Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today
reported results for the second quarter ended June 30, 2020
and maintained its full year 2020 Outlook, with the exception of a
reduction to net income.
(in
millions, except per share amounts) |
Midpoint of Current Full Year2020 Outlook |
Full Year 2019 Actual |
% Change |
Previous Full Year 2020 Outlook(c) |
Current Compared to Previous Outlook |
Site rental
revenues |
$ |
5,360 |
$ |
5,093 |
+5 |
% |
$ |
5,360 |
$ |
— |
Net income (loss) |
$ |
943 |
$ |
860 |
+10 |
% |
$ |
1,038 |
-$ |
95 |
Net income (loss) per
share—diluted(a) |
$ |
2.09 |
$ |
1.79 |
+17 |
% |
$ |
2.32 |
-$ |
0.23 |
Adjusted EBITDA(b) |
$ |
3,502 |
$ |
3,299 |
+6 |
% |
$ |
3,502 |
$ |
— |
AFFO(a)(b) |
$ |
2,595 |
$ |
2,371 |
+9 |
% |
$ |
2,595 |
$ |
— |
AFFO per share(a)(b) |
$ |
6.12 |
$ |
5.68 |
+8 |
% |
$ |
6.12 |
$ |
— |
(a) Attributable to CCIC common stockholders.(b) See "Non-GAAP
Financial Measures, Segment Measures and Other Calculations"
included herein for further information and reconciliation of this
non-GAAP financial measure to net income (loss).(c) As issued on
April 29, 2020.
"In the second quarter, we generated solid
results that were in line with our expectations as our business
continues to perform well during this period of unprecedented
uncertainty," stated Jay Brown, Crown Castle’s Chief Executive
Officer. "We continue to anticipate a significant increase in
industry activity in the second half of this year as our carrier
customers invest to improve their existing networks and as 5G
investments ramp. Although the full rebound in overall industry
activity on towers is taking a bit more time to materialize than we
previously expected, we remain on track to generate at least 7%
growth in AFFO per share this year. Looking beyond this year, I am
excited about what will likely be another decade-long investment
cycle for our customers with the deployment of 5G, and see the
potential for our AFFO per share growth to improve next year.
"We believe our ability to offer towers, small
cells and fiber solutions, which are all integral components of
communications networks and are shared among multiple tenants,
provides us the best opportunity to generate significant growth
while delivering high returns for our shareholders. We 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. As we look forward, I
am excited about the opportunity we see for Crown Castle to deliver
long-term value to our shareholders while delivering dividend per
share growth of 7% to 8% per year. Over the past several weeks, we
have had the opportunity to engage with many of our shareholders.
We have appreciated the thoughtful exchange of ideas during those
discussions as well as the feedback they have given us. During
these conversations, we heard two consistent points of investor
feedback: they want more visibility into how our strategy and
business are performing and they would like us to make certain
improvements to our corporate governance practices. To address this
feedback, we will discuss some increased disclosure around our
small cell and fiber strategy during our earnings call tomorrow
and, as we disclosed in a separate press release today, we are
making changes to our corporate governance."
RESULTS FOR THE QUARTERThe
table below sets forth select financial results for the quarter
ended June 30, 2020 and June 30, 2019.
(in
millions, except per share amounts) |
Q2 2020 |
Q2 2019 |
Change |
% Change |
|
|
(As Restated)(c) |
|
|
Site rental revenues |
$ |
1,319 |
$ |
1,263 |
+$ |
56 |
+4 |
% |
Net income (loss) |
$ |
200 |
$ |
216 |
-$ |
16 |
-7 |
% |
Net income (loss) per share—diluted(a) |
$ |
0.41 |
$ |
0.45 |
-$ |
0.04 |
-9 |
% |
Adjusted EBITDA(b) |
$ |
831 |
$ |
827 |
+$ |
4 |
— |
% |
AFFO(a)(b) |
$ |
609 |
$ |
589 |
+$ |
20 |
+3 |
% |
AFFO per share(a)(b) |
$ |
1.45 |
$ |
1.41 |
+$ |
0.04 |
+3 |
% |
(a) Attributable to CCIC common stockholders.(b) See "Non-GAAP
Financial Measures, Segment Measures and Other Calculations"
included herein for further information and reconciliation of this
non-GAAP financial measure to net income (loss).(c) See our Annual
Report on Form 10-K for the year ended December 31, 2019 for
further information.
HIGHLIGHTS FROM THE QUARTER
- Site rental revenues. Site rental revenues
grew approximately 4.4%, or $56 million, from second quarter 2019
to second quarter 2020, inclusive of approximately $69 million in
Organic Contribution to Site Rental Revenues and a $13 million
decrease in straight-lined revenues. The $69 million in Organic
Contribution to Site Rental Revenues represents approximately 5.6%
growth, comprised of approximately 9.4% growth from new leasing
activity and contracted tenant escalations, net of approximately
3.8% from tenant non-renewals.
- Capital Expenditures. Capital expenditures
during the quarter were $414 million, comprised of $24 million of
sustaining capital expenditures and $390 million of discretionary
capital expenditures. Discretionary capital expenditures included
approximately $295 million attributable to Fiber, approximately $88
million attributable to Towers, and approximately $7 million
attributable to Other.
- Common stock dividend. During the quarter,
Crown Castle paid common stock dividends of approximately $500
million in the aggregate, or $1.20 per common share, an increase of
approximately 7% on a per share basis compared to the same period a
year ago.
- Financing Activity. In April, Crown Castle
issued $1.25 billion in aggregate principal amount of senior
unsecured notes, with a combination of 10-year and 30-year
maturities, resulting in a weighted average maturity and coupon of
18 years and approximately 3.6%, respectively. Net proceeds from
the offering were used to repay outstanding borrowings under its
revolving credit facility. In June, Crown Castle issued $2.5
billion in aggregate principal amount of senior unsecured notes,
with a combination of 5-year, 10-year and 30-year maturities,
resulting in a weighted average maturity and coupon of 16 years and
approximately 2.4%, respectively. In July, net proceeds from the
offering were used to retire $2.4 billion of senior unsecured notes
in the aggregate, resulting in a $95 million loss on the retirement
of debt. After giving effect to the refinancing of the outstanding
senior unsecured notes, Crown Castle had approximately $18.9
billion of total debt outstanding.
"We are excited about the significant network
investments our customers are pursuing as they deploy 5G, and how
well we are positioned with our comprehensive infrastructure
offering across towers and fiber to meet our customers’ needs and
create significant value for our shareholders," stated Dan
Schlanger, Crown Castle's Chief Financial Officer. "By
opportunistically accessing the investment grade bond market twice
in recent months, we further strengthened our balance sheet by
extending the maturity of our debt and reducing our cost of
capital. We believe our liquidity position is strong with nearly $5
billion of undrawn capacity on our revolving credit facility and no
meaningful debt maturities until 2022, providing us with confidence
that we are well positioned to navigate the current environment
while investing in assets that we believe will add to long-term
growth in dividends per share."
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 SEC.
The following table sets forth Crown Castle's
current Outlook for full year 2020, which remains unchanged from
the previous full year 2020 Outlook with the exception of a
reduction to net income due to the $95 million loss on the
retirement of debt in July:
(in millions) |
Full Year 2020 |
Site rental revenues |
$5,337 |
to |
$5,382 |
Site rental cost of operations(a) |
$1,482 |
to |
$1,527 |
Net income (loss) |
$903 |
to |
$983 |
Adjusted EBITDA(b) |
$3,479 |
to |
$3,524 |
Interest expense and
amortization of deferred financing costs(c) |
$691 |
to |
$736 |
FFO(b)(d) |
$2,354 |
to |
$2,399 |
AFFO(b)(d) |
$2,572 |
to |
$2,617 |
Weighted-average common shares
outstanding - diluted |
424 |
(a) Exclusive of depreciation, amortization and accretion.(b)
See reconciliation of this non-GAAP financial measure to net income
(loss) and definition included herein.(c) See reconciliation of
"components of current outlook for interest expense and
amortization of deferred financing costs" herein for a discussion
of non-cash interest expense.(d) Attributable to CCIC common
stockholders.
Full Year 2020 OutlookThe table below compares
the results for full year 2019, the midpoint of the current full
year 2020 Outlook and the midpoint of our previous full year 2020
Outlook for select metrics.
(in
millions, except per share amounts) |
Midpoint of Current Full Year2020 Outlook |
Full Year 2019 Actual |
Change |
% Change |
Midpoint of Previous Full Year 2020 Outlook(c) |
Current Compared to Previous Outlook |
Site rental revenues |
$ |
5,360 |
$ |
5,093 |
+$ |
267 |
+5 |
% |
$ |
5,360 |
$ |
— |
Net income (loss) |
$ |
943 |
$ |
860 |
+$ |
83 |
+10 |
% |
$ |
1,038 |
-$ |
95 |
Net income (loss) per
share—diluted(a) |
$ |
2.09 |
$ |
1.79 |
+$ |
0.30 |
+17 |
% |
$ |
2.32 |
-$ |
0.23 |
Adjusted EBITDA(b) |
$ |
3,502 |
$ |
3,299 |
+$ |
203 |
+6 |
% |
$ |
3,502 |
$ |
— |
AFFO(a)(b) |
$ |
2,595 |
$ |
2,371 |
+$ |
224 |
+9 |
% |
$ |
2,595 |
$ |
— |
AFFO per share(a)(b) |
$ |
6.12 |
$ |
5.68 |
+$ |
0.44 |
+8 |
% |
$ |
6.12 |
$ |
— |
(a) Attributable to CCIC common stockholders.(b) See "Non-GAAP
Financial Measures, Segment Measures and Other Calculations"
included herein for further information and reconciliation of this
non-GAAP financial measure to net income (loss).(c) As issued on
April 29, 2020.
- The 2020 Outlook also reflects the impact of the assumed
conversion of preferred stock in August 2020. This conversion is
expected to increase the diluted weighted average common shares
outstanding for 2020 by approximately 6 million shares and reduce
the annual preferred stock dividends paid by approximately $28
million when compared to 2019.
- The chart below reconciles the components of expected growth in
site rental revenues from 2019 to 2020 of $250 million to $295
million, inclusive of expected Organic Contribution to Site Rental
Revenues during 2020 of $295 million to $335 million. Chart
1: https://www.globenewswire.com/NewsRoom/AttachmentNg/02ada3cf-2082-4514-8acd-225a358c3a5b
- The chart below reconciles the components of expected growth in
AFFO from 2019 to 2020 of $195 million to $240 million.Chart
2: https://www.globenewswire.com/NewsRoom/AttachmentNg/5e9b8904-40f4-49d4-8b51-873cbcbd4ec5
- Additional information is available in Crown Castle's quarterly
Supplemental Information Package posted in the Investors section of
our website.
CONFERENCE CALL DETAILSCrown
Castle has scheduled a conference call for Thursday, July 30, 2020,
at 10:30 a.m. Eastern time to discuss its second quarter 2020
results. The conference call may be accessed by dialing
800-458-4121 and asking for the Crown Castle call (access code
6178294) at least 30 minutes prior to the start time. The
conference call may also be accessed live over the Internet at
investor.crowncastle.com. Supplemental materials for the call have
been posted on the Crown Castle website at
investor.crowncastle.com.
A telephonic replay of the conference call will
be available from 1:30 p.m. Eastern time on Thursday, July 30,
2020, through 1:30 p.m. Eastern time on Wednesday, October 28,
2020, and may be accessed by dialing 888-203-1112 and using access
code 6178294. An audio archive will also be available on Crown
Castle's website at investor.crowncastle.com shortly after the call
and will be accessible for approximately 90 days.
ABOUT CROWN CASTLECrown Castle
owns, operates and leases more than 40,000 cell towers and
approximately 80,000 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"), including
per share amounts, Funds from Operations ("FFO"), including per
share amounts, and Organic Contribution to Site Rental Revenues,
which are non-GAAP financial measures. These non-GAAP financial
measures are not intended as alternative measures of operating
results or cash flow from operations (as determined in accordance
with Generally Accepted Accounting Principles ("GAAP")).
Our non-GAAP financial measures may not be
comparable to similarly titled measures of other companies,
including other companies in the communications infrastructure
sector or other real estate investment trusts ("REITs"). Our
definition of FFO is consistent with guidelines from the National
Association of Real Estate Investment Trusts with the exception of
the impact of income taxes in periods prior to our REIT conversion
in 2014.
In addition to the non-GAAP financial measures
used herein, we also provide Segment Site Rental Gross Margin,
Segment Services and Other Gross Margin and Segment Operating
Profit, which are key measures used by management to evaluate our
operating segments. These segment measures are provided pursuant to
GAAP requirements related to segment reporting. In addition, we
provide the components of certain GAAP measures, such as capital
expenditures.
Our non-GAAP financial measures are presented as
additional information because management believes these measures
are useful indicators of the financial performance of our business.
Among other things, management believes that:
- Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by removing the impact of our
capital structure (primarily interest charges from our outstanding
debt) and asset base (primarily depreciation, amortization and
accretion) from our financial results. Management also believes
Adjusted EBITDA is frequently used by investors or other interested
parties in the evaluation of the communications infrastructure
sector and other REITs to measure financial performance without
regard to items such as depreciation, amortization and accretion
which can vary depending upon accounting methods and the book value
of assets. In addition, Adjusted EBITDA is similar to the measure
of current financial performance generally used in our debt
covenant calculations. Adjusted EBITDA should be considered only as
a supplement to net income computed in accordance with GAAP as a
measure of our performance.
- AFFO, including per share amounts, is useful to investors or
other interested parties in evaluating our financial performance.
Management believes that AFFO helps investors or other interested
parties meaningfully evaluate our financial performance as it
includes (1) the impact of our capital structure (primarily
interest expense on our outstanding debt and dividends on our
preferred stock) and (2) sustaining capital expenditures, and
excludes the impact of our (a) asset base (primarily depreciation,
amortization and accretion) and (b) certain non-cash items,
including straight-lined revenues and expenses related to fixed
escalations and rent free periods. GAAP requires rental revenues
and expenses related to leases that contain specified rental
increases over the life of the lease to be recognized evenly over
the life of the lease. In accordance with GAAP, if payment terms
call for fixed escalations, or rent free periods, the revenue or
expense is recognized on a straight-lined basis over the fixed,
non-cancelable term of the contract. Management notes that Crown
Castle uses AFFO only as a performance measure. AFFO should be
considered only as a supplement to net income computed in
accordance with GAAP as a measure of our performance and should not
be considered as an alternative to cash flows from operations or as
residual cash flow available for discretionary investment.
- FFO, including per share amounts, is useful to investors or
other interested parties in evaluating our financial performance.
Management believes that FFO may be used by investors or other
interested parties as a basis to compare our financial performance
with that of other REITs. FFO helps investors or other interested
parties meaningfully evaluate financial performance by excluding
the impact of our asset base (primarily depreciation, amortization
and accretion). FFO is not a key performance indicator used by
Crown Castle. FFO should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance and should not be considered as an alternative to cash
flow from operations.
- Organic Contribution to Site Rental Revenues is useful to
investors or other interested parties in understanding the
components of the year-over-year changes in our site rental
revenues computed in accordance with GAAP. Management uses the
Organic Contribution to Site Rental Revenues to assess
year-over-year growth rates for our rental activities, to evaluate
current performance, to capture trends in rental rates, new leasing
activities and tenant non-renewals in our core business, as well to
forecast future results. Organic Contribution to Site Rental
Revenues is not meant as an alternative measure of revenue and
should be considered only as a supplement in understanding and
assessing the performance of our site rental revenues computed in
accordance with GAAP.
We define our non-GAAP financial measures,
segment measures and other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define Adjusted EBITDA as
net income (loss) plus restructuring charges (credits), asset
write-down charges, acquisition and integration costs,
depreciation, amortization and accretion, amortization of prepaid
lease purchase price adjustments, interest expense and amortization
of deferred financing costs, (gains) losses on retirement of
long-term obligations, net (gain) loss on interest rate swaps,
(gains) losses on foreign currency swaps, impairment of
available-for-sale securities, interest income, other (income)
expense, (benefit) provision for income taxes, cumulative effect of
a change in accounting principle, (income) loss from discontinued
operations and stock-based compensation expense.
Adjusted Funds from Operations. We define
Adjusted Funds from Operations as FFO before straight-lined
revenue, straight-lined expense, stock-based compensation expense,
non-cash portion of tax provision, non-real estate related
depreciation, amortization and accretion, amortization of non-cash
interest expense, other (income) expense, (gains) losses on
retirement of long-term obligations, net (gain) loss on interest
rate swaps, (gains) losses on foreign currency swaps, acquisition
and integration costs, and adjustments for noncontrolling
interests, and less sustaining capital expenditures.
AFFO per share. We define AFFO per share as AFFO
divided by diluted weighted-average common shares outstanding.
Funds from Operations. We define Funds from
Operations as net income plus real estate related depreciation,
amortization and accretion and asset write-down charges, less
noncontrolling interest and cash paid for preferred stock
dividends, and is a measure of funds from operations attributable
to CCIC common stockholders.
FFO per share. We define FFO per share as FFO
divided by the diluted weighted-average common shares
outstanding.
Organic Contribution to Site Rental Revenues. We
define the Organic Contribution to Site Rental Revenues as the sum
of the change in GAAP site rental revenues related to (1) new
leasing activity, including revenues from the construction of small
cells and the impact of prepaid rent, (2) escalators and less (3)
non-renewals of tenant contracts.
Segment Measures
Segment Site Rental Gross Margin. We define
Segment Site Rental Gross Margin as segment site rental revenues
less segment site rental cost of operations, excluding stock-based
compensation expense and prepaid lease purchase price adjustments
recorded in consolidated site rental cost of operations.
Segment Services and Other Gross Margin. We
define Segment Services and Other Gross Margin as segment services
and other revenues less segment services and other cost of
operations, excluding stock-based compensation expense recorded in
consolidated services and other cost of operations.
Segment Operating Profit. We define Segment
Operating Profit as segment site rental gross margin plus segment
services and other gross margin, less selling, general and
administrative expenses attributable to the respective segment.
All of these measurements of profit or loss are
exclusive of depreciation, amortization and accretion, which are
shown separately. Additionally, certain costs are shared across
segments and are reflected in our segment measures through
allocations that management believes to be reasonable.
Other Calculations
Discretionary capital expenditures. We define
discretionary capital expenditures as those capital expenditures
made with respect to activities which we believe exhibit sufficient
potential to enhance long-term stockholder value. They primarily
consist of expansion or development of communications
infrastructure (including capital expenditures related to (1)
enhancing communications infrastructure in order to add new tenants
for the first time or support subsequent tenant equipment
augmentations or (2) modifying the structure of a communications
infrastructure asset to accommodate additional tenants) and
construction of new communications infrastructure. Discretionary
capital expenditures also include purchases of land interests
(which primarily relates to land assets under towers as we seek to
manage our interests in the land beneath our towers), certain
technology-related investments necessary to support and scale
future customer demand for our communications infrastructure, and
other capital projects.
Integration capital expenditures. We define
integration capital expenditures as those capital expenditures made
as a result of integrating acquired companies into our
business.
Sustaining capital expenditures. We define
sustaining capital expenditures as those capital expenditures not
otherwise categorized as either discretionary or integration
capital expenditures, such as (1) maintenance capital expenditures
on our communications infrastructure assets that enable our
tenants' ongoing quiet enjoyment of the communications
infrastructure and (2) ordinary corporate capital expenditures.
The tables set forth on the following pages
reconcile the non-GAAP financial measures used herein to comparable
GAAP financial measures. The components in these tables may not sum
to the total due to rounding.
Reconciliations of Non-GAAP Financial
Measures, Segment Measures and Other Calculations to Comparable
GAAP Financial Measures:
Reconciliation of Historical Adjusted
EBITDA:
|
For the Three Months Ended |
|
For the Six Months Ended |
|
For the Twelve Months Ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
December 31, 2019 |
(in millions) |
|
|
(As Restated)(d) |
|
|
|
(As Restated)(d) |
|
|
Net income (loss) |
$ |
200 |
|
|
$ |
216 |
|
|
$ |
386 |
|
|
$ |
409 |
|
|
$ |
860 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
|
|
|
|
|
|
Asset write-down charges |
3 |
|
|
6 |
|
|
7 |
|
|
12 |
|
|
19 |
|
Acquisition and integration costs |
2 |
|
|
2 |
|
|
7 |
|
|
6 |
|
|
13 |
|
Depreciation, amortization and accretion |
402 |
|
|
393 |
|
|
801 |
|
|
787 |
|
|
1,572 |
|
Amortization of prepaid lease purchase price adjustments |
4 |
|
|
5 |
|
|
9 |
|
|
10 |
|
|
20 |
|
Interest expense and amortization of deferred financing
costs(a) |
178 |
|
|
169 |
|
|
353 |
|
|
337 |
|
|
683 |
|
(Gains) losses on retirement of long-term obligations |
— |
|
|
1 |
|
|
— |
|
|
2 |
|
|
2 |
|
Interest income |
(1 |
) |
|
(1 |
) |
|
(2 |
) |
|
(3 |
) |
|
(6 |
) |
Other (income) expense |
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
(1 |
) |
(Benefit) provision for income taxes |
6 |
|
|
4 |
|
|
11 |
|
|
10 |
|
|
21 |
|
Stock-based compensation expense |
37 |
|
|
32 |
|
|
73 |
|
|
61 |
|
|
116 |
|
Adjusted EBITDA(b)(c) |
$ |
831 |
|
|
$ |
827 |
|
|
$ |
1,645 |
|
|
$ |
1,632 |
|
|
$ |
3,299 |
|
(a) See the reconciliation of "components of
historical interest expense and amortization of deferred financing
costs" herein for a discussion of non-cash interest
expense.(b) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" herein for a discussion of our
definition of Adjusted EBITDA.(c) The above
reconciliation excludes line items included in our definition which
are not applicable for the periods shown. (d) See our
Annual Report on Form 10-K for the year ended December 31, 2019 for
further information.
Reconciliation of Current Outlook for Adjusted
EBITDA:
|
Full Year 2020 |
(in millions) |
Outlook |
Net income (loss) |
$903 |
|
to |
$983 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
Acquisition and integration costs |
$7 |
|
to |
$17 |
|
Depreciation, amortization and accretion |
$1,503 |
|
to |
$1,598 |
|
Amortization of prepaid lease purchase price adjustments |
$18 |
|
to |
$20 |
|
Interest expense and amortization of deferred financing
costs(a) |
$691 |
|
to |
$736 |
|
(Gains) losses on retirement of long-term obligations |
$95 |
|
to |
$95 |
|
Interest income |
$(7 |
) |
to |
$(3) |
|
Other (income) expense |
$(1 |
) |
to |
$1 |
|
(Benefit) provision for income taxes |
$16 |
|
to |
$24 |
|
Stock-based compensation expense |
$126 |
|
to |
$130 |
|
Adjusted EBITDA(b)(c) |
$3,479 |
|
to |
$3,524 |
|
(a) See the reconciliation of "components of
historical interest expense and amortization of deferred financing
costs" herein for a discussion of non-cash interest
expense.(b) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" herein for a discussion of our
definition of Adjusted EBITDA.(c) The above
reconciliation excludes line items included in our definition which
are not applicable for the periods shown.
Reconciliation of Historical FFO and
AFFO:
|
For the Three Months Ended |
|
For the Six Months Ended |
|
For the Twelve Months Ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
December 31, 2019 |
(in millions, except per share
amounts) |
|
|
(As Restated)(f) |
|
|
|
(As Restated)(f) |
|
|
Net income (loss) |
$ |
200 |
|
|
$ |
216 |
|
|
$ |
386 |
|
|
$ |
409 |
|
|
$ |
860 |
|
Real estate related
depreciation, amortization and accretion |
389 |
|
|
379 |
|
|
774 |
|
|
759 |
|
|
1,517 |
|
Asset write-down charges |
3 |
|
|
6 |
|
|
7 |
|
|
12 |
|
|
19 |
|
Dividends/distributions on
preferred stock |
(28 |
) |
|
(28 |
) |
|
(57 |
) |
|
(57 |
) |
|
(113 |
) |
FFO(a)(b)(c)(d) |
$ |
564 |
|
|
$ |
573 |
|
|
$ |
1,110 |
|
|
$ |
1,122 |
|
|
$ |
2,284 |
|
Weighted-average common shares outstanding—diluted(e) |
419 |
|
|
418 |
|
|
418 |
|
|
417 |
|
|
418 |
|
FFO per share(a)(b)(c)(d)(e) |
$ |
1.35 |
|
|
$ |
1.37 |
|
|
$ |
2.66 |
|
|
$ |
2.69 |
|
|
$ |
5.47 |
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
564 |
|
|
$ |
573 |
|
|
$ |
1,110 |
|
|
$ |
1,122 |
|
|
$ |
2,284 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
|
|
|
|
|
|
Straight-lined revenue |
(10 |
) |
|
(23 |
) |
|
(23 |
) |
|
(40 |
) |
|
(80 |
) |
Straight-lined expense |
20 |
|
|
24 |
|
|
40 |
|
|
46 |
|
|
93 |
|
Stock-based compensation expense |
37 |
|
|
32 |
|
|
73 |
|
|
61 |
|
|
116 |
|
Non-cash portion of tax provision |
5 |
|
|
(4 |
) |
|
9 |
|
|
1 |
|
|
5 |
|
Non-real estate related depreciation, amortization and
accretion |
13 |
|
|
14 |
|
|
27 |
|
|
28 |
|
|
55 |
|
Amortization of non-cash interest expense |
2 |
|
|
— |
|
|
3 |
|
|
1 |
|
|
1 |
|
Other (income) expense |
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
(1 |
) |
(Gains) losses on retirement of long-term obligations |
— |
|
|
1 |
|
|
— |
|
|
2 |
|
|
2 |
|
Acquisition and integration costs |
2 |
|
|
2 |
|
|
7 |
|
|
6 |
|
|
13 |
|
Sustaining capital expenditures |
(24 |
) |
|
(30 |
) |
|
(44 |
) |
|
(51 |
) |
|
(117 |
) |
AFFO(a)(b)(c)(d) |
$ |
609 |
|
|
$ |
589 |
|
|
$ |
1,202 |
|
|
$ |
1,177 |
|
|
$ |
2,371 |
|
Weighted-average common shares outstanding—diluted(e) |
419 |
|
|
418 |
|
|
418 |
|
|
417 |
|
|
418 |
|
AFFO per share(a)(b)(c)(d)(e) |
$ |
1.45 |
|
|
$ |
1.41 |
|
|
$ |
2.88 |
|
|
$ |
2.82 |
|
|
$ |
5.68 |
|
(a) See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of FFO,
including per share amounts, and AFFO, including per share
amounts.
(b) FFO and AFFO are reduced by cash paid for preferred stock
dividends during the period in which they are paid.
(c) Attributable to CCIC common stockholders.
(d) The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
(e) For all periods presented, the diluted weighted-average
common shares outstanding does not include any assumed conversion
of preferred stock in the share count.
(f) See our Annual Report on Form 10-K for the year ended
December 31, 2019 for further information.
Reconciliation of Current Outlook for
FFO and AFFO:
|
Full Year 2020 |
(in millions except per share
amounts) |
Outlook |
Net income (loss) |
$903 |
|
to |
$983 |
|
Real estate related
depreciation, amortization and accretion |
$1,454 |
|
to |
$1,534 |
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
Dividends/distributions on
preferred stock |
$(85 |
) |
to |
$(85) |
|
FFO(a)(b)(c)(d) |
$2,354 |
|
to |
$2,399 |
|
Weighted-average common shares outstanding—diluted(e) |
|
|
|
424 |
|
|
|
FFO per share(a)(b)(c)(d)(e) |
$5.55 |
|
to |
$5.65 |
|
|
|
|
|
FFO (from above) |
$2,354 |
|
to |
$2,399 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
Straight-lined revenue |
$(53 |
) |
to |
$(33) |
|
Straight-lined expense |
$70 |
|
to |
$90 |
|
Stock-based compensation expense |
$126 |
|
to |
$130 |
|
Non-cash portion of tax provision |
$(6 |
) |
to |
$9 |
|
Non-real estate related depreciation, amortization and
accretion |
$49 |
|
to |
$64 |
|
Amortization of non-cash interest expense |
$(4 |
) |
to |
$6 |
|
Other (income) expense |
$(1 |
) |
to |
$1 |
|
(Gains) losses on retirement of long-term obligations |
$95 |
|
to |
$95 |
|
Acquisition and integration costs |
$7 |
|
to |
$17 |
|
Sustaining capital expenditures |
$(123 |
) |
to |
$(103) |
|
AFFO(a)(b)(c)(d) |
$2,572 |
|
to |
$2,617 |
|
Weighted-average common shares outstanding—diluted(e) |
|
|
|
424 |
|
|
|
AFFO per share(a)(b)(c)(d)(e) |
$6.06 |
|
to |
$6.17 |
|
(a) See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of FFO,
including per share amounts, and AFFO, including per share
amounts.
(b) FFO and AFFO are reduced by cash paid for preferred stock
dividends during the period in which they are paid.
(c) Attributable to CCIC common stockholders.
(d) The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
(e) The assumption for diluted weighted-average common shares
outstanding for full year 2020 Outlook is based on the diluted
common shares outstanding as of June 30, 2020 and is inclusive of
the assumed conversion of preferred stock in August 2020, which we
expect to result in (1) an increase in the diluted weighted-average
common shares outstanding by approximately 6 million shares and (2)
a reduction in the amount of annual preferred stock dividends paid
by approximately $28 million when compared to full year 2019 actual
results.
For Comparative Purposes - Reconciliation of Previous
Outlook for Adjusted EBITDA:
|
Previously Issued |
|
Full Year 2020 |
(in millions) |
Outlook |
Net income (loss) |
$998 |
|
to |
$1,078 |
|
Adjustments to increase
(decrease) net income (loss): |
|
|
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
Acquisition and integration costs |
$7 |
|
to |
$17 |
|
Depreciation, amortization and accretion |
$1,503 |
|
to |
$1,598 |
|
Amortization of prepaid lease purchase price adjustments |
$18 |
|
to |
$20 |
|
Interest expense and amortization of deferred financing costs |
$691 |
|
to |
$736 |
|
(Gains) losses on retirement of long-term obligations |
$0 |
|
to |
$0 |
|
Interest income |
$(7 |
) |
to |
$(3) |
|
Other (income) expense |
$(1 |
) |
to |
$1 |
|
(Benefit) provision for income taxes |
$16 |
|
to |
$24 |
|
Stock-based compensation expense |
$126 |
|
to |
$130 |
|
Adjusted EBITDA(a)(b) |
$3,479 |
|
to |
$3,524 |
|
(a) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" herein for a discussion of our
definition of Adjusted EBITDA.(b) The above
reconciliation excludes line items included in our definition which
are not applicable for the periods shown.
For Comparative Purposes -
Reconciliation of Previous Outlook for FFO and AFFO:
|
Previously Issued |
|
Full Year 2020 |
(in millions, except per share
amounts) |
Outlook |
Net income (loss) |
$998 |
|
to |
$1,078 |
|
Real estate related
depreciation, amortization and accretion |
$1,454 |
|
to |
$1,534 |
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
Dividends/distributions on
preferred stock |
$(85 |
) |
to |
$(85) |
|
FFO(a)(b)(c)(d) |
$2,449 |
|
to |
$2,494 |
|
Weighted-average common shares outstanding—diluted(e) |
|
|
|
424 |
|
|
|
FFO per share(a)(b)(c)(d)(e) |
$5.77 |
|
to |
$5.88 |
|
|
|
|
|
FFO (from above) |
$2,449 |
|
to |
$2,494 |
|
Adjustments to increase
(decrease) FFO: |
|
|
|
Straight-lined revenue |
$(53 |
) |
to |
$(33) |
|
Straight-lined expense |
$70 |
|
to |
$90 |
|
Stock-based compensation expense |
$126 |
|
to |
$130 |
|
Non-cash portion of tax provision |
$(6 |
) |
to |
$9 |
|
Non-real estate related depreciation, amortization and
accretion |
$49 |
|
to |
$64 |
|
Amortization of non-cash interest expense |
$(4 |
) |
to |
$6 |
|
Other (income) expense |
$(1 |
) |
to |
$1 |
|
(Gains) losses on retirement of long-term obligations |
$0 |
|
to |
$0 |
|
Acquisition and integration costs |
$7 |
|
to |
$17 |
|
Sustaining capital expenditures |
$(123 |
) |
to |
$(103) |
|
AFFO(a)(b)(c)(d) |
$2,572 |
|
to |
$2,617 |
|
Weighted-average common shares outstanding—diluted(e) |
|
|
|
424 |
|
|
|
AFFO per share(a)(b)(c)(d)(e) |
$6.06 |
|
to |
$6.17 |
|
- See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" herein for a discussion of our definitions of FFO,
including per share amounts, and AFFO, including per share
amounts.
- FFO and AFFO are reduced by cash paid for preferred stock
dividends during the period in which they are paid.
- Attributable to CCIC common stockholders.
- The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
- The assumption for diluted weighted-average common shares
outstanding for full year 2020 Outlook is based on the diluted
common shares outstanding as of March 31, 2020 and is inclusive of
the assumed conversion of preferred stock in August 2020, which we
expect to result in (1) an increase in the diluted weighted-average
common shares outstanding by approximately 6 million shares and (2)
a reduction in the amount of annual preferred stock dividends paid
by approximately $28 million when compared to full year 2019 actual
results.
The components of changes in site rental
revenues for the quarters ended June 30, 2020 and 2019 are as
follows:
|
Three Months Ended June 30, |
|
2020 |
|
2019 |
(dollars in millions) |
|
|
(As Restated)(g) |
Components of changes in site
rental revenues(a): |
|
|
|
Prior year site rental revenues exclusive of straight-lined
revenues associated with fixed escalators(b)(c) |
$ |
1,240 |
|
|
$ |
1,169 |
|
|
|
|
|
New leasing activity(b)(c) |
94 |
|
|
94 |
|
Escalators |
22 |
|
|
21 |
|
Non-renewals |
(47 |
) |
|
(44 |
) |
Organic Contribution to Site Rental Revenues(d) |
69 |
|
|
71 |
|
Contribution from straight-lined revenues associated with fixed
escalators |
10 |
|
|
23 |
|
Acquisitions(e) |
— |
|
|
— |
|
Other |
— |
|
|
— |
|
Total GAAP site rental
revenues |
$ |
1,319 |
|
|
$ |
1,263 |
|
|
|
|
|
Year-over-year changes
in revenue: |
|
|
|
Reported GAAP site rental
revenues |
4.4 |
% |
|
|
Organic Contribution to Site
Rental Revenues(d)(f) |
5.6 |
% |
|
|
- Additional information regarding Crown Castle's site rental
revenues, including projected revenue from tenant licenses,
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.
- 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.
- See our Annual Report on Form 10-K for the year ended December
31, 2019 for further information.
The components of the changes in site
rental revenues for the year ending December 31, 2020 are
forecasted as follows:
(dollars in millions) |
Full Year 2020 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) |
$5,012 |
|
|
|
New leasing activity(b)(c) |
395-425 |
Escalators |
90-100 |
Non-renewals |
(195)-(175) |
Organic Contribution to Site Rental Revenues(d) |
295-335 |
Contribution from full year straight-lined revenues associated with
fixed escalators |
33-53 |
Acquisitions(e) |
|
— |
|
Other |
|
— |
|
Total GAAP site rental
revenues |
$5,337-$5,382 |
|
|
Year-over-year changes
in revenue: |
|
Reported GAAP site rental
revenues(f) |
|
5.1% |
|
Organic Contribution to Site
Rental Revenues(d)(f)(g) |
|
6.3% |
|
- Additional information regarding Crown Castle's site rental
revenues, including projected revenue from tenant licenses,
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.
- Calculated based on midpoint of full year 2020 Outlook.
- Calculated as the percentage change from prior year site rental
revenues, exclusive of straight-lined revenues associated with
fixed escalations, compared to Organic Contribution to Site Rental
Revenues for the current period.
Components of Historical Interest
Expense and Amortization of Deferred Financing Costs:
|
For the Three Months Ended |
(in millions) |
June 30, 2020 |
|
June 30, 2019 |
Interest expense on debt
obligations |
$ |
176 |
|
|
$ |
169 |
|
Amortization of deferred
financing costs and adjustments on long-term debt, net |
6 |
|
|
5 |
|
Other, net |
(4 |
) |
|
(5 |
) |
Interest expense and
amortization of deferred financing costs |
$ |
178 |
|
|
$ |
169 |
|
Components of Current Outlook for
Interest Expense and Amortization of Deferred Financing
Costs:
|
Full Year 2020 |
(in millions) |
Outlook |
Interest expense on debt
obligations |
$703 |
|
to |
$723 |
|
Amortization of deferred
financing costs and adjustments on long-term debt, net |
$20 |
|
to |
$25 |
|
Other, net |
$(24 |
) |
to |
$(19) |
|
Interest expense and
amortization of deferred financing costs |
$691 |
|
to |
$736 |
|
Debt balances and
maturity dates as of June 30, 2020 are as
follows(a): |
|
(in millions) |
Face Value |
|
Final Maturity |
Cash, cash equivalents
and restricted cash |
$ |
2,673 |
|
|
3.849% Secured Notes |
|
1,000 |
|
Apr. 2023 |
Secured Notes, Series 2009-1,
Class A-2(b) |
|
64 |
|
Aug. 2029 |
Tower Revenue Notes, Series
2015-1(c) |
|
300 |
|
May 2042 |
Tower Revenue Notes, Series
2018-1(c) |
|
250 |
|
July 2043 |
Tower Revenue Notes, Series
2015-2(c) |
|
700 |
|
May 2045 |
Tower Revenue Notes, Series
2018-2(c) |
|
750 |
|
July 2048 |
Finance leases and other
obligations |
|
225 |
|
Various |
Total secured debt |
$ |
3,289 |
|
|
2016 Revolver |
|
— |
|
June 2024 |
2016 Term Loan ACommercial Paper
Notes(d) |
2,282— |
|
June 2024N/A |
3.400% Senior Notes |
|
850 |
|
Feb. 2021 |
2.250% Senior Notes |
|
700 |
|
Sept. 2021 |
4.875% Senior Notes |
|
850 |
|
Apr. 2022 |
5.250% Senior Notes |
|
1,650 |
|
Jan. 2023 |
3.150% Senior Notes |
|
750 |
|
July 2023 |
3.200% Senior Notes |
|
750 |
|
Sept. 2024 |
1.350% Senior notes |
|
500 |
|
July 2025 |
4.450% Senior Notes |
|
900 |
|
Feb. 2026 |
3.700% Senior Notes |
|
750 |
|
June 2026 |
4.000% Senior Notes |
|
500 |
|
Mar. 2027 |
3.650% Senior Notes |
|
1,000 |
|
Sept. 2027 |
3.800% Senior Notes |
|
1,000 |
|
Feb. 2028 |
4.300% Senior Notes |
|
600 |
|
Feb. 2029 |
3.100% Senior Notes |
|
550 |
|
Nov. 2029 |
3.300% Senior Notes |
|
750 |
|
July 2030 |
2.250% Senior Notes |
|
1,100 |
|
Jan. 2031 |
4.750% Senior Notes |
|
350 |
|
May 2047 |
5.200% Senior Notes |
|
400 |
|
Feb. 2049 |
4.000% Senior Notes |
|
350 |
|
Nov. 2049 |
4.150% Senior notes |
|
500 |
|
July 2050 |
3.250% Senior Notes |
|
900 |
|
Jan. 2051 |
Total unsecured debt |
$ |
17,982 |
|
|
Total net debt |
$ |
18,598 |
|
|
(a) Does not reflect (1) the July 2020 redemption of all of the
outstanding 3.400% Senior Notes due 2021, 2.250% Senior Notes due
2021 and 4.875% Senior Notes due 2022 (collectively, "Senior
Notes") and (2) the use of net proceeds from the June 2020 senior
notes offering, together with available cash, to redeem the Senior
Notes.
(b) The Senior Secured Notes, 2009-1, Class A-2 principal
amortizes during the period beginning in September 2019 and ending
in August 2029.
(c) The Senior Secured Tower Revenue Notes, Series 2015-1 and
2015-2 have anticipated repayment dates in 2022 and 2025,
respectively. The Senior Secured Tower Revenue Notes, Series 2018-1
and 2018-2 have anticipated repayment dates in 2023 and 2028,
respectively.
(d) The maturities of the Commercial Paper Notes, when
outstanding, may vary but may not exceed 397 days from the date of
issue.
Net Debt to Last Quarter Annualized Adjusted EBITDA is
computed as follows:
(dollars in millions) |
For the Three Months Ended June 30, 2020 |
Total face value of debt |
$ |
21,271 |
|
Ending cash, cash equivalents
and restricted cash |
2,673 |
|
Total Net Debt |
$ |
18,598 |
|
|
|
Adjusted EBITDA for the three
months ended June 30, 2020 |
$ |
831 |
|
Last quarter annualized
Adjusted EBITDA |
3,324 |
|
Net Debt to Last
Quarter Annualized Adjusted EBITDA |
5.6 |
x |
Components of Capital
Expenditures:
|
For the Three Months Ended |
(in millions) |
June 30, 2020 |
|
June 30, 2019 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
16 |
|
$ |
— |
|
$ |
— |
|
$ |
16 |
|
|
$ |
10 |
|
$ |
— |
|
$ |
— |
|
$ |
10 |
|
Communications infrastructure improvements and other capital
projects |
72 |
|
295 |
|
7 |
|
$ |
374 |
|
|
116 |
|
359 |
|
— |
|
475 |
|
Sustaining |
4 |
|
15 |
|
5 |
|
$ |
24 |
|
|
10 |
|
12 |
|
8 |
|
30 |
|
Integration |
— |
|
— |
|
— |
|
$ |
— |
|
|
— |
|
— |
|
4 |
|
4 |
|
Total |
$ |
92 |
|
$ |
310 |
|
$ |
12 |
|
$ |
414 |
|
|
$ |
136 |
|
$ |
371 |
|
$ |
12 |
|
$ |
518 |
|
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 news release contains forward-looking
statements and information that are based on our management's
current expectations as of the date of this news release.
Statements that are not historical facts are hereby identified as
forward-looking statements. In addition, words such as "estimate,"
"see," "anticipate," "project," "plan," "intend," "believe,"
"expect," "likely," "predicted," "positioned," "continue,"
"target," and any variations of these words and similar expressions
are intended to identify forward-looking statements. Such
statements include our Outlook and plans, projections, and
estimates regarding (1) potential benefits, growth, returns,
opportunities and tenant and shareholder value which may be derived
from our business, assets, investments, acquisitions and dividends,
(2) our business, strategy, strategic position, business model and
capabilities and the strength thereof, (3) industry fundamentals
and driving factors for improvements in such fundamentals, (4) our
customers' investment, including investment cycles, in network
improvements (including 5G), the trends driving such improvements
and opportunities created thereby, (5) impact of the COVID-19
pandemic on our business, (6) our long-and short-term prospects and
the trends, events and industry activities impacting our business,
(7) opportunities we see to deliver value to our shareholders, (8)
our dividends and our dividend (including on a per share basis)
growth rate, including its driving factors, and targets,
(9) debt maturities, (10) strategic position of our portfolio
of assets, (11) assumed conversion of preferred stock and the
impact therefrom, (12) cash flows, including growth thereof,
(13) leasing activity, (14) tenant non-renewals, including the
impact and timing thereof, (15) capital expenditures, including
sustaining and discretionary capital expenditures, and the timing
thereof, (16) straight-line adjustments, (17) revenues and growth
thereof and benefits derived therefrom, (18) net income (loss)
(including on a per share basis), (19) Adjusted EBITDA,
including the impact of the timing of certain components thereof
and growth thereof, (20) expenses, including interest expense
and amortization of deferred financing costs, (21) FFO (including
on a per share basis) and growth thereof, (22) AFFO (including on a
per share basis) and growth thereof and corresponding driving
factors, (23) Organic Contribution to Site Rental Revenues and its
components, including contributions therefrom, (24) our
weighted-average common shares outstanding (including on a diluted
basis) and growth thereof, (25) services contribution, and
(26) the utility of certain financial measures, including
non-GAAP financial measures. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions prevailing
market conditions and the following:
- Our business depends on the demand for our communications
infrastructure, driven primarily by demand for data, and we may be
adversely affected by any slowdown in such demand. Additionally, a
reduction in the amount or change in the mix of network investment
by our tenants may materially and adversely affect our business
(including reducing demand for our communications infrastructure or
services).
- A substantial portion of our revenues is derived from a small
number of tenants, and the loss, consolidation or financial
instability of any of such tenants may materially decrease revenues
or reduce demand for our communications infrastructure and
services.
- The expansion or development of our business, including through
acquisitions, increased product offerings or other strategic growth
opportunities, may cause disruptions in our business, which may
have an adverse effect on our business, operations or financial
results.
- Our Fiber segment has expanded rapidly, and the Fiber business
model contains certain differences from our Towers business model,
resulting in different operational risks. If we do not successfully
operate our Fiber business model or identify or manage the related
operational risks, such operations may produce results that are
lower 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, our business may be adversely affected.
- Our services business has historically experienced significant
volatility in demand, which reduces the predictability of our
results.
- The restatement of our previously issued financial statements,
the errors that resulted in such restatement, the material weakness
that was identified in our internal control over financial
reporting and the determination that our internal control over
financial reporting and disclosure controls and procedures were not
effective, could result in loss of investor confidence, shareholder
litigation or governmental proceedings or investigations, any of
which could cause the market value of our common stock or debt
securities to decline or impact our ability to access the capital
markets.
- New wireless technologies may not deploy or be adopted by
tenants as rapidly or in the manner projected.
- If we fail to comply with laws or regulations which regulate
our business and which may change at any time, we may be fined or
even lose our right to conduct some of our business.
- If radio frequency emissions from wireless handsets or
equipment on our communications infrastructure are demonstrated to
cause negative health effects, potential future claims could
adversely affect our operations, costs or revenues.
- Certain provisions of our restated certificate of
incorporation, amended and restated by-laws and operative
agreements, and domestic and international competition laws may
make it more difficult for a third party to acquire control of us
or for us to acquire control of a third party, even if such a
change in control would be beneficial to our stockholders.
- We may be vulnerable to security breaches or other unforeseen
events that could adversely affect our operations, business, and
reputation.
- Future dividend payments to our stockholders will reduce the
availability of our cash on hand available to fund future
discretionary investments, and may result in a need to incur
indebtedness or issue equity securities to fund growth
opportunities. In such event, the then current economic, credit
market or equity market conditions will impact the availability or
cost of such financing, which may hinder our ability to grow our
per share results of operations.
- Remaining qualified to be taxed as a REIT involves highly
technical and complex provisions of the U.S. Internal Revenue Code.
Failure to remain qualified as a REIT would result in our inability
to deduct dividends to stockholders when computing our taxable
income, which would reduce our available cash.
- If we fail to pay scheduled dividends on our 6.875% Mandatory
Convertible Preferred Stock (prior to or in connection with the
automatic conversion in August 2020), 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.
- The impact of COVID-19 and related risks could materially
affect our financial position, results of operations and cash
flows.
Should one or more of these or other risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expected.
More information about potential risk factors which could affect
our results is included in our filings with the SEC. Our filings
with the SEC are available through the SEC website at www.sec.gov
or through our investor relations website at
investor.crowncastle.com. We use our investor relations website to
disclose information about us that may be deemed to be material. We
encourage investors, the media and others interested in us to visit
our investor relations website from time to time to review
up-to-date information or to sign up for e-mail alerts to be
notified when new or updated information is posted on the site.
As used in this release, the term "including,"
and any variation thereof, means "including without
limitation."
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED BALANCE SHEET (UNAUDITED)(Amounts in
millions, except par values) |
|
June 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
2,514 |
|
|
$ |
196 |
|
Restricted cash |
154 |
|
|
137 |
|
Receivables, net |
439 |
|
|
596 |
|
Prepaid expenses |
137 |
|
|
107 |
|
Other current assets |
192 |
|
|
168 |
|
Total current assets |
3,436 |
|
|
1,204 |
|
Deferred site rental
receivables |
1,428 |
|
|
1,424 |
|
Property and equipment,
net |
14,963 |
|
|
14,666 |
|
Operating lease right-of-use
assets |
6,251 |
|
|
6,133 |
|
Goodwill |
10,078 |
|
|
10,078 |
|
Other intangible assets,
net |
4,626 |
|
|
4,836 |
|
Other assets, net |
119 |
|
|
116 |
|
Total assets |
$ |
40,901 |
|
|
$ |
38,457 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
280 |
|
|
$ |
334 |
|
Accrued interest |
182 |
|
|
169 |
|
Deferred revenues |
763 |
|
|
657 |
|
Other accrued liabilities |
333 |
|
|
361 |
|
Current maturities of debt and other obligations |
99 |
|
|
100 |
|
Current portion of operating lease liabilities |
307 |
|
|
299 |
|
Total current liabilities |
1,964 |
|
|
1,920 |
|
Debt and other long-term
obligations |
21,014 |
|
|
18,021 |
|
Operating lease
liabilities |
5,615 |
|
|
5,511 |
|
Other long-term
liabilities |
2,482 |
|
|
2,516 |
|
Total liabilities |
31,075 |
|
|
27,968 |
|
Commitments and
contingencies |
|
|
|
CCIC stockholders'
equity: |
|
|
|
Common stock, $0.01 par value; 600 shares authorized; shares issued
and outstanding: June 30, 2020—417 and December 31,
2019—416 |
4 |
|
|
4 |
|
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par
value; 20 shares authorized; shares issued and outstanding: June
30, 2020—2 and December 31, 2019—2; aggregate liquidation
value: June 30, 2020—$1,650 and December 31, 2019—$1,650 |
— |
|
|
— |
|
Additional paid-in capital |
17,872 |
|
|
17,855 |
|
Accumulated other comprehensive income (loss) |
(6 |
) |
|
(5 |
) |
Dividends/distributions in excess of earnings |
(8,044 |
) |
|
(7,365 |
) |
Total equity |
9,826 |
|
|
10,489 |
|
Total liabilities and equity |
$ |
40,901 |
|
|
$ |
38,457 |
|
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)(Amounts
in millions, except per share amounts) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(As Restated)(a) |
|
|
|
(As Restated)(a) |
Net revenues: |
|
|
|
|
|
|
|
Site rental |
$ |
1,319 |
|
|
$ |
1,263 |
|
|
$ |
2,629 |
|
|
$ |
2,505 |
|
Services and other |
121 |
|
|
184 |
|
|
232 |
|
|
350 |
|
Net revenues |
1,440 |
|
|
1,447 |
|
|
2,861 |
|
|
2,855 |
|
Operating expenses: |
|
|
|
|
|
|
|
Costs of operations (exclusive of depreciation, amortization and
accretion): |
|
|
|
|
|
|
|
Site rental |
378 |
|
|
365 |
|
|
752 |
|
|
726 |
|
Services and other |
108 |
|
|
137 |
|
|
207 |
|
|
261 |
|
Selling, general and administrative |
164 |
|
|
155 |
|
|
339 |
|
|
307 |
|
Asset write-down charges |
3 |
|
|
6 |
|
|
7 |
|
|
12 |
|
Acquisition and integration costs |
2 |
|
|
2 |
|
|
7 |
|
|
6 |
|
Depreciation, amortization and accretion |
402 |
|
|
393 |
|
|
801 |
|
|
787 |
|
Total operating expenses |
1,057 |
|
|
1,058 |
|
|
2,113 |
|
|
2,099 |
|
Operating income (loss) |
383 |
|
|
389 |
|
|
748 |
|
|
756 |
|
Interest expense and
amortization of deferred financing costs |
(178 |
) |
|
(169 |
) |
|
(353 |
) |
|
(337 |
) |
Gains (losses) on retirement
of long-term obligations |
— |
|
|
(1 |
) |
|
— |
|
|
(2 |
) |
Interest income |
1 |
|
|
1 |
|
|
2 |
|
|
3 |
|
Other income (expense) |
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
Income (loss) before income
taxes |
206 |
|
|
220 |
|
|
397 |
|
|
419 |
|
Benefit (provision) for income
taxes |
(6 |
) |
|
(4 |
) |
|
(11 |
) |
|
(10 |
) |
Net income (loss) |
200 |
|
|
216 |
|
|
386 |
|
|
409 |
|
Dividends/distributions on
preferred stock |
(28 |
) |
|
(28 |
) |
|
(57 |
) |
|
(57 |
) |
Net income (loss) attributable
to CCIC common stockholders |
$ |
172 |
|
|
$ |
188 |
|
|
$ |
329 |
|
|
$ |
352 |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to CCIC common stockholders, per common share: |
|
|
|
|
|
|
|
Net income (loss) attributable to CCIC common stockholders,
basic |
$ |
0.41 |
|
|
$ |
0.45 |
|
|
$ |
0.79 |
|
|
$ |
0.85 |
|
Net income (loss) attributable to CCIC common stockholders,
diluted |
$ |
0.41 |
|
|
$ |
0.45 |
|
|
$ |
0.79 |
|
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
417 |
|
|
416 |
|
|
416 |
|
|
415 |
|
Diluted |
419 |
|
|
418 |
|
|
418 |
|
|
417 |
|
(a) See our Annual Report on Form 10-K for
the year ended December 31, 2019 for further information.
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)(In
millions of dollars) |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
|
|
(As Restated)(a) |
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
386 |
|
|
$ |
409 |
|
Adjustments to reconcile net
income (loss) to net cash provided by (used for) operating
activities: |
|
|
|
Depreciation, amortization and accretion |
801 |
|
|
787 |
|
(Gains) losses on retirement of long-term obligations |
— |
|
|
2 |
|
Amortization of deferred financing costs and other non-cash
interest |
3 |
|
|
1 |
|
Stock-based compensation expense |
75 |
|
|
62 |
|
Asset write-down charges |
7 |
|
|
12 |
|
Deferred income tax (benefit) provision |
2 |
|
|
1 |
|
Other non-cash adjustments, net |
2 |
|
|
3 |
|
Changes in assets and liabilities, excluding the effects of
acquisitions: |
|
|
|
Increase (decrease) in liabilities |
27 |
|
|
101 |
|
Decrease (increase) in assets |
106 |
|
|
(151 |
) |
Net cash provided by (used for) operating activities |
1,409 |
|
|
1,227 |
|
Cash flows from
investing activities: |
|
|
|
Capital expenditures |
(861 |
) |
|
(998 |
) |
Payments for acquisitions, net of cash acquired |
(16 |
) |
|
(13 |
) |
Other investing activities, net |
(13 |
) |
|
1 |
|
Net cash provided by (used for) investing activities |
(890 |
) |
|
(1,010 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from issuance of long-term debt |
3,733 |
|
|
995 |
|
Principal payments on debt and other long-term obligations |
(53 |
) |
|
(36 |
) |
Purchases and redemptions of long-term debt |
— |
|
|
(12 |
) |
Borrowings under revolving credit facility |
1,340 |
|
|
1,195 |
|
Payments under revolving credit facility |
(1,865 |
) |
|
(1,785 |
) |
Net borrowings (repayments) under commercial paper program |
(155 |
) |
|
500 |
|
Payments for financing costs |
(38 |
) |
|
(14 |
) |
Purchases of common stock |
(74 |
) |
|
(43 |
) |
Dividends/distributions paid on common stock |
(1,014 |
) |
|
(944 |
) |
Dividends/distributions paid on preferred stock |
(57 |
) |
|
(57 |
) |
Net cash provided by (used for) financing activities |
1,817 |
|
|
(201 |
) |
Net increase
(decrease) in cash, cash equivalents, and restricted
cash |
2,336 |
|
|
16 |
|
Effect of exchange
rate changes on cash |
(1 |
) |
|
— |
|
Cash, cash equivalents, and restricted cash at beginning of
period |
338 |
|
|
413 |
|
Cash, cash
equivalents, and restricted cash at end of period |
$ |
2,673 |
|
|
$ |
429 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Interest paid |
336 |
|
|
318 |
|
Income taxes paid |
1 |
|
|
9 |
|
(a) See our Annual Report on Form 10-K for
the year ended December 31, 2019 for further information.
|
CROWN CASTLE INTERNATIONAL CORP.SEGMENT
OPERATING RESULTS (UNAUDITED)(In millions of dollars) |
SEGMENT OPERATING RESULTS |
|
Three Months Ended June 30, 2020 |
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
(As Restated)(e) |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
868 |
|
|
$ |
451 |
|
|
|
|
$ |
1,319 |
|
|
$ |
841 |
|
|
$ |
422 |
|
|
|
|
$ |
1,263 |
|
Segment services and other
revenues |
117 |
|
|
4 |
|
|
|
|
121 |
|
|
181 |
|
|
3 |
|
|
|
|
184 |
|
Segment revenues |
985 |
|
|
455 |
|
|
|
|
1,440 |
|
|
1,022 |
|
|
425 |
|
|
|
|
1,447 |
|
Segment site rental cost of
operations |
218 |
|
|
150 |
|
|
|
|
368 |
|
|
218 |
|
|
136 |
|
|
|
|
354 |
|
Segment services and other
cost of operations |
104 |
|
|
2 |
|
|
|
|
106 |
|
|
133 |
|
|
2 |
|
|
|
|
135 |
|
Segment cost of
operations(a)(b) |
322 |
|
|
152 |
|
|
|
|
474 |
|
|
351 |
|
|
138 |
|
|
|
|
489 |
|
Segment site rental gross
margin(c) |
650 |
|
|
301 |
|
|
|
|
951 |
|
|
623 |
|
|
286 |
|
|
|
|
909 |
|
Segment services and other
gross margin(c) |
13 |
|
|
2 |
|
|
|
|
15 |
|
|
48 |
|
|
1 |
|
|
|
|
49 |
|
Segment selling, general and
administrative expenses(b) |
24 |
|
|
45 |
|
|
|
|
69 |
|
|
24 |
|
|
51 |
|
|
|
|
75 |
|
Segment operating
profit(c) |
639 |
|
|
258 |
|
|
|
|
897 |
|
|
647 |
|
|
236 |
|
|
|
|
883 |
|
Other selling, general and
administrative expenses(b) |
|
|
|
|
$ |
65 |
|
|
65 |
|
|
|
|
|
|
$ |
56 |
|
|
56 |
|
Stock-based compensation
expense |
|
|
|
|
37 |
|
|
37 |
|
|
|
|
|
|
32 |
|
|
32 |
|
Depreciation, amortization and
accretion |
|
|
|
|
402 |
|
|
402 |
|
|
|
|
|
|
393 |
|
|
393 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
178 |
|
|
178 |
|
|
|
|
|
|
169 |
|
|
169 |
|
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
9 |
|
|
9 |
|
|
|
|
|
|
13 |
|
|
13 |
|
Income (loss) before income
taxes |
|
|
|
|
|
|
$ |
206 |
|
|
|
|
|
|
|
|
$ |
220 |
|
FIBER SEGMENT SITE RENTAL REVENUES SUMMARY |
|
|
Three Months Ended June 30, |
|
|
2020 |
|
2019 |
|
|
Fiber Solutions |
|
Small Cells |
|
Total |
|
Fiber Solutions |
|
Small Cells |
|
Total |
Site rental revenues |
$ |
315 |
$ |
136 |
$ |
451 |
$ |
306 |
$ |
116 |
$ |
422 |
(a) Exclusive of depreciation, amortization and accretion
shown separately.(b) Segment cost of operations excludes (1)
stock-based compensation expense of $7 million and $8 million for
the three months ended June 30, 2020 and 2019, respectively and (2)
prepaid lease purchase price adjustments of $4 million and $5
million for the three months ended June 30, 2020 and 2019,
respectively. Selling, general and administrative expenses
exclude stock-based compensation expense of $30 million and $24
million for the three months ended June 30, 2020 and 2019,
respectively.(c) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" herein for a discussion of our
definitions of segment site rental gross margin, segment services
and other gross margin and segment operating profit.(d) See
condensed consolidated statement of operations for further
information.(e) See our Annual Report on Form 10-K for the
year ended December 31, 2019 for further information.
SEGMENT OPERATING RESULTS |
|
Six Months Ended June 30, 2020 |
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
(As Restated)(e) |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
1,735 |
|
|
$ |
894 |
|
|
|
|
$ |
2,629 |
|
|
$ |
1,669 |
|
|
$ |
836 |
|
|
|
|
$ |
2,505 |
|
Segment services and other
revenues |
225 |
|
|
7 |
|
|
|
|
232 |
|
|
343 |
|
|
7 |
|
|
|
|
350 |
|
Segment revenues |
1,960 |
|
|
901 |
|
|
|
|
2,861 |
|
|
2,012 |
|
|
843 |
|
|
|
|
2,855 |
|
Segment site rental cost of
operations |
432 |
|
|
302 |
|
|
|
|
734 |
|
|
429 |
|
|
277 |
|
|
|
|
706 |
|
Segment services and other
cost of operations |
199 |
|
|
4 |
|
|
|
|
203 |
|
|
252 |
|
|
5 |
|
|
|
|
257 |
|
Segment cost of
operations(a)(b) |
631 |
|
|
306 |
|
|
|
|
937 |
|
|
681 |
|
|
282 |
|
|
|
|
963 |
|
Segment site rental gross
margin(c) |
1,303 |
|
|
592 |
|
|
|
|
1,895 |
|
|
1,240 |
|
|
559 |
|
|
|
|
1,799 |
|
Segment services and other
gross margin(c) |
26 |
|
|
3 |
|
|
|
|
29 |
|
|
91 |
|
|
2 |
|
|
|
|
93 |
|
Segment selling, general and
administrative expenses(b) |
48 |
|
|
96 |
|
|
|
|
144 |
|
|
50 |
|
|
98 |
|
|
|
|
148 |
|
Segment operating
profit(c) |
1,281 |
|
|
499 |
|
|
|
|
1,780 |
|
|
1,281 |
|
|
463 |
|
|
|
|
1,744 |
|
Other selling, general and
administrative expenses(b) |
|
|
|
|
$ |
135 |
|
|
135 |
|
|
|
|
|
|
$ |
112 |
|
|
112 |
|
Stock-based compensation
expense |
|
|
|
|
73 |
|
|
73 |
|
|
|
|
|
|
61 |
|
|
61 |
|
Depreciation, amortization and
accretion |
|
|
|
|
801 |
|
|
801 |
|
|
|
|
|
|
787 |
|
|
787 |
|
Interest expense and
amortization of deferred financing costs |
|
|
|
|
353 |
|
|
353 |
|
|
|
|
|
|
337 |
|
|
337 |
|
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
21 |
|
|
21 |
|
|
|
|
|
|
28 |
|
|
28 |
|
Income (loss) before income
taxes |
|
|
|
|
|
|
$ |
397 |
|
|
|
|
|
|
|
|
$ |
419 |
|
FIBER
SEGMENT SITE RENTAL REVENUES SUMMARY |
|
|
Six Months Ended June 30, |
|
|
2020 |
|
2019 |
|
|
Fiber Solutions |
|
Small Cells |
|
Total |
|
Fiber Solutions |
|
Small Cells |
|
Total |
Site rental
revenues |
$ |
627 |
$ |
267 |
$ |
894 |
$ |
609 |
$ |
227 |
$ |
836 |
(a) Exclusive of depreciation,
amortization and accretion shown separately.(b) Segment cost of
operations excludes (1) stock-based compensation expense of $13
million and $14 million for the six months ended June 30, 2020 and
2019, respectively and (2) prepaid lease purchase price adjustments
of $9 million and $10 million for the six months ended June 30,
2020 and 2019, respectively. Selling, general and
administrative expenses exclude stock-based compensation expense of
$60 million and $47 million for the six months ended June 30 2020
and 2019, respectively.(c) See "Non-GAAP Financial Measures,
Segment Measures and Other Calculations" herein for a discussion of
our definitions of segment site rental gross margin, segment
services and other gross margin and segment operating profit.(d)
See condensed consolidated statement of operations for further
information.(e) See our Annual Report on Form 10-K for the
year ended December 31, 2019 for further information.
Contacts: Dan Schlanger, CFO Ben Lowe, VP &
Treasurer Crown Castle International Corp. 713-570-3050
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