Crown Castle Reports Third Quarter 2014 Results, Provides Outlook for 2015 and Announces Increase to Common Stock Dividend
HIGHLIGHTS
-
Announces increase in dividend rate to
$3.28 per common share annually, or 75% of 2015 expected AFFO - Exceeds third quarter Outlook for Adjusted EBITDA and AFFO
- Provides 2015 Outlook with growth muted by headwinds from tenant non-renewals associated with carrier consolidation
"Given the quality and track record of our business and sustained runway of carrier investment activity, I am pleased to announce that we are raising our annual dividend rate from
CONSOLIDATED FINANCIAL RESULTS
Total revenues for the third quarter of 2014 increased 24% to
Adjusted Funds from Operations ("AFFO") increased 29% to
Net income attributable to CCIC common stockholders for the third quarter of 2014 was
DIVIDEND ANNOUNCEMENT
The factors considered in
- Aligning of shareholder returns to the core business model
-
Reinforcing confidence in the long-term, recurring nature of
Crown Castle's cash flows - Retaining sufficient liquidity to achieve long-term, embedded organic growth opportunity
- Increasing the certainty of a significant component of shareholder returns given an expectation that future growth rates are likely to be lower than historical growth rates
-
Potential to lower
Crown Castle's cost of capital -
Maintaining balance sheet profile consistent with investment grade credit rating objective
FINANCING AND INVESTING ACTIVITIES
During the third quarter of 2014,
During third quarter 2014,
On September 30, 2014,
As of September 30, 2014,
As of September 30, 2014,
"Since the early days of
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
As reflected in the table below,
At the midpoint of 2014 Outlook for site rental revenues,
The increase in the midpoint of 2014 Outlook for Adjusted EBITDA primarily reflects higher expected site rental and network services gross margin contribution. The increase in the midpoint of 2014 Outlook for AFFO is attributable to the benefit from the aforementioned increase in Adjusted EBITDA partially offset by an anticipated increase in straight-line revenue adjustment related to the aforementioned Australian Lease Extension.
Compared to third quarter 2014, the fourth quarter 2014 Outlook for AFFO assumes an increase of
The midpoint of 2015 Outlook for site rental revenue growth is expected to be approximately
A chart accompanying this release is available at http://media.globenewswire.com/cache/7657/file/29904.pdf
As previously disclosed, based on
Additionally, during 2015,
The midpoint of 2015 Outlook for Adjusted EBITDA and AFFO assumes network services gross margin contribution remains consistent with the levels expected for 2014. Further,
The following table sets forth
(in millions, except per share amounts) | Fourth Quarter 2014 | Full Year 2014 | Full Year 2015 |
Site rental revenues | $755 to $760 | $3,001 to $3,006 | $3,047 to $3,067 |
Site rental cost of operations | $234 to $239 | $940 to $945 | $964 to $979 |
Site rental gross margin | $519 to $524 | $2,058 to $2,063 | $2,073 to $2,093 |
Adjusted EBITDA | $538 to $543 | $2,128 to $2,133 | $2,126 to $2,146 |
Interest expense and amortization of deferred financing costs(a) | $138 to $143 | $571 to $576 | $521 to $536 |
FFO | $353 to $358 | $1,317 to $1,322 | $1,429 to $1,449 |
AFFO | $346 to $351 | $1,396 to $1,401 | $1,437 to $1,457 |
AFFO per share(b) | $1.04 to $1.05 | $4.19 to $4.20 | $4.31 to $4.37 |
Net income (loss) | $97 to $130 | $342 to $375 | $428 to $512 |
Net income (loss) per share - diluted(b) | $0.29 to $0.39 | $1.03 to $1.13 | $1.28 to $1.54 |
Net income (loss) attributable to CCIC common stockholders | $84 to $121 | $300 to $337 | $382 to $474 |
Net income (loss) attributable to CCIC common stockholders per share - diluted(b) | $0.25 to $0.36 | $0.90 to $1.01 | $1.15 to $1.42 |
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. | |||
(b) Based on 333.2 million diluted shares outstanding as of September 30, 2014. |
CONFERENCE CALL DETAILS
A telephonic replay of the conference call will be available from
ABOUT
Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
During the first quarter of 2014,
Adjusted EBITDA.
Funds from Operations ("FFO").
FFO per share.
FFO, as previously defined.
Adjusted Funds from Operations ("AFFO").
AFFO per share.
AFFO, as previously defined.
Site Rental Revenues, as Adjusted.
Organic Site Rental Revenues.
Sustaining capital expenditures.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA for the three months ended
For the Three Months Ended | ||
September 30, 2014 | September 30, 2013 | |
(in millions) | ||
Net income (loss) | $ 108.0 | $ 46.5 |
Adjustments to increase (decrease) net income (loss): | ||
Asset write-down charges | 5.3 | 3.9 |
Acquisition and integration costs | 4.1 | 4.4 |
Depreciation, amortization and accretion | 254.9 | 195.4 |
Amortization of prepaid lease purchase price adjustments | 5.0 | 3.9 |
Interest expense and amortization of deferred financing costs(a) | 141.3 | 142.0 |
Interest income | (0.2) | (0.2) |
Other income (expense) | 0.7 | 0.6 |
Benefit (provision) for income taxes | 0.5 | 34.0 |
Stock-based compensation expense | 13.5 | 10.2 |
Adjusted EBITDA(b) | $ 533.0 | $ 440.6 |
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. | ||
(b) The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
Adjusted EBITDA for the quarter ending December 31, 2014 and the years ending December 31, 2014 and December 31, 2015 are forecasted as follows:
Q4 2014 | Full Year 2014 | Full Year 2015 | |
(in millions) | Outlook | Outlook | Outlook |
Net income (loss) | $97 to $130 | $342 to $375 | $428 to $512 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $4 to $6 | $15 to $17 | $16 to $26 |
Acquisition and integration costs | $2 to $6 | $31 to $35 | $0 to $0 |
Depreciation, amortization and accretion | $252 to $257 | $1,011 to $1,016 | $1,007 to $1,027 |
Amortization of prepaid lease purchase price adjustments | $4 to $6 | $18 to $20 | $19 to $21 |
Interest expense and amortization of deferred financing costs(a) | $138 to $143 | $571 to $576 | $521 to $536 |
Gains (losses) on retirement of long-term obligations | $0 to $0 | $45 to $45 | $0 to $0 |
Interest income | $(1) to $1 | $(2) to $0 | $(2) to $0 |
Other income (expense) | $(1) to $1 | $9 to $11 | $1 to $3 |
Benefit (provision) for income taxes | $1 to $5 | $1 to $5 | $7 to $15 |
Stock-based compensation expense | $14 to $16 | $59 to $61 | $65 to $70 |
Adjusted EBITDA(b) | $538 to $543 | $2,128 to $2,133 | $2,126 to $2,146 |
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense. | |||
(b) The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
FFO and AFFO for the quarter ending December 31, 2014 and the years ending December 31, 2014 and December 31, 2015 are forecasted as follows (based upon updated definitions):
Q4 2014 | Full Year 2014 | Full Year 2015 | |
(in millions, except share and per share amounts) | Outlook | Outlook | Outlook |
Net income | $97 to $130 | $342 to $375 | $428 to $512 |
Real estate related depreciation, amortization and accretion | $248 to $251 | $992 to $995 | $990 to $1,005 |
Asset write-down charges | $4 to $6 | $15 to $17 | $16 to $26 |
Adjustment for noncontrolling interest (a) | $(2) to $2 | $(6) to $(2) | $(6) to $2 |
Dividends on preferred stock | $(11) to $(11) | $(44) to $(44) | $(44) to $(44) |
FFO(c) | $353 to $358 | $1,317 to $1,322 | $1,429 to $1,449 |
FFO (from above) | $353 to $358 | $1,317 to $1,322 | $1,429 to $1,449 |
Adjustments to increase (decrease) FFO: | |||
Straight-line revenue | $(49) to $(44) | $(198) to $(193) | $(144) to $(129) |
Straight-line expense | $23 to $28 | $102 to $107 | $87 to $102 |
Stock-based compensation expense | $14 to $16 | $59 to $61 | $65 to $70 |
Non-cash portion of tax provision | $(2) to $3 | $(10) to $(5) | $(5) to $10 |
Non-real estate related depreciation, amortization and accretion | $4 to $6 | $19 to $21 | $17 to $22 |
Amortization of non-cash interest expense | $19 to $23 | $79 to $83 | $31 to $42 |
Other (income) expense | $(1) to $1 | $9 to $11 | $1 to $3 |
Gains (losses) on retirement of long-term obligations | $0 to $0 | $45 to $45 | $0 to $0 |
Acquisition and integration costs | $2 to $6 | $31 to $35 | $0 to $0 |
Adjustment for noncontrolling interest (a) | $2 to $(2) | $6 to $2 | $6 to $(2) |
Capital improvement capital expenditures | $(15) to $(13) | $(32) to $(30) | $(38) to $(33) |
Corporate capital expenditures | $(18) to $(16) | $(47) to $(45) | $(47) to $(42) |
AFFO(c) | $346 to $351 | $1,396 to $1,401 | $1,437 to $1,457 |
Weighted average common shares outstanding — diluted (b) | 333.2 | 333.2 | 333.2 |
AFFO per share (c) | $1.04 to $1.05 | $4.19 to $4.20 | $4.31 to $4.37 |
(a) Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. | |||
(b) Based on diluted shares outstanding as of September 30, 2014. | |||
(c) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of the definitions of FFO and AFFO. |
Organic Site Rental Revenue growth for the years ending December 31, 2014 and December 31, 2015 are forecasted as follows:
Midpoint of Full Year | Midpoint of Full Year | ||
(in millions of dollars) | Full Year 2013 | 2014 Outlook | 2015 Outlook |
GAAP site rental revenues | $ 2,504 | $ 3,004 | $ 3,057 |
Site rental straight-line revenues | (219) | (196) | (137) |
Other - Non-recurring | – | (5) | – |
Site Rental Revenues, as Adjusted(a)(c) | $ 2,285 | $ 2,803 | $ 2,921 |
Cash adjustments: | |||
FX and other | 10 | 8 | |
New tower acquisitions and builds | (379) | (5) | |
Organic Site Rental Revenues(a)(b)(c) | $ 2,434 | $ 2,924 | |
Year-Over-Year Revenue Growth | |||
GAAP site rental revenues | 19.9% | 1.8% | |
Site Rental Revenues, as Adjusted | 22.6% | 4.2% | |
Organic Site Rental Revenues(d)(e) | 6.5% | 4.3% | |
(a) Includes amortization of prepaid rent. | |||
(b) Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. | |||
(c) See "Non-GAAP Financial Measures and Other Calculations" herein. | |||
(d) Year-over-year Organic Site Rental Revenue growth for the years ending December 31, 2014 and December 31, 2015: |
|||
Midpoint of Full Year 2014 Outlook |
Midpoint of Full Year 2015 Outlook |
||
New leasing activity | 5.5% | 5.1% | |
Escalators | 3.6% | 3.3% | |
Organic Site Rental Revenue growth, before non-renewals | 9.1% | 8.5% | |
Non-renewals | (2.6)% | (4.2)% | |
Organic Site Rental Revenue growth | 6.5% | 4.3% | |
(e) Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
Organic Site Rental Revenue growth for the quarter ended September 30, 2014 is as follows:
Three Months Ended September 30, | ||
(in millions of dollars) | 2014 | 2013 |
Beginning towers as of September 30, 2013 | 31,619 | |
Net tower additions/(dispositions) | 9,795 | |
Ending towers as of September 30, 2014 | 41,414 | |
Reported GAAP site rental revenues | $ 752 | $ 621 |
Site rental straight-line revenues | (47) | (53) |
Site Rental Revenues, as Adjusted(a) | $ 705 | $ 567 |
Cash adjustments: | ||
FX and other | — | |
New tower acquisitions and builds | (98) | |
Organic Site Rental Revenues(b)(c) | $ 607 | |
Year-Over-Year Revenue Growth | ||
Reported GAAP site rental revenues | 21.1% | |
Site Rental Revenues, as Adjusted | 24.3% | |
Organic Site Rental Revenues(d)(e) | 7.0% | |
(a) Includes amortization of prepaid rent. | ||
(b) Includes Site Rental Revenues, as Adjusted from the construction of new small cell nodes. | ||
(c) See "Non-GAAP Financial Measures and Other Calculations" herein. | ||
(d) Quarter-over-quarter Organic Site Rental Revenue growth for the quarter ending September 30, 2014: | ||
Three Months Ended | ||
September 30, 2014 | ||
New leasing activity | 6.3% | |
Escalators | 3.7% | |
Organic Site Rental Revenue growth, before non-renewals | 10.0% | |
Non-renewals | (3.0)% | |
Organic Site Rental Revenue Growth | 7.0% | |
(e) Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
FFO and AFFO for the three and nine months ended September 30, 2014 and 2013 are computed as follows:
For the Three Months Ended | For the Nine Months Ended | |||||||
(in millions, except share and per share amounts) |
September 30, 2014 |
September 30, 2013 |
September 30, 2014 |
September 30, 2013 |
||||
Net income | $ 108.0 | $ 46.5 | $ 246.2 | $ 116.6 | ||||
Real estate related depreciation, amortization and accretion | 250.0 | 192.7 | 743.9 | 562.5 | ||||
Asset write-down charges | 5.3 | 3.9 | 11.1 | 10.7 | ||||
Adjustment for noncontrolling interest (a) | (1.1) | (0.6) | (3.7) | (2.9) | ||||
Dividends on preferred stock | (11.0) | — | (33.0) | — | ||||
FFO(c) | $ 351.2 | (e) | $ 242.4 | (d) | $ 964.5 | (e) | $ 686.9 | (d) |
Weighted average common shares outstanding — diluted | 333.2 | 291.4 | 333.0 | 292.0 | ||||
FFO per share(c) | $ 1.05 | $ 0.83 | $ 2.90 | $ 2.35 | ||||
FFO (from above) | $ 351.2 | $ 242.4 | $ 964.5 | $ 686.9 | ||||
Adjustments to increase (decrease) FFO: | ||||||||
Straight-line revenue | (46.8) | (53.3) | (149.7) | (169.6) | ||||
Straight-line expense | 25.0 | 20.6 | 78.8 | 61.9 | ||||
Stock-based compensation expense | 13.5 | 10.2 | 44.6 | 29.9 | ||||
Non-cash portion of tax provision | (2.6) | 32.5 | (b) | (7.5) | 83.3 | |||
Non-real estate related depreciation, amortization and accretion | 4.9 | 2.7 | 15.4 | 10.0 | ||||
Amortization of non-cash interest expense | 19.8 | 20.8 | 61.3 | 78.2 | ||||
Other (income) expense | 0.7 | 0.6 | 9.5 | 0.8 | ||||
Gains (losses) on retirement of long-term obligations | — | — | 44.6 | 36.5 | ||||
Acquisition and integration costs | 4.1 | 4.4 | 28.9 | 13.2 | ||||
Adjustment for noncontrolling interest (a) | 1.1 | 0.6 | 3.7 | 2.9 | ||||
Capital improvement capital expenditures | (7.9) | (3.7) | (16.2) | (9.5) | ||||
Corporate capital expenditures | (12.5) | (6.5) | (28.2) | (17.7) | ||||
AFFO(c) | $ 350.4 | $ 271.3 | $ 1,049.7 | $ 806.8 | ||||
Weighted average common shares outstanding — diluted | 333.2 | 291.4 | 333.0 | 292.0 | ||||
AFFO per share(c) | $ 1.05 | $ 0.93 | $ 3.15 | $ 2.76 | ||||
AFFO (from above) | $ 350.4 | $ 271.3 | $ 1,049.7 | $ 806.8 | ||||
Prepaid rent received | 81.2 | 63.9 | 233.1 | 153.6 | ||||
Amortization of prepaid rent | (27.5) | (17.1) | (69.1) | (47.1) | ||||
AFFO, as previously defined (c) | $ 404.1 | $ 318.2 | $ 1,213.7 | $ 913.3 | ||||
(a) Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. | ||||||||
(b) Adjusts the income tax provision for 2013 to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result, income tax expense (benefit) is lower by the amount of the adjustment. | ||||||||
(c) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of the definitions of FFO and AFFO. | ||||||||
(d) FFO, as previously defined, for Q3 and year to date 2013 was previously reported as $271.7 million and $762.4 million, respectively, which is exclusive of the net impact from the update of the definition of $29.3 million and $75.5 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write down charges and noncontrolling interests. | ||||||||
(e) FFO, as previously defined, for Q3 and year to date 2014 was $344.4 million and $949.6 million respectively, which is exclusive of the net impact from the update of the definition of $(6.8) million and $(14.9) million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write-down charges and noncontrolling interests. |
Other Calculations:
The components of interest expense and amortization of deferred financing costs for the three months ended September 30, 2014 and 2013 are as follows:
For the Three Months Ended | ||
(in millions) |
September 30, 2014 |
September 30, 2013 |
Interest expense on debt obligations | $ 121.5 | $ 121.2 |
Amortization of deferred financing costs | 5.5 | 5.4 |
Amortization of adjustments on long-term debt | (0.9) | (1.0) |
Amortization of interest rate swaps(a) | 15.6 | 16.2 |
Other, net | (0.3) | 0.2 |
Interest expense and amortization of deferred financing costs | $ 141.3 | $ 142.0 |
(a) Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
The components of interest expense and amortization of deferred financing costs for the quarter ending December 31, 2014 and the years ending December 31, 2014 and December 31, 2015 are forecasted as follows:
Q4 2014 | Full Year 2014 | Full Year 2015 | |
(in millions) | Outlook | Outlook | Outlook |
Interest expense on debt obligations | $121 to $123 | $492 to $494 | $488 to $498 |
Amortization of deferred financing costs | $6 to $7 | $22 to $23 | $21 to $23 |
Amortization of adjustments on long-term debt | $(1) to $0 | $(4) to $(3) | $(4) to $(2) |
Amortization of interest rate swaps (a) | $14 to $16 | $62 to $64 | $16 to $21 |
Other, net | $0 to $0 | $(1) to $(1) | $(2) to $0 |
Interest expense and amortization of deferred financing costs | $138 to $143 | $571 to $576 | $521 to $536 |
(a) Relates to the amortization of interest rate swaps, all of which has been cash settled in prior periods. |
Debt balances and maturity dates as of September 30, 2014 are as follows:
(in millions) | ||
Face Value | Final Maturity | |
Revolver | $ 354.0 | Nov. 2018/Jan 2019 |
Term Loan A | 650.1 | Nov. 2018/Jan 2019 |
Term Loan B | 2,842.7 | Jan. 2019/Jan. 2021 |
4.875% Senior Notes | 850.0 | Apr. 2022 |
5.25% Senior Notes | 1,650.0 | Jan. 2023 |
2012 Secured Notes(a) | 1,500.0 | Dec. 2017/Apr. 2023 |
Senior Secured Notes, Series 2009-1(b) | 165.6 | Various |
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(c) | 1,600.0 | Various |
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(d) | 1,550.0 | Various |
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(e) | 263.7 | Nov. 2040 |
Capital Leases and Other Obligations | 147.1 | Various |
Total Debt | $ 11,573.1 | |
Less: Cash and Cash Equivalents(f) | $ 238.6 | |
Net Debt | $ 11,334.5 | |
(a) The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2023. | ||
(b) The Senior Secured Notes, Series 2009-1 consist of $95.6 million of principal as of September 30, 2014 that amortizes during the period beginning January 2010 and ending in 2019, and $70.0 million of principal that amortizes during the period beginning in 2019 and ending in 2029. | ||
(c) The Senior Secured Tower Revenue Notes Series 2010-2 and 2010-3 have principal amounts of $350.0 million and $1.25 billion with anticipated repayment dates of 2017 and 2020, respectively. | ||
(d) The Senior Secured Tower Revenue Notes Series 2010-4, 2010-5 and 2010-6 have principal amounts of $250.0 million, $300.0 million and $1.0 billion with anticipated repayment dates of 2015, 2017 and 2020, respectively. | ||
(e) The WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes") were assumed in connection with the WCP acquisition. If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates in 2015, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence. | ||
(f) Excludes restricted cash. |
Net Debt to Last Quarter Annualized EBITDA is computed as follows:
(in millions) |
For the Three Months Ended September 30, 2014 |
Total face value of debt | $ 11,573.1 |
Ending cash and cash equivalents | 238.6 |
Total Net Debt | $ 11,334.5 |
Adjusted EBITDA for the three months ended September 30, 2014 | $ 533.0 |
Last quarter annualized adjusted EBITDA | 2,131.8 |
Net Debt to Last Quarter Annualized Adjusted EBITDA | 5.3x |
Sustaining capital expenditures for the three months ended September 30, 2014 and 2013 is computed as follows:
For the Three Months Ended | ||
(in millions) |
September 30, 2014 |
September 30, 2013 |
Capital Expenditures | $ 203.8 | $ 130.7 |
Less: Land purchases | 16.5 | 17.6 |
Less: Wireless infrastructure construction and improvements | 167.0 | 102.8 |
Sustaining capital expenditures | $ 20.4 | $ 10.2 |
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements and information that are based on our management's current expectations. Such statements include, but are not limited to, plans, projections, Outlook and estimates regarding (i) our dividends, including our dividend plans, the amount and growth of our dividends, and the potential benefits therefrom, (ii) non-renewal of leases and the timing and impact thereof, including with respect to the Acquired Networks, (iii) carrier network investments and upgrades, and potential benefits derived therefrom, (iv) potential benefits and returns which may be derived from our business, our investments and our acquisitions, (v) demand for our sites and services, (vi) small cells, including growth and margin contribution, (vii) leasing activity, including new tenant installations and amendments and the impact of such leasing activity on our results and Outlook, (viii) our growth, (ix) currency exchange rates, (x) the impact of the Australian Lease Extension, (xi) capital expenditures, including sustaining capital expenditures, (xii) the iDEN network decommissioning, including the impact and timing thereof, (xiii) timing items, (xiv) operating and general and administrative expenses, (xv) site rental revenues and Site Rental Revenues, as Adjusted, (xvi) site rental cost of operations, (xvii) site rental gross margin and network services gross margin, (xviii) Adjusted EBITDA, (xix) interest expense and amortization of deferred financing costs, (xx) FFO, including on a per share basis, (xxi) AFFO, including on a per share basis, (xxii) Organic Site Rental Revenue and Organic Site Rental Revenue growth, (xxiii) net income (loss), including on a per share basis, (xxiv) our common shares outstanding, including on a diluted basis, (xxv) the utility of certain financial measures, including non-GAAP financial measures, and (xxvi) the utility of our updated definitions of FFO and AFFO. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:
- Our business depends on the demand for wireless communications and wireless infrastructure, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services).
- A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues or reduce demand for our wireless infrastructure and network services.
- Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated.
- We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
- Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock.
- As a result of competition in our industry, including from some competitors with significantly more resources or less debt than we have, we may find it more difficult to achieve favorable rental rates on our new or renewing customer contracts.
- The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks. If we do not successfully operate that business model or identify or manage those operational risks, such operations may produce results that are less than anticipated.
- New technologies may significantly reduce demand for our wireless infrastructure and negatively impact our revenues.
- New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
- If we fail to retain rights to our wireless infrastructure, including the land under our sites, our business may be adversely affected.
- Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
- The expansion and development of our business, including through acquisitions, increased product offerings, or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results.
- If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.
- If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
- Certain provisions of our certificate of incorporation, bylaws and operative agreements and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
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We may be adversely affected by our exposure to changes in foreign currency exchange rates relating to our operations in
Australia . - Future dividend payments to our common stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.
- Qualifying and remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the US Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash.
- Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives.
- If we fail to pay scheduled dividends on the 4.50% Mandatory Convertible Preferred Stock, in cash, common stock or any combination of cash and common stock, we will be prohibited from paying dividends on our Common Stock, which may jeopardize our status as a REIT.
- We have limited experience operating as a REIT. Our failure to successfully operate as a REIT may adversely affect our financial condition, cash flow, the per share trading price of our common stock, or our ability to satisfy debt service obligations.
- We expect to pursue certain REIT-related ownership limitations and transfer restrictions with respect to our capital stock.
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the SEC.
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands, except share amounts) |
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September 30, 2014 |
December 31, 2013 |
|
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 238,550 | $ 223,394 |
Restricted cash | 137,824 | 183,526 |
Receivables, net | 311,798 | 249,925 |
Prepaid expenses | 154,240 | 132,003 |
Deferred income tax assets | 40,201 | 26,714 |
Other current assets | 96,182 | 77,121 |
Total current assets | 978,795 | 892,683 |
Deferred site rental receivables | 1,220,050 | 1,078,995 |
Property and equipment, net | 8,870,817 | 8,947,677 |
Goodwill | 5,091,800 | 4,916,426 |
Other intangible assets, net | 3,795,426 | 4,057,865 |
Deferred income tax assets | 10,855 | 19,008 |
Long-term prepaid rent, deferred financing costs and other assets, net | 817,117 | 682,254 |
Total assets | $ 20,784,860 | $ 20,594,908 |
LIABILITIES AND EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 175,110 | $ 145,390 |
Accrued interest | 68,044 | 65,582 |
Deferred revenues | 327,265 | 260,114 |
Other accrued liabilities | 168,475 | 181,715 |
Current maturities of debt and other obligations | 106,673 | 103,586 |
Total current liabilities | 845,567 | 756,387 |
Debt and other long-term obligations | 11,467,005 | 11,490,914 |
Deferred income tax liabilities | 57,118 | 56,513 |
Deferred credits and other liabilities | 1,552,425 | 1,349,919 |
Total liabilities | 13,922,115 | 13,653,733 |
Commitments and contingencies | ||
CCIC stockholders' equity: | ||
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2014—333,859,447 and December 31, 2013—334,070,016 | 3,339 | 3,341 |
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: September 30, 2014 and December 31, 2013—$977,500 | 98 | 98 |
Additional paid-in capital | 9,500,490 | 9,482,769 |
Accumulated other comprehensive income (loss) | 19,006 | (23,612) |
Dividends/distributions in excess of earnings | (2,677,959) | (2,535,879) |
Total CCIC stockholders' equity | 6,844,974 | 6,926,717 |
Noncontrolling interest | 17,771 | 14,458 |
Total equity | 6,862,745 | 6,941,175 |
Total liabilities and equity | $ 20,784,860 | $ 20,594,908 |
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |
Net revenues: | ||||
Site rental | $ 751,893 | $ 620,766 | $ 2,245,395 | $ 1,853,030 |
Network services and other | 178,132 | 128,211 | 476,925 | 370,935 |
Net revenues | 930,025 | 748,977 | 2,722,320 | 2,223,965 |
Operating expenses: | ||||
Costs of operations (exclusive of depreciation, amortization and accretion): | ||||
Site rental | 241,110 | 181,966 | 706,177 | 538,587 |
Network services and other | 103,023 | 81,998 | 279,344 | 229,574 |
General and administrative | 71,395 | 58,504 | 205,397 | 171,539 |
Asset write-down charges | 5,275 | 3,893 | 11,144 | 10,705 |
Acquisition and integration costs | 4,068 | 4,369 | 28,924 | 13,186 |
Depreciation, amortization and accretion | 254,862 | 195,408 | 759,288 | 572,518 |
Total operating expenses | 679,733 | 526,138 | 1,990,274 | 1,536,109 |
Operating income (loss) | 250,292 | 222,839 | 732,046 | 687,856 |
Interest expense and amortization of deferred financing costs | (141,287) | (142,016) | (432,221) | (446,641) |
Gains (losses) on retirement of long-term obligations | — | (1) | (44,629) | (36,487) |
Interest income | 192 | 236 | 554 | 861 |
Other income (expense) | (678) | (631) | (9,477) | (753) |
Income (loss) before income taxes | 108,519 | 80,427 | 246,273 | 204,836 |
Benefit (provision) for income taxes | (482) | (33,959) | (86) | (88,254) |
Net income (loss) | 108,037 | 46,468 | 246,187 | 116,582 |
Less: net income (loss) attributable to the noncontrolling interest | 1,100 | 632 | 3,744 | 2,925 |
Net income (loss) attributable to CCIC stockholders | 106,937 | 45,836 | 242,443 | 113,657 |
Dividends on preferred stock | (10,997) | — | (32,991) | — |
Net income (loss) attributable to CCIC common stockholders | $ 95,940 | $ 45,836 | $ 209,452 | $ 113,657 |
Net income (loss) attributable to CCIC common stockholders, per common share: | ||||
Basic | $ 0.29 | $ 0.16 | $ 0.63 | $ 0.39 |
Diluted | $ 0.29 | $ 0.16 | $ 0.63 | $ 0.39 |
Weighted-average common shares outstanding (in thousands): | ||||
Basic | 332,413 | 290,372 | 332,264 | 290,900 |
Diluted | 333,241 | 291,378 | 333,020 | 292,043 |
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
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Nine Months Ended September 30, | ||
2014 | 2013 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 246,187 | $ 116,582 |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||
Depreciation, amortization and accretion | 759,288 | 572,518 |
Gains (losses) on retirement of long-term obligations | 44,629 | 36,487 |
Amortization of deferred financing costs and other non-cash interest | 61,322 | 78,241 |
Stock-based compensation expense | 39,497 | 29,334 |
Asset write-down charges | 11,144 | 10,705 |
Deferred income tax benefit (provision) | (7,512) | 80,999 |
Other adjustments, net | (2,088) | 2,167 |
Changes in assets and liabilities, excluding the effects of acquisitions: | ||
Increase (decrease) in liabilities | 282,619 | 147,721 |
Decrease (increase) in assets | (242,856) | (235,888) |
Net cash provided by (used for) operating activities | 1,192,230 | 838,866 |
Cash flows from investing activities: | ||
Payments for acquisition of businesses, net of cash acquired | (179,918) | (55,131) |
Capital expenditures | (513,552) | (385,482) |
Other investing activities, net | 2,787 | 7,601 |
Net cash provided by (used for) investing activities | (690,683) | (433,012) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 845,750 | 830,941 |
Principal payments on debt and other long-term obligations | (86,197) | (77,986) |
Purchases and redemptions of long-term debt | (836,899) | (675,481) |
Purchases of capital stock | (21,778) | (99,217) |
Borrowings under revolving credit facility | 567,000 | 94,000 |
Payments under revolving credit facility | (587,000) | (1,092,000) |
Payments for financing costs | (15,899) | (20,753) |
Net decrease (increase) in restricted cash | 39,882 | 415,498 |
Dividends/distributions paid on common stock | (350,535) | — |
Dividends paid on preferred stock | (33,357) | — |
Net cash provided by (used for) financing activities | (479,033) | (624,998) |
Effect of exchange rate changes on cash | (7,358) | (3,571) |
Net increase (decrease) in cash and cash equivalents | 15,156 | (222,715) |
Cash and cash equivalents at beginning of period | 223,394 | 441,364 |
Cash and cash equivalents at end of period | $ 238,550 | $ 218,649 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 368,437 | 356,421 |
Income taxes paid | 15,353 | 12,769 |
Contacts:
713-570-3050