date, certain amounts related to our
lessee arrangements that were previously reported separately have
been de-recognized and reclassified into "Operating lease
right-of-use assets" on the condensed consolidated balance sheet as
of June 30, 2019.
|
CROWN CASTLE INTERNATIONAL
CORP. |
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS (UNAUDITED) |
(Amounts in millions, except per share
amounts) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net revenues: |
|
|
|
|
|
|
|
Site rental |
$ |
1,238 |
|
|
$ |
1,169 |
|
|
$ |
2,457 |
|
|
$ |
2,323 |
|
Services and other |
240 |
|
|
161 |
|
|
447 |
|
|
307 |
|
Net revenues |
1,478 |
|
|
1,330 |
|
|
2,904 |
|
|
2,630 |
|
Operating expenses: |
|
|
|
|
|
|
|
Costs of operations (exclusive of depreciation, amortization and
accretion): |
|
|
|
|
|
|
|
Site rental |
365 |
|
|
355 |
|
|
726 |
|
|
702 |
|
Services and other |
138 |
|
|
99 |
|
|
263 |
|
|
185 |
|
Selling, general and administrative |
155 |
|
|
138 |
|
|
307 |
|
|
273 |
|
Asset write-down charges |
6 |
|
|
6 |
|
|
12 |
|
|
9 |
|
Acquisition and integration costs |
2 |
|
|
8 |
|
|
6 |
|
|
14 |
|
Depreciation, amortization and accretion |
393 |
|
|
379 |
|
|
787 |
|
|
753 |
|
Total operating expenses |
1,059 |
|
|
985 |
|
|
2,101 |
|
|
1,936 |
|
Operating income (loss) |
419 |
|
|
345 |
|
|
803 |
|
|
694 |
|
Interest expense and
amortization of deferred financing costs |
(169 |
) |
|
(158 |
) |
|
(337 |
) |
|
(318 |
) |
Gains (losses) on retirement
of long-term obligations |
(1 |
) |
|
(3 |
) |
|
(2 |
) |
|
(74 |
) |
Interest income |
1 |
|
|
1 |
|
|
3 |
|
|
2 |
|
Other income (expense) |
— |
|
|
— |
|
|
(1 |
) |
|
(1 |
) |
Income (loss) before income
taxes |
250 |
|
|
185 |
|
|
466 |
|
|
303 |
|
Benefit (provision) for income
taxes |
(4 |
) |
|
(5 |
) |
|
(10 |
) |
|
(9 |
) |
Net income (loss) |
246 |
|
|
180 |
|
|
456 |
|
|
294 |
|
Dividends on preferred
stock |
(28 |
) |
|
(28 |
) |
|
(57 |
) |
|
(57 |
) |
Net income (loss) attributable
to CCIC common stockholders |
$ |
218 |
|
|
$ |
152 |
|
|
$ |
399 |
|
|
$ |
237 |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to CCIC common stockholders, per common share: |
|
|
|
|
|
|
|
Net income (loss) attributable to CCIC common stockholders,
basic |
$ |
0.52 |
|
|
$ |
0.37 |
|
|
$ |
0.96 |
|
|
$ |
0.58 |
|
Net income (loss) attributable to CCIC common stockholders,
diluted |
$ |
0.52 |
|
|
$ |
0.36 |
|
|
$ |
0.95 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
416 |
|
|
415 |
|
|
415 |
|
|
412 |
|
Diluted |
418 |
|
|
416 |
|
|
417 |
|
|
413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CROWN CASTLE INTERNATIONAL
CORP. |
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED) |
|
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
Net income
(loss) |
$ |
456 |
|
|
$ |
294 |
|
Adjustments to reconcile net
income (loss) to net cash provided by (used for) operating
activities: |
|
|
|
Depreciation, amortization and accretion |
787 |
|
|
753 |
|
(Gains) losses on retirement of long-term obligations |
2 |
|
|
74 |
|
Amortization of deferred financing costs and other non-cash
interest |
1 |
|
|
4 |
|
Stock-based compensation expense |
62 |
|
|
47 |
|
Asset write-down charges |
12 |
|
|
9 |
|
Deferred income tax (benefit) provision |
1 |
|
|
1 |
|
Other non-cash adjustments, net |
3 |
|
|
1 |
|
Changes in assets and liabilities, excluding the effects of
acquisitions: |
|
|
|
Increase (decrease) in liabilities |
54 |
|
|
78 |
|
Decrease (increase) in assets |
(151 |
) |
|
(150 |
) |
Net cash provided by (used for) operating activities |
1,227 |
|
|
1,111 |
|
Cash flows from
investing activities: |
|
|
|
Payments for acquisitions, net of cash acquired |
(13 |
) |
|
(18 |
) |
Capital expenditures |
(998 |
) |
|
(763 |
) |
Other investing activities, net |
1 |
|
|
3 |
|
Net cash provided by (used for) investing activities |
(1,010 |
) |
|
(778 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from issuance of long-term debt |
995 |
|
|
1,743 |
|
Principal payments on debt and other long-term obligations |
(36 |
) |
|
(47 |
) |
Purchases and redemptions of long-term debt |
(12 |
) |
|
(1,318 |
) |
Borrowings under revolving credit facility |
1,195 |
|
|
485 |
|
Payments under revolving credit facility |
(1,785 |
) |
|
(1,150 |
) |
Net borrowings (repayments) under commercial paper program |
500 |
|
|
— |
|
Payments for financing costs |
(14 |
) |
|
(20 |
) |
Net proceeds from issuance of common stock |
— |
|
|
841 |
|
Purchases of common stock |
(43 |
) |
|
(34 |
) |
Dividends/distributions paid on common stock |
(944 |
) |
|
(879 |
) |
Dividends paid on preferred stock |
(57 |
) |
|
(57 |
) |
Net cash provided by (used for) financing activities |
(201 |
) |
|
(436 |
) |
Net increase
(decrease) in cash, cash equivalents, and restricted
cash |
16 |
|
|
(103 |
) |
Effect of exchange
rate changes on cash |
— |
|
|
(1 |
) |
Cash, cash equivalents, and restricted cash at beginning of
period |
413 |
|
|
440 |
|
Cash, cash
equivalents, and restricted cash at end of period |
$ |
429 |
|
|
$ |
336 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Interest paid |
318 |
|
|
292 |
|
Income taxes paid |
9 |
|
|
12 |
|
|
|
|
|
|
|
|
CROWN CASTLE INTERNATIONAL
CORP. |
SEGMENT OPERATING RESULTS
(UNAUDITED) |
|
SEGMENT OPERATING RESULTS |
|
Three Months Ended June 30, 2019 |
|
Three Months Ended June 30, 2018 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
816 |
|
|
$ |
422 |
|
|
|
|
$ |
1,238 |
|
|
$ |
771 |
|
|
$ |
398 |
|
|
|
|
$ |
1,169 |
|
Segment services and other
revenues |
237 |
|
|
3 |
|
|
|
|
240 |
|
|
158 |
|
|
3 |
|
|
|
|
161 |
|
Segment revenues |
1,053 |
|
|
425 |
|
|
|
|
1,478 |
|
|
929 |
|
|
401 |
|
|
|
|
1,330 |
|
Segment site rental cost of
operations |
218 |
|
|
136 |
|
|
|
|
354 |
|
|
216 |
|
|
130 |
|
|
|
|
346 |
|
Segment services and other
cost of operations |
134 |
|
|
2 |
|
|
|
|
136 |
|
|
94 |
|
|
3 |
|
|
|
|
97 |
|
Segment cost of
operations(a)(b) |
352 |
|
|
138 |
|
|
|
|
490 |
|
|
310 |
|
|
133 |
|
|
|
|
443 |
|
Segment site rental gross
margin(c) |
598 |
|
|
286 |
|
|
|
|
884 |
|
|
555 |
|
|
268 |
|
|
|
|
823 |
|
Segment services and other
gross margin(c) |
103 |
|
|
1 |
|
|
|
|
104 |
|
|
64 |
|
|
— |
|
|
|
|
64 |
|
Segment selling, general and
administrative expenses(b) |
24 |
|
|
51 |
|
|
|
|
75 |
|
|
27 |
|
|
44 |
|
|
|
|
71 |
|
Segment operating
profit(c) |
677 |
|
|
236 |
|
|
|
|
913 |
|
|
592 |
|
|
224 |
|
|
|
|
816 |
|
Other selling, general and
administrative expenses(b) |
|
|
|
|
$ |
56 |
|
|
56 |
|
|
|
|
|
|
$ |
47 |
|
|
47 |
|
Stock-based compensation
expense |
|
|
|
|
32 |
|
|
32 |
|
|
|
|
|
|
26 |
|
|
26 |
|
Depreciation, amortization and
accretion |
|
|
|
|
393 |
|
|
393 |
|
|
|
|
|
|
379 |
|
|
379 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
169 |
|
|
169 |
|
|
|
|
|
|
158 |
|
|
158 |
|
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
13 |
|
|
13 |
|
|
|
|
|
|
21 |
|
|
21 |
|
Income (loss) before income
taxes |
|
|
|
|
|
|
$ |
250 |
|
|
|
|
|
|
|
|
$ |
185 |
|
- Exclusive of depreciation, amortization and accretion shown
separately.
- Segment cost of operations excludes (1) stock-based
compensation expense of $8 million and $6 million for the three
months ended June 30, 2019 and 2018, respectively, and (2) prepaid
lease purchase price adjustments of $5 million for both of the
three months ended June 30, 2019 and 2018. Selling, general and
administrative expenses exclude stock-based compensation expense of
$24 million and $20 million for the three months ended June 30,
2019 and 2018, respectively.
- 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.
- See condensed consolidated statement of operations for further
information.
|
SEGMENT OPERATING RESULTS |
|
Six Months Ended June 30, 2019 |
|
Six Months Ended June 30, 2018 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
1,621 |
|
|
$ |
836 |
|
|
|
|
$ |
2,457 |
|
|
$ |
1,536 |
|
|
$ |
787 |
|
|
|
|
$ |
2,323 |
|
Segment services and other
revenues |
440 |
|
|
7 |
|
|
|
|
447 |
|
|
300 |
|
|
7 |
|
|
|
|
307 |
|
Segment revenues |
2,061 |
|
|
843 |
|
|
|
|
2,904 |
|
|
1,836 |
|
|
794 |
|
|
|
|
2,630 |
|
Segment site rental cost of
operations |
429 |
|
|
277 |
|
|
|
|
706 |
|
|
427 |
|
|
256 |
|
|
|
|
683 |
|
Segment services and other
cost of operations |
254 |
|
|
5 |
|
|
|
|
259 |
|
|
176 |
|
|
5 |
|
|
|
|
181 |
|
Segment cost of
operations(a)(b) |
683 |
|
|
282 |
|
|
|
|
965 |
|
|
603 |
|
|
261 |
|
|
|
|
864 |
|
Segment site rental gross
margin(c) |
1,192 |
|
|
559 |
|
|
|
|
1,751 |
|
|
1,109 |
|
|
531 |
|
|
|
|
1,640 |
|
Segment services and other
gross margin(c) |
186 |
|
|
2 |
|
|
|
|
188 |
|
|
124 |
|
|
2 |
|
|
|
|
126 |
|
Segment selling, general and
administrative expenses(b) |
50 |
|
|
98 |
|
|
|
|
148 |
|
|
53 |
|
|
87 |
|
|
|
|
140 |
|
Segment operating
profit(c) |
1,328 |
|
|
463 |
|
|
|
|
1,791 |
|
|
1,180 |
|
|
446 |
|
|
|
|
1,626 |
|
Other selling, general and
administrative expenses(b) |
|
|
|
|
$ |
112 |
|
|
112 |
|
|
|
|
|
|
$ |
94 |
|
|
94 |
|
Stock-based compensation
expense |
|
|
|
|
61 |
|
|
61 |
|
|
|
|
|
|
52 |
|
|
52 |
|
Depreciation, amortization and
accretion |
|
|
|
|
787 |
|
|
787 |
|
|
|
|
|
|
753 |
|
|
753 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
337 |
|
|
337 |
|
|
|
|
|
|
318 |
|
|
318 |
|
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
28 |
|
|
28 |
|
|
|
|
|
|
106 |
|
|
106 |
|
Income (loss) before income
taxes |
|
|
|
|
|
|
$ |
466 |
|
|
|
|
|
|
|
|
$ |
303 |
|
- Exclusive of depreciation, amortization and accretion shown
separately.
- Segment cost of operations excludes (1) stock-based
compensation expense of $14 million and $13 million for the six
months ended June 30, 2019 and 2018, respectively, and (2) prepaid
lease purchase price adjustments of $10 million for both of the six
months ended June 30, 2019 and 2018. Selling, general and
administrative expenses exclude stock-based compensation expense of
$47 million and $39 million for the six months ended June 30, 2019
and 2018, respectively.
- 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.
- See condensed consolidated statement of operations for further
information.
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