UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 2014
Crown Castle International Corp.
(Exact name of registrant as specified in its charter)
| Delaware |
001-16441 |
76-0470458 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 1220 Augusta Drive, Suite 600 Houston, TX |
77057 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 570-3000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 23, 2014, the Company issued a press release disclosing its financial results for the first quarter of 2014. That press release referred to certain supplemental information that was posted as a supplemental information package on the Company’s website on April 23, 2014. The April 23, 2014 press release and supplemental information package are furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K, respectively.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
As described in Item 2.02 of this Report, the following exhibits are furnished as part of this Current Report on Form 8-K:
| Exhibit No. |
Description | |
| 99.1 | Press Release dated April 23, 2014 | |
| 99.2 | Supplemental Information Package for the quarter ended March 31, 2014 | |
The information in this Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CROWN CASTLE INTERNATIONAL CORP. | ||||||||
| By: | /s/ E. Blake Hawk | |||||||
| Name: | E. Blake Hawk | |||||||
| Title: | Executive Vice President and General Counsel | |||||||
Date: April 23, 2014
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated April 23, 2014 | |
| 99.2 | Supplemental Information Package for the quarter ended March 31, 2014 | |
Exhibit 99.1
| Contacts: | Jay Brown, CFO | |||||
| Son Nguyen, VP - Corporate Finance | ||||||
| FOR IMMEDIATE RELEASE | Crown Castle International Corp. | |||||
| 713-570-3050 |
CROWN CASTLE REPORTS FIRST QUARTER 2014 RESULTS
AND RAISES OUTLOOK FOR 2014
April 23, 2014 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) (“Crown Castle”) today reported results for the quarter ended March 31, 2014.
“We had an excellent first quarter, positioning us to raise our Outlook for 2014,” stated Ben Moreland, Crown Castle’s President and Chief Executive Officer. “We continue to see strong leasing activity from all four major wireless carriers as they continue to upgrade their networks for LTE and capacity enhancements. We expect the level of activity from the first quarter to continue through the remainder of the year, as reflected by our increased Outlook for 2014. Also, during the first quarter, we achieved a significant milestone, as we began operating as a REIT and paid our first-ever common stock dividend. With nearly 40,000 towers and 12,000 small cell nodes, I am pleased with our leadership position in the US. Further, our portfolio, combined with our proven track record of execution and disciplined capital allocation, positions us well to continue to meet the needs of wireless carriers, grow our dividend over time and deliver significant long-term total shareholder returns.”
CONSOLIDATED FINANCIAL RESULTS
Total revenue for the first quarter of 2014 increased 18% to $876 million from $740 million for the same period in 2013. Site rental revenue for the first quarter of 2014 increased $132 million, or 21%, to $747 million from $615 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 $81 million, or 19%, to $519 million in the first quarter of 2014 from $438 million in the same period in 2013. Adjusted EBITDA for the first quarter of 2014 increased $86 million, or 20%, to $527 million from $441 million in the same period in 2013.
Adjusted Funds from Operations (“AFFO”) increased 33% to $349 million in the first quarter of 2014, compared to $263 million in the first quarter of 2013. AFFO per share increased 17% to $1.05 in the first quarter of 2014, compared to $0.90 in the first quarter of 2013. Funds from Operations (“FFO”) increased 68% to $338 million in the first quarter of 2014, compared to $201 million in the first quarter of
| News Release continued: | Page 2 |
2013. FFO per share increased 46% to $1.01 in the first quarter of 2014, compared to $0.69 in the first quarter of 2013. During the first quarter of 2014, Crown Castle updated its definitions of FFO and AFFO. Under its current and previous definitions, Crown Castle’s first quarter 2014 results for FFO and AFFO exceeded its first quarter 2014 Outlook provided on January 22, 2014. See below for a discussion regarding the updated definitions and the reconciliations of non-GAAP financial measures.
Net income attributable to CCIC common stockholders for the first quarter of 2014 was $91 million, compared to $15 million of net income for the same period in 2013. Net income attributable to CCIC common stockholders per common share was $0.27 for the first quarter of 2014, compared to $0.05 per common share in the first quarter of 2013.
Crown Castle’s first quarter 2014 financial results include the impact of the AT&T tower transaction, which closed on December 16, 2013, and a one-time benefit of approximately $5 million related to a contract termination payment from Revol Wireless, which ceased operations earlier this year. Revol Wireless, a regional wireless carrier based in Ohio, previously generated annual site rental revenue of approximately $4 million.
FINANCING AND INVESTING ACTIVITIES
Since December 31, 2013, and after giving effect to Crown Castle’s most recent notes offering in April (“Notes Offering”), Crown Castle has refinanced or extended the maturities on $2.6 billion of its debt. During January 2014, Crown Castle extended the maturity on approximately $1.8 billion of its Tranche B Term Loan from January 2019 to January 2021. Further, during April 2014, Crown Castle closed its aforementioned Notes Offering, issuing $850 million of senior notes with a stated interest rate of 4.875% per annum. Net proceeds from the Notes Offering were used to repay $300 million of Senior Secured Tower Revenue Notes, which had an anticipated maturity date of January 2015. Crown Castle intends to use the remaining net proceeds, together with cash on hand, to redeem its outstanding 7.125% Senior Notes due 2019, pursuant to the previously announced redemption, on May 2, 2014. After giving effect to the Notes Offering and the application of proceeds therefrom, Crown Castle’s outstanding debt has a weighted average coupon of 4.2% per annum and a weighted average maturity of six years. Crown Castle anticipates annual cash interest expense savings from the Notes Offering and related transactions to be approximately $7 million.
During the first quarter of 2014, Crown Castle invested approximately $143 million in capital expenditures, comprised of $20 million of land purchases, $11 million of sustaining capital expenditures and $111 million of revenue generating capital expenditures.
| News Release continued: | Page 3 |
On March 31, 2014, Crown Castle paid its first quarter common stock dividend of $0.35 per common share, or approximately $117 million in aggregate. Further, during the first quarter of 2014, Crown Castle purchased 0.3 million of its common shares using $21 million in cash at an average price of approximately $74 per share. Diluted common shares outstanding at March 31, 2014 were 333.3 million.
As of March 31, 2014, Crown Castle had approximately $201 million in cash and cash equivalents (excluding restricted cash) and approximately $1.1 billion of availability under its revolving credit facility.
“We executed another terrific quarter, growing site rental revenue and Adjusted EBITDA by 21% and 20%, respectively, compared to first quarter 2013,” stated Jay Brown, Crown Castle’s Chief Financial Officer. “Given our excellent first quarter results, our recent financing activities and our increased expectations for the remainder of the year, we are raising our 2014 Outlook, including increasing the midpoint for site rental revenue, Adjusted EBITDA and AFFO by $11 million, $26 million and $28 million, respectively. Further, beginning this quarter, we are providing a new supplemental information package along with our earnings release. I believe the supplemental information package will assist investors in understanding and evaluating our business model and overall performance.”
SUPPLEMENTAL INFORMATION PACKAGE AND UPDATE TO EXISTING FINANCIAL METRICS
Crown Castle’s new supplemental information package, providing certain operational and financial highlights, is available on its website at http://investor.crowncastle.com. Crown Castle has updated its definitions of FFO and AFFO. Crown Castle presents FFO and AFFO as additional information because management believes these measures are useful indicators of the financial performance of Crown Castle’s core businesses. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle’s site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this release and the supplemental information package are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions below.
| News Release continued: | Page 4 |
OUTLOOK
This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle’s filings with the Securities and Exchange Commission (“SEC”).
The following Outlook is based on current expectations and assumptions and assumes a US dollar to Australian dollar exchange rate of 0.89 US dollars to 1.0 Australian dollar for the remainder of 2014, including the second quarter.
As reflected in the table below, Crown Castle has increased the midpoint of its full year 2014 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO by $11 million, $9 million, $26 million and $28 million, respectively. The increase in the midpoint of 2014 Outlook for site rental revenues is primarily attributable to a higher run-rate heading into second quarter 2014, expected strong leasing activity for the remainder of 2014 and Revol Wireless’ previously mentioned contract termination payment. At the midpoint of 2014 Outlook for site rental revenues, Crown Castle expects Organic Site Rental Revenue growth, before non-renewals, of approximately 9% year-over-year, comprised of approximately 5% from new leasing activity and approximately 4% from escalations on existing customer lease contracts.
The increase in the midpoint of 2014 Outlook for Adjusted EBITDA primarily reflects the previously mentioned increase in site rental gross margin and higher expected service gross margin contribution. The increase in the midpoint of 2014 Outlook for AFFO primarily reflects the impact from the aforementioned increase in Adjusted EBITDA and interest expense savings from the aforementioned financing activities offset by an expected increase in sustaining capital expenditures related to our corporate facilities.
Further, 2014 Outlook for site rental revenues includes the negative impact from leases that come to the end of their respective terms and are not renewed of approximately 2% of site rental revenues, of which approximately half is expected to come from typical non-renewal activity and approximately half is expected to come from Sprint’s decommissioning of their legacy Nextel iDEN network. Based on Sprint’s stated intention to decommission their iDEN network and Crown Castle’s contractual terms with Sprint, Crown Castle expects approximately 3% of its run-rate site rental revenues to be impacted by the iDEN network decommissioning. These iDEN leases have effective term-end dates spread evenly throughout 2014 and 2015. For a reconciliation of Organic Site Rental Revenue see below.
| News Release continued: | Page 5 |
In addition to the previously mentioned one-time benefit of approximately $5 million related to Revol Wireless’ contract termination payment during first quarter 2014, sequential growth from first quarter 2014 to second quarter 2014 is expected to be impacted by certain seasonal or timing items. Repair and maintenance and sustaining capital expenditures during second quarter 2014 are expected to be higher by $3 million and $11 million, respectively, as compared to the first quarter, reflecting the seasonal nature of certain activities consistent with prior years.
The following table sets forth Crown Castle’s current Outlook for second quarter 2014 and full year 2014:
| (in millions, except per share amounts) |
Second Quarter 2014 | Full Year 2014 | ||
| Site rental revenues |
$740 to $745 | $2,983 to $2,993 | ||
| Site rental cost of operations |
$230 to $235 | $926 to $936 | ||
| Site rental gross margin |
$507 to $512 | $2,052 to $2,062 | ||
| Adjusted EBITDA |
$516 to $521 | $2,066 to $2,081 | ||
| Interest expense and amortization of deferred financing costs(a) |
$142 to $147 | $570 to $580 | ||
| FFO(c) |
$283 to $288 | $1,276 to $1,291 | ||
| AFFO(c) |
$326 to $331 | $1,346 to $1,361 | ||
| AFFO per share(b)(c) |
$0.98 to $0.99 | $4.04 to $4.08 | ||
| Net income (loss) |
$32 to $65 | $298 to $382 | ||
| Net income (loss) per share - diluted(b) |
$0.10 to $0.19 | $0.89 to $1.15 | ||
| Net income (loss) attributable to CCIC common stockholders |
$20 to $53 | $249 to $333 | ||
| Net income (loss) attributable to CCIC common stockholders per |
$0.06 to $0.16 | $0.75 to $1.00 |
| (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 333.3 million diluted shares outstanding as of March 31, 2014. |
| (c) | Reflects the updated definitions as discussed and reconciled herein. |
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, April 24, 2014, at 10:30 a.m. Eastern Time. The conference call may be accessed by dialing 480-629-9835 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 Thursday, April 24, 2014, through 11:59 p.m. Eastern Time on Thursday, May 1, 2014, and may be accessed by dialing 303-590-3030 using access code 4671206. 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 all of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages approximately 40,000 and 1,800 wireless communication sites in the US and Australia, respectively. For more information on Crown Castle, please visit www.crowncastle.com.
| News Release continued: | Page 6 |
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 REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
Crown Castle has updated its definitions of FFO and AFFO. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle’s site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this release and the supplemental information package are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions below.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations (“FFO”). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
FFO, as previously defined. Crown Castle defines FFO, as previously defined, as FFO plus non-cash portion of tax provision, less asset write-down charges and noncontrolling interest.
Adjusted Funds from Operations (“AFFO”). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gains (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
| News Release continued: | Page 7 |
AFFO, as previously defined. Crown Castle defines AFFO, as previously defined, as AFFO plus prepaid rent received less amortization of prepaid rent.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers’ ongoing quiet enjoyment of the tower.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA for the three months ended March 31, 2014 and 2013 is computed as follows:
| For the Three Months Ended | ||||||||
|
|
|
|||||||
| March 31, 2014 |
March 31, 2013 |
|||||||
|
|
|
|
|
|||||
| (in millions) |
||||||||
| Net income (loss) |
$ | 102.8 | $ | 16.7 | ||||
| Adjustments to increase (decrease) net income (loss): |
||||||||
| Asset write-down charges |
2.7 | 3.7 | ||||||
| Acquisition and integration costs |
5.7 | 1.6 | ||||||
| Depreciation, amortization and accretion |
250.2 | 186.5 | ||||||
| Amortization of prepaid lease purchase price adjustments |
3.9 | 3.9 | ||||||
| Interest expense and amortization of deferred financing costs(a) |
146.4 | 164.4 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35.9 | ||||||
| Interest income |
(0.2) | (0.3) | ||||||
| Other income (expense) |
2.7 | 0.6 | ||||||
| Benefit (provision) for income taxes |
(0.2) | 17.7 | ||||||
| Stock-based compensation expense |
12.9 | 10.1 | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA(b) |
$ | 527.0 | $ | 440.8 | ||||
|
|
|
|
|
|||||
| (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. |
| News Release continued: | Page 8 |
Adjusted EBITDA for the quarter ending June 30, 2014 and the year ending December 31, 2014 is forecasted as follows:
| Q2 2014 | Full Year 2014 | |||
| (in millions) | Outlook | Outlook | ||
|
|
| |||
| Net income (loss) |
$32 to $65 | $298 to $382 | ||
| Adjustments to increase (decrease) net income (loss): |
||||
| Asset write-down charges |
$2 to $4 | $6 to $16 | ||
| Acquisition and integration costs |
$2 to $6 | $13 to $23 | ||
| Depreciation, amortization and accretion |
$248 to $253 | $991 to $1,011 | ||
| Amortization of prepaid lease purchase price adjustments |
$3 to $5 | $15 to $17 | ||
| Interest expense and amortization of deferred financing costs(a) |
$142 to $147 | $570 to $580 | ||
| Gains (losses) on retirement of long-term obligations |
$46 to $46 | $46 to $46 | ||
| Interest income |
$(1) to $1 | $(2) to $0 | ||
| Other income (expense) |
$0 to $2 | $3 to $5 | ||
| Benefit (provision) for income taxes |
$(1) to $3 | $2 to $10 | ||
| Stock-based compensation expense |
$15 to $17 | $55 to $60 | ||
|
|
| |||
| Adjusted EBITDA(b) |
$516 to $521 | $2,066 to $2,081 | ||
|
|
|
| (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. |
| News Release continued: | Page 9 |
FFO and AFFO for the quarter ending June 30, 2014 and the year ending December 31, 2014 are forecasted as follows (based upon updated definitions):
| Q2 2014 | Full Year 2014 | |||
| (in millions, except share and per share amounts) | Outlook | Outlook | ||
|
|
| |||
| Net income |
$32 to $65 | $298 to $382 | ||
| Real estate related depreciation, amortization and accretion |
$243 to $246 | $970 to $985 | ||
| Asset write-down charges |
$2 to $4 | $6 to $16 | ||
| Adjustment for noncontrolling interest (a) |
$(2) to $2 | $(7) to $1 | ||
| Dividends on preferred stock |
$(11) to $(11) | $(44) to $(44) | ||
|
|
| |||
| FFO(c)(d) |
$283 to $288 | $1,276 to $1,291 | ||
|
|
| |||
| FFO (from above) |
$283 to $288 | $1,276 to $1,291 | ||
| Adjustments to increase (decrease) FFO: |
||||
| Straight-line revenue |
$(55) to $(50) | $(196) to $(181) | ||
| Straight-line expense |
$23 to $28 | $94 to $109 | ||
| Stock-based compensation expense |
$15 to $17 | $55 to $60 | ||
| Non-cash portion of tax provision |
$(4) to $1 | $(10) to $5 | ||
| Non-real estate related depreciation, amortization and accretion |
$5 to $7 | $21 to $26 | ||
| Amortization of non-cash interest expense |
$20 to $24 | $75 to $86 | ||
| Other (income) expense |
$0 to $2 | $3 to $5 | ||
| Gains (losses) on retirement of long-term obligations |
$46 to $46 | $46 to $46 | ||
| Acquisition and integration costs |
$2 to $6 | $13 to $23 | ||
| Adjustment for noncontrolling interest (a) |
$2 to $(2) | $7 to $(1) | ||
| Capital improvement capital expenditures |
$(10) to $(8) | $(35) to $(33) | ||
| Corporate capital expenditures |
$(14) to $(12) | $(41) to $(39) | ||
|
|
| |||
| AFFO(d) |
$326 to $331 | $1,346 to $1,361 | ||
|
|
| |||
| Weighted average common shares outstanding — diluted (b) |
333.3 | 333.3 | ||
|
|
| |||
| AFFO per share (d) |
$0.98 to $0.99 | $4.04 to $4.08 | ||
|
|
| |||
| (a) | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| (b) | Based on diluted shares outstanding as of March 31, 2014. |
| (c) | FFO, as previously defined, for Full Year 2014 Outlook was previously forecasted on January 22, 2014 as $1,284 million to $1,299 million, which is exclusive of the net impact from the update of the definition of $11 million to $21 million, which amounts include the adjustment for non-cash portion of tax provision, and excluding the adjustment for asset write down charges and noncontrolling interests. |
| (d) | See also “Supplemental Information Package and Update to Existing Financial Metrics” and “Definitions of Non-GAAP Measures and Other Calculations” herein for a discussion of the updated definition of FFO and AFFO. |
Previously issued AFFO Outlook for the quarter ending March 31, 2014 and the year ending December 31, 2014 recalculated using updated AFFO definition:
| Q1 2014 | Full Year 2014 | |||
| (in millions of dollars) | Outlook | Outlook | ||
|
|
| |||
| AFFO Outlook, as previously defined (reported on January 22, 2014) |
$370 to $375 | $1,496 to $1,511 | ||
| Prepaid rent received |
$(58) to $(63) | $(259) to $(274) | ||
| Amortization of prepaid rent |
$17 to $22 | $81 to $96 | ||
|
|
| |||
| AFFO Outlook(a) |
$329 to $334 | $1,318 to $1,333 | ||
|
|
|
| (a) | See also “Supplemental Information Package and Update to Existing Financial Metrics” and “Definitions of Non-GAAP Measures and Other Calculations” herein for a discussion of the updated definition of FFO and AFFO. |
| News Release continued: | Page 10 |
Organic Site Rental Revenue growth for the year ending December 31, 2014 is forecasted as follows:
| Midpoint of Full Year | ||||||||
| (in millions of dollars) | 2014 Outlook | Full Year 2013 | ||||||
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|
|
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|
|||||
| GAAP site rental revenues |
$ | 2,988 | $ | 2,504 | ||||
| Site rental straight-line revenues |
(188) | (219) | ||||||
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|
|
|||||
| Site Rental Revenues, as Adjusted(a)(c) |
2,800 | 2,285 | ||||||
| Cash adjustments: |
||||||||
| FX and other |
6 | |||||||
| New tower acquisitions and builds |
(383) | |||||||
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|
|
|
|||||
| Organic Site Rental Revenue(a)(b)(c) |
$ | 2,424 | ||||||
| Year-Over-Year Revenue Growth |
||||||||
| GAAP site rental revenues |
19.3% | |||||||
| Site Rental Revenues, as Adjusted |
22.5% | |||||||
| Organic Site Rental Revenues(d)(e) |
6.1% | |||||||
| (a) | Includes amortization of prepaid rent. |
| (b) | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
| (c) | See “Definitions of Non-GAAP Measures and Other Calculations” herein. |
| (d) | Year-over-year Organic Site Rental Revenue growth for the year ending December 31, 2014: |
| Midpoint of Full Year 2014 Outlook |
||||||
|
|
|
|||||
| New leasing activity |
5.1 % | |||||
| Escalators |
3.6 % | |||||
|
|
|
|||||
| Organic Site Rental Revenue growth, before non-renewals |
8.8 % | |||||
| Non-renewals |
(2.7)% | |||||
|
|
|
|||||
| Organic Site Rental Revenue growth |
6.1 % | |||||
| (e) | Calculated as the percentage change from Site Rental Revenue, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
| News Release continued: | Page 11 |
FFO and AFFO for the three months ended March 31, 2014 and 2013 are computed as follows (based upon updated definitions):
| For the Three Months Ended | ||||||||
|
|
|
|||||||
| (in millions, except share and per share amounts) | March 31, 2014 |
March 31, 2013 |
||||||
|
|
|
|
|
|||||
| Net income |
$ | 102.8 | $ | 16.7 | ||||
| Real estate related depreciation, amortization and accretion |
244.4 | 181.8 | ||||||
| Asset write-down charges |
2.7 | 3.7 | ||||||
| Adjustment for noncontrolling interest (a) |
(1.3) | (1.3) | ||||||
| Dividends on preferred stock |
(11.0) | — | ||||||
|
|
|
|
|
|||||
| FFO(c) |
$ | 337.7 | (e) | $ | 200.9 | (d) | ||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
333.0 | 292.6 | ||||||
|
|
|
|
|
|||||
| FFO per share(c) |
$ | 1.01 | $ | 0.69 | ||||
|
|
|
|
|
|||||
| FFO (from above) |
337.7 | 200.9 | ||||||
| Adjustments to increase (decrease) FFO: |
||||||||
| Straight-line revenue |
(50.8) | (59.4) | ||||||
| Straight-line expense |
26.4 | 20.7 | ||||||
| Stock-based compensation expense |
12.9 | 10.1 | ||||||
| Non-cash portion of tax provision |
(2.3) | 16.1 | (b) | |||||
| Non-real estate related depreciation, amortization and accretion |
5.8 | 4.7 | ||||||
| Amortization of non-cash interest expense |
20.9 | 36.9 | ||||||
| Other (income) expense |
2.7 | 0.6 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35.9 | ||||||
| Acquisition and integration costs |
5.7 | 1.6 | ||||||
| Adjustment for noncontrolling interest (a) |
1.3 | 1.3 | ||||||
| Capital improvement capital expenditures |
(3.9) | (3.3) | ||||||
| Corporate capital expenditures |
(7.6) | (3.6) | ||||||
|
|
|
|
|
|||||
| AFFO(c) |
$ | 348.7 | $ | 262.6 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
333.0 | 292.6 | ||||||
|
|
|
|
|
|||||
| AFFO per share(c) |
$ | 1.05 | $ | 0.90 | ||||
|
|
|
|
|
|||||
| AFFO (from above) |
$ | 348.7 | $ | 262.6 | ||||
| Prepaid rent received |
68.2 | 43.7 | ||||||
| Amortization of prepaid rent |
(19.1) | (15.0) | ||||||
|
|
|
|
|
|||||
| AFFO, as previously defined (c) |
$ | 397.9 | $ | 291.3 | ||||
|
|
|
|
|
|||||
| (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 “Supplemental Information Package and Update to Existing Financial Metrics” and “Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
| (d) | FFO, as previously defined, for Q1 of 2013 was previously reported as $214.6 million, which is exclusive of the net impact from the update of the definition of $13.7 million, 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 Q1 of 2014 was $333.9 million, which is exclusive of the net impact from the update of the definition of $3.8 million, which amount includes the adjustment for non-cash portion of tax provision excludes the adjustments for asset write-down charges and noncontrolling interests. |
| News Release continued: | Page 12 |
FFO and AFFO for the quarters ended March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013 are computed as follows:
| For the Three Months Ended | ||||||||||||||||
| (in millions of dollars, except share and per share amounts) | March 31, 2013 |
June 30, 2013 |
September 30, 2013 |
December 31, 2013 |
||||||||||||
| Net income |
$ | 16.7 | $ | 53.4 | $ | 46.5 | $ | (22.7) | ||||||||
| Real estate related depreciation, amortization and accretion |
181.8 | 188.0 | 192.7 | 198.6 | ||||||||||||
| Asset write-down charges |
3.7 | 3.1 | 3.9 | 4.2 | ||||||||||||
| Adjustment for noncontrolling interest(a) |
(1.3) | (1.0) | (0.6) | (0.9) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO(c) |
$ | 200.9 | $ | 243.5 | $ | 242.4 | $ | 179.2 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
292.6 | 292.7 | 291.4 | 319.6 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO per share(c) |
$ | 0.69 | $ | 0.83 | $ | 0.83 | $ | 0.56 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO (from above) |
200.9 | 243.5 | 242.4 | 179.2 | ||||||||||||
| Adjustments to increase (decrease) FFO: |
||||||||||||||||
| Straight-line revenue |
(59.4) | (56.9) | (53.3) | (49.0) | ||||||||||||
| Straight-line expense |
20.7 | 20.6 | 20.6 | 19.1 | ||||||||||||
| Stock-based compensation expense |
10.1 | 9.6 | 10.2 | 11.9 | ||||||||||||
| Non-cash portion of tax provision(b) |
16.1 | 34.7 | 32.5 | 108.4 | ||||||||||||
| Non-real estate related depreciation, amortization and accretion |
4.7 | 2.6 | 2.7 | 3.1 | ||||||||||||
| Amortization of non-cash interest expense |
36.9 | 20.6 | 20.8 | 21.0 | ||||||||||||
| Other (income) expense |
0.6 | (0.5) | 0.6 | 3.1 | ||||||||||||
| Gains (losses) on retirement of long-term obligations |
35.9 | 0.6 | — | 0.6 | ||||||||||||
| Acquisition and integration costs |
1.6 | 7.2 | 4.4 | 12.8 | ||||||||||||
| Adjustment for noncontrolling interest(a) |
1.3 | 1.0 | 0.6 | 0.9 | ||||||||||||
| Capital improvement capital expenditures |
(3.3) | (2.4) | (3.7) | (9.9) | ||||||||||||
| Corporate capital expenditures |
(3.6) | (7.7) | (6.5) | (10.7) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO(c) |
$ | 262.6 | $ | 272.9 | $ | 271.3 | $ | 290.6 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
292.6 | 292.7 | 291.4 | 319.6 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO per share(c) |
$ | 0.90 | $ | 0.93 | $ | 0.93 | $ | 0.91 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO (from above) |
$ | 262.6 | $ | 272.9 | $ | 271.3 | $ | 290.6 | ||||||||
| Prepaid rent received |
43.7 | 45.9 | 63.9 | 87.8 | ||||||||||||
| Amortization of prepaid rent |
(15.0) | (14.9) | (17.1) | (19.7) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO, as previously defined(c) |
$ | 291.3 | $ | 303.9 | $ | 318.2 | $ | 358.7 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (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 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 “Supplemental Information Package and Update to Existing Financial Metrics” and “Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
| News Release continued: | Page 13 |
FFO and AFFO for the years ended December 31, 2013, 2012, 2011, and 2010 are computed as follows:
| For the Years Ended December 31, | ||||||||||||||||
| (in millions of dollars, except share and per share amounts) | 2013 | 2012 | 2011 | 2010 | ||||||||||||
| Net income |
$ | 93.9 | $ | 200.9 | $ | 171.5 | $ | (311.3) | ||||||||
| Real estate related depreciation, amortization and accretion |
761.1 | 601.4 | 531.9 | 522.5 | ||||||||||||
| Asset write-down charges |
14.9 | 15.5 | 22.3 | 13.7 | ||||||||||||
| Adjustment for noncontrolling interest(a) |
(3.8) | (12.3) | (0.4) | 0.3 | ||||||||||||
| Dividends on preferred stock |
— | (2.5) | (19.5) | (19.9) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO(c) |
$ | 866.0 | $ | 803.0 | $ | 705.7 | $ | 205.4 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
299.3 | 291.3 | 285.9 | 286.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO per share(c) |
$ | 2.89 | $ | 2.76 | $ | 2.47 | $ | 0.71 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO (from above) |
866.0 | 803.0 | 705.7 | 205.4 | ||||||||||||
| Adjustments to increase (decrease) FFO: |
||||||||||||||||
| Straight-line revenue |
(218.6) | (251.3) | (200.0) | (161.7) | ||||||||||||
| Straight-line expense |
81.0 | 54.1 | 39.0 | 38.7 | ||||||||||||
| Stock-based compensation expense |
41.8 | 47.4 | 36.0 | 40.0 | ||||||||||||
| Non-cash portion of tax provision(b) |
191.7 | (106.7) | 5.0 | (29.0) | ||||||||||||
| Non-real estate related depreciation, amortization and accretion |
13.1 | 21.2 | 21.1 | 18.3 | ||||||||||||
| Amortization of non-cash interest expense |
99.2 | 109.3 | 102.9 | 85.5 | ||||||||||||
| Other (income) expense |
3.9 | 5.4 | 5.6 | 0.6 | ||||||||||||
| Gains (losses) on retirement of long-term obligations |
37.1 | 132.0 | — | 138.4 | ||||||||||||
| Net gain (loss) on interest rate swaps |
— | — | — | 286.4 | ||||||||||||
| Acquisition and integration costs |
26.0 | 18.3 | 3.3 | 2.1 | ||||||||||||
| Adjustment for noncontrolling interest(a) |
3.8 | 12.3 | 0.4 | (0.3) | ||||||||||||
| Capital improvement capital expenditures |
(19.3) | (21.6) | (14.0) | (14.8) | ||||||||||||
| Corporate capital expenditures |
(28.4) | (15.5) | (9.4) | (9.5) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO(c) |
$ | 1,097.3 | $ | 807.8 | $ | 695.7 | $ | 599.9 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
299.3 | 291.3 | 285.9 | 286.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO per share(c) |
$ | 3.67 | $ | 2.77 | $ | 2.43 | $ | 2.09 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO (from above) |
$ | 1,097.3 | $ | 807.8 | $ | 695.7 | $ | 599.9 | ||||||||
| Prepaid rent received |
241.5 | 117.4 | 34.4 | 17.0 | ||||||||||||
| Amortization of prepaid rent |
(66.7) | (41.6) | (12.9) | (5.6) | ||||||||||||
| Dividends on preferred stock |
— | 2.5 | 19.5 | 19.9 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO, as previously defined(c) |
$ | 1,272.1 | $ | 886.1 | $ | 736.7 | $ | 631.2 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (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 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 “Supplemental Information Package and Update to Existing Financial Metrics” and “Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
| News Release continued: | Page 14 |
Other Calculations:
The components of interest expense and amortization of deferred financing costs for the three months ended March 31, 2014 and 2013 are as follows:
| For the Three Months Ended | ||||||||
| (in millions) | March 31, 2014 |
March 31, 2013 |
||||||
| Interest expense on debt obligations |
$ | 125.5 | $ | 127.4 | ||||
| Amortization of deferred financing costs |
5.6 | 9.0 | ||||||
| Amortization of adjustments on long-term debt |
(1.0) | 11.4 | ||||||
| Amortization of interest rate swaps(a) |
16.2 | 16.3 | ||||||
| Other, net |
— | 0.2 | ||||||
|
|
|
|
|
|||||
| Interest expense and amortization of deferred financing costs |
$ | 146.4 | $ | 164.4 | ||||
|
|
|
|
|
|||||
| (a) | Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
The components of interest expense and amortization of deferred financing costs for the quarter ending June 30, 2014 and the year ending December 31, 2014 are forecasted as follows:
| (in millions) | Q2 2014 Outlook |
Full Year 2014 Outlook | ||
| Interest expense on debt obligations |
$123 to $125 | $489 to $499 | ||
| Amortization of deferred financing costs |
$6 to $7 | $21 to $23 | ||
| Amortization of adjustments on long-term debt |
$(1) to $0 | $(5) to $(3) | ||
| Amortization of interest rate swaps (a) |
$15 to $17 | $60 to $65 | ||
| Other, net |
$0 to $0 | $(1) to $1 | ||
|
|
| |||
| Interest expense and amortization of deferred financing costs |
$142 to $147 | $570 to $580 | ||
|
|
|
| (a) | Relates to the amortization of interest rate swaps, all of which has been cash settled in prior periods. |
Debt balances and maturity dates as of March 31, 2014, after giving effect to the issuance of the 4.875% Senior Notes in April 2014, the April 2014 repayment of the Tower Revenue Notes, Series 2010-1 and the anticipated May 2014 redemption of the 7.125% Senior Notes:
| (in millions) | ||||||
| Face Value | Final Maturity | |||||
| Revolver |
$ | 368.0 | Nov. 2018/Jan 2019 | |||
| Term Loan A |
658.4 | Nov. 2018/Jan 2019 | ||||
| Term Loan B |
2,857.0 | Jan. 2019/Jan. 2021 | ||||
| 4.875% Senior Notes |
850.0 | Apr. 2022 | ||||
| 5.25% Senior Notes |
1,650.0 | Jan. 2023 | ||||
| 2012 Senior Notes(a) |
1,500.0 | Dec. 2017/Apr. 2023 | ||||
| Senior Secured Notes, Series 2009-1(b) |
175.1 | 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) |
273.0 | Nov. 2040 | ||||
| Capital Leases and Other Obligations |
136.8 | Various | ||||
|
|
|
|||||
| Total Debt |
$ | 11,618.3 | ||||
|
|
|
|||||
| Less: Cash and Cash Equivalents(f) |
$ | 199.9 | ||||
|
|
|
|||||
| Net Debt |
$ | 11,418.4 | ||||
|
|
|
|||||
| (a) | The 2012 Senior 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. |
| News Release continued: | Page 15 |
| (b) | The Senior Secured Notes, Series 2009-1 consist of $105.1 million of principal as of March 31, 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 $1.3 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. |
Sustaining capital expenditures for the three months ended March 31, 2014 and 2013 is computed as follows:
| For the Three Months Ended | ||||||||
| (in millions) | March 31, 2014 |
March 31, 2013 |
||||||
| Capital Expenditures |
$ | 142.9 | $ | 116.4 | ||||
| Less: Land purchases |
20.4 | 16.0 | ||||||
| Less: Wireless infrastructure construction and improvements |
111.1 | 93.5 | ||||||
|
|
|
|
|
|||||
| Sustaining capital expenditures |
$ | 11.4 | $ | 6.9 | ||||
|
|
|
|
|
|||||
| News Release continued: | Page 16 |
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) demand for our sites and services, (ii) leasing activity, including the impact on our results and Outlook, (iii) carrier network enhancements, (iv) dividends, including our dividend plans, timing and the amount and growth of any dividends, (v) long-term total stockholder returns, (vi) our debt financings and refinancings, including use of proceeds and interest expense savings, (vii) the supplemental information package, including the utility thereof, (viii) currency exchange rates, (ix) capital expenditures, including repairs and maintenance and sustaining capital expenditures, (x) organic revenue growth, (xi) non-renewal of leases and the impact therefrom, (xii) the impact of the iDEN network decommissioning, (xiii) tenant non-renewal, (xiv) seasonal and timing items, (xv) site rental revenues and Site Rental Revenues, as Adjusted, (xvi) site rental cost of operations, (xvii) site rental gross margin and 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) prepaid rents, (xxv) our common shares outstanding, including on a diluted basis, (xxvi) the utility of certain financial measures, including non-GAAP financial measures, and (xxvii) 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. |
| News Release continued: | Page 17 |
| • | 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 may impact the availability or cost of such financing, which could 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.
| News Release continued: | Page 18 |
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands) |
| March 31, 2014 |
December 31, 2013 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 200,537 | $ | 223,394 | ||||
| Restricted cash |
163,953 | 183,526 | ||||||
| Receivables, net |
245,556 | 249,925 | ||||||
| Prepaid expenses |
132,026 | 132,003 | ||||||
| Deferred income tax assets |
26,972 | 26,714 | ||||||
| Other current assets |
83,224 | 77,121 | ||||||
|
|
|
|
|
|||||
| Total current assets |
852,268 | 892,683 | ||||||
| Deferred site rental receivables |
1,129,678 | 1,078,995 | ||||||
| Property and equipment, net |
8,927,218 | 8,947,677 | ||||||
| Goodwill |
4,934,148 | 4,916,426 | ||||||
| Other intangible assets, net |
3,997,518 | 4,057,865 | ||||||
| Deferred income tax assets |
14,746 | 19,008 | ||||||
| Long-term prepaid rent, deferred financing costs and other assets, net |
714,090 | 682,254 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 20,569,666 | $ | 20,594,908 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 127,053 | $ | 145,390 | ||||
| Accrued interest |
64,561 | 65,582 | ||||||
| Deferred revenues |
255,323 | 260,114 | ||||||
| Other accrued liabilities |
155,868 | 181,715 | ||||||
| Current maturities of debt and other obligations |
105,467 | 103,586 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
708,272 | 756,387 | ||||||
| Debt and other long-term obligations |
11,467,859 | 11,490,914 | ||||||
| Deferred income tax liabilities |
52,134 | 56,513 | ||||||
| Deferred credits and other liabilities |
1,406,734 | 1,349,919 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
13,634,999 | 13,653,733 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| CCIC stockholders’ equity: |
||||||||
| Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: March 31, 2014—333,795,981 and December 31, 2013—334,070,016 |
3,338 | 3,341 | ||||||
| 4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: March 31, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: March 31, 2014 and December 31, 2013—$977,500 |
98 | 98 | ||||||
| Additional paid-in capital |
9,473,311 | 9,482,769 | ||||||
| Accumulated other comprehensive income (loss) |
4,059 | (23,612) | ||||||
| Dividends in excess of earnings |
(2,562,541) | (2,535,879) | ||||||
|
|
|
|
|
|||||
| Total CCIC stockholders’ equity |
6,918,265 | 6,926,717 | ||||||
| Noncontrolling interest |
16,402 | 14,458 | ||||||
|
|
|
|
|
|||||
| Total equity |
6,934,667 | 6,941,175 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 20,569,666 | $ | 20,594,908 | ||||
|
|
|
|
|
|||||
| News Release continued: | Page 19 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (in thousands) |
| Three Months Ended March 31, |
||||||||
| 2014 | 2013 | |||||||
| Net revenues: |
||||||||
| Site rental |
$ | 747,162 | $ | 615,415 | ||||
| Network services and other |
128,788 | 124,645 | ||||||
|
|
|
|
|
|||||
| Net revenues |
875,950 | 740,060 | ||||||
|
|
|
|
|
|||||
| Operating expenses: |
||||||||
| Costs of operations (exclusive of depreciation, amortization and accretion): |
||||||||
| Site rental |
228,076 | 177,606 | ||||||
| Network services and other |
72,874 | 77,377 | ||||||
| General and administrative |
64,849 | 58,246 | ||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||
| Acquisition and integration costs |
5,659 | 1,602 | ||||||
| Depreciation, amortization and accretion |
250,191 | 186,459 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
624,382 | 505,005 | ||||||
|
|
|
|
|
|||||
| Operating income (loss) |
251,568 | 235,055 | ||||||
| Interest expense and amortization of deferred financing costs |
(146,400) | (164,369) | ||||||
| Gains (losses) on retirement of long-term obligations |
— | (35,909) | ||||||
| Interest income |
173 | 297 | ||||||
| Other income (expense) |
(2,736) | (629) | ||||||
|
|
|
|
|
|||||
| Income (loss) before income taxes |
102,605 | 34,445 | ||||||
| Benefit (provision) for income taxes |
188 | (17,708) | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
102,793 | 16,737 | ||||||
| Less: net income (loss) attributable to the noncontrolling interest |
1,296 | 1,275 | ||||||
|
|
|
|
|
|||||
| Net income (loss) attributable to CCIC stockholders |
101,497 | 15,462 | ||||||
| Dividends on preferred stock |
(10,997) | — | ||||||
|
|
|
|
|
|||||
| Net income (loss) attributable to CCIC common stockholders |
$ | 90,500 | $ | 15,462 | ||||
|
|
|
|
|
|||||
| Net income (loss) attributable to CCIC common stockholders, per common share: |
||||||||
| Basic |
$ | 0.27 | $ | 0.05 | ||||
| Diluted |
$ | 0.27 | $ | 0.05 | ||||
| Weighted-average common shares outstanding (in thousands): |
||||||||
| Basic |
332,034 | 291,102 | ||||||
| Diluted |
333,045 | 292,570 | ||||||
| News Release continued: | Page 20 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 102,793 | $ | 16,737 | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: |
||||||||
| Depreciation, amortization and accretion |
250,191 | 186,459 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35,909 | ||||||
| Amortization of deferred financing costs and other non-cash interest |
20,881 | 36,920 | ||||||
| Stock-based compensation expense |
11,956 | 10,029 | ||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||
| Deferred income tax benefit (provision) |
(2,332) | 14,740 | ||||||
| Other adjustments, net |
(774) | 765 | ||||||
| Changes in assets and liabilities, excluding the effects of acquisitions: |
||||||||
| Increase (decrease) in liabilities |
23,278 | 31,539 | ||||||
| Decrease (increase) in assets |
(46,443) | (50,187) | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used for) operating activities |
362,283 | 286,626 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Payments for acquisition of businesses, net of cash acquired |
(62,228) | (12,810) | ||||||
| Capital expenditures |
(142,943) | (116,353) | ||||||
| Other investing activities, net |
952 | 147 | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used for) investing activities |
(204,219) | (129,016) | ||||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Principal payments on debt and other long-term obligations |
(27,739) | (25,333) | ||||||
| Purchases and redemptions of long-term debt |
— | (644,422) | ||||||
| Purchases of capital stock |
(21,417) | (23,579) | ||||||
| Borrowings under revolving credit facility |
83,000 | — | ||||||
| Payments under revolving credit facility |
(89,000) | (165,000) | ||||||
| Payments for financing costs |
(5,854) | (3,927) | ||||||
| Net decrease (increase) in restricted cash |
14,743 | 425,774 | ||||||
| Cash dividends paid on common stock |
(116,829) | — | ||||||
| Cash dividends paid on preferred stock |
(11,363) | — | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used for) financing activities |
(174,459) | (436,487) | ||||||
|
|
|
|
|
|||||
| Effect of exchange rate changes on cash |
(6,462) | (1,622) | ||||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
(22,857) | (280,499) | ||||||
| Cash and cash equivalents at beginning of period |
223,394 | 441,364 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | 200,537 | $ | 160,865 | ||||
|
|
|
|
|
|||||
| Supplemental disclosure of cash flow information: |
||||||||
| Interest paid |
126,540 | 99,871 | ||||||
| Income taxes paid |
7,400 | 2,645 | ||||||
Exhibit 99.2
Supplemental Information Package
First Quarter • March 31, 2014
,
www.crowncastle.com
Crown Castle International Corp.
First Quarter 2014
TABLE OF CONTENTS
| Page | ||
|
| ||
| Company Overview |
||
| Profile and Strategy |
2 | |
| Historical Dividend and AFFO per Share |
3 | |
| Portfolio Footprint |
3 | |
| Corporate Information |
4 | |
| Research Coverage |
5 | |
| Historical Common Stock Data |
5 | |
| Portfolio and Financial Highlights |
6-7 | |
| Outlook – 2Q14 and Full Year 2014 |
7-8 | |
| Financials & Metrics |
||
| Consolidated Balance Sheet |
9 | |
| Consolidated Statement of Operations |
10 | |
| FFO and AFFO Reconciliations |
11 | |
| Consolidated Statement of Cash Flows |
12 | |
| Site Rental Revenue Growth |
13 | |
| Site Rental Gross Margin Growth |
14 | |
| Summary of Straight-Line, Prepaid Rent Activity, and Capital Expenditures |
15 | |
| Lease Renewal and Lease Distribution |
16 | |
| Customer Overview |
17 | |
| Asset Portfolio Overview |
||
| Summary of Tower Portfolio by Vintage |
18 | |
| Portfolio Overview |
19-20 | |
| Ground Interest Overview |
21 | |
| Ground Interest Activity |
22 | |
| Small Cell Network Overview |
22 | |
| Capitalization Overview |
||
| Capitalization Overview |
23 | |
| Debt Maturity Overview |
24 | |
| Liquidity Overview |
25 | |
| Maintenance and Financial Covenants |
26-27 | |
| Interest Rate Sensitivity |
28 | |
| Appendix |
||
Cautionary Language Regarding Forward-Looking Statements
This supplemental information package (“Supplement”) contains forward-looking statements and information that are based on our management’s current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as “Outlook”, “guide”, “forecast”, “estimate”, “anticipate”, “project”, “plan”, “intend”, “believe”, “expect”, “likely”, “predicted”, and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the second quarter of 2014 and full year 2014.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. 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 Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP measures, including FFO and AFFO, are provided in the Appendix to this Supplement.
As used herein, the term “including” and any variation thereof, means “including without limitation.” The use of the word “or” herein is not exclusive.
1
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
COMPANY PROFILE
Crown Castle International Corp. (to which the terms “Crown Castle,” “CCIC,” “we,” “our,” “our Company,” “the Company” or “us” as used herein refer) owns, operates and leases shared wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, “towers”), and to a lesser extent, (2) distributed antenna systems, a type of small cell network (“small cells”), and (3) interests in land under third party towers in various forms (“third party land interests”) (collectively, “wireless infrastructure”). Crown Castle offers significant wireless communications coverage in each of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages approximately 40,000 and approximately 1,800 wireless communication sites in the US and Australia, respectively.
Our core business is providing access, including space or capacity, to our towers, and to a lesser extent, to our small cells and third party land interests via long-term contracts in various forms, including license, sublease and lease agreements (collectively, “contracts”). Our wireless infrastructure can accommodate multiple customers (“co-location”) for antennas or other equipment necessary for the transmission of signals for wireless communication devices. We seek to increase our site rental revenues by adding more tenants on our wireless infrastructure, which we expect to result in significant incremental cash flows due to our relatively fixed operating costs.
Effective January 1, 2014, Crown Castle commenced operating as a Real Estate Investment Trust (“REIT”) for U.S. federal income tax purposes as it relates to our towers and third party land interests, excluding our operations in Australia.
STRATEGY
Our strategy is to translate anticipated demand for our wireless infrastructure into growth in our cash flows and long-term stockholder value. We measure “long-term stockholder value” as the combined growth in our per share results and dividends to common stockholders. The key elements of our strategy are to:
| • | Organically grow the cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by co-locating additional tenants on our wireless infrastructure through long-term contracts as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing installations (collectively, “new tenant additions”) through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in cash rental receipts from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communications industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns. |
| • | Allocate capital efficiently. We seek to allocate our available capital, including the net cash provided by our operating activities, in a manner that will increase long-term stockholder value, including dividends to common stockholders. Our historical discretionary investments have included the following (in no particular order): |
| - | purchase shares of our common stock (“common stock”) from time to time; |
| - | acquire or construct wireless infrastructure; |
| - | acquire land interests under towers; |
| - | make improvements and structural enhancements to our existing wireless infrastructure; or |
| - | purchase, repay or redeem our debt. |
Our long-term strategy is based on our belief that additional demand for our wireless infrastructure will be created by the expected continued growth in the wireless communications industry, which is predominately driven by the demand for wireless data services by consumers. We believe that additional demand for wireless infrastructure will create future growth opportunities for us. We believe that such demand for our wireless infrastructure will continue, will result in organic growth of our cash flows due to new tenant additions on our existing wireless infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure.
2
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
HISTORICAL DIVIDEND AND AFFO PER SHARE(1)
GLOBAL FOOTPRINT
| U.S. FOOTPRINT | AUSTRALIAN FOOTPRINT | |
|
|
| 1 | Calculated to recognize the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received, as previously calculated. See reconciliations and definitions provided herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” in the Appendix for a discussion of the updated definitions of FFO and AFFO. |
| 2 | Last quarter annualized (“LQA”) calculated as the most recently completed quarterly period times four. |
3
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| GENERAL COMPANY INFORMATION | ||
| Principal executive offices | 1220 Augusta Drive, Suite 600, Houston, TX 77057 | |
| Common shares trading symbol | CCI | |
| Stock exchange listing | New York Stock Exchange | |
| Fiscal year ending date | December 31 | |
| Fitch – Long Term Issuer Default Rating | BB | |
| Moody’s – Long Term Corporate Family Rating | Ba2 | |
| Standard & Poor’s – Long Term Local Issuer Credit Rating | BB | |
Note: These credit ratings may not reflect the potential risks relating to the structure or trading of the Company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. The Company does not undertake any obligation to maintain the ratings or to advise of any change in the ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significances of the ratings can be obtained from each of the ratings agencies.
| EXECUTIVE MANAGEMENT TEAM | ||||||
| Name | Age | Years with Company |
Position | |||
| W. Benjamin Moreland |
50 | 14 | President and Chief Executive Officer | |||
| Jay A. Brown |
41 | 14 | Senior Vice President, Chief Financial Officer and Treasurer | |||
| James D. Young |
52 | 8 | Senior Vice President and Chief Operating Officer | |||
| E. Blake Hawk |
64 | 15 | Executive Vice President and General Counsel | |||
| Patrick Slowey |
57 | 13 | Senior Vice President and Chief Commercial Officer | |||
| Philip M. Kelley |
41 | 16 | Senior Vice President—Corporate Development and Strategy | |||
| BOARD OF DIRECTORS | ||||||||
| Name | Position | Committees | Age | Years as Director | ||||
| J. Landis Martin |
Chairman | NCG(1) | 68 | 17 | ||||
| P. Robert Bartolo |
Director | Audit | 42 | <1 | ||||
| Cindy Christy |
Director | NCG(1), Strategy | 48 | 6 | ||||
| Ari Q. Fitzgerald |
Director | Compensation, Strategy | 51 | 11 | ||||
| Robert E. Garrison II |
Director | Audit, Compensation | 72 | 8 | ||||
| Dale N. Hatfield |
Director | NCG(1), Strategy | 76 | 12 | ||||
| Lee W. Hogan |
Director | Audit, Compensation, Strategy | 69 | 12 | ||||
| Edward C. Hutcheson |
Director | Strategy | 68 | 17 | ||||
| John P. Kelly |
Director | Strategy | 56 | 13 | ||||
| Robert F. McKenzie |
Director | Audit, Strategy | 70 | 18 | ||||
| W. Benjamin Moreland |
Director | 50 | 7 | |||||
| 1 | Nominating & Corporate Governance Committee |
4
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| RESEARCH COVERAGE | ||||
|
| ||||
| Equity Research | ||||
|
| ||||
| Ameriprise Advisor Services, Inc. Justin Burgin (313) 628-1396 |
Atlantic Equities Christopher Watts +44 20 7382 2911 |
Bank of America David Barden (646) 855-1320 | ||
| Barclays Amir Rozwadowski (212) 526-4043 |
Canaccord Genuity Greg Miller (212) 389-8128 |
Citigroup Michael Rollins (212) 816-1116 | ||
| Cowen and Company Colby Synesael (646) 562-1355 |
EVA Dimensions Andrew Zamfotis (212) 201-2337 |
Evercore Partners Jonathan Schildkraut (212) 497-0864 | ||
| Jefferies Mike McCormack (212) 284-2516 |
JPMorgan Philip Cusick (212) 622-1444 |
Macquarie Kevin Smithen (212) 231-0695 | ||
| Morgan Stanley Simon Flannery (212) 761-6432 |
New Street Research Jonathan Chaplin (212) 921-9876 |
Nomura Adam Ilkowitz (212) 298-4121 | ||
| Oppenheimer & Co. Timothy Horan (212) 667-8137 |
Pacific Crest Securities Michael Bowen (503) 727-0721 |
Raymond James Ric Prentiss (727) 567-2567 | ||
| RBC Capital Markets Jonathan Atkin (415) 633-8589 |
S&P Capital IQ James Moorman (212) 438-2691 |
UBS Batya Levi (212) 713-8824 | ||
| Wells Fargo Securities, LLC Jennifer Fritzsche (312) 920-3548 |
||||
|
| ||||
| Rating Agency | ||||
|
| ||||
| Fitch John Culver (312) 368-3216 |
Moody’s Christopher Wimmer (212) 553-2947 |
Standard & Poor’s Catherine Cosentino (212) 438-7828 | ||
HISTORICAL COMMON STOCK DATA
|
|
||||||||||||||||||||
| (in millions, except per share data) | Three Months Ended | |||||||||||||||||||
| 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | ||||||||||||||||
|
|
||||||||||||||||||||
| High price(1) |
$76.54 | $77.22 | $78.00 | $81.16 | $75.50 | |||||||||||||||
| Low price(1) |
$68.44 | $69.87 | $66.73 | $66.95 | $66.13 | |||||||||||||||
| Period end closing price(2) |
$73.78 | $73.09 | $72.69 | $72.05 | $69.31 | |||||||||||||||
| Dividends paid per common share |
$0.35 | — | — | — | — | |||||||||||||||
| Volume weighted average price for the period(1) |
$72.93 | $73.93 | $71.33 | $72.40 | $70.44 | |||||||||||||||
| Common shares outstanding – diluted, at period end |
333 | 334 | 293 | 294 | 293 | |||||||||||||||
| Market value of outstanding common shares, at period end(3) |
$24,572 | $24,417 | $21,375 | $21,243 | $20,460 | |||||||||||||||
1 Based on the sales price, adjusted for dividends, as reported by Bloomberg.
2 Based on the period end closing price, as reported by Bloomberg.
3 Period end market value of outstanding common shares is based on the period end shares of common stock then outstanding multiplied by period end closing share price, adjusted for dividends, as reported by Bloomberg.
5
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
SUMMARY PORTFOLIO HIGHLIGHTS
|
| ||||
| (as of March 31, 2014) | U.S. | Australia | ||
|
| ||||
| Number of towers(1) |
39,612 | 1,755 | ||
| Average number of tenants per tower |
2.3 | 2.3 | ||
| Remaining contracted customer receivables ($ in billions)(2) |
$ 21 | $ 1 | ||
| Weighted average remaining customer contract term (years)(3) |
8 | 6 | ||
| Percent of towers in the Top 50 / 100 Basic Trading Areas |
56% / 71% | Not Applicable | ||
| Percent of ground leased / owned (by site rental gross margin) |
66% / 34% | 86% / 14% | ||
| Weighted average maturity of ground leases (years)(4) |
31 | 18 | ||
| SUMMARY FINANCIAL HIGHLIGHTS | ||||||||
|
|
||||||||
| Three Months Ended March 31, | ||||||||
| (in thousands of dollars, except per share amounts) | 2014 | 2013 | ||||||
|
|
||||||||
| Operating Data: |
||||||||
| Net revenues |
||||||||
| Site rental |
$ | 747,162 | $ | 615,415 | ||||
| Network services and other |
128,788 | 124,645 | ||||||
|
|
|
|
|
|||||
| Net revenues |
$ | 875,950 | $ | 740,060 | ||||
|
|
|
|
|
|||||
| Gross margin |
||||||||
| Site rental |
$ | 519,086 | $ | 437,809 | ||||
| Network services and other |
55,914 | 47,268 | ||||||
|
|
|
|
|
|||||
| Total gross margin |
$ | 575,000 | $ | 485,077 | ||||
|
|
|
|
|
|||||
| Net income (loss) attributable to CCIC common stockholders |
$ | 90,500 | $ | 15,462 | ||||
| Net income (loss) attributable to CCIC common stockholders per share - diluted |
0.27 | 0.05 | ||||||
| Non-GAAP Data(5): |
||||||||
| Adjusted EBITDA |
$ | 526,983 | $ | 440,791 | ||||
| FFO(6) |
337,654 | 200,931 | ||||||
| AFFO |
348,744 | 262,572 | ||||||
| AFFO per share(7) |
$ | 1.05 | $ | 0.90 | ||||
| Summary Cash Flow Data: |
||||||||
| Net cash provided by (used for) operating activities |
$ | 362,283 | $ | 286,626 | ||||
| Net cash provided by (used for) investing activities(8) |
(204,219) | (129,016) | ||||||
| Net cash provided by (used for) financing activities |
(174,459) | (436,487) | ||||||
| 1 | Includes towers and rooftops, excludes small cells and third-party land interests. |
| 2 | Excludes renewal terms at customers’ option. |
| 3 | Excludes renewal terms at customers’ option; weighted by site rental revenues. |
| 4 | Includes renewal terms at the Company’s option; weighted by site rental gross margin. |
| 5 | See reconciliations and definitions provided herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” in the Appendix for a discussion of the updated definition of FFO and AFFO. |
| 6 | Calculated to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. |
| 7 | Based on 333.3 million diluted shares outstanding as of March 31, 2014. |
| 8 | Including net cash used for acquisitions of approximately $62 million and $13 million for the three months ended March 31, 2014 and 2013, respectively. |
6
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED) | ||||||||
| Three months ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Other Data: |
||||||||
| Net debt to last quarter annualized Adjusted EBITDA |
5.4X | 6.0X | ||||||
| Quarterly dividend per share |
$ | 0.35 | $ | — | ||||
| AFFO payout ratio(2) |
33% | — | ||||||
| (in thousands of dollars) | March 31, 2014 | December 31, 2013 | ||||||
| Balance Sheet Data (at period end): |
||||||||
| Cash and cash equivalents |
$ | 200,537 | $ | 223,394 | ||||
| Property and equipment, net |
8,927,218 | 8,947,677 | ||||||
| Total assets |
20,569,666 | 20,594,908 | ||||||
| Total debt and other long-term obligations |
11,573,326 | 11,594,500 | ||||||
| Total CCIC stockholders’ equity |
6,918,265 | 6,926,717 | ||||||
| OUTLOOK FOR SECOND QUARTER 2014 AND FULL YEAR 2014 | ||||
| (dollars in millions, except per share amounts) | Second Quarter 2014 | Full Year 2014 | ||
| Site rental revenues |
$740 to $745 | $2,983 to $2,993 | ||
| Site rental cost of operations |
$230 to $235 | $926 to $936 | ||
| Site rental gross margin |
$507 to $512 | $2,052 to $2,062 | ||
| Adjusted EBITDA(2) |
$516 to $521 | $2,066 to $2,081 | ||
| Interest expense and amortization of deferred financing costs(1) |
$142 to $147 | $570 to $580 | ||
| FFO(2) |
$283 to $288 | $1,276 to $1,291 | ||
| AFFO(2) |
$326 to $331 | $1,346 to $1,361 | ||
| AFFO per share(2)(3) |
$0.98 to $0.99 | $4.04 to $4.08 | ||
| Net income (loss) |
$32 to $65 | $298 to $382 | ||
| Net income (loss) per share - diluted(3) |
$0.10 to $0.19 | $0.89 to $1.15 | ||
| Net income (loss) attributable to CCIC common stockholders |
$20 to $53 | $249 to $333 | ||
| Net income (loss) attributable to CCIC common stockholders per share - diluted(3) |
$0.06 to $0.16 | $0.75 to $1.00 | ||
| 1 | See the reconciliation of “Components of interest expense and amortization of deferred financing costs” in the Appendix. |
| 2 | See reconciliations and definitions provided herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” in the Appendix for a discussion of the updated definitions of FFO and AFFO. |
| 3 | Based on 333.3 million diluted shares outstanding as of March 31, 2014. |
7
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
OUTLOOK FOR FULL YEAR 2014
SITE RENTAL REVENUE GROWTH
| (dollars in millions) |
Midpoint of Full Year 2014 Outlook |
Full Year 2013 | ||||||
| Reported GAAP site rental revenues |
$ | 2,988 | $ | 2,504 | ||||
| Site rental straight-line revenues |
(188 | ) | (219) | |||||
|
|
|
|||||||
| Site Rental Revenues, as Adjusted(1) |
$ | 2,800 | $ | 2,285 | ||||
| Cash adjustments: |
||||||||
| FX and other |
6 | |||||||
| New tower acquisitions and builds |
(383 | ) | ||||||
|
|
|
|||||||
| Organic Site Rental Revenue(2)(3) |
$ | 2,424 | ||||||
| Year-Over-Year Revenue Growth |
||||||||
| Reported GAAP site rental revenues |
19.3% | |||||||
| Site Rental Revenues, as Adjusted |
22.5% | |||||||
| Organic Site Rental Revenues(4) |
6.1% | |||||||
ORGANIC SITE RENTAL REVENUE GROWTH
| Midpoint of Full Year 2014 Outlook | ||||
| New leasing activity |
5.1% | |||
| Escalators |
3.6% | |||
|
| ||||
| Organic Site Rental Revenue growth, before non-renewals |
8.8% | |||
| Non-renewals |
(2.7%) | |||
|
| ||||
| Organic Site Rental Revenue Growth(4) |
6.1% | |||
|
| ||||
OUTLOOK FOR FULL YEAR 2014
SITE RENTAL GROSS MARGIN GROWTH
| (dollars in millions) | Midpoint of Full Year 2014 Outlook |
Full Year 2013 | ||||||
| Reported GAAP site rental gross margin |
$ | 2,057 | $ | 1,779 | ||||
| Straight line revenues and expenses, net |
(87) | (138) | ||||||
|
|
|
|||||||
| Site Rental Gross Margin, as Adjusted(1) |
$ | 1,970 | $ | 1,640 | ||||
| Cash adjustments: |
||||||||
| FX and other |
$ | 3 | ||||||
| New tower acquisitions and builds |
(222) | |||||||
|
|
|
|||||||
| Organic Site Rental Gross Margin(2)(3) |
$ | 1,751 | ||||||
| Year-Over-Year Gross Margin Growth |
||||||||
| Reported GAAP site rental gross margin |
15.7% | |||||||
| Site Rental Gross Margin, as Adjusted |
20.1% | |||||||
| Organic Site Rental Gross Margin(5) |
6.7% | |||||||
| Year-Over-Year Incremental Margin |
||||||||
| Reported GAAP site rental gross margin |
57.5% | |||||||
| Site Rental Gross Margin, as Adjusted |
64.0% | |||||||
| Organic Site Rental Gross Margin(6) |
79.9% | |||||||
| 1 | Includes amortization of prepaid rent. |
| 2 | Includes Site Rental Revenue, as Adjusted, from the construction of new small cell nodes. |
| 3 | See definitions provided herein. |
| 4 | Calculated as the percentage change from Site Rental Revenue, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
| 5 | Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period. |
| 6 | Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenue, as Adjusted in the prior period when compared to Organic Site Rental Revenue for the current period. |
8
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
CONSOLIDATED BALANCE SHEET (Unaudited)
| (dollars in thousands, except share amounts) |
March 31, |
December 31, 2013 |
||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 200,537 | $ | 223,394 | ||||
| Restricted cash |
163,953 | 183,526 | ||||||
| Receivables, net |
245,556 | 249,925 | ||||||
| Prepaid expenses |
132,026 | 132,003 | ||||||
| Deferred income tax assets |
26,972 | 26,714 | ||||||
| Other current assets |
83,224 | 77,121 | ||||||
|
|
|
|
|
|||||
| Total current assets |
852,268 | 892,683 | ||||||
| Deferred site rental receivables |
1,129,678 | 1,078,995 | ||||||
| Property and equipment, net |
8,927,218 | 8,947,677 | ||||||
| Goodwill |
4,934,148 | 4,916,426 | ||||||
| Other intangible assets, net |
3,997,518 | 4,057,865 | ||||||
| Deferred income tax assets |
14,746 | 19,008 | ||||||
| Long-term prepaid rent, deferred financing costs and other assets, net |
714,090 | 682,254 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 20,569,666 | $ | 20,594,908 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 127,053 | $ | 145,390 | ||||
| Accrued interest |
64,561 | 65,582 | ||||||
| Deferred revenues |
255,323 | 260,114 | ||||||
| Other accrued liabilities |
155,868 | 181,715 | ||||||
| Current maturities of debt and other obligations |
105,467 | 103,586 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
708,272 | 756,387 | ||||||
| Debt and other long-term obligations |
11,467,859 | 11,490,914 | ||||||
| Deferred income tax liabilities |
52,134 | 56,513 | ||||||
| Deferred credits and other liabilities |
1,406,734 | 1,349,919 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
13,634,999 | 13,653,733 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| CCIC stockholders’ equity: |
||||||||
| Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: March 31, 2014—333,795,981 and December 31, 2013—334,070,016 |
3,338 | 3,341 | ||||||
| 4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: March 31, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: March 31, 2014 and December 31, 2013—$977,500 |
98 | 98 | ||||||
| Additional paid-in capital |
9,473,311 | 9,482,769 | ||||||
| Accumulated other comprehensive income (loss) |
4,059 | (23,612 | ) | |||||
| Dividends in excess of earnings |
(2,562,541 | ) | (2,535,879 | ) | ||||
|
|
|
|
|
|||||
| Total CCIC stockholders’ equity |
6,918,265 | 6,926,717 | ||||||
| Noncontrolling interest |
16,402 | 14,458 | ||||||
|
|
|
|
|
|||||
| Total equity |
6,934,667 | 6,941,175 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 20,569,666 | $ | 20,594,908 | ||||
|
|
|
|
|
|||||
9
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
|
|
|
|||||||||||
| (dollars in thousands, except share and per share amounts) | 2014 | 2013 | Percent Change(1) |
|||||||||
| Net revenues: |
||||||||||||
| Site rental |
$ | 747,162 | $ | 615,415 | 21 % | |||||||
| Network services and other |
128,788 | 124,645 | 3 % | |||||||||
|
|
|
|
|
|
|
|||||||
| Net revenues |
875,950 | 740,060 | 18 % | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating expenses: |
||||||||||||
| Costs of operations(2): |
||||||||||||
| Site rental |
228,076 | 177,606 | 28 % | |||||||||
| Network services and other |
72,874 | 77,377 | (6) % | |||||||||
|
|
|
|
|
|
|
|||||||
| Total costs of operations |
300,950 | 254,983 | 18 % | |||||||||
|
|
|
|
|
|
|
|||||||
| General and administrative |
64,849 | 58,246 | 11 % | |||||||||
| Asset write-down charges |
2,733 | 3,715 | * | |||||||||
| Acquisition and integration costs |
5,659 | 1,602 | * | |||||||||
| Depreciation, amortization and accretion |
250,191 | 186,459 | 34 % | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
624,382 | 505,005 | 24 % | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income (loss) |
251,568 | 235,055 | 7 % | |||||||||
|
|
|
|
|
|
|
|||||||
| Interest expense and amortization of deferred financing costs |
(146,400 | ) | (164,369 | ) | (11) % | |||||||
| Gains (losses) on retirement of long-term obligations |
— | (35,909 | ) | |||||||||
| Interest income |
173 | 297 | ||||||||||
| Other income (expense) |
(2,736 | ) | (629 | ) | ||||||||
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
102,605 | 34,445 | ||||||||||
| Benefit (provision) for income taxes |
188 | (17,708 | ) | |||||||||
|
|
|
|
|
|||||||||
| Net income (loss) |
102,793 | 16,737 | ||||||||||
| Less: net income (loss) attributable to the noncontrolling interest |
1,296 | 1,275 | ||||||||||
|
|
|
|
|
|||||||||
| Net income (loss) attributable to CCIC stockholders |
101,497 | 15,462 | ||||||||||
| Dividends on preferred stock |
(10,997 | ) | — | |||||||||
|
|
|
|
|
|||||||||
| Net income (loss) attributable to CCIC common stockholders |
$ | 90,500 | $ | 15,462 | ||||||||
|
|
|
|
|
|||||||||
| Net income (loss) attributable to CCIC common stockholders, per common share: |
||||||||||||
| Basic |
$ | 0.27 | $ | 0.05 | ||||||||
| Diluted |
$ | 0.27 | $ | 0.05 | ||||||||
| Weighted-average common shares outstanding (in thousands): |
||||||||||||
| Basic |
332,034 | 291,102 | ||||||||||
| Diluted |
333,045 | 292,570 | ||||||||||
1 Inclusive of the impact of foreign exchange rate fluctuations.
2 Exclusive of depreciation, amortization and accretion shown separately.
* Percentage is not meaningful.
10
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| FFO AND AFFO RECONCILIATIONS | ||||||||
| Three Months Ended March 31, | ||||||||
| (in thousands of dollars, except share and per share amounts) | 2014 | 2013 | ||||||
| Net income |
$ | 102,793 | $ | 16,737 | ||||
| Real estate related depreciation, amortization and accretion |
244,420 | 181,755 | ||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||
| Adjustment for noncontrolling interest(1) |
(1,296 | ) | (1,275 | ) | ||||
| Dividends on preferred stock |
(10,997 | ) | — | |||||
|
|
|
|
|
|||||
| FFO(2) |
$ | 337,654 | $ | 200,931 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
333,045 | 292,570 | ||||||
|
|
|
|
|
|||||
| FFO per share(2) |
$ | 1.01 | $ | 0.69 | ||||
|
|
|
|
|
|||||
| FFO (from above) |
337,654 | 200,931 | ||||||
| Adjustments to increase (decrease) FFO: |
||||||||
| Straight-line revenue |
(50,806 | ) | (59,399 | ) | ||||
| Straight-line expense |
26,380 | 20,707 | ||||||
| Stock-based compensation expense |
12,937 | 10,098 | ||||||
| Non-cash portion of tax provision(3) |
(2,332 | ) | 16,061 | |||||
| Non-real estate related depreciation, amortization and accretion |
5,770 | 4,704 | ||||||
| Amortization of non-cash interest expense |
20,882 | 36,920 | ||||||
| Other (income) expense |
2,736 | 629 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35,909 | ||||||
| Acquisition and integration costs |
5,659 | 1,602 | ||||||
| Adjustment for noncontrolling interest(1) |
1,296 | 1,275 | ||||||
| Capital improvement capital expenditures |
(3,860 | ) | (3,314 | ) | ||||
| Corporate capital expenditures |
(7,571 | ) | (3,552 | ) | ||||
|
|
|
|
|
|||||
| AFFO(2) |
$ | 348,744 | $ | 262,572 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
333,045 | 292,570 | ||||||
|
|
|
|
|
|||||
| AFFO per share(2) |
$ | 1.05 | $ | 0.90 | ||||
|
|
|
|
|
|||||
1 Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
2 See reconciliations and definitions provided herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” in the Appendix for a discussion of the updated definition of FFO and AFFO.
3 Adjusts the income tax provision for 2013 to reflect our estimate of the cash taxes had we been a REIT, which predominantly relates to foreign taxes paid. As a result, income tax expense (benefit) is lower by the amount of the adjustment.
11
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
102,793 | $ | 16,737 | |||||
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: |
||||||||
| Depreciation, amortization and accretion |
250,191 | 186,459 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35,909 | ||||||
| Amortization of deferred financing costs and other non-cash interest |
20,881 | 36,920 | ||||||
| Stock-based compensation expense |
11,956 | 10,029 | ||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||
| Deferred income tax benefit (provision) |
(2,332 | ) | 14,740 | |||||
| Other adjustments, net |
(774 | ) | 765 | |||||
| Changes in assets and liabilities, excluding the effects of acquisitions: |
||||||||
| Increase (decrease) in liabilities |
23,278 | 31,539 | ||||||
| Decrease (increase) in assets |
(46,443 | ) | (50,187 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by (used for) operating activities |
362,283 | 286,626 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Payments for acquisition of businesses, net of cash acquired |
(62,228 | ) | (12,810 | ) | ||||
| Capital expenditures |
(142,943 | ) | (116,353 | ) | ||||
| Other investing activities, net |
952 | 147 | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used for) investing activities |
(204,219 | ) | (129,016 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Principal payments on debt and other long-term obligations |
(27,739 | ) | (25,333 | ) | ||||
| Purchases and redemptions of long-term debt |
— | (644,422 | ) | |||||
| Purchases of capital stock |
(21,417 | ) | (23,579 | ) | ||||
| Borrowings under revolving credit facility |
83,000 | — | ||||||
| Payments under revolving credit facility |
(89,000 | ) | (165,000 | ) | ||||
| Payments for financing costs |
(5,854 | ) | (3,927 | ) | ||||
| Net decrease (increase) in restricted cash |
14,743 | 425,774 | ||||||
| Cash dividends paid on common stock |
(116,829 | ) | — | |||||
| Cash dividends paid on preferred stock |
(11,363 | ) | — | |||||
|
|
|
|
|
|||||
| Net cash provided by (used for) financing activities |
(174,459 | ) | (436,487 | ) | ||||
|
|
|
|
|
|||||
| Effect of exchange rate changes on cash |
(6,462 | ) | (1,622 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
(22,857 | ) | (280,499 | ) | ||||
| Cash and cash equivalents at beginning of period |
223,394 | 441,364 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | 200,537 | $ | 160,865 | ||||
|
|
|
|
|
|||||
| Supplemental disclosure of cash flow information: |
||||||||
| Interest paid |
126,540 | 99,871 | ||||||
| Income taxes paid |
7,400 | 2,645 | ||||||
12
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
|
SITE RENTAL REVENUE GROWTH |
| |||||||
| Three months ended March 31, | ||||||||
| (dollars in millions) | 2014 | 2013 | ||||||
| Beginning towers |
31,576 | |||||||
| Net tower additions/(dispositions) |
9,791 | |||||||
|
|
|
|||||||
| Ending towers |
41,367 | |||||||
| Reported GAAP site rental revenue |
$ | 747 | $ | 615 | ||||
| Site rental straight-line revenue |
(51 | ) | (59 | ) | ||||
|
|
|
|||||||
| Site Rental Revenue, as Adjusted(1) |
$ | 696 | $ | 556 | ||||
| Cash adjustments: |
||||||||
| FX and other |
(1 | ) | ||||||
| New tower acquisitions and builds |
(100 | ) | ||||||
|
|
|
|||||||
| Organic Site Rental Revenue(2)(3) |
$ | 595 | ||||||
| Year-Over-Year Revenue Growth |
||||||||
| Reported GAAP site rental revenue |
21.4 | % | ||||||
| Site Rental Revenue, as Adjusted |
25.3 | % | ||||||
| Organic Site Rental Revenue(4) |
7.1 | % | ||||||
| ORGANIC SITE RENTAL REVENUE GROWTH | ||
| Three months ended March 31, 2014 | ||
| New leasing activity |
4.9% | |
| Escalators |
3.5% | |
|
| ||
| Organic Site Rental Revenue growth, before non-renewals |
8.5% | |
| Non-renewals |
(1.4%) | |
|
| ||
| Organic Site Rental Revenue growth(4) |
7.1% | |
| 1 | Includes amortization of prepaid rent; see the table “Summary of Prepaid Rent Activity” on page 15 for further details. |
| 2 | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
| 3 | See definitions provided herein. |
| 4 | Calculated as the percentage change from Site Rental Revenue, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period. |
13
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
|
SITE RENTAL GROSS MARGIN GROWTH |
| |||||||
| Three months ended March 31, | ||||||||
| (dollars in millions) | 2014 | 2013 | ||||||
| Reported GAAP site rental gross margin |
$ | 519 | $ | 438 | ||||
| Straight line revenues and expenses, net |
(25) | (39) | ||||||
| Site Rental Gross Margin, as Adjusted |
$ | 494 | $ | 399 | ||||
| Cash adjustments: |
||||||||
| FX and other |
(1) | |||||||
| New tower acquisitions and builds |
(58) | |||||||
| Organic Site Rental Gross Margin(1)(2) |
$ | 435 | ||||||
| Year-Over-Year Gross Margin Growth |
||||||||
| Reported GAAP site rental gross margin |
18.6% | |||||||
| Site Rental Gross Margin, as Adjusted |
24.0% | |||||||
| Organic Site Rental Gross Margin(3) |
9.0% | |||||||
| Year-Over-Year Incremental Margin |
||||||||
| Reported GAAP site rental gross margin |
61.7% | |||||||
| Site Rental Gross Margin, as Adjusted |
68.1% | |||||||
| Organic Site Rental Gross Margin(4) |
91.5% | |||||||
| 1 | Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes. |
| 2 | See definitions provided herein. |
| 3 | Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period. |
| 4 | Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenue, as Adjusted in the prior period when compared to Organic Site Rental Revenue for the current period. |
14
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| SUMMARY OF SITE RENTAL STRAIGHT-LINE REVENUE AND EXPENSES (1) | ||||||||
|
|
||||||||
| Three months ended March 31, | ||||||||
|
|
|
|||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
|
|
||||||||
| Total site rental straight-line revenue |
$ | 50,806 | $ | 59,399 | ||||
| Total site rental straight-line expense |
26,380 | 20,707 | ||||||
| SUMMARY OF PREPAID RENT ACTIVITY(2) | ||||||||
|
|
||||||||
| Three months ended March 31, | ||||||||
|
|
|
|||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
|
|
||||||||
| Prepaid rent received |
$ | 68,222 | $ | 43,742 | ||||
| Amortization of prepaid rent |
(19,086 | ) | (15,021) | |||||
| SUMMARY OF CAPITAL EXPENDITURES | ||||||||
|
|
||||||||
| Three months ended March 31, | ||||||||
|
|
|
|||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
|
|
||||||||
| Discretionary: |
||||||||
| Purchases of land interests |
$ | 20,396 | $ | 15,987 | ||||
| Wireless infrastructure construction and improvements |
111,116 | 93,500 | ||||||
| Sustaining |
11,431 | 6,866 | ||||||
|
|
|
|||||||
| Total |
$ | 142,943 | $ | 116,353 | ||||
|
|
|
|||||||
| 1 | In accordance with GAAP accounting, if payment terms call for fixed escalations, or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods. |
| 2 | Reflects prepaid rent received from long-term tenant contracts and the amortization thereof for GAAP revenue recognition purposes. |
15
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
|
PROJECTED REVENUE FROM EXISTING CUSTOMER CONTRACTS(1) |
| |||||||||||||||||||
| Remaining nine months |
Years ended December 31, | |||||||||||||||||||
| (as of March 31, 2014; dollars in millions) | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
| Site rental revenue (GAAP) |
$ | 2,185 | $ | 2,870 | $ | 2,884 | $ | 2,909 | $ | 2,933 | ||||||||||
| Site rental straight-line revenue |
(131 | ) | (97 | ) | (26 | ) | 37 | 86 | ||||||||||||
| Site Rental Revenue, as Adjusted |
$ | 2,054 | $ | 2,773 | $ | 2,858 | $ | 2,945 | $ | 3,019 | ||||||||||
| PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2) | ||||||||||||||||||||
| Remaining nine months |
Years ended December 31, | |||||||||||||||||||
| (as of March 31, 2014; dollars in millions) | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
| Ground lease expense (GAAP) |
$ | 506 | $ | 679 | $ | 686 | $ | 692 | $ | 699 | ||||||||||
| Site rental straight-line expense |
(69 | ) | (83 | ) | (71 | ) | (59 | ) | (49 | ) | ||||||||||
| Ground Lease Expense, as Adjusted |
$ | 437 | $ | 596 | $ | 615 | $ | 633 | $ | 650 | ||||||||||
| ANNUALIZED CASH SITE RENTAL REVENUE AT TIME OF RENEWAL(3) | ||||||||||||||||||||
| Remaining nine months |
Years ended December 31, | |||||||||||||||||||
| (as of March 31, 2014; dollars in millions) | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||||
| AT&T |
$ | 8 | $ | 26 | $ | 44 | $ | 20 | $ | 37 | ||||||||||
| Sprint(4) |
15 | 31 | 48 | 45 | 40 | |||||||||||||||
| T-Mobile |
9 | 12 | 32 | 24 | 32 | |||||||||||||||
| Verizon |
7 | 10 | 11 | 15 | 16 | |||||||||||||||
| Optus |
1 | 29 | 2 | 9 | 2 | |||||||||||||||
| VHA |
1 | 1 | 7 | 11 | 2 | |||||||||||||||
| Telstra |
1 | 2 | 4 | 2 | 1 | |||||||||||||||
| All Others Combined |
27 | 44 | 40 | 28 | 33 | |||||||||||||||
| Total |
$ | 69 | $ | 155 | $ | 189 | $ | 153 | $ | 162 | ||||||||||
| HISTORICAL ANNUAL NON-RENEWALS AS PERCENTAGE OF SITE RENTAL REVENUE, AS ADJUSTED | ||||||||
| Years ended December 31, | ||||||||
| 2013 | 2012 | 2011 | 2010 | 2009 | ||||
| 1.7% | 2.2% | 1.9% | 2.0% | 2.6% | ||||
1 Based on existing contracts as of March 31, 2014. All contracts, except for Sprint contracts associated with the iDen network and contracts where termination notices have been received, are assumed to renew for a new term at current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.89 US dollar to 1.0 Australian dollar.
2 Based on existing ground leases as of March 31, 2014. CPI-linked leases are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.89 US dollar to 1.0 Australian dollar.
3 Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table “Projected Revenue from Existing Customer Contracts.”
4 Excludes Sprint leases associated with the iDen network, which are assumed to not renew as reflected in the table “Projected Revenue from Existing Customer Contracts.”
16
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
|
CUSTOMER OVERVIEW | ||||||||||
| (as of March 31, 2014) |
Percentage of Q1 2014 Rental Revenues |
Weighted Average Term Remaining(1) |
Long-Term Credit Rating (S&P / Moody’s) | |||||||
| AT&T |
29 | % | 7 | A- / A3 | ||||||
| Sprint |
23 | % | 6 | BB- / Ba3 | ||||||
| T-Mobile |
22 | % | 7 | BB | ||||||
| Verizon |
14 | % | 8 | BBB+ / Baa1 | ||||||
| Optus |
1 | % | 2 | A+ / Aa3 | ||||||
| VHA |
1 | % | 6 | A- / A3(2) | ||||||
| Telstra |
1 | % | 12 | A / A2 | ||||||
| All Others Combined |
9 | % | 8 | N/A | ||||||
| Total / Weighted Average |
100 | % | 7 | |||||||
| 1 | Weighted by site rental revenue contributions; excludes renewals at the customers’ option. |
| 2 | Vodafone Hutchison Australia (“VHA”) is a joint venture between Vodafone Group Plc and Hutchison Telecommunications Australia, a subsidiary of Hutchison Whompoa; Vodafone Group Plc and Hutchison Whompoa each are rated A- and A3 by S&P and Moody’s, respectively, as of March 31, 2014. |
17
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| SUMMARY OF TOWER PORTFOLIO BY VINTAGE | ||
| (as of March 31, 2014; dollars in thousands) |
||
| YIELD(1) | NUMBER OF TENANTS PER TOWER | |
|
| ||
| LQA SITE RENTAL REVENUE PER TOWER | LQA SITE RENTAL GROSS MARGIN PER TOWER | |
|
| ||
| INVESTED CAPITAL PER TOWER(2) | NUMBER OF TOWERS | |
|
| ||
| 1 | Yield is calculated as LQA site rental gross margin divided by invested capital. |
| 2 | Reflects gross total assets, including incremental capital invested by the Company since time of acquisition or construction completion. |
18
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| PORTFOLIO OVERVIEW(1) | ||||
| (as of March 31, 2014; dollars in thousands) | ||||
| NUMBER OF TOWERS | TENANTS PER TOWER | LQA SITE RENTAL REVENUE PER TOWER | ||
|
| ||||
1 Includes towers and rooftops, excludes small cells and third-party land interests.
19
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
DISTRIBUTION OF TOWER TENANCY (as of March 31, 2014) | ||
| PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1) | ||
| U.S. PORTFOLIO | AUSTRALIA PORTFOLIO | |
|
|
| |
| GEOGRAPHIC DISTRIBUTION (as of March 31, 2014) (1) | ||
| PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION |
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION | |
|
|
| |
| 1 | Includes towers and rooftops, excludes small cells and third-party land interests. |
20
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| U.S. GROUND INTEREST OVERVIEW | ||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| (as of March 31, 2014; dollars in millions) |
LQA Site Rental Revenue |
Percentage of U.S. LQA Site Rental Revenue |
LQA Site Gross |
Percentage |
Number of U.S. Towers(1) |
Percentage of U.S. Towers |
Weighted Average Term Remaining (by years)(2) |
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| Less than 10 years |
$ | 340 | 13% | $ | 199 | 11% | 5,782 | 15% | ||||||||||||||||||||
| 10 to 20 years |
538 | 21% | 299 | 16% | 10,338 | 26% | ||||||||||||||||||||||
| Greater 20 years |
1,072 | 41% | 736 | 40% | 15,896 | 40% | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total leased |
$ | 1,950 | 75% | $ | 1,235 | 66% | 32,016 | 81% | 31 | |||||||||||||||||||
| Owned |
665 | 25% | 627 | 34% | 7,596 | 19% | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total / Average |
$ | 2,615 | 100% | $ | 1,862 | 100% | 39,612 | 100% | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| AUSTRALIA GROUND INTEREST OVERVIEW | ||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| (as of March 31, 2014; dollars in millions) |
LQA Site Rental Revenue |
Percentage of Australia LQA Site Rental Revenue |
LQA Site Gross |
Percentage of Australia LQA Site Rental Gross Margin |
Number Australia of Towers(1) |
Percentage of Australia Towers |
Weighted Average Term Remaining (by years)(2) |
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
| Less than 10 years |
$ | 41 | 33% | $ | 28 | 30% | 583 | 33% | ||||||||||||||||||||
| 10 to 20 years |
38 | 30% | 28 | 29% | 534 | 30% | ||||||||||||||||||||||
| Greater 20 years |
33 | 26% | 26 | 27% | 502 | 29% | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total leased |
$ | 112 | 90% | $ | 83 | 86% | 1,619 | 92% | 18 | |||||||||||||||||||
| Owned |
13 | 10% | 13 | 14% | 136 | 8% | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Total / Average |
$ | 125 | 100% | $ | 95 | 100% | 1,755 | 100% | ||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| 1 | Includes towers and rooftops, excludes small cells and third-party land interests. |
| 2 | Includes renewal terms at the Company’s option; weighted by site rental gross margin. |
21
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| U.S. GROUND INTEREST ACTIVITY | ||||
| (dollars in millions) |
Three Months Ended March 31, 2014 |
|||
| Ground Extensions: |
| |||
| Number of ground leases extended |
329 | |||
| Average number of years extended |
26 | |||
| Percentage increase in consolidated cash ground lease expense due to extension activities |
0.2% | |||
| Ground Purchases: |
||||
| Number of ground leases purchased |
128 | |||
| Land lease purchase capital expenditures (includes acquisitions and capital leases) |
$ | 30 | ||
| Percentage of consolidated site rental gross margin from purchased sites |
<1% | |||
| AUSTRALIA GROUND INTEREST ACTIVITY | ||||
| (dollars in millions) |
Three Months Ended March 31, 2014 |
|||
| Ground Extensions: |
| |||
| Number of ground leases extended |
11 | |||
| Average number of years extended |
16 | |||
| Percentage increase in consolidated cash ground lease expense due to extension activities |
Not Meaningful | |||
| Ground Purchases: |
||||
| Number of ground leases purchased |
2 | |||
| Land lease purchase capital expenditures (includes acquisitions and capital leases) |
$ | 1 | ||
| Percentage of consolidated site rental gross margin from purchased sites |
Not Meaningful | |||
| SMALL CELL NETWORK OVERVIEW | ||||||
| Number of Nodes | Miles of Fiber | Percentage of LQA Site Rental Revenues |
Weighted Average Current Term Remaining for Customer Contracts(1) | |||
| 11,849 | 6,245 | 6% | 8 | |||
| 1 | Excludes renewal terms at customers’ option; weighted by site rental revenue. |
22
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| CAPITALIZATION OVERVIEW | ||||||||||||||||||
|
| ||||||||||||||||||
| (dollars in millions) | Face Value as Reported 3/31/14 |
Face Value as Adjusted 3/31/14(1) |
Fixed vs. Floating |
Secured vs. Unsecured |
Interest Rate(1)(2) |
Net Debt to LQA EBITDA(1)(3) |
Maturity | |||||||||||
|
| ||||||||||||||||||
| Cash |
$ | 201 | $ | 200 | ||||||||||||||
| Senior Secured Tower Revenue Notes, Series 2010-1-2010-3(4) |
1,900 | 1,600 | Fixed | Secured | 5.75% | Various(9) | ||||||||||||
| Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(4) |
1,550 | 1,550 | Fixed | Secured | 4.48% | Various(9) | ||||||||||||
| 2012 Senior Notes(5) |
1,500 | 1,500 | Fixed | Secured | 3.36% | 2017/2023 | ||||||||||||
| Senior Secured Notes, Series 2009-1(6) |
175 | 175 | Fixed | Secured | 7.35% | Various(9) | ||||||||||||
| WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(7) |
273 | 273 | Fixed | Secured | 5.61% | 2040 | ||||||||||||
|
|
| |||||||||||||||||
| Subtotal |
$ | 5,398 | $ | 5,098 | 4.78% | 2.4x | ||||||||||||
| Revolving Credit Facility(8) |
368 | 368 | Floating | Secured | 2.16% | 2018 | ||||||||||||
| Term Loan A |
658 | 658 | Floating | Secured | 2.15% | 2018 | ||||||||||||
| Term Loan B |
2,857 | 2,857 | Floating | Secured | 3.25% | 2019/2021(10) | ||||||||||||
|
|
| |||||||||||||||||
| Total CCOC Facility Debt |
$ | 3,883 | $ | 3,883 | 2.96% | 1.8x | ||||||||||||
| 4.875% Senior Notes |
— | 850 | Fixed | Unsecured | 4.88% | 2022 | ||||||||||||
| 5.250% Senior Notes |
1,650 | 1,650 | Fixed | Unsecured | 5.25% | 2023 | ||||||||||||
| 7.125% Senior Notes |
500 | — | Fixed | Unsecured | 7.13% | 2019 | ||||||||||||
| Capital Leases & Other Debt |
137 | 137 | Various | Various | Various | Various | ||||||||||||
|
|
| |||||||||||||||||
| Total HoldCo and other Debt |
$ | 2,287 | $ | 2,637 | 5.12% | 1.3x | ||||||||||||
| Total Net Debt |
$ | 11,367 | $ | 11,418 | 4.24% | 5.4x | ||||||||||||
|
|
| |||||||||||||||||
| Preferred Stock, at liquidation value |
978 | 978 | ||||||||||||||||
| Market Capitalization(11) |
24,627 | 24,627 | ||||||||||||||||
|
|
| |||||||||||||||||
| Firm Value(12) |
$ | 36,972 | $ | 37,023 | ||||||||||||||
| 1 | After giving effect to the issuance of the 4.875% Senior Notes in April 2014, repayment of the Senior Secured Tower Revenue Notes Series 2010-1 in April 2014, and the anticipated May 2014 redemption of the 7.125% Senior Notes. |
| 2 | Represents the weighted-average stated interest rate. |
| 3 | Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA. |
| 4 | If the Senior Secured Tower Revenue Notes, Series 2010-1, 2010-3, and 2010-3 and Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 (“2010 Tower Revenue Notes”) are not paid in full on or prior to 2015, 2017 and 2020, as applicable, then Excess Cash Flow (as defined in the indenture) of the issuers (of such notes) will be used to repay principal of the applicable series and class of the 2010 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes. The Senior Secured Tower Revenue Notes, Series 2010-1, 2010-2, and 2010-3 consist of three series of notes with principal amounts of $300 million, $350 million and $1.3 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 consist of three series of notes with principal amounts of $250 million, $300 million and $1.0 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively. |
| 5 | 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 2030. |
| 6 | The Senior Secured notes, Series 2009-1 consist of $105 million of principal as of March 31, 2014 that amortizes through 2019, and $70 million of principal as of March 31, 2014 that amortizes during the period beginning in 2019 and ending in 2029. |
| 7 | The anticipated repayment date is 2015 for each class of the WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 (“WCP Securitized Notes”). If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates, 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 using the excess cash flows of the issuers of the WCP Securitized Notes. |
| 8 | As of March 31, 2014, the undrawn availability under the $1.5 billion Revolving Credit Facility is $1.1 billion. |
| 9 | Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration. |
| 10 | As of March 31, 2014, approximately $570 million of the Term Loan B have 101 soft call until the next call date. |
| 11 | Market capitalization calculated based on $73.78 closing price and 333.8 million shares outstanding as of March 31, 2014. |
| 12 | Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization. |
23
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| DEBT MATURITY OVERVIEW, AS ADJUSTED(1)(2) |
|
|
| 1 | Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes capital leases and other obligations; amounts presented at face value net of repurchases held at CCIC. |
| 2 | After giving effect to the issuance of the 4.875% Senior Notes in April 2014, repayment of the Senior Secured Tower Revenue Notes, Series 2010-1, in April 2014, and anticipated redemption of the 7.125% Senior Notes in May 2014. |
24
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| LIQUIDITY OVERVIEW
|
| |||||||
| (dollars in thousands)
|
March 31, 2014 As Adjusted(1) |
|||||||
| Cash and cash equivalents(2) |
$ | 199,918 | ||||||
| Undrawn revolving credit facility availability(3) |
1,132,000 | |||||||
| Restricted cash |
168,953 | |||||||
| Debt and other long-term obligations |
11,620,687 | |||||||
| Total equity |
6,888,819 | |||||||
| 1 | After giving effect to the issuance of the 4.875% Senior Notes in April 2014, repayment of the Senior Secured Tower Revenue Notes, Series 2010-1, in April 2014, and anticipated redemption of the 7.125% Senior Notes in May 2014. |
| 2 | Exclusive of restricted cash. |
| 3 | Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, our credit agreement governing our senior credit facilities (“2012 Credit Facility”). |
25
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS(1) | ||||||||||||||
|
|
||||||||||||||
| Debt
|
Borrower / Issuer
|
Covenant(2)
|
Covenant Level
|
As of 2014
|
||||||||||
|
|
||||||||||||||
| Maintenance Financial Covenants(3) | ||||||||||||||
| 2012 Credit Facility |
CCOC | Total Net Leverage Ratio | < 5.50x | 4.4 | ||||||||||
| 2012 Credit Facility |
CCOC | Consolidated Interest Coverage Ratio | > 2.50x | 5.5 | ||||||||||
|
|
||||||||||||||
| Restrictive Negative Financial Covenants |
||||||||||||||
| Financial covenants restricting ability to make restricted payments, including dividends |
||||||||||||||
| 4.875% Senior Notes |
CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | < 7.00x | 5.6 | ||||||||||
| 5.25% Senior Notes |
CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | < 7.00x | 5.6 | ||||||||||
| 2012 Credit Facility |
CCOC | Total Net Leverage Ratio | < 5.50x | 4.4 | ||||||||||
|
|
||||||||||||||
| Financial covenants restricting ability to incur additional debt |
||||||||||||||
| 7.125% Senior Notes |
CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | < 7.00x | 5.6 | ||||||||||
| 5.25% Senior Notes |
CCIC | Debt to Adjusted Consolidated Cash Flow Ratio | < 7.00x | 5.6 | ||||||||||
| 2012 Credit Facility |
CCOC | Total Net Leverage Ratio | < 5.50x | (4) | 4.4 | |||||||||
| 2012 Credit Facility |
CCOC | Holdings Leverage Ratio | < 7.00x | (5) | 5.6 | |||||||||
| 2012 Credit Facility |
CCOC | Consolidated Interest Coverage Ratio | > 2.50x | 5.5 | ||||||||||
| 2012 Secured Notes |
CC Holdings GS V LLC and Crown Castle GS III Corp. | Debt to Adjusted Consolidated Cash Flow Ratio | < 3.50x | 3.7 | ||||||||||
|
|
||||||||||||||
| Financial covenants restricting ability to make investments |
||||||||||||||
| 2012 Credit Facility |
CCOC | Total Net Leverage Ratio | < 5.50x | 4.4 | ||||||||||
| 1 | After giving effect to the issuance of the 4.875% Senior Notes in April 2014, repayment of the Senior Secured Tower Revenue Notes, Series 2010-1, in April 2014, and anticipated redemption of the 7.125% Senior Notes in May 2014. |
| 2 | As defined in the respective debt agreement. |
| 3 | Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2012 Credit Facility. |
| 4 | Applicable for debt issued at CCOC or its subsidiaries. |
| 5 | Applicable for debt issued at CCIC or its subsidiaries. |
26
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS (CONTINUED)
| ||||||||||
| Debt | Borrower / Issuer | Covenant(1) | Covenant Level Requirement |
As of March 31, 2014 | ||||||
| Restrictive Negative Financial Covenants
| ||||||||||
| Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released | ||||||||||
| 2010 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (2) | 3.9 | |||||
| WCP Securitized Notes | Certain WCP Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (2) | 1.4 | |||||
| 2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (2) | 4.2 | |||||
| Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture | ||||||||||
| 2010 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 2.00x | (3) | 3.9 | |||||
| WCP Securitized Notes | Certain WCP Subsidiaries | Debt Service Coverage Ratio | > 1.50x | (3) | 1.4 | |||||
| 2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | > 2.34x | (3) | 4.2 | |||||
| 1 | As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is “DSCR”. |
| 2 | The 2010 Tower Revenue Notes, WCP Securitized Notes, and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.15x or 1.15x, in each case as described under the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, or 2009 Securitized Notes, respectively. |
| 3 | Rating Agency Confirmation (as defined in the respective debt agreement) is also required. |
27
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| INTEREST RATE SENSITIVITY(6) | ||||||||||||
| Remaining nine months, |
Years Ended December 31,
|
|||||||||||
| (as of March 31, 2014; dollars in millions) | 2014 | 2015 | 2016 | |||||||||
| Fixed Rate Debt: |
||||||||||||
| Face Value of Principal Outstanding(1) |
$ | 7,570 | $ | 7,536 | $ | 7,517 | ||||||
| Current Interest Payment Obligations(2) |
278 | 369 | 368 | |||||||||
| Effect of 0.125% Change in Interest Rates(3) |
— | 1 | 2 | |||||||||
| Floating Rate Debt: |
||||||||||||
| Face Value of Principal Outstanding(1) |
$ | 3,849 | $ | 3,804 | $ | 3,742 | ||||||
| Current Interest Payment Obligations(4) |
79 | 110 | 144 | |||||||||
| Effect of 0.125% Change in Interest Rates(5) |
1 | 2 | 2 | |||||||||
| 1 | Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases. |
| 2 | Interest expense calculated based on current interest rates. |
| 3 | Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps. |
| 4 | Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of March 31, 2014. Calculation takes into account any LIBOR floors in place and assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s net leverage ratio. |
| 5 | Interest expense calculated based on current interest rates using forward LIBOR assumptions until the stated maturity date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps. |
| 6 | Excludes capital lease and other obligations. |
28
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
DEFINITIONS
Non-GAAP Financial Measures and Other Calculations
This Supplement includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, 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, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, 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, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, 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.
Crown Castle has updated its definitions of FFO and AFFO. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle’s site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this Supplement are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions on pages 32-34 of this Supplement.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations (“FFO”). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less non controlling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
29
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
DEFINITIONS (continued)
FFO, as previously defined. Crown Castle defines FFO, as previously defined, as FFO plus non cash portion of tax provision, less asset write-down charges and non controlling interests.
Adjusted Funds from Operations (“AFFO”). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gains (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO, as previously defined. Crown Castle defines AFFO, as previously defined, as AFFO plus prepaid rent received less amortization of prepaid rent.
AFFO payout ratio. Dividends per common share divided by AFFO per share.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Site Rental Gross Margins, as Adjusted. Crown Castle defines Site Rental Gross Margins, as Adjusted, as site rental gross margin as reported less straight-line revenues and straight-line expenses.
Organic Site Rental Gross Margins. Crown Castle defines Organic Site Rental Gross Margins as site rental gross margins, as reported less straight-line revenues, straight-line expenses, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Ground Lease Expense, as Adjusted. Crown Castle defines Ground Lease Expense, as Adjusted as ground lease expense less straight line ground lease expense.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers’ ongoing quiet enjoyment of the tower.
The tables set forth below reconcile non-GAAP financial measures to comparable GAAP financial measures and provide certain other calculations. The components in these tables may not sum to the total due to rounding.
30
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
Adjusted EBITDA for the three months ended March 31, 2014 and 2013 is computed as follows:
|
|
||||||||||
| For the Three Months Ended March 31, |
||||||||||
|
|
|
|||||||||
| (dollars in thousands) | 2014 | 2013 | ||||||||
|
|
||||||||||
| Net income (loss) |
$ | 102,793 | $ | 16,737 | ||||||
| Adjustments to increase (decrease) net income (loss): |
||||||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||||
| Acquisition and integration costs |
5,659 | 1,602 | ||||||||
| Depreciation, amortization and accretion |
250,191 | 186,459 | ||||||||
| Amortization of prepaid lease purchase price adjustments |
3,895 | 3,863 | ||||||||
| Interest expense and amortization of deferred financing costs(1) |
146,400 | 164,369 | ||||||||
| Gains (losses) on retirement of long-term obligations |
— | 35,909 | ||||||||
| Interest income |
(173 | ) | (297 | ) | ||||||
| Other income (expense) |
2,736 | 629 | ||||||||
| Benefit (provision) for income taxes |
(188 | ) | 17,708 | |||||||
| Stock-based compensation expense |
12,937 | 10,097 | ||||||||
|
|
|
|
|
|||||||
| Adjusted EBITDA(2) |
$ | 526,983 | $ | 440,791 | ||||||
|
|
|
|
|
|||||||
| Adjusted EBITDA for the quarter ending June 30, 2014 and the year ending December 31, 2014 is forecasted as follows: | ||||||||||
|
|
||||||||||
| (dollars in millions) | Q2 2014 Outlook |
Full Year 2014 Outlook | ||
|
| ||||
| Net income (loss) | $32 to $65 | $298 to $382 | ||
| Adjustments to increase (decrease) net income (loss): |
||||
| Asset write-down charges |
$2 to $4 | $6 to $16 | ||
| Acquisition and integration costs |
$2 to $6 | $13 to $23 | ||
| Depreciation, amortization and accretion |
$248 to $253 | $991 to $1,011 | ||
| Amortization of prepaid leases purchase price adjustments |
$3 to $5 | $15 to $17 | ||
| Interest expense and amortization of deferred financing costs(1) |
$142 to $147 | $570 to $580 | ||
| Gains (losses) on retirement of long-term obligations |
$46 to $46 | $46 to $46 | ||
| Interest income |
$(1) to $1 | $(2) to $0 | ||
| Other income (expense) |
$0 to $2 | $3 to $5 | ||
| Benefit (provision) for income taxes |
$(1) to $3 | $2 to $10 | ||
| Stock-based compensation expense |
$15 to $17 | $55 to $60 | ||
|
|
| |||
| Adjusted EBITDA(2) |
$516 to $521 | $2,066 to $2,081 | ||
|
|
| |||
| The components of interest expense and amortization of deferred financing costs for the quarters ending March 31, 2014 and March 31, 2013 are as follows: |
||||||||
|
|
||||||||
| Three Months Ended March 31, | ||||||||
|
|
|
|||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
|
|
||||||||
| Interest expense on debt obligations |
$ | 125,519 | $ | 127,449 | ||||
| Amortization of deferred financing costs |
5,641 | 9,047 | ||||||
| Amortization of adjustments on long-term debt |
(955 | ) | 11,436 | |||||
| Amortization of interest rate swaps(3) |
16,182 | 16,262 | ||||||
| Other, net |
13 | 175 | ||||||
|
|
|
|
|
|||||
| Interest expense and amortization of deferred financing costs |
$ | 146,400 | $ | 164,369 | ||||
|
|
|
|
|
|||||
| 1 | See the reconciliation of “Components of interest expense and amortization of deferred financing costs” herein. |
| 2 | The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown. |
| 3 | Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
31
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
Components of interest expense and amortization of deferred financing costs for the quarter ending June 30, 2014 and the year ending December 31, 2014 are forecasted as follows:
|
| ||||
| Q2 2014 | Full Year 2014 | |||
| (dollars in millions) | Outlook | Outlook | ||
|
| ||||
| Interest expense on debt obligations |
$123 to $125 | $489 to $499 | ||
| Amortization of deferred financing costs |
$6 to $7 | $21 to $23 | ||
| Amortization of adjustments on long-term debt |
$(1) to $0 | $(5) to $(3) | ||
| Amortization of interest rate swaps(1) |
$15 to $17 | $60 to $65 | ||
| Other, net |
$0 to $0 | $(1) to $1 | ||
|
|
| |||
| Interest expense and amortization of deferred financing costs |
$142 to $147 | $570 to $580 | ||
|
|
| |||
FFO and AFFO for the three months ended March 31, 2014 and 2013 are computed as follows:
|
|
||||||||
| Three Months Ended March 31, | ||||||||
|
|
|
|||||||
| (dollars in thousands, except share and per share amounts) | 2014 | 2013 | ||||||
|
|
||||||||
| Net income |
$ | 102,793 | $ | 16,737 | ||||
| Real estate related depreciation, amortization and accretion |
244,420 | 181,755 | ||||||
| Asset write-down charges |
2,733 | 3,715 | ||||||
| Adjustment for noncontrolling interest(2) |
(1,296) | (1,275) | ||||||
| Dividends on preferred stock |
(10,997) | — | ||||||
|
|
|
|
|
|||||
| FFO(4) |
$ | 337,654 | $ | 200,931 | ||||
|
|
|
|
|
|||||
| FFO (from above) |
337,654 | 200,932 | ||||||
| Adjustments to increase (decrease) FFO: |
||||||||
| Straight-line revenue |
(50,806) | (59,399) | ||||||
| Straight-line expense |
26,380 | 20,707 | ||||||
| Stock-based compensation expense |
12,937 | 10,098 | ||||||
| Non-cash portion of tax provision(5) |
(2,332) | 16,061 | ||||||
| Non-real estate related depreciation, amortization and accretion |
5,770 | 4,704 | ||||||
| Amortization of non-cash interest expense |
20,882 | 36,920 | ||||||
| Other (income) expense |
2,736 | 629 | ||||||
| Gains (losses) on retirement of long-term obligations |
— | 35,909 | ||||||
| Acquisition and integration costs |
5,659 | 1,602 | ||||||
| Adjustment for noncontrolling interest(2) |
1,296 | 1,275 | ||||||
| Capital improvement capital expenditures |
(3,860) | (3,314) | ||||||
| Corporate capital expenditures |
(7,571) | (3,552) | ||||||
|
|
|
|
|
|||||
| AFFO(3) |
$ | 348,744 | $ | 262,572 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
333,045 | 292,570 | ||||||
|
|
|
|
|
|||||
| AFFO per share(3) |
$ | 1.05 | $ | 0.90 | ||||
|
|
|
|
|
|||||
| AFFO (from above) |
$ | 348,744 | $ | 262,572 | ||||
| Prepaid rent received |
68,222 | 43,742 | ||||||
| Amortization of prepaid rent |
(19,086) | (15,021) | ||||||
|
|
|
|
|
|||||
| AFFO, as previously defined(3) |
$ | 397,881 | $ | 291,294 | ||||
|
|
|
|
|
|||||
| 1 | Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods. |
| 2 | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| 3 | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
| 4 | FFO, as previously defined, for Q1 of 2014 was $333.9 million, which is exclusive of the net impact from the update of the definition of $3.8 million, which amount includes the adjustment for non-cash portion of tax provision, and excludes the adjustments for asset write down charges and non controlling interests. FFO, as previously defined, for Q1 of 2013 was $214.6 million, which is exclusive of the net impact from the update of the definition of $13.7 million, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write down charges and non controlling interests. |
| 5 | 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. |
32
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
FFO and AFFO for the quarters ended March 31, 2013, September 30, 2013 and December 31, 2013 are computed as follows:
| For the Three Months Ended | ||||||||||||||||
| (in thousands of dollars, except share and per share amounts) | March 31, 2013 |
June 30, 2013 |
September 30, 2013 |
December 31, 2013 |
||||||||||||
| Net income |
$ | 16,737 | $ | 53,377 | $ | 46,467 | $ | (22,681 | ) | |||||||
| Real estate related depreciation, amortization and accretion |
181,755 | 188,039 | 192,707 | 198,569 | ||||||||||||
| Asset write-down charges |
3,715 | 3,098 | 3,892 | 4,158 | ||||||||||||
| Adjustment for noncontrolling interest(1) |
(1,275 | ) | (1,017 | ) | (632 | ) | (866 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO(3) |
$ | 200,931 | $ | 243,496 | $ | 242,434 | $ | 179,181 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
292,570 | 292,706 | 291,378 | 319,634 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO per share(3) |
$ | 0.69 | $ | 0.83 | $ | 0.83 | $ | 0.56 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| FFO (from above) |
200,931 | 243,496 | 242,434 | 179,181 | ||||||||||||
| Adjustments to increase (decrease) FFO: |
||||||||||||||||
| Straight-line revenue |
(59,399 | ) | (56,919 | ) | (53,294 | ) | (49,019 | ) | ||||||||
| Straight-line expense |
20,707 | 20,572 | 20,604 | 19,071 | ||||||||||||
| Stock-based compensation expense |
10,098 | 9,608 | 10,178 | 11,904 | ||||||||||||
| Non-cash portion of tax provision(2) |
16,061 | 34,747 | 32,510 | 108,411 | ||||||||||||
| Non-real estate related depreciation, amortization and accretion |
4,704 | 2,612 | 2,701 | 3,128 | ||||||||||||
| Amortization of non-cash interest expense |
36,920 | 20,551 | 20,771 | 21,003 | ||||||||||||
| Other (income) expense |
629 | (507 | ) | 633 | 3,117 | |||||||||||
| Gains (losses) on retirement of long-term obligations |
35,909 | 577 | 1 | 641 | ||||||||||||
| Acquisition and integration costs |
1,602 | 7,215 | 4,369 | 12,820 | ||||||||||||
| Adjustment for noncontrolling interest(1) |
1,275 | 1,017 | 632 | 866 | ||||||||||||
| Capital improvement capital expenditures |
(3,314 | ) | (2,399 | ) | (3,741 | ) | (9,858 | ) | ||||||||
| Corporate capital expenditures |
(3,552 | ) | (7,694 | ) | (6,478 | ) | (10,685 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO(3) |
$ | 262,572 | $ | 272,877 | $ | 271,319 | $ | 290,579 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding — diluted |
292,570 | 292,706 | 291,378 | 319,634 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO per share(3) |
$ | 0.90 | $ | 0.93 | $ | 0.93 | $ | 0.91 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO (from above) |
$ | 262,572 | $ | 272,877 | $ | 271,319 | $ | 290,579 | ||||||||
| Prepaid rent received |
43,742 | 45,947 | 63,940 | 87,822 | ||||||||||||
| Amortization of prepaid rent |
(15,021 | ) | (14,932 | ) | (17,105 | ) | (19,671 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| AFFO, as previously defined(3) |
$ | 291,294 | $ | 303,892 | $ | 318,154 | $ | 358,730 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| 2 | Adjusts the income tax provision to reflect our estimate of the cash taxes had we been a REIT, which predominantly relates to foreign taxes paid. As a result income tax expense (benefit) is lower by the amount of the adjustment. |
| 3 | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
33
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
FFO and AFFO for the years ended December 31, 2013, 2012, 2011, and 2010 are computed as follows:
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| For the Years Ended December 31, | ||||||||||||||||
| (dollars in thousands, except share and per share amounts) | 2013 | 2012 | 2011 | 2010 | ||||||||||||
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| Net income |
$ | 93,901 | $ | 200,888 | $ | 171,459 | $ | (311,259) | ||||||||
| Real estate related depreciation, amortization and accretion |
761,070 | 601,372 | 531,869 | 522,514 | ||||||||||||
| Asset write-down charges |
14,863 | 15,548 | 22,285 | 13,687 | ||||||||||||
| Adjustment for noncontrolling interest(1) |
(3,790) | (12,304) | (383) | 320 | ||||||||||||
| Dividends on preferred stock |
— | (2,481) | (19,487) | (19,879) | ||||||||||||
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| FFO(3) |
$ | 866,043 | $ | 803,023 | $ | 705,744 | $ | 205,382 | ||||||||
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| FFO (from above) |
866,043 | 803,023 | 705,744 | 205,382 | ||||||||||||
| Adjustments to increase (decrease) FFO: |
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| Straight-line revenue |
(218,631) | (251,327) | (199,969) | (161,716) | ||||||||||||
| Straight-line expense |
80,953 | 54,069 | 39,025 | 38,759 | ||||||||||||
| Stock-based compensation expense |
41,788 | 47,382 | 35,991 | 39,965 | ||||||||||||
| Non-cash portion of tax provision(2) |
191,729 | (106,742) | 4,970 | (29,033) | ||||||||||||
| Non-real estate related depreciation, amortization and accretion |
13,145 | 21,220 | 21,082 | 18,257 | ||||||||||||
| Amortization of non-cash interest expense |
99,244 | 109,337 | 102,944 | 85,454 | ||||||||||||
| Other (income) expense |
3,872 | 5,392 | 5,577 | 603 | ||||||||||||
| Gains (losses) on retirement of long-term obligations |
37,127 | 131,974 | — | 138,367 | ||||||||||||
| Net gain (loss) on interest rate swaps |
— | — | — | 286,435 | ||||||||||||
| Acquisition and integration costs |
26,005 | 18,298 | 3,311 | 2,102 | ||||||||||||
| Adjustment for noncontrolling interest(1) |
3,790 | 12,304 | 383 | (320) | ||||||||||||
| Capital improvement capital expenditures |
(19,312) | (21,647) | (13,965) | (14,795) | ||||||||||||
| Corporate capital expenditures |
(28,409) | (15,459) | (9,429) | (9,531) | ||||||||||||
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| AFFO(3) |
$ | 1,097,347 | $ | 807,823 | $ | 695,662 | $ | 599,931 | ||||||||
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| Weighted average common shares outstanding — diluted |
299,293 | 291,270 | 285,947 | 286,764 | ||||||||||||
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| AFFO per share(3) |
$ | 3.67 | $ | 2.77 | $ | 2.43 | $ | 2.09 | ||||||||
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| AFFO (from above) |
$ | 1,097,347 | $ | 807,823 | $ | 695,662 | $ | 599,931 | ||||||||
| Prepaid rent received |
241,451 | 117,419 | 34,395 | 16,965 | ||||||||||||
| Amortization of prepaid rent |
(66,728) | (41,592) | (12,890) | (5,598 | ||||||||||||
| Dividends on preferred stock |
— | 2,481 | 19,487 | 19,879 | ||||||||||||
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| AFFO, as previously defined(3) |
$ | 1,272,070 | $ | 886,131 | $ | 736,654 | $ | 631,177 | ||||||||
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Previously issued AFFO Outlook for Quarter ending March 31, 2014 and the year ending December 31, 2014 recalculated using updated AFFO definition:
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| Q1 2014 | Full Year 2014 | |||
| (dollars in millions) | Outlook | Outlook | ||
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| AFFO Outlook, as previously defined (reported on January 22, 2014) |
$370 to $375 | $1,496 to $1,511 | ||
| Prepaid rent received |
($58 to $63) | ($259 to $274) | ||
| Amortization of prepaid rent |
$17 to $22 | $81 to $96 | ||
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| AFFO Outlook(3) |
$329 to $334 | $1,318 to $1,333 | ||
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| 1 | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs. |
| 2 | Adjusts the income tax provision 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. |
| 3 | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
34
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
FFO and AFFO for the quarter ending June 30, 2014 and the year ending December 31, 2014 is forecasted as follows:
| Q2 2014 | Full Year 2014 | |||
| (dollars in millions) | Outlook | Outlook | ||
| Net income |
$32 to $65 | $298 to $382 | ||
| Real estate related depreciation, amortization and accretion |
$243 to $246 | $970 to $985 | ||
| Asset write-down charges |
$2 to $4 | $6 to $16 | ||
| Adjustment for noncontrolling interest(1) |
$(2) to $2 | $(7) to $1 | ||
| Dividends on preferred stock |
$(11) to $(11) | $(44) to $(44) | ||
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| FFO(3)(4) |
$283 to $288 | $1,276 to $1,291 | ||
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| FFO (from above) |
$283 to $288 | $1,276 to $1,291 | ||
| Adjustments to increase (decrease) FFO: |
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| Straight-line revenue |
$(55) to $(50) | $(196) to $(181) | ||
| Straight-line expense |
$23 to $28 | $94 to $109 | ||
| Stock-based compensation expense |
$15 to $17 | $55 to $60 | ||
| Non-cash portion of tax provision |
$(4) to $1 | $(10) to $5 | ||
| Non-real estate related depreciation, amortization and accretion |
$5 to $7 | $21 to $26 | ||
| Amortization of non-cash interest expense |
$20 to $24 | $75 to $86 | ||
| Other (income) expense |
$0 to $2 | $3 to $5 | ||
| Gains (losses) on retirement of long-term obligations |
$46 to $46 | $46 to $46 | ||
| Acquisition and integration costs |
$2 to $6 | $13 to $23 | ||
| Adjustment for noncontrolling interest(1) |
$2 to $(2) | $7 to $(1) | ||
| Capital improvement capital expenditures |
$(10) to $(8) | $(35) to $(33) | ||
| Corporate capital expenditures |
$(14) to $(12) | $(41) to $(39) | ||
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| AFFO(4) |
$326 to $331 | $1,346 to $1,361 | ||
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| Weighted average common shares outstanding — diluted(2) |
333.3 | 333.3 | ||
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| AFFO per share(4) |
$0.98 to $0.99 | $4.04 to $4.08 | ||
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| 1 | Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs |
| 2 | Based on 333.3 million diluted shares outstanding as of March 31, 2014. |
| 3 | FFO, as previously defined, for Full Year 2014 Outlook was previously forecasted on January 22, 2014 as $1,284 million to $1,299 million, which is exclusive of the net impact form the update of the definition of $11 million to $21 million, which amounts include the adjustment for non-cash portion of tax provision and excludes the adjustment for asset write down charges and noncontrolling interests. |
| 4 | See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the updated definitions of FFO and AFFO. |
35
Crown Castle International Corp.
First Quarter 2014
|
COMPANY OVERVIEW |
FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW |
CAPITALIZATION OVERVIEW |
APPENDIX |
| Net Debt to Last Quarter Annualized EBITDA Calculation: | ||||||||||||
| As Reported | As Adjusted | As of | ||||||||||
| (dollars in millions) | 3/31/2014 | 3/31/2014(1) | 3/31/2013 | |||||||||
| Total face value of debt |
$ | 11,568.3 | $ | 11,618.3 | $ | 10,827.3 | ||||||
| Ending cash and cash equivalents |
200.5 | 199.9 | 160.9 | |||||||||
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| Total Net Debt |
11,367.8 | 11,418.4 | 10,666.4 | |||||||||
| Adjusted EBITDA for the three months ended March 31, |
$ | 527.0 | $ | 527.0 | $ | 440.8 | ||||||
| Last quarter annualized adjusted EBITDA |
2,108.0 | 2,108.0 | 1,763.2 | |||||||||
| Net Debt to Last Quarter Annualized Adjusted EBITDA |
5.4X | 5.4X | 6.0X | |||||||||
| Cash Interest Coverage Calculation: | ||||||||
| Three Months Ended March 31, | ||||||||
| (dollars in thousands) | 2014 | 2013 | ||||||
| Adjusted EBITDA |
$ | 526,983 | $ | 440,791 | ||||
| Interest expense on debt obligations |
125,519 | 127,449 | ||||||
| Interest Coverage Ratio |
4.2X | 3.5X | ||||||
| 1 | After giving effect to the issuance of the 4.875% Senior Notes in April 2014, repayment of the Senior Secured Tower Revenue Notes, Series 2010-1, in April 2014, and anticipated redemption of the 7.125% Senior Notes in May 2014. |
36