|Crown Castle International Reports Fourth Quarter and Full Year 2011 Results|
2011 Highlights and Recent Developments
HOUSTON, Jan. 25, 2012 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) today reported results for the quarter and year ended December 31, 2011.
"We had an excellent fourth quarter and full year 2011, growing site rental revenue, Adjusted EBITDA, and adjusted funds from operations ("AFFO") for the full year 2011, by 9%, 12%, and 17%, respectively," stated Ben Moreland, President and Chief Executive Officer. "Further, we announced an agreement to acquire NextG Networks, the largest provider of distributed antenna systems ("DAS") in the US. Our acquisition of NextG positions us as the industry leader in DAS and builds on the DAS success we have already enjoyed. We expect DAS to be an increasingly important component of our future growth as small-cell architecture plays a vital role in meeting the capacity challenges posed by growing mobile data traffic. In addition, we announced the acquisitions of two portfolios of ground lease related assets, allowing us to build on our leading expertise in this area. Upon closing, we expect these contemplated acquisitions will further enhance our premier portfolio of wireless infrastructure assets in the US market, the largest, fastest growing and most profitable wireless market in the world by nearly every measure."
CONSOLIDATED FINANCIAL RESULTS
Total revenue for the fourth quarter of 2011 increased 5% to $519 million from $496 million for the same period in 2010. Site rental revenue for the fourth quarter of 2011 increased $24 million, or 5%, to $471 million from $447 million for the same period in the prior year. Site rental gross margin, defined as site rental revenue less site rental cost of operations, increased $26 million, or 8%, to $351 million in the fourth quarter of 2011 from $325 million in the same period in 2010. Adjusted EBITDA for the fourth quarter of 2011 increased $24 million, or 8%, to $335 million from $311 million in the same period in 2010.
Net income for the fourth quarter of 2011 increased 20% to $49 million compared to $41 million for the same period in 2010. Net income after deduction of dividends on preferred stock increased to $44 million in the fourth quarter of 2011 compared to $36 million for the same period in 2010. Net income after deduction of dividends on preferred stock per common share was $0.16 for the fourth quarter of 2011 compared to $0.12 in the fourth quarter of 2010.
Site rental revenues for full year 2011 increased 9% to $1.85 billion, up $153 million from $1.70 billion for full year 2010. Site rental gross margin for full year 2011 increased 11% to $1.37 billion, up $139 million from $1.23 billion for full year 2010. Adjusted EBITDA for full year 2011 increased $135 million, or 12%, to $1.31 billion, up from $1.17 billion for full year 2010.
Net income for full year 2011 increased to $171 million compared to net loss of $311 million for the same period in 2010. Net income after deduction of dividends on preferred stock increased to $148 million for full year 2011 compared to net loss of $332 million for the same period in 2010. Net income per common share was $0.52 for full year 2011 compared to net loss per common share of $1.16 for full year 2010.
INTRODUCTION OF NEW FINANCIAL METRICS
Crown Castle, a provider of real estate to the wireless industry, has adopted the following financial metrics, which are metrics typically utilized by Real Estate Investment Trusts ("REITs"): funds from operations ("FFO") and AFFO. Crown Castle is adopting the definition of FFO set forth by the National Association of Real Estate Investment Trusts. Further, Crown Castle is adopting the same definition of AFFO as American Tower Corporation, one of Crown Castle's peers in the tower industry. Crown Castle's definition for FFO and AFFO are set forth in this release. Crown Castle expects to report both FFO and AFFO on a per common share basis, based on diluted weighted average common shares outstanding. While Crown Castle's recurring cash flow ("RCF") metric is provided in this press release, Crown Castle expects to replace its historical RCF metric with FFO and AFFO going forward.
FFO increased 9% to $182 million in the fourth quarter of 2011 compared to $168 million in the fourth quarter of 2010. FFO per share increased 10% to $0.63 in the fourth quarter of 2011 compared to $0.58 in the fourth quarter of 2010.
AFFO increased 15% to $193 million in fourth quarter 2011 compared to $167 million in the fourth quarter of 2010. AFFO per share increased 17% to $0.68 in the fourth quarter of 2011 compared to $0.58 in the fourth quarter of 2010.
FFO increased $526 million from $182 million for full year 2010 to $708 million for full year 2011. FFO per share increased $1.85 to $2.48 in full year 2011 compared to $0.63 for full year 2010. AFFO increased $106 million, or 17%, from $631 million for full year 2010 to $737 million for full year 2011. AFFO per share increased 17% to $2.58 in full year 2011 compared to $2.20 for full year 2010.
FFO and AFFO have been provided in this release for periods beginning January 1, 2007. Further, Crown Castle has provided a supplemental file containing additional information related to the introduction of these metrics on its website at http://investor.crowncastle.com.
RECENT SIGNIFICANT AGREEMENTS
In December 2011, Crown Castle entered into an agreement to acquire NextG Networks for $1.0 billion in cash (subject to certain adjustments). NextG, the largest provider of DAS, currently has over 7,000 nodes on-air, 1,500 nodes under construction and over 4,600 miles of fiber. The acquisition will expand Crown Castle's portfolio of DAS, providing additional wireless coverage and capacity solutions to customers beyond those areas traditionally served by towers. Following the contemplated acquisition, Crown Castle expects to be the largest independent DAS operator in the US, with approximately 10,000 nodes in operation or under construction. Eighty percent of these nodes are located in the top ten US metropolitan areas, including more than 20 university campuses and 26 venues. Based on existing and contracted networks under construction, Crown Castle expects NextG to have at closing approximately $40 million of run-rate annualized site rental gross margin, $17 million of annualized run-rate general and administrative costs, and approximately $10 million of run-rate annualized site rental gross margin under construction. The NextG general and administrative costs are largely comprised of costs associated with developing and building new sites and leasing the existing nodes. Crown Castle expects to be able to achieve cost synergies following the acquisition while maintaining the development and operating expertise of NextG. The acquisition is expected to close in the second quarter of 2012.
In January 2012, Crown Castle entered into an agreement to acquire from Wireless Capital Partners, LLC ("WCP") a portfolio of ground lease related assets for approximately $180 million in cash and the assumption of approximately $320 million of debt (weighted average interest rate of approximately 5.5%). The portfolio includes approximately 2,300 ground lease related assets, including over 150 related to Crown Castle towers. The assets being acquired generate annual cash flow before interest expense of approximately $42 million, with 80% generated from the big four carriers. The acquisition is expected to close in the first quarter of 2012.
FINANCING AND INVESTING ACTIVITIES
In January 2012, Crown Castle announced it was seeking a new $3.1 billion senior credit facility. The new facility is expected to consist of a $1.0 billion Senior Secured Revolving Credit Facility ("Revolver"), a $500 million Delayed-Draw Senior Secured Term Loan A Facility ("Term Loan A"), and a $1.6 billion Senior Secured Term Loan B Facility ("Term Loan B"). The proceeds of the loans are expected to be used in part to repay the existing revolving credit facility (under which $251 million is currently outstanding), to repay the existing term loan facility (under which $619 million is currently outstanding), and to fund the expected acquisitions of NextG and WCP assets. The balance of the proceeds will be available for general corporate purposes, including acquisitions and purchases of its shares. Crown Castle expects the proposed $3.1 billion credit facility to close on January 31, 2012, resulting in a net increase to 2012 interest expense of approximately $60 million, assuming the $1.6 billion Term Loan B is drawn on January 31, 2012, the $500 million Term Loan A is drawn on April 1, 2012, and the Revolver is undrawn.
Also, in January 2012, Crown Castle announced its intention to convert its 6.25% redeemable convertible preferred stock, which will result in the issuance of 8.3 million common shares and eliminate an annual dividend of $19 million. As of December 31, 2011, the outstanding balance of the 6.25% redeemable convertible preferred stock was $305 million.
Pro forma diluted common shares outstanding at December 31, 2011 were 291.3 million, including the aforementioned common shares expected to be issued in connection with the conversion of Crown Castle's 6.25% redeemable convertible preferred stock. During 2011, Crown Castle spent $318 million to buy 7.7 million of its common shares and potential shares. Since January 2003, Crown Castle has spent $2.7 billion to purchase 100.3 million of its common shares and potential shares, at an average price of $26.85 per common share.
During the fourth quarter of 2011, Crown Castle invested approximately $83 million in capital expenditures, comprised of $33 million of land purchases, $9 million of sustaining capital expenditures and $41 million of revenue generating capital expenditures, the latter consisting of $28 million on existing sites and $13 million on the construction of new sites, primarily DAS nodes.
"We had an excellent 2011 as we grew our core business and made meaningful investments that I believe will enhance our long-term growth rates," stated Jay Brown, Chief Financial Officer of Crown Castle. "During the course of 2011, we continued to strengthen our contractual relationships, ending 2011 with more than $17 billion of site rental revenues under contract and 76% of annualized run-rate site rental gross margin on land, beneath towers, that we own or control for more than 20 years. Additionally, I am very pleased with the announcement of the proposed $3.1 billion credit facility. I believe that the new facility will give us tremendous flexibility with approximately $1 billion of undrawn revolver capacity. As has been our historical practice, we remain focused on enhancing our operating growth through investments around our core business, including investments in share purchases, tower and DAS acquisitions and land purchases, that we believe will enhance long-term AFFO per share."
This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC").
The following Outlook table is based on current expectations and assumptions and assumes a US dollar to Australian dollar exchange rate of 1.0 US dollar to 1.0 Australian dollar for first quarter 2012 and full year 2012 Outlook. Further, the Outlook does not include the impact of the acquisitions and financing described in this press release.
The following table sets forth Crown Castle's current Outlook for the first quarter of 2012 and full year 2012:
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for January 26, 2012, at 11:00 a.m. eastern time. The conference call may be accessed by dialing 480-629-9771 and asking for the Crown Castle call at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Supplemental materials for the call will be posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 12:30 p.m. eastern time on January 26, 2012, through 11:59 p.m. eastern time on February 2, 2012, and may be accessed by dialing 303-590-3030 using access code 4501567. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
Crown Castle owns, operates, and leases towers and other infrastructure for wireless communications. Crown Castle offers significant wireless communications coverage to 92 of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 22,000 and approximately 1,600 wireless communication sites in the US and Australia, respectively. For more information on Crown Castle, please visit www.crowncastle.com.
The Crown Castle International Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3063
Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, recurring cash flow, funds from operations and adjusted funds from operations, 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, recurring cash flow, FFO, and AFFO 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 FFO and AFFO.
Our measures of Adjusted EBITDA, recurring cash flow, FFO and AFFO may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by REITs. FFO and AFFO presented are not necessarily indicative of the operating results that would have been achieved had we converted to a REIT, nor are they necessarily indicative of future financial position or operating results. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including as a result of our adjustment to the income tax provision to reflect our estimate of the cash taxes had we been a REIT.
Adjusted EBITDA, recurring cash flow, FFO and AFFO are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense.
Recurring cash flow. Crown Castle defines recurring cash flow to be Adjusted EBITDA, less interest expense and less sustaining capital expenditures.
Funds from operations. Crown Castle defines funds from operations as net income plus adjusted tax provision plus real estate deprecation, amortization and accretion.
Adjusted funds from operations. Crown Castle defines adjusted funds from operations as funds from operations before straight-line revenue, straight-line expense, stock-based compensation expense, non-real estate related depreciation, amortization and accretion, amortization of deferred financing costs, debt discounts, and interest rate swaps, other (income) and expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, asset-write down charges and less capital improvement capital expenditures and corporate capital expenditures.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA for the quarters and years ended December 31, 2011 and 2010 is computed as follows:
Adjusted EBITDA for the quarter ending March 31, 2012 and the year ending December 31, 2012 is forecasted as follows:
FFO and AFFO for the quarter ending March 31, 2012 and the year ending December 31, 2012 are forecasted as follows:
FFO and AFFO for the quarters ended March 31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011 are computed as follows:
FFO and AFFO for the years ended December 31, 2011, 2010, 2009, 2008 and 2007 are computed as follows:
Recurring cash flow and recurring cash flow per share for the three months and years ended December 31, 2011 and 2010 are computed as follows:
Recurring cash flow for the quarter ending March 31, 2012 and the year ending December 31, 2012 is forecasted as follows:
The components of interest expense and amortization of deferred financing costs for three months ended December 31, 2011 and December 31, 2010 are as follows:
The components of interest expense and amortization of deferred financing costs for the quarter ending March 31, 2012 and the year ending December 31, 2012 are forecasted as follows:
Debt balances and maturity dates as of December 31, 2011 are as follows:
Sustaining capital expenditures for the three months and years ended December 31, 2011 and 2010 are computed as follows:
Site rental gross margin for the quarter ending March 31, 2012 and for the year ending December 31, 2012 is forecasted as follows:
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) the completion and closing of our announced, contemplated acquisitions ("Contemplated Acquisitions"), (ii) the utility and role of DAS and small-cell architecture, including as a component of our growth, (iii) the impact and benefits of the Contemplated Acquisitions, (iv) our potential determination to elect to become a REIT, including timing with respect thereto, (v) our use of various financial metrics, including the replacement of recurring cash flow with FFO and AFFO (including on a per share basis) and the amount of our estimated taxes had we been a REIT, (vi) use of proceeds, impact, benefits, drawdown dates and timing of the proposed credit facility and term loans, (vii) our investment activities, including share purchases, tower and DAS acquisitions and land purchases, and the impact of and return on our investments, (viii) currency exchange rates, (ix) site rental revenues, (x) site rental cost of operations, (xi) site rental gross margin, (xii) Adjusted EBITDA, (xiii) interest expense and amortization of deferred financing costs, (xiv) capital expenditures, (xv) recurring cash flow, including on a per share basis, (xvi) net income (loss), including on a per share basis, and (xvii) the utility of certain financial measures in analyzing our results. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:
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.
CONTACT: Jay Brown, CFO Fiona McKone, VP - Finance Crown Castle International Corp. 713-570-3050