Crown Castle International Corp. (NYSE:CCI) ("Crown Castle") today
reported results for the quarter ended March 31, 2015.
"Our excellent first quarter results reflect the continued
demand for our wireless infrastructure as US wireless carriers
continue to make network investments to meet wireless consumer
demand," stated Ben Moreland, Crown Castle's President and Chief
Executive Officer. "We believe the US market, which represents
approximately 96% of our total revenues, is the most attractive
wireless market in the world for wireless investment. Wireless
consumer demand is expected to increase significantly over the next
several years, with one industry estimate projecting a seven-fold
increase in US mobile data traffic between 2014 and 2019, driven by
increased innovation and adoption of data-driven mobile devices and
applications such as machine-to-machine connections and streaming
video. The network density required to meet such demand aligns with
our extensive mission-critical portfolio of towers and small cells,
providing us with confidence in our ability to deliver on our
stated goal of generating compounded annual growth in AFFO per
share of 6% to 7% organically over the next five years. We believe
the expected growth in AFFO per share, half of which is comprised
of cash escalations on our tenant lease contracts, combined with
our current dividend yield of approximately 4% represents an
attractive long-term total return profile for shareholders."
CONSOLIDATED FINANCIAL RESULTS
Adjusted Funds from Operations ("AFFO") increased 10% to $383
million in the first quarter of 2015, compared to $349 million in
the first quarter of 2014. AFFO per share increased 10% to
$1.15 in the first quarter of 2015, compared to $1.05 in the first
quarter of 2014. Adjusted EBITDA for the first quarter of 2015
increased $27 million, or 5%,to $554 million from $527 million in
the same period in 2014.
Total revenues for the first quarter of 2015 increased 7% to
$941 million from $876 million for the same period in
2014. Site rental revenues for the first quarter of 2015
increased $20 million, or 3%, to $768 million from $747 million for
the same period in the prior year. Site rental gross margin,
defined as site rental revenues less site rental cost of
operations, increased $8 million, or 1%, to $527 million in the
first quarter of 2015 from $519 million in the same period in
2014.
Net income attributable to CCIC common stockholders for the
first quarter of 2015 was $112 million, compared to $91 million of
net income for the same period in 2014. Net income
attributable to CCIC common stockholders per common share was $0.34
for the first quarter of 2015, compared to $0.27 per common share
in the first quarter of 2014. Funds from Operations ("FFO")
increased 11% to $373 million in the first quarter of 2015,
compared to $338 million in the first quarter of 2014. FFO per
share increased 11% to $1.12 in the first quarter of 2015, compared
to $1.01 in the first quarter of 2014.
Adjusted EBITDA and AFFO for the first quarter of 2015 benefited
from approximately $9 million in network services activity that was
previously expected to occur in the second quarter of
2015. AFFO for the first quarter of 2015 also benefited from
approximately $6 million in lower-than-expected sustaining capital
expenditures. Ignoring the benefit from the timing of these
two items, Adjusted EBITDA and AFFO for the first quarter would be
at or higher than the midpoint of our previously provided first
quarter 2015 Outlook. For full year 2015 Outlook, Crown
Castle's expectations for network services gross margin
contribution and sustaining capital expenditures remain
substantially unchanged from the previously provided Outlook,
reflecting differences in timing of events compared to Crown
Castle's previously provided quarterly Outlook.
FINANCING AND INVESTING ACTIVITIES
During the first quarter of 2015, Crown Castle invested
approximately $205 million in capital expenditures, comprised of
$24 million of land purchases, $17 million of sustaining capital
expenditures and $164 million of revenue generating capital
expenditures. Revenue generating capital expenditures
consisted of $96 million on existing sites and $68 million on the
construction of new sites, primarily small cell construction
activity.
On March 31, 2015, Crown Castle paid a quarterly common
stock dividend of $0.82 per common share, or approximately $274
million in aggregate. Diluted common shares outstanding at
March 31, 2015 were 333.9 million.
As of March 31, 2015, Crown Castle's outstanding debt had a
weighted average coupon of 4.1% per annum and a weighted average
maturity of six years. Further, Crown Castle's net debt (total
debt less cash and cash equivalents) to first quarter annualized
Adjusted EBITDA ratio was approximately 5.3x.
As of March 31, 2015, Crown Castle had approximately $240
million in cash and cash equivalents (excluding restricted cash)
and approximately $1.4 billion of availability under its revolving
credit facility.
"We had a terrific first quarter, allowing us to raise the
midpoint of our full year 2015 Outlook for site rental revenues,
site rental gross margin, Adjusted EBITDA and AFFO," stated Jay
Brown, Crown Castle's Chief Financial Officer. "During the
quarter, we continued to make significant investments in small
cells, which we believe furthers our leadership position in US
wireless infrastructure and enhances our long-term growth in AFFO
and dividends per share. We believe our disciplined approach to
returning significant capital to shareholders through dividends and
investing in activities that we expect will enhance near and
long-term results position Crown Castle to provide shareholders
with compelling long-term total returns."
OUTLOOK
This Outlook section contains forward-looking statements, and
actual results may differ materially. Information regarding
potential risks which could cause actual results to differ from the
forward-looking statements herein is set forth below and in Crown
Castle's filings with the Securities and Exchange Commission
("SEC"). The following Outlook is based on current
expectations and assumptions and assumes a US dollar to Australian
dollar exchange rate of 0.76 US dollars to 1.0 Australian dollar
("Exchange Rate") for second quarter 2015 and full year 2015.
As reflected in the table below, Crown Castle has increased the
midpoint of its full year 2015 Outlook for site rental revenues,
site rental gross margin, Adjusted EBITDA and AFFO by approximately
$7 million, $3 million, $3 million and $3 million,
respectively. The increased midpoint of full year 2015 Outlook
for site rental revenues, site rental gross margin, Adjusted EBITDA
and AFFO reflects the results from the first quarter of 2015 and
includes the negative impact of approximately $8 million, $6
million, $6 million and $6 million, respectively, from a decrease
in the Exchange Rate compared to the previously provided
Outlook. The increase in full year 2015 Outlook assumes an
increase of approximately $15 million in Organic Site Rental
Revenue growth as compared to the previously provided Outlook.
On a sequential basis, the second quarter 2015 Outlook for site
rental gross margin, Adjusted EBITDA and AFFO are expected to be
impacted by certain seasonal or timing items. Repair and
maintenance during the second quarter of 2015 is expected to be
higher by approximately $4 million as compared to the first
quarter, reflecting the seasonal nature of certain activities
consistent with prior years. Additionally, the midpoint of
second quarter 2015 Outlook for Adjusted EBITDA and AFFO assumes a
decrease of approximately $20 million in network services gross
margin contribution from the first quarter of 2015, driven
primarily by the previously mentioned $9 million of network
services activity in the first quarter of 2015 which was expected
to occur in the second quarter of 2015. Further, compared to
the midpoint of second quarter 2015 Outlook for AFFO, first quarter
2015 AFFO benefited from $6 million in lower-than-expected
sustaining capital expenditures, which is now expected to be
incurred during the remainder of 2015. The expected sequential
movements in network services activity and sustaining capital
expenditures is attributable to timing, as expectations for network
services gross margin contribution and sustaining capital
expenditures remain substantially unchanged from the previously
provided full year 2015 Outlook.
The following table sets forth Crown Castle's current Outlook
for second quarter 2015 and full year 2015:
(in millions, except per share amounts) |
Second Quarter 2015 |
Full Year 2015 |
Site rental revenues |
$767 to $772 |
$3,067 to $3,082 |
Site rental cost of operations |
$242 to $247 |
$967 to $982 |
Site rental gross margin |
$523 to $528 |
$2,091 to $2,106 |
Adjusted EBITDA |
$531 to $536 |
$2,145 to $2,160 |
Interest expense and amortization of deferred
financing costs(a) |
$133 to $138 |
$531 to $546 |
FFO |
$352 to $357 |
$1,439 to $1,454 |
AFFO |
$348 to $353 |
$1,450 to $1,465 |
AFFO per share(b) |
$1.04 to $1.06 |
$4.34 to $4.39 |
Net income (loss) |
$92 to $125 |
$419 to $498 |
Net income (loss) per share - diluted(b) |
$0.28 to $0.37 |
$1.26 to $1.49 |
Net income (loss) attributable to CCIC common
stockholders |
$80 to $117 |
$381 to $467 |
Net income (loss) attributable to CCIC common
stockholders per share - diluted(b) |
$0.24 to $0.35 |
$1.14 to $1.40 |
|
(a) See the reconciliation
of "components of interest expense and amortization of deferred
financing costs" herein for a discussion of non-cash interest
expense. |
(b) Based on 333.9 million
diluted shares outstanding as of March 31, 2015. |
As previously disclosed, based on Sprint's stated intention to
decommission its iDEN network and Crown Castle's contractual terms
with Sprint, Crown Castle expects site rental revenues to be
negatively impacted by approximately $60 million to $70 million in
2015. Additionally, during 2015, Crown Castle expects site
rental revenues to be impacted by non-renewals of $35 million to
$45 million as a result of the decommissioning of the LEAP,
MetroPCS and Clearwire networks ("Acquired Networks") by AT&T,
T-Mobile and Sprint, respectively.
Crown Castle currently expects potential non-renewals from the
decommissioning of the Acquired Networks in aggregate to be
approximately $200 million in current run-rate site rental
revenues, the majority of which Crown Castle expects to occur
between 2015 and 2018 at a rate of approximately 1% to 2% of
consolidated site rental revenues in any given year. Depending
on the eventual network deployment and decommissioning plans for
the Acquired Networks, the impact and timing of such non-renewals
may vary from Crown Castle's expectations. Additional
information regarding non-renewals from carrier consolidation is
available in Crown Castle's quarterly Supplemental Information
Package posted in the Investors section of its website.
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, April
23, 2015, at 10:30 a.m. Eastern Time. The conference call may
be accessed by dialing 888-204-4517 and asking for the Crown Castle
call (access code 8875858) at least 30 minutes prior to the start
time. The conference call may also be accessed live over the
Internet at http://investor.crowncastle.com. Supplemental materials
for the call have been posted on the Crown Castle website at
http://investor.crowncastle.com.
A telephonic replay of the conference call will be available
from 1:30 p.m. Eastern Time on Thursday, April 23, 2015, through
1:30 p.m. Eastern Time on Wednesday, July 22, 2015, and may be
accessed by dialing 888-203-1112 and using access code
8875858. An audio archive will also be available on the
company's website at http://investor.crowncastle.com shortly after
the call and will be accessible for approximately 90 days.
ABOUT CROWN CASTLE
Crown Castle provides wireless carriers with the infrastructure
they need to keep people connected and businesses running. With
approximately 40,000 towers and 14,000 small cell nodes supported
by approximately 7,000 miles of fiber, Crown Castle is the nation's
largest provider of shared wireless infrastructure with a
significant presence in the top 100 US markets. In addition,
Crown Castle operates approximately 1,800 towers in
Australia. For more information on Crown Castle, please visit
www.crowncastle.com.
Non-GAAP Financial Measures and Other
Calculations
This press release includes presentations of Adjusted EBITDA,
Funds from Operations, Adjusted Funds from Operations, Organic Site
Rental Revenues, and Site Rental Revenues, as Adjusted, which are
non-GAAP financial measures. These non-GAAP financial measures are
not intended as alternative measures of operating results or cash
flow from operations (as determined in accordance with Generally
Accepted Accounting Principles ("GAAP")). Each of the amounts
included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic
Site Rental Revenues, and Site Rental Revenues, as Adjusted, are
computed in accordance with GAAP, with the exception of: (1)
sustaining capital expenditures, which is not defined under GAAP
and (2) our adjustment to the income tax provision in calculations
of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental
Revenues and Site Rental Revenues, as Adjusted, may not be
comparable to similarly titled measures of other companies,
including other companies in the tower sector or those reported by
other REITs. Our FFO and AFFO may not be comparable to those
reported in accordance with National Association of Real Estate
Investment Trusts, including with respect to the impact of income
taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and
Site Rental Revenues, as Adjusted, are presented as additional
information because management believes these measures are useful
indicators of the financial performance of our core businesses. In
addition, Adjusted EBITDA is a measure of current financial
performance used in our debt covenant calculations.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net
income (loss) plus restructuring charges (credits), asset
write-down charges, acquisition and integration costs,
depreciation, amortization and accretion, amortization of prepaid
lease purchase price adjustments, interest expense and amortization
of deferred financing costs, gains (losses) on retirement of
long-term obligations, net gain (loss) on interest rate swaps,
impairment of available-for-sale securities, interest income, other
income (expense), benefit (provision) for income taxes, cumulative
effect of change in accounting principle, income (loss) from
discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from
Operations as net income plus real estate related depreciation,
amortization and accretion and asset write-down charges, less
noncontrolling interest and cash paid for preferred stock
dividends, and is a measure of funds from operations attributable
to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided
by the diluted weighted average common shares outstanding.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines
Adjusted Funds from Operations as FFO before straight-line revenue,
straight-line expense, stock-based compensation expense, non-cash
portion of tax provision, non-real estate related depreciation,
amortization and accretion, amortization of non-cash interest
expense, other (income) expense, gain (loss) on retirement of
long-term obligations, net gain (loss) on interest rate swaps,
acquisition and integration costs, and adjustments for
noncontrolling interests, and less capital improvement capital
expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO
divided by diluted weighted average common shares outstanding.
Site Rental Revenues, as Adjusted. Crown Castle defines Site
Rental Revenues, as Adjusted, as site rental revenues, as reported,
less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site
Rental Revenues as site rental revenues, as reported, less
straight-line revenues, the impact of tower acquisitions and
construction, foreign currency adjustments and certain non
recurring items.
Sustaining capital expenditures. Crown Castle defines sustaining
capital expenditures as either (1) corporate related capital
improvements, such as buildings, information technology equipment
and office equipment or (2) capital improvements to tower sites
that enable our customers' ongoing quiet enjoyment of the
tower.
The tables set forth below reconcile these non-GAAP financial
measures to comparable GAAP financial measures. The components in
these tables may not sum to the total due to rounding.
|
|
|
Reconciliations of
Non-GAAP Financial Measures to Comparable GAAP Financial
Measures:
Adjusted EBITDA for the three months ended
March 31, 2015 and 2014 is computed as follows:
|
|
For the Three Months
Ended |
|
March 31, 2015 |
March 31, 2014 |
(in millions) |
|
|
Net income (loss) |
$ 125.1 |
$ 102.8 |
Adjustments to increase (decrease) net income
(loss): |
|
|
Asset write-down charges |
8.6 |
2.7 |
Acquisition and integration
costs |
2.0 |
5.7 |
Depreciation, amortization and
accretion |
258.1 |
250.2 |
Amortization of prepaid lease
purchase price adjustments |
5.2 |
3.9 |
Interest expense and
amortization of deferred financing costs(a) |
134.4 |
146.4 |
Interest income |
(0.1) |
(0.2) |
Other income (expense) |
0.2 |
2.7 |
Benefit (provision) for income
taxes |
3.3 |
(0.2) |
Stock-based compensation
expense |
17.4 |
12.9 |
Adjusted
EBITDA(b) |
$ 554.3 |
$ 527.0 |
|
(a) See the reconciliation of
"components of interest expense and amortization of deferred
financing costs" herein for a discussion of non-cash interest
expense. |
(b) The above reconciliation
excludes line items included in our Adjusted EBITDA definition
which are not applicable for the periods
shown. |
|
Adjusted EBITDA for the
quarter ending June 30, 2015 and the year ending
December 31, 2015 are forecasted as follows: |
|
|
Q2 2015 |
Full Year 2015 |
(in millions) |
Outlook |
Outlook |
Net income (loss) |
$92 to $125 |
$419 to $498 |
Adjustments to increase (decrease) net income
(loss): |
|
|
Asset write-down charges |
$4 to $6 |
$19 to $29 |
Acquisition and integration
costs |
$0 to $3 |
$4 to $4 |
Depreciation, amortization and
accretion |
$256 to $261 |
$1,021 to $1,041 |
Amortization of prepaid lease
purchase price adjustments |
$4 to $6 |
$19 to $21 |
Interest expense and
amortization of deferred financing costs(a) |
$133 to $138 |
$531 to $546 |
Interest income |
$(2) to $0 |
$(3) to $(1) |
Other income (expense) |
$(1) to $2 |
$1 to $3 |
Benefit (provision) for income
taxes |
$1 to $5 |
$4 to $12 |
Stock-based compensation
expense |
$16 to $18 |
$66 to $71 |
Adjusted
EBITDA(b) |
$531 to $536 |
$2,145 to
$2,160 |
|
(a) See the reconciliation of
"components of interest expense and amortization of deferred
financing costs" herein for a discussion of non-cash interest
expense. |
(b) The above reconciliation
excludes line items included in our Adjusted EBITDA definition
which are not applicable for the periods
shown. |
|
FFO and AFFO for the
quarter ending June 30, 2015 and the year ending
December 31, 2015 are forecasted as follows: |
|
|
Q2 2015 |
Full Year 2015 |
(in millions, except share and per share
amounts) |
Outlook |
Outlook |
Net income |
$92 to $125 |
$419 to $498 |
Real estate related depreciation,
amortization and accretion |
$252 to $255 |
$1,003 to $1,018 |
Asset write-down charges |
$4 to $6 |
$19 to $29 |
Adjustment for noncontrolling
interest(a) |
$(3) to $1 |
$(13) to $(6) |
Dividends on preferred stock |
$(11) to $(11) |
$(44) to $(44) |
FFO(c)(d) |
$352 to $357 |
$1,439 to
$1,454 |
|
|
|
FFO (from above) |
$352 to $357 |
$1,439 to $1,454 |
|
|
|
Adjustments to increase (decrease) FFO: |
|
|
Straight-line revenue |
$(40) to $(35) |
$(142) to $(127) |
Straight-line expense |
$23 to $28 |
$88 to $103 |
Stock-based compensation
expense |
$16 to $18 |
$66 to $71 |
Non-cash portion of tax
provision |
$(9) to $(4) |
$(21) to $(6) |
Non-real estate related
depreciation, amortization and accretion |
$4 to $6 |
$18 to $23 |
Amortization of non-cash
interest expense |
$10 to $15 |
$30 to $41 |
Other (income) expense |
$(1) to $2 |
$1 to $3 |
Acquisition and integration
costs |
$0 to $3 |
$4 to $4 |
Adjustment for noncontrolling
interest(a) |
$3 to $(1) |
$13 to $6 |
Capital improvement capital
expenditures |
$(12) to $(10) |
$(41) to $(36) |
Corporate capital
expenditures |
$(12) to $(10) |
$(40) to $(35) |
AFFO(c)(d) |
$348 to $353 |
$1,450 to
$1,465 |
Weighted average common shares
outstanding — diluted(b)(e) |
333.9 |
333.9 |
AFFO per
share(c) |
$1.04 to $1.06 |
$4.34 to $4.39 |
|
(a) Inclusive of the
noncontrolling interest related to real estate related
depreciation, amortization and accretion and asset
write-downs. |
(b) Based on diluted shares
outstanding as of March 31, 2015. |
(c) See "Non-GAAP Financial
Measures and Other Calculations" herein for a discussion of our
definitions of FFO and AFFO. |
(d) FFO and AFFO are reduced by
cash paid for preferred stock
dividends. |
(e) The diluted weighted average
common shares outstanding assumes no conversion of preferred stock
in the share count. |
Organic Site Rental
Revenue growth for the year ending December 31, 2015 is
forecasted as follows: |
|
|
|
|
|
|
Midpoint of Full Year |
|
(in millions of dollars) |
2015 Outlook |
Full Year 2014 |
GAAP site rental revenues |
$ 3,075 |
$ 3,007 |
Site rental straight-line
revenues |
(135) |
(197) |
Other - Non-recurring |
— |
(5) |
Site Rental Revenues, as
Adjusted(a)(c) |
$ 2,940 |
$ 2,805 |
Cash adjustments: |
|
|
FX and other |
25 |
|
New tower acquisitions and
builds(b) |
(19) |
|
Organic Site Rental
Revenues(a)(c)(d) |
$ 2,946 |
|
Year-Over-Year Revenue
Growth |
|
|
GAAP site rental revenues |
2.3% |
|
Site Rental Revenues, as
Adjusted |
4.8% |
|
Organic Site Rental
Revenues(e)(f) |
5.0% |
|
|
(a) Includes amortization of
prepaid rent. |
(b) The financial impact of
new tower acquisitions and builds is excluded from organic site
rental revenues until the one-year anniversary of the acquisition
or build. |
(c) Includes Site Rental
Revenues, as Adjusted, from the construction of new small cell
nodes. |
(d) See "Non-GAAP Financial
Measures and Other Calculations" herein. |
(e) Year-over-year Organic Site
Rental Revenue growth for the year ending December 31,
2015: |
|
Midpoint of Full Year 2015
Outlook |
New leasing activity |
5.6% |
Escalators |
3.4% |
Organic Site Rental Revenue
growth, before non-renewals |
9.0% |
Non-renewals |
(4.0)% |
Organic Site Rental Revenue
growth |
5.0% |
(f) Calculated as the percentage
change from Site Rental Revenues, as Adjusted, for the prior period
when compared to Organic Site Rental Revenue for the current
period. |
Organic Site Rental
Revenue growth for the quarter ended March 31, 2015 is as
follows: |
|
Three Months Ended March
31, |
(in millions of dollars) |
2015 |
2014 |
Reported GAAP site rental
revenues |
$ 768 |
$ 747 |
Site rental straight-line
revenues |
(38) |
(51) |
Other - Non-recurring |
— |
$ (5) |
Site Rental Revenues, as
Adjusted(a)(c) |
$ 730 |
$ 691 |
Cash adjustments: |
|
|
FX and other |
5 |
|
New tower acquisitions and
builds(b) |
(6) |
|
Organic Site Rental
Revenues(a)(c)(d) |
729 |
|
Year-Over-Year Revenue
Growth |
|
|
Reported GAAP site rental
revenues |
2.7% |
|
Site Rental Revenues, as
Adjusted |
5.5% |
|
Organic Site Rental
Revenues(e)(f) |
5.4% |
|
|
(a) Includes
amortization of prepaid rent. (b) The financial impact of new
tower acquisitions and builds is excluded from organic site rental
revenues until the one-year anniversary of the acquisition or
build. (c) Includes Site Rental Revenues, as Adjusted from the
construction of new small cell nodes. (d) See "Non-GAAP
Financial Measures and Other Calculations" herein. (e)
Quarter-over-quarter Organic Site Rental Revenue growth for the
quarter ending March 31, 2015: |
|
Three Months Ended March 31,
2015 |
New leasing activity |
6.2% |
Escalators |
3.4% |
Organic Site Rental Revenue
growth, before non-renewals |
9.6% |
Non-renewals |
(4.2)% |
Organic Site Rental Revenue
Growth |
5.4% |
(f) Calculated
as the percentage change from Site Rental Revenues, as Adjusted,
for the prior period when compared to Organic Site Rental Revenues
for the current period. |
FFO and AFFO for the
three months ended March 31, 2015 and 2014 are computed as
follows: |
|
|
|
|
For the Three Months
Ended |
(in millions, except share and per share
amounts) |
March 31, 2015 |
March 31, 2014 |
Net income |
$ 125.1 |
$ 102.8 |
Real estate related depreciation,
amortization and accretion |
252.7 |
244.4 |
Asset write-down charges |
8.6 |
2.7 |
Adjustment for noncontrolling
interest(a) |
(2.3) |
(1.3) |
Dividends on preferred stock |
(11.0) |
(11.0) |
FFO(b)(c) |
$ 373.1 |
$ 337.7 |
Weighted average common shares
outstanding — diluted(d) |
333.5 |
333.0 |
FFO per
share(b) |
$ 1.12 |
$ 1.01 |
|
|
|
FFO (from above) |
$ 373.1 |
$ 337.7 |
Adjustments to increase (decrease) FFO: |
|
|
Straight-line revenue |
(38.0) |
(50.8) |
Straight-line expense |
25.3 |
26.4 |
Stock-based compensation
expense |
17.4 |
12.9 |
Non-cash portion of tax
provision |
0.8 |
(2.3) |
Non-real estate related
depreciation, amortization and accretion |
5.3 |
5.8 |
Amortization of non-cash
interest expense |
11.7 |
20.9 |
Other (income) expense |
0.2 |
2.7 |
Acquisition and integration
costs |
2.0 |
5.7 |
Adjustment for noncontrolling
interest(a) |
2.3 |
1.3 |
Capital improvement capital
expenditures |
(7.6) |
(3.9) |
Corporate capital
expenditures |
(9.4) |
(7.6) |
AFFO(b)(c) |
$ 383.3 |
$ 348.7 |
Weighted average common shares
outstanding — diluted(d) |
333.5 |
333.0 |
AFFO per
share(b) |
$ 1.15 |
$ 1.05 |
|
(a) Inclusive of the
noncontrolling interest related to real estate related
depreciation, amortization and accretion and asset
write-downs. |
(b) See "Non-GAAP Financial
Measures and Other Calculations" herein for a discussion of our
definitions of FFO and AFFO. |
(c) FFO and AFFO are reduced by
cash paid for preferred stock
dividends. |
(d) The diluted weighted average
common shares outstanding assumes no conversion of preferred stock
in the share count. |
|
Other
Calculations: |
The components of
interest expense and amortization of deferred financing costs for
the three months ended March 31, 2015 and 2014 are as
follows: |
|
|
For the Three Months
Ended |
(in millions) |
March 31, 2015 |
March 31, 2014 |
Interest expense on debt obligations |
$ 122.7 |
$ 125.5 |
Amortization of deferred financing costs |
5.6 |
5.6 |
Amortization of adjustments on long-term
debt |
(0.9) |
(1.0) |
Amortization of interest rate swaps(a) |
7.5 |
16.2 |
Other, net |
(0.5) |
— |
Interest expense and amortization of
deferred financing costs |
$ 134.4 |
$ 146.4 |
|
(a) Relates to the
amortization of interest rate swaps; the swaps were cash settled in
prior periods. |
|
The components of
interest expense and amortization of deferred financing costs for
the quarter ending June 30, 2015 and the year ending
December 31, 2015 are forecasted as follows: |
|
Q2 2015 |
Full Year 2015 |
(in millions) |
Outlook |
Outlook |
Interest expense on debt obligations |
$123 to $125 |
$498 to $508 |
Amortization of deferred financing costs |
$5 to $7 |
$21 to $23 |
Amortization of adjustments on long-term
debt |
$(1) to $0 |
$(4) to $(2) |
Amortization of interest rate swaps(a) |
$6 to $8 |
$16 to $21 |
Other, net |
$0 to $0 |
$(3) to $(1) |
Interest expense and amortization of
deferred financing costs |
$133 to $138 |
$531 to $546 |
(a) Relates to the
amortization of interest rate swaps, all of which has been cash
settled in prior periods. |
|
Debt balances and
maturity dates as of March 31, 2015 are as
follows: |
|
(in millions) |
|
|
|
Face Value |
Final Maturity |
Revolver |
$ 860.0 |
Nov. 2018/Jan 2019 |
Term Loan A |
641.8 |
Nov. 2018/Jan 2019 |
Term Loan B |
2,828.3 |
Jan. 2019/Jan. 2021 |
4.875% Senior Notes |
850.0 |
Apr. 2022 |
5.25% Senior Notes |
1,650.0 |
Jan. 2023 |
2012 Secured Notes(a) |
1,500.0 |
Dec. 2017/Apr. 2023 |
Senior Secured Notes, Series 2009-1(b) |
156.0 |
Various |
Senior Secured Tower Revenue Notes, Series
2010-2-2010-3(c) |
1,600.0 |
Various |
Senior Secured Tower Revenue Notes, Series
2010-4-2010-6(d) |
1,550.0 |
Various |
WCP Secured Wireless Site Contracts Revenue
Notes, Series 2010-1(e) |
254.3 |
Nov. 2040 |
Capital Leases and Other Obligations |
180.9 |
Various |
Total Debt |
$ 12,071.3 |
|
Less: Cash and Cash Equivalents(f) |
$ 240.2 |
|
Net Debt |
$ 11,831.1 |
|
|
(a) The 2012 Secured Notes
consist of $500 million aggregate principal amount of 2.381%
secured notes due 2017 and $1.0 billion aggregate principal amount
of 3.849% secured notes due 2023. |
(b) The Senior Secured Notes,
Series 2009-1 consist of $86.0 million of principal as of
March 31, 2015 that amortizes during the period beginning
January 2010 and ending in 2019, and $70.0 million of principal
that amortizes during the period beginning in 2019 and ending in
2029. |
(c) The Senior Secured Tower
Revenue Notes Series 2010-2 and 2010-3 have principal amounts of
$350.0 million and $1.25 billion with anticipated repayment dates
of 2017 and 2020, respectively. |
(d) The Senior Secured Tower
Revenue Notes Series 2010-4, 2010-5 and 2010-6 have principal
amounts of $250.0 million, $300.0 million and $1.0 billion with
anticipated repayment dates of 2015, 2017 and 2020,
respectively. |
(e) The WCP Secured Wireless Site
Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes")
were assumed in connection with the WCP acquisition. If the
WCP Securitized Notes are not repaid in full by their anticipated
repayment dates in 2015, the applicable interest rate increases by
an additional approximately 5% per annum. If the WCP
Securitized Notes are not repaid in full by their rapid
amortization date of 2017, monthly principal payments
commence. |
(f) Excludes restricted
cash. |
|
Net Debt to Last Quarter
Annualized Adjusted EBITDA is computed as follows: |
|
|
(in millions) |
For the Three Months Ended March 31,
2015 |
Total face value of debt |
$ 12,071.3 |
Ending cash and cash
equivalents |
240.2 |
Total Net Debt |
$ 11,831.1 |
|
|
Adjusted EBITDA for the three
months ended March 31, 2015 |
$ 554.3 |
Last quarter annualized
adjusted EBITDA |
2,217.0 |
Net Debt to Last
Quarter Annualized Adjusted EBITDA |
5.3x |
|
Sustaining capital
expenditures for the three months ended March 31, 2015 and
2014 is computed as follows: |
|
|
For the Three Months
Ended |
(in millions) |
March 31, 2015 |
March 31, 2014 |
Capital Expenditures |
$ 204.8 |
$ 142.9 |
Less: Land purchases |
23.8 |
20.4 |
Less: Wireless infrastructure
construction and improvements |
164.0 |
111.1 |
Sustaining capital
expenditures |
$ 16.9 |
$ 11.4 |
Cautionary Language Regarding
Forward-Looking Statements
This press release contains forward-looking statements and
information that are based on our management's current
expectations. Such statements include, but are not limited to,
plans, projections, Outlook and estimates regarding (1) demand for
our wireless infrastructure and services, (2) carrier network
investments and upgrades, and the benefits which may be derived
therefrom, (3) our dividends, including our dividend plans, the
amount and growth of our dividends, and the potential benefits
therefrom, (4)wireless consumer demand, (5) our growth, (6)
potential benefits, returns and shareholder value which may be
derived from our business and assets, our investments, dividends
and acquisitions, (7) leasing activity, including the impact of
such leasing activity on our results and Outlook, (8) the US
wireless market, (9) investments in small cells, including the
potential benefits therefrom, (10) our strategy, (11) currency
exchange rates, (12) non-renewal of leases and the timing and
impact thereof, including with respect to the Acquired Networks,
(13) the decommissioning of the iDEN network and the Acquired
Networks, including the impact and timing thereof, (14) capital
expenditures, including sustaining capital expenditures, (15)
timing items, (16) repair and maintenance expense, (17) site rental
revenues and Site Rental Revenues, as Adjusted, (18) site rental
cost of operations, (19) site rental gross margin and network
services gross margin, (20) Adjusted EBITDA, (21) interest expense
and amortization of deferred financing costs, (22) FFO, including
on a per share basis, (23) AFFO, including on a per share basis,
(24) Organic Site Rental Revenues and Organic Site Rental Revenue
growth, (25) net income (loss), including on a per share basis,
(26) our common shares outstanding, including on a diluted basis,
and (27) the utility of certain financial measures, including
non-GAAP financial measures. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions, including
but not limited to prevailing market conditions and the
following:
- Our business depends on the demand for wireless communications
and wireless infrastructure, and we may be adversely affected by
any slowdown in such demand. Additionally, a reduction in carrier
network investment may materially and adversely affect our business
(including reducing demand for new tenant additions and network
services).
- A substantial portion of our revenues is derived from a small
number of customers, and the loss, consolidation or financial
instability of any of our limited number of customers may
materially decrease revenues or reduce demand for our wireless
infrastructure and network services.
- Our substantial level of indebtedness could adversely affect
our ability to react to changes in our business, and the terms of
our debt instruments and 4.50% Mandatory Convertible Preferred
Stock limit our ability to take a number of actions that our
management might otherwise believe to be in our best interests. In
addition, if we fail to comply with our covenants, our debt could
be accelerated.
- We have a substantial amount of indebtedness. In the event we
do not repay or refinance such indebtedness, we could face
substantial liquidity issues and might be required to issue equity
securities or securities convertible into equity securities, or
sell some of our assets to meet our debt payment obligations.
- Sales or issuances of a substantial number of shares of our
common stock may adversely affect the market price of our common
stock.
- As a result of competition in our industry, including from some
competitors with significantly more resources or less debt than we
have, we may find it more difficult to achieve favorable rental
rates on our new or renewing customer contracts.
- The business model for our small cell operations contains
differences from our traditional site rental business, resulting in
different operational risks. If we do not successfully operate that
business model or identify or manage those operational risks, such
operations may produce results that are less than anticipated.
- New technologies may significantly reduce demand for our
wireless infrastructure and negatively impact our revenues.
- New wireless technologies may not deploy or be adopted by
customers as rapidly or in the manner projected.
- If we fail to retain rights to our wireless infrastructure,
including the land under our sites, our business may be adversely
affected.
- Our network services business has historically experienced
significant volatility in demand, which reduces the predictability
of our results.
- The expansion and development of our business, including
through acquisitions, increased product offerings, or other
strategic growth opportunities, may cause disruptions in our
business, which may have an adverse effect on our business,
operations or financial results.
- If we fail to comply with laws and regulations which regulate
our business and which may change at any time, we may be fined or
even lose our right to conduct some of our business.
- If radio frequency emissions from wireless handsets or
equipment on our wireless infrastructure are demonstrated to cause
negative health effects, potential future claims could adversely
affect our operations, costs or revenues.
- Certain provisions of our certificate of incorporation, bylaws
and operative agreements, and domestic and international
competition laws may make it more difficult for a third party to
acquire control of us or for us to acquire control of a third
party, even if such a change in control would be beneficial to our
stockholders.
- We may be adversely affected by our exposure to changes in
foreign currency exchange rates relating to our operations in
Australia.
- Future dividend payments to our common stockholders will reduce
the availability of our cash on hand available to fund future
discretionary investments, and may result in a need to incur
indebtedness or issue equity securities to fund growth
opportunities. In such event, the then current economic, credit
market or equity market conditions will impact the availability or
cost of such financing, which may hinder our ability to grow our
per share results of operations.
- Remaining qualified to be taxed as a REIT involves highly
technical and complex provisions of the US Internal Revenue Code.
Failure to remain qualified as a REIT would result in our inability
to deduct dividends to stockholders when computing our taxable
income, which would reduce our available cash.
- Complying with REIT requirements, including the 90%
distribution requirement, may limit our flexibility or cause us to
forgo otherwise attractive opportunities, including certain
discretionary investments and potential financing
alternatives.
- If we fail to pay scheduled dividends on the 4.50% Mandatory
Convertible Preferred Stock, in cash, common stock or any
combination of cash and common stock, we will be prohibited from
paying dividends on our Common Stock, which may jeopardize our
status as a REIT.
- We have limited experience operating as a REIT. Our failure to
successfully operate as a REIT may adversely affect our financial
condition, cash flow, the per share trading price of our common
stock, or our ability to satisfy debt service obligations.
- REIT ownership limitations and transfer restrictions may
prevent or restrict certain transfers of our capital stock.
Should one or more of these or other risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those expected. More
information about potential risk factors which could affect our
results is included in our filings with the SEC.
|
CROWN CASTLE
INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE
SHEET (UNAUDITED) (in thousands, except share
amounts) |
|
March 31,
2015 |
December 31,
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 240,153 |
$ 175,620 |
Restricted cash |
136,964 |
147,411 |
Receivables, net |
292,565 |
329,229 |
Prepaid expenses |
144,334 |
155,070 |
Deferred income tax assets |
30,105 |
29,961 |
Other current assets |
83,393 |
94,211 |
Total current assets |
927,514 |
931,502 |
Deferred site rental receivables |
1,292,630 |
1,260,614 |
Property and equipment, net |
9,139,703 |
9,148,311 |
Goodwill |
5,215,348 |
5,210,091 |
Other intangible assets, net |
3,650,945 |
3,715,700 |
Deferred income tax assets |
18,620 |
20,914 |
Long-term prepaid rent, deferred financing
costs and other assets, net |
860,717 |
856,144 |
Total assets |
$ 21,105,477 |
$ 21,143,276 |
|
|
|
LIABILITIES AND
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 146,894 |
$ 167,662 |
Accrued interest |
68,697 |
66,943 |
Deferred revenues |
327,270 |
348,338 |
Other accrued liabilities |
163,096 |
202,657 |
Current maturities of debt and
other obligations |
115,998 |
113,335 |
Total current liabilities |
821,955 |
898,935 |
Debt and other long-term obligations |
11,954,093 |
11,807,526 |
Deferred income tax liabilities |
38,152 |
39,889 |
Other long-term liabilities |
1,732,484 |
1,659,698 |
Total liabilities |
14,546,684 |
14,406,048 |
Commitments and contingencies |
|
|
CCIC stockholders' equity: |
|
|
Common stock, $.01 par value;
600,000,000 shares authorized; shares issued and outstanding: March
31, 2015—333,761,959 and December 31, 2014—333,856,632 |
3,339 |
3,339 |
4.50% Mandatory Convertible
Preferred Stock, Series A, $.01 par value; 20,000,000 shares
authorized; shares issued and outstanding: March 31, 2015 and
December 31, 2014—9,775,000; aggregate liquidation value:
March 31, 2015 and December 31, 2014—$977,500 |
98 |
98 |
Additional paid-in capital |
9,503,335 |
9,512,396 |
Accumulated other comprehensive
income (loss) |
8,304 |
15,820 |
Dividends/distributions in
excess of earnings |
(2,978,356) |
(2,815,428) |
Total CCIC stockholders'
equity |
6,536,720 |
6,716,225 |
Noncontrolling interest |
22,073 |
21,003 |
Total equity |
6,558,793 |
6,737,228 |
Total liabilities and
equity |
$ 21,105,477 |
$ 21,143,276 |
|
CROWN CASTLE
INTERNATIONAL CORP. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED) (in thousands, except
share and per share amounts) |
|
|
|
Three Months
Ended March 31, |
|
2015 |
2014 |
Net revenues: |
|
|
Site rental |
$ 767,606 |
$ 747,162 |
Network services and other |
173,395 |
128,788 |
Net revenues |
941,001 |
875,950 |
Operating expenses: |
|
|
Costs of operations (exclusive
of depreciation, amortization and accretion): |
|
|
Site rental |
240,980 |
228,076 |
Network services and other |
88,878 |
72,874 |
General and administrative |
79,487 |
64,849 |
Asset write-down charges |
8,623 |
2,733 |
Acquisition and integration
costs |
2,019 |
5,659 |
Depreciation, amortization and
accretion |
258,060 |
250,191 |
Total operating expenses |
678,047 |
624,382 |
Operating income (loss) |
262,954 |
251,568 |
Interest expense and amortization of deferred
financing costs |
(134,439) |
(146,400) |
Interest income |
109 |
173 |
Other income (expense) |
(230) |
(2,736) |
Income (loss) before income taxes |
128,394 |
102,605 |
Benefit (provision) for income taxes |
(3,282) |
188 |
Net income (loss) |
125,112 |
102,793 |
Less: Net income (loss) attributable to the
noncontrolling interest |
2,325 |
1,296 |
Net income (loss) attributable to CCIC
stockholders |
122,787 |
101,497 |
Dividends on preferred stock |
(10,997) |
(10,997) |
Net income (loss) attributable to CCIC common
stockholders |
$ 111,790 |
$ 90,500 |
|
|
|
Net income (loss) attributable to CCIC common
stockholders, per common share: |
|
|
Basic |
$ 0.34 |
$ 0.27 |
Diluted |
$ 0.34 |
$ 0.27 |
|
|
|
Weighted-average common shares outstanding
(in thousands): |
|
|
Basic |
332,712 |
332,034 |
Diluted |
333,485 |
333,045 |
|
CROWN CASTLE
INTERNATIONAL CORP. CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
|
Three Months
Ended March 31, |
|
2015 |
2014 |
Cash flows from operating
activities: |
|
|
Net income (loss) |
$ 125,112 |
$ 102,793 |
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating activities: |
|
|
Depreciation, amortization and
accretion |
258,060 |
250,191 |
Amortization of deferred
financing costs and other non-cash interest |
11,736 |
20,881 |
Stock-based compensation
expense |
15,244 |
11,956 |
Asset write-down charges |
8,623 |
2,733 |
Deferred income tax benefit
(provision) |
(800) |
(2,332) |
Other non-cash adjustments,
net |
(557) |
(774) |
Changes in assets and
liabilities, excluding the effects of acquisitions: |
|
|
Increase (decrease) in
liabilities |
16,969 |
23,278 |
Decrease (increase) in
assets |
26,407 |
(46,443) |
Net cash provided by (used for)
operating activities |
460,794 |
362,283 |
Cash flows from investing
activities: |
|
|
Payments for acquisition of
businesses, net of cash acquired |
(17,493) |
(62,228) |
Capital expenditures |
(204,753) |
(142,943) |
Other investing activities,
net |
(514) |
952 |
Net cash provided by (used for)
investing activities |
(222,760) |
(204,219) |
Cash flows from financing
activities: |
|
|
Principal payments on debt and
other long-term obligations |
(31,497) |
(27,739) |
Purchases of capital stock |
(29,372) |
(21,417) |
Borrowings under revolving
credit facility |
230,000 |
83,000 |
Payments under revolving credit
facility |
(65,000) |
(89,000) |
Payments for financing
costs |
(1,904) |
(5,854) |
Net decrease (increase) in
restricted cash |
10,214 |
14,743 |
Dividends/distributions paid on
common stock |
(273,685) |
(116,829) |
Dividends paid on preferred
stock |
(10,997) |
(11,363) |
Net cash provided by (used for)
financing activities |
(172,241) |
(174,459) |
Effect of exchange rate changes on
cash |
(1,260) |
(6,462) |
Net increase (decrease) in cash and
cash equivalents |
64,533 |
(22,857) |
Cash and cash equivalents at
beginning of period |
175,620 |
223,394 |
Cash and cash equivalents at end of
period |
$ 240,153 |
$ 200,537 |
Supplemental disclosure of cash flow
information: |
|
|
Interest paid |
120,949 |
126,540 |
Income taxes paid |
2,498 |
7,400 |
|
|
|
|
Contacts: |
Jay Brown, CFO |
|
Son Nguyen, VP - Corporate Finance |
|
Crown Castle International Corp. |
|
713-570-3050 |
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