HOUSTON, April 29, 2020 (GLOBE NEWSWIRE) — Crown Castle International Corp. (NYSE: CCI) (“Crown Castle”) today reported results for the first quarter ended March 31, 2020 and maintained its full year 2020 Outlook.
Attributable to CCIC common stockholders.See “Non-GAAP Financial Measures, Segment Measures and Other Calculations” included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).As issued on February 26, 2020.“In the first quarter, we delivered strong results that were in line with our expectations, positioning us to generate attractive growth in cash flows and dividends per share for full year 2020,” stated Jay Brown, Crown Castle’s Chief Executive Officer. “Our business continues to perform well during this period of unprecedented uncertainty with COVID-19, and we are focused on taking the appropriate steps to deliver on our long-term annual dividend per share growth target of 7% to 8%. To this end, we have prioritized the health and safety of our workforce, while continuing to deliver critical infrastructure for our customers and the communities in which we operate. I’d like to thank our team for quickly adjusting to a new operating environment and prioritizing the needs of our customers. Although COVID-19 has the potential to create challenges in the near term, we remain confident our long-term contracted revenues will allow us to deliver value to shareholders through a high quality and growing dividend.“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 to what will likely be another decade-long investment cycle for our customers with the deployment of 5G, I am excited about the opportunity we see for Crown Castle to deliver long-term value to our shareholders.”
RESULTS FOR THE QUARTERThe table below sets forth select financial results for the quarter ended March 31, 2020 and March 31, 2019.Attributable to CCIC common stockholders.See “Non-GAAP Financial Measures, Segment Measures and Other Calculations” included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information.HIGHLIGHTS FROM THE QUARTERSite rental revenues. Site rental revenues grew approximately 5.5%, or $68 million, from first quarter 2019 to first quarter 2020, inclusive of approximately $71 million in Organic Contribution to Site Rental Revenues and a $3 million decrease in straight-lined revenues. The $71 million in Organic Contribution to Site Rental Revenues represents approximately 5.8% growth, comprised of approximately 9.9% growth from new leasing activity and contracted tenant escalations, net of approximately 4.1% from tenant non-renewals.Capital Expenditures. Capital expenditures during the quarter were $447 million, comprised of $13 million of discretionary land purchases, $21 million of sustaining capital expenditures and $413 million of discretionary capital expenditures. The discretionary capital expenditures included approximately $319 million attributable to Fiber and approximately $87 million attributable to Towers.Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $513 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, resulting in $5 billion of undrawn capacity available under its revolving credit facility.“The performance of our business during this period of significant disruption highlights the durability in the demand for our critical communications infrastructure and the strength of our strategy,” stated Dan Schlanger, Crown Castle’s Chief Financial Officer. “We took steps to further improve our strong balance sheet position by opportunistically accessing the bond market in April to repay existing borrowings under our revolving credit facility. With an undrawn $5 billion revolving credit facility combined with our investment grade balance sheet and no debt maturities this year, we are well positioned to continue to navigate the current environment while investing in new assets that we believe will add to long-term growth in dividends per share.”OUTLOOKThis Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle’s filings with the 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:Exclusive of depreciation, amortization and accretion.See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.See reconciliation of “components of current outlook for interest expense and amortization of deferred financing costs” herein for a discussion of non-cash interest expense.Attributable to CCIC common stockholders.Full Year 2020 Outlook
The 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.Attributable to CCIC common stockholders.See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.As issued on February 26, 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 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/148d1e91-de62-424f-9a8f-56625850cfc4The 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/55b7d288-2048-4fed-8808-8ad9c464df18Additional information is available in Crown Castle’s quarterly Supplemental Information Package posted in the Investors section of our website.CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, April 30, 2020, at 10:30 a.m. Eastern time to discuss its first quarter 2020 results. The conference call may be accessed by dialing 800-239-9838 and asking for the Crown Castle call (access code 2629992) 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, April 30, 2020, through 1:30 p.m. Eastern time on Wednesday, July 29, 2020, and may be accessed by dialing 888-203-1112 and using access code 2629992. 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 CASTLE
Crown 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 MeasuresAdjusted 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 MeasuresSegment 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 CalculationsDiscretionary 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:(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:(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:(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:(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 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.
For Comparative Purposes – Reconciliation of Previous Outlook for Adjusted EBITDA:(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:(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 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 March 31, 2020 and 2019 are as follows:(a) 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.
(b) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c) Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d) See “Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein.
(e) Represents the contribution from recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
(f) Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.
(g) 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:(a) 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.
(b) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c) Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d) See “Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein.
(e) Represents the contribution from recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
(f) Calculated based on midpoint of full year 2020 Outlook.
(g) Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.
Components of Historical Interest Expense and Amortization of Deferred Financing Costs:Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:Debt balances and maturity dates as of March 31, 2020 are as follows (a):
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