Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today
reported results for the quarter ended September 30, 2018.
"We delivered another terrific quarter of
results in the third quarter and increased our annualized common
stock dividend by 7% to $4.50 per share based on accelerating
leasing activity," stated Jay Brown, Crown Castle's Chief Executive
Officer. "Over the past two decades, we have built and acquired an
unmatched portfolio of more than 40,000 towers and 65,000 route
miles of dense, high capacity fiber in the top U.S. markets, where
we see the greatest long-term demand from multiple customers.
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. Further, we believe that
the U.S. represents the best market in the world 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 dedicated to investing in our business to
generate future growth while 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
September 30, 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 Q3 2018
Outlook(b) |
Actual Compared to
Outlook |
Q3 2018 |
Q3 2017 |
Change |
% Change |
Site rental revenues |
$1,184 |
$893 |
+$291 |
+33% |
$1,177 |
+$7 |
Net income (loss) |
$164 |
$115 |
+$49 |
+43% |
$139 |
+$25 |
Adjusted EBITDA(a) |
$793 |
$605 |
+$188 |
+31% |
$790 |
+$3 |
AFFO(a)(c) |
$579 |
$459 |
+$120 |
+26% |
$573 |
+$6 |
Weighted-average common shares outstanding - diluted |
416 |
397 |
+19 |
+5% |
416 |
— |
Note: Figures may not tie due to rounding.
- See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.
- As issued on July 18, 2018.
- Attributable to CCIC common stockholders.
HIGHLIGHTS FROM THE
QUARTER
- Site rental
revenues. Site rental revenues grew
approximately 33%, or $291 million, from third quarter 2017 to
third quarter 2018, inclusive of approximately $52 million in
Organic Contribution to Site Rental Revenues plus $219 million in
contributions from acquisitions and other items, plus a $20 million
increase in straight-lined revenues. The $52 million in
Organic Contribution to Site Rental Revenues represents
approximately 5.8% growth, comprised of approximately 8.4% growth
from new leasing activity and contracted tenant escalations, net of
approximately 2.6% from tenant non-renewals. When compared to
the prior third quarter 2018 Outlook, site rental revenues
benefited by approximately $3 million of additional straight-lined
revenues primarily resulting from term extensions associated with
leasing activity.
- Net income. Net income
for third quarter 2018 was $164 million, compared to $115 million
during the same period a year ago.
- Adjusted EBITDA. When
compared to the third quarter 2018 Outlook, Adjusted EBITDA
benefited by approximately $3 million of additional straight-lined
revenues, offset by approximately $2 million of additional
straight-lined expenses.
- AFFO. When compared to
the third quarter 2018 Outlook, AFFO benefited by approximately $3
million related to certain sustaining capital expenditures that did
not occur during the third quarter and are now expected to occur
during the fourth quarter.
- Capital expenditures.
Capital expenditures during the quarter were $478 million,
comprised of $14 million of land purchases, $27 million of
sustaining capital expenditures, $436 million of revenue generating
capital expenditures and $1 million of integration capital
expenditures.
- Common stock dividend.
During the quarter, Crown Castle paid common stock dividends of
$1.05 per common share, an increase of approximately 11% compared
to the same period a year ago.
- Financing activities.
In July, Crown Castle issued $1.0 billion of Senior Secured Tower
Revenue Notes with net proceeds from the offering and cash on hand
used to retire $1.0 billion of existing Senior Secured Tower
Revenue Notes.
"The solid third quarter results reflect the
strength of our business model and our ability to leverage our
leadership position in the U.S. across towers, small cells and
fiber solutions to generate growth," stated Dan Schlanger, Crown
Castle's Chief Financial Officer. "As we focus on closing out
2018 and look towards 2019, we are excited about all of the
positive trends creating increasing demand for our tower, small
cell and fiber assets. We believe we are in a great position
to continue to deliver on our growth targets and invest for the
future while returning capital to our shareholders through a high
quality and growing dividend. Since 2014, and inclusive of
the dividend increase we are announcing today, we have increased
our dividend by a compounded annual growth rate of approximately
8%, and we believe we are well positioned to deliver on our 7% to
8% long-term annual dividend growth target going forward."
DIVIDEND INCREASE
ANNOUNCEMENTCrown Castle's Board of Directors has
declared a quarterly cash dividend of $1.125 per common share,
representing an increase of 7% over the previous quarterly dividend
of $1.05 per share. The quarterly dividend will be payable on
December 31, 2018 to common stockholders of record at the close of
business on December 14, 2018. Future dividends are subject to the
approval of Crown Castle's Board of Directors.
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"). Beginning in 2019, the Outlook section of Crown
Castle's quarterly earnings releases will include Outlook for full
year periods only.
The following table sets forth Crown Castle's
current Outlook for fourth quarter 2018, full year 2018 and full
year 2019:
(in millions) |
Fourth Quarter 2018 |
Full Year 2018 |
Full Year 2019 |
Site rental revenues |
$1,189 |
to |
$1,199 |
$4,696 |
to |
$4,706 |
$4,898 |
to |
$4,943 |
Site rental cost of operations(a) |
$343 |
to |
$353 |
$1,400 |
to |
$1,410 |
$1,438 |
to |
$1,483 |
Net income (loss) |
$201 |
to |
$226 |
$659 |
to |
$684 |
$738 |
to |
$818 |
Adjusted EBITDA(b) |
$820 |
to |
$830 |
$3,144 |
to |
$3,154 |
$3,303 |
to |
$3,348 |
Interest expense and amortization of deferred financing
costs(c) |
$160 |
to |
$170 |
$638 |
to |
$648 |
$691 |
to |
$736 |
FFO(b)(d) |
$567 |
to |
$577 |
$2,055 |
to |
$2,065 |
$2,252 |
to |
$2,297 |
AFFO(b)(d) |
$591 |
to |
$601 |
$2,273 |
to |
$2,283 |
$2,413 |
to |
$2,458 |
Weighted-average common shares outstanding - diluted(e) |
416 |
415 |
416 |
- 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 fourth quarter
2018, full year 2018 and full year 2019 diluted weighted-average
common shares outstanding is based on the diluted common shares
outstanding as of September 30, 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.
- Compared to third quarter 2018, the
midpoints of fourth quarter 2018 Outlook for Adjusted EBITDA and
AFFO are expected to benefit from a higher network services
contribution and lower repair and maintenance expense, offset by
higher sustaining capital expenditures and interest expense.
Full Year 2018 OutlookThe table below compares
the results for full year 2017, midpoint of the current full year
2018 Outlook and the midpoint of the previously provided full year
2018 Outlook for select metrics.
|
Midpoint of FY 2018 Outlook toFY
2017 Actual Comparison |
|
|
(in millions) |
CurrentFull Year2018 Outlook |
Full Year2017 Actual |
Change |
% Change |
Previous Full Year 2018
Outlook(d) |
Current Compared to Previous
Outlook |
Site rental revenues |
$4,701 |
$3,669 |
+$1,032 |
+28% |
$4,688 |
+$13 |
Net income (loss) |
$672 |
$445 |
+$227 |
+51% |
$633 |
+$39 |
Adjusted EBITDA(a) |
$3,149 |
$2,482 |
+$667 |
+27% |
$3,147 |
+$2 |
AFFO(a)(b) |
$2,278 |
$1,860 |
+$418 |
+22% |
$2,278 |
— |
Weighted-average common shares outstanding - diluted(c) |
415 |
383 |
+32 |
+8% |
415 |
— |
- See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.
- Attributable to CCIC common stockholders.
- The assumption for full year 2018 diluted weighted-average
common shares outstanding is based on diluted common shares
outstanding as of September 30, 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.
- As issued on July 18, 2018.
- The increases in full year 2018 Outlook reflect higher than
expected results from the third quarter and an expectation of
continued strong leasing activity during the fourth quarter.
- Additional information is available in Crown Castle's quarterly
Supplemental Information Package posted in the Investors section of
its website.
Full Year 2019 OutlookThe table below compares
the midpoint of the full year 2019 Outlook and the midpoint of the
currently provided full year 2018 Outlook for select metrics.
|
Midpoint of FY 2019 Outlook
toMidpoint of FY 2018 Outlook |
(in millions) |
CurrentFull Year2019 Outlook |
CurrentFull Year2018 Outlook |
Change |
% Change |
Site rental revenues |
$4,921 |
$4,701 |
+$220 |
+5% |
Net income (loss) |
$778 |
$672 |
+$106 |
+16% |
Adjusted EBITDA(a) |
$3,326 |
$3,149 |
+$177 |
+6% |
AFFO(a)(b) |
$2,436 |
$2,278 |
+$158 |
+7% |
Weighted-average common shares outstanding - diluted(c) |
416 |
415 |
+1 |
— |
- See reconciliation of this non-GAAP financial measure to net
income (loss) and definition included herein.
- Attributable to CCIC common stockholders.
- The assumption for full year 2018 and full year 2019 diluted
weighted-average common shares outstanding is based on diluted
common shares outstanding as of September 30, 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.
- The chart below reconciles the components of expected growth in
site rental revenues from 2018 to 2019 of $197 million to $242
million, inclusive of expected Organic Contribution to Site Rental
Revenues during 2019 of $260 million to $300 million.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/61274c07-b8c6-44e9-8829-10cce9da253f
- New leasing activity is expected to contribute $350 million to
$380 million to 2019 Organic Contribution to Site Rental Revenues,
consisting of new leasing activity from towers of $120 million to
$130 million, small cells of $70 million to $80 million, and fiber
solutions of $160 million to $170 million.
- The chart below reconciles the components of expected growth in
AFFO from 2018 to 2019 of $135 million to $180 million.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/5f742149-932c-45b8-ad87-d4a441239b28
- The expected increase in expenses from 2018 to 2019 of
approximately $80 million at the midpoint reflects a combination of
the typical cost escalations and the direct expenses associated
with accelerating new leasing activity.
- The expected change in network services contribution in 2019 of
approximately $25 million at the midpoint reflects the higher
expected new leasing activity from towers in 2019.
- In addition, the expected growth in AFFO from 2018 to 2019 is
impacted by approximately $70 million of higher financing costs,
inclusive of approximately $25 million that is related to higher
expected average floating interest rates in 2019 when compared to
average rates in 2018, as well as approximately $45 million that is
related to funding our discretionary capital expenditures.
- 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, October 18, 2018, at 10:30 a.m. Eastern time to
discuss its third quarter 2018 results. The conference call
may be accessed by dialing 855-719-5012 and asking for the Crown
Castle call (access code 8650722) 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, October 18,
2018, through 1:30 p.m. Eastern time on Wednesday, January 16,
2019, and may be accessed by dialing 888-203-1112 and using access
code 8650722. 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 Network 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
capital improvement 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 Network Services and Other Gross
Margin. We define Segment Network Services and Other Gross
Margin as segment network services and other revenues less segment
network services and other cost of operations, excluding
stock-based compensation expense recorded in consolidated network
services and other cost of operations.
Segment Operating Profit. We define
Segment Operating Profit as segment site rental gross margin plus
segment network 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.
Sustaining capital expenditures. We define
sustaining capital expenditures as those capital expenditures made
with respect to either (1) corporate capital expenditures or (2)
capital improvement capital expenditures on our communications
infrastructure assets that enable our customers' ongoing quiet
enjoyment of the communications infrastructure.
Integration capital expenditures. We
define integration capital expenditures as those capital
expenditures made specifically with respect to acquisitions that
are essential to integrating acquired companies into our
business.
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 |
|
September 30, 2018 |
|
September 30, 2017 |
|
December 31, 2017 |
(in millions) |
|
|
|
|
|
Net income (loss) |
$ |
164 |
|
|
$ |
115 |
|
|
$ |
445 |
|
Adjustments to increase (decrease) net income (loss): |
|
|
|
|
|
Asset write-down charges |
8 |
|
|
5 |
|
|
17 |
|
Acquisition and integration costs |
4 |
|
|
13 |
|
|
61 |
|
Depreciation, amortization and accretion |
385 |
|
|
296 |
|
|
1,242 |
|
Amortization of prepaid lease purchase price
adjustments |
5 |
|
|
5 |
|
|
20 |
|
Interest expense and amortization of deferred
financing costs(a) |
160 |
|
|
154 |
|
|
591 |
|
(Gains) losses on retirement of long-term
obligations |
32 |
|
|
— |
|
|
4 |
|
Interest income |
(1 |
) |
|
(11 |
) |
|
(19 |
) |
Other (income) expense |
(1 |
) |
|
— |
|
|
(1 |
) |
(Benefit) provision for income taxes |
5 |
|
|
3 |
|
|
26 |
|
Stock-based compensation expense |
32 |
|
|
25 |
|
|
96 |
|
Adjusted EBITDA(b)(c) |
$ |
793 |
|
|
$ |
605 |
|
|
$ |
2,482 |
|
- 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:
|
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(a) |
$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(b)(c) |
$820 |
to |
$830 |
|
$3,144 |
to |
$3,154 |
|
$3,303 |
to |
$3,348 |
- 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 Nine Months Ended |
|
For the Twelve Months Ended |
(in millions) |
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
|
December 31, 2017 |
Net income (loss) |
$ |
164 |
|
|
$ |
115 |
|
|
$ |
458 |
|
|
$ |
346 |
|
|
$ |
445 |
|
Real estate related depreciation, amortization and accretion |
371 |
|
|
288 |
|
|
1,097 |
|
|
857 |
|
|
1,211 |
|
Asset write-down charges |
8 |
|
|
5 |
|
|
18 |
|
|
10 |
|
|
17 |
|
Dividends on preferred stock |
(28 |
) |
|
— |
|
|
(85 |
) |
|
— |
|
|
(30 |
) |
FFO(a)(b)(c)(d)(e) |
$ |
515 |
|
|
$ |
408 |
|
|
$ |
1,487 |
|
|
$ |
1,214 |
|
|
$ |
1,643 |
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
515 |
|
|
$ |
408 |
|
|
$ |
1,487 |
|
|
$ |
1,214 |
|
|
$ |
1,643 |
|
Adjustments to increase (decrease) FFO: |
|
|
|
|
|
|
|
|
|
Straight-lined revenue |
(17 |
) |
|
3 |
|
|
(53 |
) |
|
3 |
|
|
— |
|
Straight-lined expense |
23 |
|
|
24 |
|
|
69 |
|
|
70 |
|
|
93 |
|
Stock-based compensation expense |
32 |
|
|
25 |
|
|
84 |
|
|
67 |
|
|
96 |
|
Non-cash portion of tax provision |
2 |
|
|
(1 |
) |
|
(1 |
) |
|
(3 |
) |
|
9 |
|
Non-real estate related depreciation, amortization
and accretion |
14 |
|
|
8 |
|
|
41 |
|
|
23 |
|
|
31 |
|
Amortization of non-cash interest expense |
2 |
|
|
2 |
|
|
5 |
|
|
8 |
|
|
9 |
|
Other (income) expense |
(1 |
) |
|
— |
|
|
— |
|
|
(4 |
) |
|
(2 |
) |
(Gains) losses on retirement of long-term
obligations |
32 |
|
|
— |
|
|
106 |
|
|
4 |
|
|
4 |
|
Acquisition and integration costs |
4 |
|
|
13 |
|
|
18 |
|
|
27 |
|
|
61 |
|
Capital improvement capital expenditures |
(15 |
) |
|
(11 |
) |
|
(47 |
) |
|
(27 |
) |
|
(41 |
) |
Corporate capital expenditures |
(12 |
) |
|
(13 |
) |
|
(28 |
) |
|
(32 |
) |
|
(44 |
) |
AFFO(a)(b)(c)(d)(e) |
$ |
579 |
|
|
$ |
459 |
|
|
$ |
1,683 |
|
|
$ |
1,349 |
|
|
$ |
1,860 |
|
- 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 416
million, 397 million, 414 million, 375 million and 383 million for
the three months ended September 30, 2018 and 2017, the nine
months ended September 30, 2018 and 2017 and the twelve months
ended December 31, 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.
- 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:
|
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)(e) |
$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 |
Capital improvement 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)(e) |
$591 |
to |
$601 |
|
$2,273 |
to |
$2,283 |
|
$2,413 |
to |
$2,458 |
- The assumption for fourth quarter 2018, full year 2018 and full
year 2019 diluted weighted-average common shares outstanding is 416
million, 415 million and 416 million, respectively, based on
diluted common shares outstanding as of September 30, 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.
- 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 |
|
Previously Issued |
|
Q3 2018 |
|
Full Year 2018 |
(in millions) |
Outlook |
|
Outlook |
Net income (loss) |
$126 |
to |
$151 |
|
$603 |
to |
$663 |
Adjustments to increase (decrease) net income (loss): |
|
|
|
|
|
|
|
Asset write-down charges |
$9 |
to |
$11 |
|
$25 |
to |
$35 |
Acquisition and integration costs |
$16 |
to |
$20 |
|
$45 |
to |
$55 |
Depreciation, amortization and accretion |
$378 |
to |
$398 |
|
$1,513 |
to |
$1,548 |
Amortization of prepaid lease purchase price
adjustments |
$4 |
to |
$6 |
|
$19 |
to |
$21 |
Interest expense and amortization of deferred
financing costs |
$156 |
to |
$166 |
|
$627 |
to |
$657 |
(Gains) losses on retirement of long-term
obligations |
$33 |
to |
$33 |
|
$107 |
to |
$107 |
Interest income |
$(1) |
to |
$1 |
|
$(4) |
to |
$0 |
Other (income) expense |
$(1) |
to |
$3 |
|
$2 |
to |
$4 |
(Benefit) provision for income taxes |
$7 |
to |
$11 |
|
$24 |
to |
$32 |
Stock-based compensation expense |
$25 |
to |
$29 |
|
$101 |
to |
$109 |
Adjusted EBITDA(a)(b) |
$785 |
to |
$795 |
|
$3,132 |
to |
$3,162 |
- 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 |
|
Previously Issued |
|
Q3 2018 |
|
Full Year 2018 |
(in millions) |
Outlook |
|
Outlook |
Net income (loss) |
$126 |
to |
$151 |
|
$603 |
to |
$663 |
Real estate related depreciation, amortization and accretion |
$370 |
to |
$380 |
|
$1,469 |
to |
$1,489 |
Asset write-down charges |
$9 |
to |
$11 |
|
$25 |
to |
$35 |
Dividends on preferred stock |
$(28) |
to |
$(28) |
|
$(113) |
to |
$(113) |
FFO(a)(b)(c)(d) |
$490 |
to |
$500 |
|
$2,014 |
to |
$2,044 |
|
|
|
|
|
|
|
|
FFO (from above) |
$490 |
to |
$500 |
|
$2,014 |
to |
$2,044 |
Adjustments to increase (decrease) FFO: |
|
|
|
|
|
|
|
Straight-lined revenue |
$(18) |
to |
$(8) |
|
$(65) |
to |
$(45) |
Straight-lined expense |
$16 |
to |
$26 |
|
$79 |
to |
$99 |
Stock-based compensation expense |
$25 |
to |
$29 |
|
$101 |
to |
$109 |
Non-cash portion of tax provision |
$1 |
to |
$11 |
|
$0 |
to |
$15 |
Non-real estate related depreciation, amortization
and accretion |
$8 |
to |
$18 |
|
$44 |
to |
$59 |
Amortization of non-cash interest expense |
$(1) |
to |
$4 |
|
$2 |
to |
$12 |
Other (income) expense |
$(1) |
to |
$3 |
|
$2 |
to |
$4 |
(Gains) losses on retirement of long-term
obligations |
$33 |
to |
$33 |
|
$107 |
to |
$107 |
Acquisition and integration costs |
$16 |
to |
$20 |
|
$45 |
to |
$55 |
Capital improvement capital expenditures |
$(14) |
to |
$(4) |
|
$(71) |
to |
$(56) |
Corporate capital expenditures |
$(26) |
to |
$(16) |
|
$(59) |
to |
$(44) |
AFFO(a)(b)(c)(d) |
$568 |
to |
$578 |
|
$2,263 |
to |
$2,293 |
- Previously issued third quarter 2018 and full year 2018 Outlook
assumes diluted weighted-average common shares outstanding as of
June 30, 2018 of 416 million and 415 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.
- 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 September 30, 2018 and 2017 are as
follows:
|
Three Months Ended September
30, |
(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) |
$ |
896 |
|
|
$ |
803 |
|
|
|
|
|
New leasing activity(b)(c) |
54 |
|
|
40 |
|
Escalators |
21 |
|
|
21 |
|
Non-renewals |
(23 |
) |
|
(20 |
) |
Organic Contribution to Site Rental Revenues(d) |
52 |
|
|
41 |
|
Straight-lined revenues associated with fixed
escalators |
17 |
|
|
(3 |
) |
Acquisitions(e) |
219 |
|
|
52 |
|
Other |
— |
|
|
— |
|
Total GAAP site rental revenues |
$ |
1,184 |
|
|
$ |
893 |
|
|
|
|
|
Year-over-year changes in revenue: |
|
|
|
Reported GAAP site rental revenues |
32.6 |
% |
|
|
Organic Contribution to Site Rental Revenues(d)(f) |
5.8 |
% |
|
|
- 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.
- 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 years ending December 31, 2018 and December 31, 2019
are forecasted as follows:
(dollars in millions) |
Full Year 2018 Outlook |
|
Full Year 2019 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 |
|
$4,639 |
|
|
|
|
New leasing activity(b)(c) |
200-210 |
|
350-380 |
Escalators |
80-90 |
|
85-95 |
Non-renewals |
(90)-(80) |
|
(185)-(165) |
Organic Contribution to Site Rental Revenues(d) |
200-210 |
|
260-300 |
Straight-lined revenues associated with fixed
escalators |
60-70 |
|
(9)-11 |
Acquisitions(e) |
755-765 |
|
— |
Other |
— |
|
— |
Total GAAP site rental revenues |
$4,696-$4,706 |
|
$4,898-$4,943 |
|
|
|
|
Year-over-year changes in revenue: |
|
|
|
Reported GAAP site rental revenues(f) |
28.1% |
|
4.7% |
Organic Contribution to Site Rental Revenues(d)(f)(g) |
5.6% |
|
6.0% |
- 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.
- 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,
which has been reflected as a contribution from acquisitions for
the full year 2018 Outlook.
- Calculated based on midpoint of full year 2018 Outlook and 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) |
September 30, 2018 |
|
September 30, 2017 |
Interest expense on debt obligations |
$ |
158 |
|
|
$ |
152 |
|
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 |
$ |
160 |
|
|
$ |
154 |
|
Components of Current Outlook for
Interest Expense and Amortization of Deferred Financing
Costs:
|
Q4 2018 |
|
Full Year 2018 |
|
Full Year 2019 |
(in millions) |
Outlook |
|
Outlook |
|
Outlook |
Interest expense on debt obligations |
$161 |
to |
$166 |
|
$634 |
to |
$639 |
|
$696 |
to |
$716 |
Amortization of deferred financing costs and adjustments on
long-term debt, net |
$4 |
to |
$6 |
|
$20 |
to |
$22 |
|
$18 |
to |
$23 |
Other, net |
$(4) |
to |
$(2) |
|
$(15) |
to |
$(13) |
|
$(16) |
to |
$(11) |
Interest expense and amortization of deferred financing
costs |
$160 |
to |
$170 |
|
$638 |
to |
$648 |
|
$691 |
to |
$736 |
Debt balances and maturity dates as of
September 30, 2018 are as follows:
(in millions) |
Face Value |
|
Final Maturity |
Bank debt - variable rate: |
|
|
|
2016 Revolver |
$ |
805 |
|
|
June 2023 |
2016 Term Loan A |
2,371 |
|
June 2023 |
Total bank debt |
3,176 |
|
|
Securitized debt - fixed rate: |
|
|
|
Secured Notes, Series 2009-1, Class A-1(a) |
18 |
|
Aug. 2019 |
Secured Notes, Series 2009-1, Class A-2(a) |
70 |
|
Aug. 2029 |
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 |
Total securitized debt |
2,088 |
|
|
Bonds - fixed rate: |
|
|
|
5.250% Senior Notes |
1,650 |
|
Jan. 2023 |
3.849% Secured Notes |
1,000 |
|
Apr. 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 bonds |
11,050 |
|
|
Capital leases and other obligations |
224 |
|
|
Various |
Total Debt |
$ |
16,538 |
|
|
|
Less: Cash and Cash Equivalents(c) |
$ |
323 |
|
|
|
Net Debt |
$ |
16,215 |
|
|
|
- The Senior Secured Notes, Series 2009-1, Class A-1 principal
amortizes during the period beginning in January 2010 and ending in
2019 and the Senior Secured Notes, 2009-1, Class A-2 principal
amortizes during the period beginning in 2019 and ending in
2029.
- 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 Series 2018-2 have anticipated repayment dates in 2023
and 2028, respectively.
- Excludes restricted cash.
Net Debt to Last Quarter Annualized Adjusted EBITDA is
computed as follows:
(dollars in millions) |
For the Three Months Ended September
30, 2018 |
Total face value of debt |
$ |
16,538 |
|
Ending cash and cash equivalents(a) |
323 |
|
Total Net Debt |
$ |
16,215 |
|
|
|
Adjusted EBITDA for the three months ended September 30, 2018 |
$ |
793 |
|
Last quarter annualized Adjusted EBITDA |
3,172 |
|
Net Debt to Last Quarter Annualized Adjusted
EBITDA |
5.1 |
x |
- Excludes restricted cash.
Components of Capital
Expenditures:
|
For the Three Months Ended |
(in millions) |
September 30, 2018 |
|
September 30, 2017 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
14 |
|
$ |
— |
|
$ |
— |
|
$ |
14 |
|
|
$ |
24 |
|
$ |
— |
|
$ |
— |
|
$ |
24 |
|
Communications infrastructure construction and
improvements |
100 |
|
336 |
|
— |
|
436 |
|
|
73 |
|
168 |
|
— |
|
240 |
|
Sustaining: |
|
|
|
|
|
|
|
|
|
Capital improvement and corporate |
9 |
|
12 |
|
5 |
|
27 |
|
|
12 |
|
4 |
|
8 |
|
24 |
|
Integration |
— |
|
— |
|
1 |
|
1 |
|
|
— |
|
— |
|
— |
|
— |
|
Total |
$ |
123 |
|
$ |
348 |
|
$ |
7 |
|
$ |
478 |
|
|
$ |
109 |
|
$ |
172 |
|
$ |
8 |
|
$ |
288 |
|
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 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) our portfolio
of assets, including demand therefor, strategic position thereof
and opportunities created thereby, (9) financing costs and the
impact of the anticipated increase in average floating interest
rates thereon, (10) cash flows, (11) tenant non-renewals, including
the impact thereof, (12) capital expenditures, including sustaining
and discretionary capital expenditures, (13) straight-line
adjustments, (14) site rental revenues and estimated growth
thereof, (15) site rental cost of operations, (16) net income
(loss), (17) Adjusted EBITDA, including the impact thereon of
timing items, (18) expenses, including repair and maintenance
expense and interest expense and amortization of deferred financing
costs, (19) FFO, (20) AFFO and estimated growth thereof, (21)
Organic Contribution to Site Rental Revenues, (22) our
weighted-average common shares outstanding, including on a diluted
basis, (23) network services contribution and (24) 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 network services).
- A substantial portion of our revenues is derived from a small
number of customers, and the loss, consolidation or financial
instability of any of such customers may materially decrease
revenues or reduce demand for our communications infrastructure and
network 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 network 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) |
|
|
|
September 30,
2018 |
|
December 31,
2017 |
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
323 |
|
|
$ |
314 |
|
Restricted cash |
125 |
|
|
121 |
|
Receivables, net |
471 |
|
|
398 |
|
Prepaid expenses |
182 |
|
|
162 |
|
Other current assets |
148 |
|
|
139 |
|
Total current assets |
1,249 |
|
|
1,134 |
|
Deferred site rental receivables |
1,357 |
|
|
1,300 |
|
Property and equipment, net |
13,433 |
|
|
12,933 |
|
Goodwill |
10,074 |
|
|
10,021 |
|
Other intangible assets, net |
5,620 |
|
|
5,962 |
|
Long-term prepaid rent and other assets, net |
911 |
|
|
879 |
|
Total assets |
$ |
32,644 |
|
|
$ |
32,229 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
302 |
|
|
$ |
249 |
|
Accrued interest |
101 |
|
|
132 |
|
Deferred revenues |
484 |
|
|
457 |
|
Other accrued liabilities |
306 |
|
|
339 |
|
Current maturities of debt and other
obligations |
111 |
|
|
115 |
|
Total current liabilities |
1,304 |
|
|
1,292 |
|
Debt and other long-term obligations |
16,313 |
|
|
16,044 |
|
Other long-term liabilities |
2,732 |
|
|
2,554 |
|
Total liabilities |
20,349 |
|
|
19,890 |
|
Commitments and contingencies |
|
|
|
CCIC stockholders' equity: |
|
|
|
Common stock, $0.01 par value; 600 shares
authorized; shares issued and outstanding: September 30, 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: September 30, 2018—2 and December 31, 2017—2;
aggregate liquidation value: September 30, 2018—$1,650 and
December 31, 2017—$1,650 |
— |
|
|
— |
|
Additional paid-in capital |
17,743 |
|
|
16,844 |
|
Accumulated other comprehensive income (loss) |
(5 |
) |
|
(4 |
) |
Dividends/distributions in excess of earnings |
(5,447 |
) |
|
(4,505 |
) |
Total equity |
12,295 |
|
|
12,339 |
|
Total liabilities and equity |
$ |
32,644 |
|
|
$ |
32,229 |
|
CROWN CASTLE
INTERNATIONAL CORP. |
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED) |
(Amounts in millions, except per
share amounts) |
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net revenues: |
|
|
|
|
|
|
|
Site rental |
$ |
1,184 |
|
|
$ |
893 |
|
|
$ |
3,507 |
|
|
$ |
2,619 |
|
Network services and other |
191 |
|
|
170 |
|
|
497 |
|
|
499 |
|
Net revenues |
1,375 |
|
|
1,063 |
|
|
4,004 |
|
|
3,118 |
|
Operating expenses: |
|
|
|
|
|
|
|
Costs of operations (exclusive of depreciation,
amortization and accretion): |
|
|
|
|
|
|
|
Site rental |
355 |
|
|
281 |
|
|
1,057 |
|
|
815 |
|
Network services and other |
119 |
|
|
107 |
|
|
304 |
|
|
310 |
|
Selling, general and administrative |
145 |
|
|
100 |
|
|
418 |
|
|
300 |
|
Asset write-down charges |
8 |
|
|
5 |
|
|
18 |
|
|
10 |
|
Acquisition and integration costs |
4 |
|
|
13 |
|
|
18 |
|
|
27 |
|
Depreciation, amortization and accretion |
385 |
|
|
296 |
|
|
1,138 |
|
|
880 |
|
Total operating expenses |
1,016 |
|
|
802 |
|
|
2,953 |
|
|
2,342 |
|
Operating income (loss) |
359 |
|
|
261 |
|
|
1,051 |
|
|
776 |
|
Interest expense and amortization of deferred financing costs |
(160 |
) |
|
(154 |
) |
|
(478 |
) |
|
(430 |
) |
Gains (losses) on retirement of long-term obligations |
(32 |
) |
|
— |
|
|
(106 |
) |
|
(4 |
) |
Interest income |
1 |
|
|
11 |
|
|
4 |
|
|
13 |
|
Other income (expense) |
1 |
|
|
— |
|
|
— |
|
|
3 |
|
Income (loss) from continuing operations before income taxes |
169 |
|
|
118 |
|
|
471 |
|
|
358 |
|
Benefit (provision) for income taxes |
(5 |
) |
|
(3 |
) |
|
(13 |
) |
|
(12 |
) |
Net income (loss) |
164 |
|
|
115 |
|
|
458 |
|
|
346 |
|
Dividends on preferred stock |
(28 |
) |
|
(30 |
) |
|
(85 |
) |
|
(30 |
) |
Net income (loss) attributable to CCIC common stockholders |
$ |
136 |
|
|
$ |
85 |
|
|
$ |
373 |
|
|
$ |
316 |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to CCIC common stockholders, per
common share: |
|
|
|
|
|
|
|
Net income (loss) attributable to CCIC common
stockholders, basic |
$ |
0.33 |
|
|
$ |
0.22 |
|
|
$ |
0.90 |
|
|
$ |
0.85 |
|
Net income (loss) attributable to CCIC common
stockholders, diluted |
$ |
0.33 |
|
|
$ |
0.21 |
|
|
$ |
0.90 |
|
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
415 |
|
|
395 |
|
|
413 |
|
|
374 |
|
Diluted |
416 |
|
|
397 |
|
|
414 |
|
|
375 |
|
CROWN CASTLE INTERNATIONAL
CORP. |
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED)(a) |
(In millions of dollars) |
|
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
Cash flows from operating activities: |
|
|
|
Net income (loss) |
$ |
458 |
|
|
$ |
346 |
|
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities: |
|
|
|
Depreciation, amortization and accretion |
1,138 |
|
|
880 |
|
(Gains) losses on retirement of long-term
obligations |
106 |
|
|
4 |
|
Amortization of deferred financing costs and other
non-cash interest |
5 |
|
|
8 |
|
Stock-based compensation expense |
79 |
|
|
67 |
|
Asset write-down charges |
18 |
|
|
10 |
|
Deferred income tax (benefit) provision |
2 |
|
|
— |
|
Other non-cash adjustments, net |
2 |
|
|
(3 |
) |
Changes in assets and liabilities, excluding the
effects of acquisitions: |
|
|
|
Increase (decrease) in liabilities |
144 |
|
|
62 |
|
Decrease (increase) in assets |
(177 |
) |
|
39 |
|
Net cash provided by (used for)
operating activities |
1,775 |
|
|
1,413 |
|
Cash flows from investing activities: |
|
|
|
Payments for acquisitions, net of cash acquired |
(26 |
) |
|
(2,113 |
) |
Capital expenditures |
(1,241 |
) |
|
(852 |
) |
Other investing activities, net |
(14 |
) |
|
(6 |
) |
Net cash provided by (used for)
investing activities |
(1,281 |
) |
|
(2,971 |
) |
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of long-term debt |
2,743 |
|
|
3,092 |
|
Principal payments on debt and other long-term
obligations |
(76 |
) |
|
(90 |
) |
Purchases and redemptions of long-term debt |
(2,346 |
) |
|
— |
|
Borrowings under revolving credit facility |
1,290 |
|
|
1,755 |
|
Payments under revolving credit facility |
(1,465 |
) |
|
(1,755 |
) |
Payments for financing costs |
(33 |
) |
|
(27 |
) |
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 |
(1,315 |
) |
|
(1,082 |
) |
Dividends paid on preferred stock |
(85 |
) |
|
— |
|
Net cash provided by (used for)
financing activities |
(480 |
) |
|
7,699 |
|
Net increase (decrease) in cash, cash equivalents, and
restricted cash |
14 |
|
|
6,141 |
|
Effect of exchange rate changes |
(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) |
$ |
453 |
|
|
$ |
6,839 |
|
Supplemental disclosure of cash flow
information: |
|
|
|
Interest paid |
503 |
|
|
420 |
|
Income taxes paid |
15 |
|
|
14 |
|
- 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 September 30,
2018 |
|
Three Months Ended September 30,
2017 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated
Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated
Total |
Segment site rental revenues |
$ |
782 |
|
|
$ |
402 |
|
|
|
|
$ |
1,184 |
|
|
$ |
725 |
|
|
$ |
168 |
|
|
|
|
$ |
893 |
|
Segment network services and other revenue |
189 |
|
|
2 |
|
|
|
|
191 |
|
|
153 |
|
|
17 |
|
|
|
|
170 |
|
Segment revenues |
971 |
|
|
404 |
|
|
|
|
1,375 |
|
|
878 |
|
|
185 |
|
|
|
|
1,063 |
|
Segment site rental cost of operations |
215 |
|
|
131 |
|
|
|
|
346 |
|
|
212 |
|
|
60 |
|
|
|
|
272 |
|
Segment network services and other cost of operations |
115 |
|
|
1 |
|
|
|
|
116 |
|
|
91 |
|
|
14 |
|
|
|
|
105 |
|
Segment cost of operations(a)(b) |
330 |
|
|
132 |
|
|
|
|
462 |
|
|
303 |
|
|
74 |
|
|
|
|
377 |
|
Segment site rental gross margin(c) |
567 |
|
|
271 |
|
|
|
|
838 |
|
|
513 |
|
|
108 |
|
|
|
|
621 |
|
Segment network services and other gross margin(c) |
74 |
|
|
1 |
|
|
|
|
75 |
|
|
62 |
|
|
3 |
|
|
|
|
65 |
|
Segment selling, general and administrative expenses(b) |
28 |
|
|
45 |
|
|
|
|
73 |
|
|
22 |
|
|
18 |
|
|
|
|
40 |
|
Segment operating profit(c) |
613 |
|
|
227 |
|
|
|
|
840 |
|
|
553 |
|
|
93 |
|
|
|
|
646 |
|
Other selling, general and administrative expenses(b) |
|
|
|
|
$ |
47 |
|
|
47 |
|
|
|
|
|
|
$ |
41 |
|
|
41 |
|
Stock-based compensation expense |
|
|
|
|
32 |
|
|
32 |
|
|
|
|
|
|
25 |
|
|
25 |
|
Depreciation, amortization and accretion |
|
|
|
|
385 |
|
|
385 |
|
|
|
|
|
|
296 |
|
|
296 |
|
Interest expense and amortization of deferred financing costs |
|
|
|
|
160 |
|
|
160 |
|
|
|
|
|
|
154 |
|
|
154 |
|
Other income (expenses) to reconcile to income (loss) from
continuing operations before income taxes(d) |
|
|
|
|
47 |
|
|
47 |
|
|
|
|
|
|
12 |
|
|
12 |
|
Income (loss) from continuing operations before income taxes |
|
|
|
|
|
|
$ |
169 |
|
|
|
|
|
|
|
|
$ |
118 |
|
- Exclusive of depreciation, amortization and accretion shown
separately.
- Segment cost of operations excludes (1) stock-based
compensation expense of $7 million and $6 million for the three
months ended September 30, 2018 and 2017, respectively, and (2)
prepaid lease purchase price adjustments of $5 million for both of
the three months ended September 30, 2018 and 2017. Selling,
general and administrative expenses exclude stock-based
compensation expense of $25 million and $19 million for the three
months ended September 30, 2018 and 2017, 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 network services and other gross
margin and segment operating profit.
- See condensed consolidated statement of operations for further
information.
SEGMENT OPERATING
RESULTS |
|
Nine Months Ended September 30,
2018 |
|
Nine Months Ended September 30,
2017 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated
Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated
Total |
Segment site rental revenues |
$ |
2,318 |
|
|
$ |
1,189 |
|
|
|
|
$ |
3,507 |
|
|
$ |
2,159 |
|
|
$ |
460 |
|
|
|
|
$ |
2,619 |
|
Segment network services and other revenue |
489 |
|
|
8 |
|
|
|
|
497 |
|
|
461 |
|
|
38 |
|
|
|
|
499 |
|
Segment revenues |
2,807 |
|
|
1,197 |
|
|
|
|
4,004 |
|
|
2,620 |
|
|
498 |
|
|
|
|
3,118 |
|
Segment site rental cost of operations |
641 |
|
|
388 |
|
|
|
|
1,029 |
|
|
632 |
|
|
158 |
|
|
|
|
790 |
|
Segment network services and other cost of operations |
292 |
|
|
6 |
|
|
|
|
298 |
|
|
277 |
|
|
31 |
|
|
|
|
308 |
|
Segment cost of operations(a)(b) |
933 |
|
|
394 |
|
|
|
|
1,327 |
|
|
909 |
|
|
189 |
|
|
|
|
1,098 |
|
Segment site rental gross margin(c) |
1,677 |
|
|
801 |
|
|
|
|
2,478 |
|
|
1,527 |
|
|
302 |
|
|
|
|
1,829 |
|
Segment network services and other gross margin(c) |
197 |
|
|
2 |
|
|
|
|
199 |
|
|
184 |
|
|
7 |
|
|
|
|
191 |
|
Segment selling, general and administrative expenses(b) |
81 |
|
|
131 |
|
|
|
|
212 |
|
|
69 |
|
|
55 |
|
|
|
|
124 |
|
Segment operating profit(c) |
1,793 |
|
|
672 |
|
|
|
|
2,465 |
|
|
1,642 |
|
|
254 |
|
|
|
|
1,896 |
|
Other selling, general and administrative expenses(b) |
|
|
|
|
$ |
141 |
|
|
141 |
|
|
|
|
|
|
$ |
121 |
|
|
121 |
|
Stock-based compensation expense |
|
|
|
|
84 |
|
|
84 |
|
|
|
|
|
|
67 |
|
|
67 |
|
Depreciation, amortization and accretion |
|
|
|
|
1,138 |
|
|
1,138 |
|
|
|
|
|
|
880 |
|
|
880 |
|
Interest expense and amortization of deferred financing costs |
|
|
|
|
478 |
|
|
478 |
|
|
|
|
|
|
430 |
|
|
430 |
|
Other income (expenses) to reconcile to income (loss) from
continuing operations before income taxes(d) |
|
|
|
|
153 |
|
|
153 |
|
|
|
|
|
|
40 |
|
|
40 |
|
Income (loss) from continuing operations before income taxes |
|
|
|
|
|
|
$ |
471 |
|
|
|
|
|
|
|
|
$ |
358 |
|
- Exclusive of depreciation, amortization and accretion shown
separately.
- Segment cost of operations excludes (1) stock-based
compensation expense of $19 million and $12 million for the nine
months ended September 30, 2018 and 2017, respectively, and (2)
prepaid lease purchase price adjustments of $15 million for both of
the nine months ended September 30, 2018 and 2017. Selling,
general and administrative expenses exclude stock-based
compensation expense of $65 million and $55 million for the nine
months ended September 30, 2018 and 2017, 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 network services and other gross
margin and segment operating profit.
- See condensed consolidated statement of operations for further
information.
Contacts: Dan Schlanger, CFO and Treasurer |
Ben Lowe, VP Corporate Finance |
Crown Castle International Corp. |
713-570-3050 |
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