Document


 

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): July 17, 2019
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:
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of each exchange on which registered
Common Stock, $0.01 par value
CCI
New York Stock Exchange
6.875% Mandatory Convertible Preferred Stock, Series A,
$0.01 par value
CCI.PRA
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 




ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 17, 2019, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for second quarter 2019. The July 17, 2019 press release is furnished herewith as Exhibit 99.1.
ITEM 7.01 — REGULATION FD DISCLOSURE
The press release referenced in Item 2.02 above refers to certain supplemental information that was posted as a supplemental information package on the Company's website on July 17, 2019. The supplemental information package is furnished herewith as Exhibit 99.2.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit Index
As described in Item 2.02 and 7.01 of this Current Report on Form 8-K ("Form 8-K"), the following exhibits are furnished as part of this Form 8-K:
Exhibit No.
 
Description
99.1
 
99.2
 
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 ("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.

1



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/ Kenneth J. Simon
 
 
 
Name:  
Kenneth J. Simon 
 
 
 
Title:
Senior Vice President
and General Counsel 
 
Date: July 17, 2019


2
Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13012350&doc=22
 
NEWS RELEASE
July 17, 2019

 
 
Contacts: Dan Schlanger, CFO
 
Ben Lowe, VP & Treasurer
FOR IMMEDIATE RELEASE
Crown Castle International Corp.
 
713-570-3050

CROWN CASTLE REPORTS SECOND QUARTER 2019 RESULTS AND RAISES OUTLOOK FOR FULL YEAR 2019

July 17, 2019 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the quarter ended June 30, 2019, and raised its full year 2019 Outlook as reflected in the table below:
(in millions)
Midpoint of Current
Full Year
2019 Outlook
Full Year
2018 Actual
% Change
Previous Full Year 2019 Outlook(c)
Current Compared to Previous Outlook
Site rental revenues
$4,965
$4,716
+5%
$4,962
+$3
Net income (loss)
$926
$671
+38%
$821
+$105
Net income (loss) per share—diluted(a)
$1.95
$1.34
+46%
$1.70
+$0.25
Adjusted EBITDA(b)
$3,408
$3,141
+9%
$3,367
+$41
AFFO(a)(b)
$2,479
$2,274
+9%
$2,436
+$43
AFFO per share(a)(b)
$5.94
$5.48
+8%
$5.85
+$0.09
(a)
Attributable to CCIC common stockholders.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).
(c)
As issued on April 17, 2019.
"We delivered terrific results in the second quarter that exceeded our expectations and reflect the strong demand for our unmatched portfolio of towers, small cells and fiber assets," stated Jay Brown, Crown Castle’s Chief Executive Officer. "We believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks and are shared among multiple tenants, provides us the best opportunity to generate significant growth while delivering high returns for our shareholders. We remain excited about our ability to continue to generate attractive growth and returns for our shareholders as we remain focused on delivering dividend per share growth of 7% to 8% per year.
"We entered 2019 with momentum building on the tower side of the business, and I am excited that we are experiencing even higher levels of tower activity than we expected, which is driving an increase to our full year 2019 Outlook. Our current tower leasing activity is our highest in more than a decade, and we believe this level of activity will carry into next year. Additionally, we are constructing small cells for our customers as they invest in their current networks while beginning 5G deployments. The significant increase in small cell deployments is straining the response time of municipalities and utilities, resulting in longer construction timelines than we previously experienced. These pressures are most acute in several top markets where we are seeing the highest volume of activity. Due to the elongated construction timelines, we now expect to deploy approximately 10,000 small cells in 2019, which is at the low end of our prior expected range of 10,000 to 15,000, but approximately 30% more than what we delivered last year. We expect the increase in tower activity, offset by longer small cell timelines, to generate higher expected AFFO per share growth of 8% for 2019, up from our prior Outlook of 7% growth and at the high end of our long-term growth target."

The pathway to possible.
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News Release continued:
 
Page 2

RESULTS FOR THE QUARTER

The table below sets forth select financial results for the three month period ended June 30, 2019 and 2018.
(in millions)
Q2 2019
Q2 2018
Change
% Change
Site rental revenues
$1,238
$1,169
+$69
+6%
Net income (loss)
$246
$180
+$66
+37%
Net income (loss) per share—diluted(a)
$0.52
$0.36
+$0.16
+44%
Adjusted EBITDA(b)
$857
$769
+$88
+11%
AFFO(a)(b)
$619
$546
+$73
+13%
AFFO per share(a)(b)
$1.48
$1.31
+$0.17
+13%
(a)
Attributable to CCIC common stockholders.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).


HIGHLIGHTS FROM THE QUARTER

Site rental revenues. Site rental revenues grew approximately 6%, or $69 million, from second quarter 2018 to second quarter 2019, inclusive of approximately $66 million in Organic Contribution to Site Rental Revenues and a $3 million increase in straight-lined revenues. The $66 million in Organic Contribution to Site Rental Revenues represents approximately 5.7% growth, comprised of approximately 9.5% growth from new leasing activity and contracted tenant escalations, net of approximately 3.8% from tenant non-renewals.
Net income. Net income for the second quarter 2019 was $246 million, compared to $180 million during the same period a year ago.
Capital expenditures. Capital expenditures during the quarter were $518 million, comprised of $10 million of land purchases, $30 million of sustaining capital expenditures, $475 million of revenue generating capital expenditures and $4 million of integration capital expenditures. The revenue generating capital expenditures of $475 million includes $359 million attributable to Fiber and $116 million attributable to Towers.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of $1.125 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago.
Financing activities. During the quarter, Crown Castle increased the commitments under its Senior Unsecured Revolving Credit Facility to $5.0 billion and extended the maturity date on its Senior Unsecured Credit Facility to June 2024.

"The momentum we see in our business has translated into solid financial results, allowing us to increase our full year 2019 Outlook," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "The increased Outlook reflects how well positioned Crown Castle is to translate the positive long-term trends creating demand for our communications infrastructure into growth in cash flows in both the near- and long-term. Looking forward, we are excited about the opportunity we see to generate compelling total returns for our shareholders through a combination of dividends and growth, while at the same time making significant investments in our business that we believe will generate attractive returns longer term and support future growth in dividends per share."


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News Release continued:
 
Page 3

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 table sets forth Crown Castle's current Outlook for full year 2019:
(in millions)
Full Year 2019
Site rental revenues
$4,950
to
$4,980
Site rental cost of operations(a)
$1,442
to
$1,472
Net income (loss)
$896
to
$956
Adjusted EBITDA(b)
$3,393
to
$3,423
Interest expense and amortization of deferred financing costs(c)
$674
to
$704
FFO(b)(d)
$2,363
to
$2,393
AFFO(b)(d)
$2,464
to
$2,494
Weighted-average common shares outstanding - diluted(e)
418
(a)
Exclusive of depreciation, amortization and accretion.
(b)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(c)
See reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(d)
Attributable to CCIC common stockholders.
(e)
The assumption for full year 2019 diluted weighted-average common shares outstanding is based on the diluted common shares outstanding as of June 30, 2019. The diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

The table below compares the results for full year 2018, midpoint of the current full year 2019 Outlook and the midpoint of the previously provided full year 2019 Outlook for select metrics.
 
Midpoint of FY 2019 Outlook to FY 2018
Actual Comparison
 
 
(in millions)
Current
Full Year
2019 Outlook
Full Year
2018 Actual
Change
% Change
Previous Full Year 2019 Outlook(d)
Current Compared to Previous Outlook
Site rental revenues
$4,965
$4,716
+$249
+5%
$4,962
+$3
Net income (loss)
$926
$671
+$255
+38%
$821
+$105
Net income (loss) per share—diluted(a)(c)
$1.95
$1.34
+$0.61
+46%
$1.70
+$0.25
Adjusted EBITDA(b)
$3,408
$3,141
+$267
+9%
$3,367
+$41
AFFO(a)(b)
$2,479
$2,274
+$205
+9%
$2,436
+$43
AFFO per share(a)(b)(c)
$5.94
$5.48
+$0.46
+8%
$5.85
+$0.09
Weighted-average common shares outstanding - diluted(c)
418
415
+3
+1%
417
+1
(a)
Attributable to CCIC common stockholders.
(b)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(c)
The assumption for full year 2019 diluted weighted-average common shares outstanding is based on the diluted common shares outstanding as of June 30, 2019. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(d)
As issued on April 17, 2019.


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News Release continued:
 
Page 4

The increase to the midpoint of the full year 2019 Outlook for site rental revenues, Adjusted EBITDA and AFFO primarily reflects a higher expected contribution from straight-lined revenues and an increase in the expected services contribution, both of which relate to the higher expected new leasing activity from towers in 2019 as compared to the midpoint of the prior full year 2019 Outlook.
The increase in the midpoint of the full year 2019 Outlook for AFFO also reflects a reduction in the expected full year financing costs.
The chart below reconciles the components of expected growth in site rental revenues from 2018 to 2019 of $234 million to $264 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2019 of $245 million to $275 million.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13012350&doc=23

When compared to the previous full year 2019 Outlook, the reduction in the expected Organic Contribution to Site Rental Revenues reflects an increase in the expected contribution from towers, offset by lower expected contribution from both small cells and fiber solutions.
New leasing activity is expected to contribute $345 million to $375 million to 2019 Organic Contribution to Site Rental Revenues, consisting of new leasing activity from towers of $135 million to $145 million (prior Outlook was $120 million to $130 million), small cells of $65 million to $75 million (prior Outlook was $70 to $80 million), and fiber solutions of $145 million to $155 million (prior Outlook was $160 million to $170 million).
The lower expected new leasing activity from small cells is the result of longer construction timelines than previously experienced, while the lower expected new leasing activity from fiber solutions is the result of lower bookings activity than previously expected.
The impact of non-renewals on 2019 Organic Contribution to Site Rental Revenues is expected to be $170 million to $190 million, representing an increase of approximately $5 million at the midpoints when compared to the prior Outlook. This increase is tied to non-renewal activity on towers that is occurring earlier in the year than previously expected.


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Page 5

The chart below reconciles the components of expected growth in AFFO from 2018 to 2019 of $190 million to $220 million.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13012350&doc=4
The increase in the full year Outlook for AFFO growth reflects the increase in the expected services contribution tied to higher tower leasing activity, a reduction in expected full year financing costs resulting from lower floating interest rates and recent financing activities, offset by the reduction in Organic Contribution to Site Rental Revenues and higher expenses primarily related to additional incentive compensation resulting from the improved full year Outlook.
Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.

CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, July 18, 2019, at 10:30 a.m. Eastern time to discuss its second quarter 2019 results. The conference call may be accessed by dialing 800-353-6461 and asking for the Crown Castle call (access code 2932521) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at investor.crowncastle.com.
A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Thursday, July 18, 2019, through 1:30 p.m. Eastern time on Wednesday, October 16, 2019, and may be accessed by dialing 888-203-1112 and using access code 2932521. An audio archive will also be available on the company's website at investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

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News Release continued:
 
Page 6


ABOUT CROWN CASTLE
Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 75,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology and wireless service - bringing information, ideas and innovations to the people and businesses that need them. For more information on Crown Castle, please visit www.crowncastle.com.

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News Release continued:
 
Page 7

Non-GAAP Financial Measures, Segment Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including per share amounts, Funds from Operations ("FFO"), including per share amounts and Organic Contribution to Site Rental Revenues, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")).
Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies, including other companies in the communications infrastructure sector or other real estate investment trusts ("REITs"). Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion in 2014.
In addition to the non-GAAP financial measures used herein, we also provide Segment Site Rental Gross Margin, Segment Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments for purposes of making decisions about allocating capital and assessing performance. These segment measures are provided pursuant to GAAP requirements related to segment reporting. In addition, we provide the components of certain GAAP measures, such as capital expenditures.
Our non-GAAP financial measures are presented as additional information because management believes these measures are useful indicators of the financial performance of our business. Among other things, management believes that:
Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of the communications infrastructure sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion which can vary depending upon accounting methods and the book value of assets. In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used in our debt covenant calculations. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
AFFO, including per share amounts, is useful to investors or other interested parties in evaluating our financial performance. Management believes that AFFO helps investors or other interested parties meaningfully evaluate our financial performance as it includes (1) the impact of our capital structure (primarily interest expense on our outstanding debt and dividends on our preferred stock) and (2) sustaining capital expenditures, and excludes the impact of our (a) asset base (primarily depreciation, amortization and accretion) and (b) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods. GAAP requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. In accordance with GAAP, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. Management notes that Crown Castle uses AFFO only as a performance measure. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment.
FFO, including per share amounts, is useful to investors or other interested parties in evaluating our financial performance. Management believes that FFO may be used by investors or other interested parties as a basis to compare our financial performance with that of other REITs. FFO helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion). FFO is not a key performance indicator used by Crown Castle. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flow from operations.

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Page 8

Organic Contribution to Site Rental Revenues is useful to investors or other interested parties in understanding the components of the year-over-year changes in our site rental revenues computed in accordance with GAAP. Management uses the Organic Contribution to Site Rental Revenues to assess year-over-year growth rates for our rental activities, to evaluate current performance, to capture trends in rental rates, new leasing activities and tenant non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.
We define our non-GAAP financial measures, segment measures and other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, (income) loss from discontinued operations and stock-based compensation expense.
Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less sustaining capital expenditures (comprised of maintenance capital expenditures and corporate capital expenditures).
AFFO per share. We define AFFO per share as AFFO divided by diluted weighted-average common shares outstanding.
Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. We define FFO per share as FFO divided by the diluted weighted-average common shares outstanding.
Organic Contribution to Site Rental Revenues. We define the Organic Contribution to Site Rental Revenues as the sum of the change in GAAP site rental revenues related to (1) new leasing activity, including revenues from the construction of small cells and the impact of prepaid rent, (2) escalators and less (3) non-renewals of tenant contracts.
Segment Measures
Segment Site Rental Gross Margin. We define Segment Site Rental Gross Margin as segment site rental revenues less segment site rental cost of operations, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated site rental cost of operations.
Segment Services and Other Gross Margin. We define Segment Services and Other Gross Margin as segment services and other revenues less segment services and other cost of operations, excluding stock-based compensation expense recorded in consolidated services and other cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment site rental gross margin plus segment services and other gross margin, less selling, general and administrative expenses attributable to the respective segment.
All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately. Additionally, certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.
Other Calculations
Discretionary capital expenditures. We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of expansion or development of existing communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure assets in order to add new tenants for the first time or support subsequent tenant equipment augmentations, or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants), construction of new

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Page 9

communications infrastructure, and, to a lesser extent, purchases of land interests (which primarily relate to land assets under towers as we seek to manage our interests in the land beneath our towers) and other capital projects.
Integration capital expenditures. We define integration capital expenditures as those capital expenditures made as a result of integrating acquired companies into our business.
Sustaining capital expenditures. We define sustaining capital expenditures as those capital expenditures not otherwise categorized as either discretionary or integration capital expenditures, such as (1) maintenance capital expenditures on our communications infrastructure assets that enable our tenants' ongoing quiet enjoyment of the communications infrastructure and (2) corporate capital expenditures.
The tables set forth below reconcile the non-GAAP financial measures used herein to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.


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Reconciliations of Non-GAAP Financial Measures, Segment Measures and Other Calculations to Comparable GAAP Financial Measures:


Reconciliation of Historical Adjusted EBITDA:
 
For the Three Months Ended
 
For the Twelve Months Ended
 
June 30, 2019
 
June 30, 2018
 
December 31, 2018
(in millions)
 
 
 
 
 
Net income (loss)
$
246

 
$
180

 
$
671

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
Asset write-down charges
6

 
6

 
26

Acquisition and integration costs
2

 
8

 
27

Depreciation, amortization and accretion
393

 
379

 
1,528

Amortization of prepaid lease purchase price adjustments
5

 
5

 
20

Interest expense and amortization of deferred financing costs(a)
169

 
158

 
642

(Gains) losses on retirement of long-term obligations
1

 
3

 
106

Interest income
(1
)
 
(1
)
 
(5
)
Other (income) expense

 

 
(1
)
(Benefit) provision for income taxes
4

 
5

 
19

Stock-based compensation expense
32

 
26

 
108

Adjusted EBITDA(b)(c)
$
857

 
$
769

 
$
3,141

(a)
See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

Reconciliation of Current Outlook for Adjusted EBITDA:
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$896
to
$956
Adjustments to increase (decrease) net income (loss):
 
 
 
Asset write-down charges
$23
to
$33
Acquisition and integration costs
$11
to
$21
Depreciation, amortization and accretion
$1,576
to
$1,611
Amortization of prepaid lease purchase price adjustments
$19
to
$21
Interest expense and amortization of deferred financing costs(a)
$674
to
$704
(Gains) losses on retirement of long-term obligations
$2
to
$2
Interest income
$(8)
to
$(4)
Other (income) expense
$2
to
$4
(Benefit) provision for income taxes
$16
to
$24
Stock-based compensation expense
$112
to
$120
Adjusted EBITDA(b)(c)
$3,393
to
$3,423
(a)
See the reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

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Reconciliation of Historical FFO and AFFO:
 
For the Three Months Ended
 
For the Six Months Ended
 
For the Twelve Months Ended
(in millions)
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
 
December 31, 2018
Net income (loss)
$
246

 
$
180

 
$
456

 
$
294

 
$
671

Real estate related depreciation, amortization and accretion
379

 
367

 
759

 
726

 
1,472

Asset write-down charges
6

 
6

 
12

 
9

 
26

Dividends on preferred stock
(28
)
 
(28
)
 
(57
)
 
(57
)
 
(113
)
FFO(a)(b)(c)(d)(e)
$
602


$
525


$
1,169


$
973

 
$
2,055

Weighted-average common shares outstanding—diluted(c)
418

 
416

 
417

 
413

 
415

FFO per share(a)(b)(c)(d)(e)
$
1.44

 
$
1.26

 
$
2.80

 
$
2.36

 
$
4.95

 
 
 
 
 
 
 
 
 
 
FFO (from above)
$
602

 
$
525

 
$
1,169

 
$
973

 
$
2,055

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
Straight-lined revenue
(23
)
 
(20
)
 
(40
)
 
(36
)
 
(72
)
Straight-lined expense
24

 
23

 
47

 
47

 
90

Stock-based compensation expense
32

 
26

 
61

 
52

 
108

Non-cash portion of tax provision
(4
)
 
(7
)
 
1

 
(3
)
 
2

Non-real estate related depreciation, amortization and accretion
14

 
12

 
28

 
27

 
56

Amortization of non-cash interest expense

 
1

 
1

 
4

 
7

Other (income) expense

 

 
1

 
1

 
(1
)
(Gains) losses on retirement of long-term obligations
1

 
3

 
2

 
74

 
106

Acquisition and integration costs
2

 
8

 
6

 
14

 
27

Maintenance capital expenditures
(22
)
 
(18
)
 
(38
)
 
(31
)
 
(64
)
Corporate capital expenditures
(8
)
 
(8
)
 
(13
)
 
(17
)
 
(41
)
AFFO(a)(b)(c)(d)(e)
$
619


$
546


$
1,225


$
1,104

 
$
2,274

Weighted-average common shares outstanding—diluted(c)
418

 
416

 
417

 
413

 
415

AFFO per share(a)(b)(c)(d)(e)
$
1.48

 
$
1.31

 
$
2.94

 
$
2.67

 
$
5.48

(a)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(b)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(c)
Diluted weighted-average common shares outstanding were 418 million, 416 million, 417 million, 413 million and 415 million for the three months ended June 30, 2019 and 2018, the six months ended June 30, 2019 and 2018 and the twelve months ended December 31, 2018, respectively. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(d)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e)
Attributable to CCIC common stockholders.



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News Release continued:
 
Page 12

Reconciliation of Current Outlook for FFO and AFFO:
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$896
to
$956
Real estate related depreciation, amortization and accretion
$1,528
to
$1,548
Asset write-down charges
$23
to
$33
Dividends on preferred stock
$(113)
to
$(113)
FFO(a)(b)(c)(d)(e)
$2,363
to
$2,393
Weighted-average common shares outstanding—diluted(a)
418
FFO per share(a)(b)(c)(d)(e)
$5.66
to
$5.73
 
 
 
 
FFO (from above)
$2,363
to
$2,393
Adjustments to increase (decrease) FFO:
 
 
 
Straight-lined revenue
$(74)
to
$(54)
Straight-lined expense
$81
to
$101
Stock-based compensation expense
$112
to
$120
Non-cash portion of tax provision
$(6)
to
$9
Non-real estate related depreciation, amortization and accretion
$48
to
$63
Amortization of non-cash interest expense
$(5)
to
$5
Other (income) expense
$2
to
$4
(Gains) losses on retirement of long-term obligations
$2
to
$2
Acquisition and integration costs
$11
to
$21
Maintenance capital expenditures
$(90)
to
$(75)
Corporate capital expenditures
$(46)
to
$(31)
AFFO(a)(b)(c)(d)(e)
$2,464
to
$2,494
Weighted-average common shares outstanding—diluted(a)
418
AFFO per share(a)(b)(c)(d)(e)
$5.90
to
$5.97
(a)
The assumption for full year 2019 diluted weighted-average common shares outstanding is 418 million based on the diluted common shares outstanding as of June 30, 2019. The diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(d)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e)
Attributable to CCIC common stockholders.



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News Release continued:
 
Page 13

For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
 
Previously Issued
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$781
to
$861
Adjustments to increase (decrease) net income (loss):
 
 
 
Asset write-down charges
$35
to
$45
Acquisition and integration costs
$15
to
$25
Depreciation, amortization and accretion
$1,606
to
$1,646
Amortization of prepaid lease purchase price adjustments
$19
to
$21
Interest expense and amortization of deferred financing costs
$687
to
$732
(Gains) losses on retirement of long-term obligations
$0
to
$0
Interest income
$(7)
to
$(3)
Other (income) expense
$(1)
to
$1
(Benefit) provision for income taxes
$17
to
$25
Stock-based compensation expense
$111
to
$116
Adjusted EBITDA(a)(b)
$3,344
to
$3,389
(a)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(b)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

For Comparative Purposes - Reconciliation of Previous Outlook for FFO and AFFO:
 
Previously Issued
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$781
to
$861
Real estate related depreciation, amortization and accretion
$1,557
to
$1,577
Asset write-down charges
$35
to
$45
Dividends on preferred stock
$(113)
to
$(113)
FFO(a)(b)(c)(d)
$2,293
to
$2,338
Weighted-average common shares outstanding—diluted(a)
417
FFO per share(a)(b)(c)(d)
$5.50
to
$5.60
 
 
 
 
FFO (from above)
$2,293
to
$2,338
Adjustments to increase (decrease) FFO:
 
 
 
Straight-lined revenue
$(50)
to
$(30)
Straight-lined expense
$70
to
$90
Stock-based compensation expense
$111
to
$116
Non-cash portion of tax provision
$(4)
to
$6
Non-real estate related depreciation, amortization and accretion
$49
to
$69
Amortization of non-cash interest expense
$(2)
to
$8
Other (income) expense
$(1)
to
$1
(Gains) losses on retirement of long-term obligations
$0
to
$0
Acquisition and integration costs
$15
to
$25
Maintenance capital expenditures
$(80)
to
$(70)
Corporate capital expenditures
$(45)
to
$(35)
AFFO(a)(b)(c)(d)
$2,413
to
$2,458
Weighted-average common shares outstanding—diluted(a)
417
AFFO per share(a)(b)(c)(d)
$5.80
to
$5.90
(a)
Previously issued full year 2019 Outlook assumes diluted weighted-average common shares outstanding as of March 31, 2019 of approximately 417 million. The diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(d)
Attributable to CCIC common stockholders.


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Page 14

The components of changes in site rental revenues for the quarters ended June 30, 2019 and 2018 are as follows:
 
Three Months Ended
 June 30,
(dollars in millions)
2019
 
2018
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$
1,149

 
$
870

 

 

New leasing activity(b)(c)
89

 
51

Escalators
21

 
20

Non-renewals
(44
)
 
(22
)
Organic Contribution to Site Rental Revenues(d)
66

 
49

Straight-lined revenues associated with fixed escalators
23

 
20

Acquisitions(e)

 
231

Other

 

Total GAAP site rental revenues
$
1,238

 
$
1,169

 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
5.9
%
 
 
Organic Contribution to Site Rental Revenues(d)(f)
5.7
%
 
 
(a)
Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein.
(e)
Represents the initial contribution of recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
(f)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.


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Page 15

The components of the changes in site rental revenues for the year ending December 31, 2019 are forecasted as follows:
(dollars in millions)
Full Year 2018
 
Full Year
2019 Outlook
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$3,670
 
$4,643
 

 
 
New leasing activity(b)(c)
213
 
345-375
Escalators
83
 
85-95
Non-renewals
(89)
 
(190)-(170)
Organic Contribution to Site Rental Revenues(d)
207
 
245-275
Straight-lined revenues associated with fixed escalators
72
 
54-74
Acquisitions(e)
767
 
Other
 
Total GAAP site rental revenues
$4,716
 
$4,950-$4,980
 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
 
 
5.3%(f)
Organic Contribution to Site Rental Revenues(d)(g)
 
 
5.6%(f)

(a)
Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein.
(e)
Represents the contribution from recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition, with the exception of the impact of Lightower. To be consistent with prior presentations of the 2018 Outlook for Organic Contributions to Site Rental Revenues, the entire contribution to growth in site rental revenues in 2018 attributable to Lightower is included within acquisitions.
(f)
Calculated based on midpoint of full year 2019 Outlook.
(g)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.



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Page 16

Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
 
For the Three Months Ended
(in millions)
June 30, 2019
 
June 30, 2018
Interest expense on debt obligations
$
169

 
$
157

Amortization of deferred financing costs and adjustments on long-term debt, net
5

 
5

Other, net
(5
)
 
(4
)
Interest expense and amortization of deferred financing costs
$
169

 
$
158


Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
 
Full Year 2019
(in millions)
Outlook
Interest expense on debt obligations
$683
to
$693
Amortization of deferred financing costs and adjustments on long-term debt, net
$17
to
$22
Other, net
$(22)
to
$(17)
Interest expense and amortization of deferred financing costs
$674
to
$704

Debt balances and maturity dates as of June 30, 2019 are as follows:
(in millions)
Face Value
 
Final Maturity
Cash, cash equivalents and restricted cash
$
429

 
 
 
 
 
 
Tower Revenue Notes, Series 2015-1(a)
300

 
May 2042
Tower Revenue Notes, Series 2015-2(a)
700

 
May 2045
Tower Revenue Notes, Series 2018-1(a)
250

 
July 2043
Tower Revenue Notes, Series 2018-2(a)
750

 
July 2048
3.849% Secured Notes
1,000

 
Apr. 2023
Secured Notes, Series 2009-1, Class A-2(b)
70

 
Aug. 2029
Finance leases and other obligations
235

 
Various
Total secured debt
$
3,305

 
 
2016 Revolver
485

 
June 2024
2016 Term Loan A
2,341

 
June 2024
2019 Commercial Paper Notes(c)
500

 
Various
5.250% Senior Notes
1,650

 
Jan. 2023
4.875% Senior Notes
850

 
Apr. 2022
3.400% Senior Notes
850

 
Feb. 2021
4.450% Senior Notes
900

 
Feb. 2026
3.700% Senior Notes
750

 
June 2026
2.250% Senior Notes
700

 
Sept. 2021
4.000% Senior Notes
500

 
Mar. 2027
4.750% Senior Notes
350

 
May 2047
3.200% Senior Notes
750

 
Sept. 2024
3.650% Senior Notes
1,000

 
Sept. 2027
3.150% Senior Notes
750

 
July 2023
3.800% Senior Notes
1,000

 
Feb. 2028
4.300% Senior Notes
600

 
Feb. 2029
5.200% Senior Notes
400

 
Feb. 2049
Total unsecured debt
$
14,376

 
 
Total net debt
$
17,252

 
 

(a)
The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively. The Senior Secured Tower Revenue Notes, Series 2018-1 and 2018-2 have anticipated repayment dates in 2023 and 2028, respectively.
(b)
The Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in September 2019 and ending in August 2029.
(c)
The maturities of the 2019 Commercial Paper Notes may vary but may not exceed 397 days from the date of issue.




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News Release continued:
 
Page 17

Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(dollars in millions)
For the Three Months Ended June 30, 2019
Total face value of debt
$
17,681

Ending cash, cash equivalents and restricted cash
429

Total Net Debt
$
17,252

 
 
Adjusted EBITDA for the three months ended June 30, 2019
$
857

Last quarter annualized Adjusted EBITDA
3,428

Net Debt to Last Quarter Annualized Adjusted EBITDA(a)
5.0
x
(a)
For purposes of calculating Net Debt to Last Quarter Annualized Adjusted EBITDA, we have changed our calculation of ending cash and cash equivalents to include restricted cash and as such, our calculation is not comparable to similar calculations previously provided.  Our restricted cash is predominately comprised of the cash rental receipts held in reserve in accordance with certain of our debt instruments; any excess of such required reserve balances are subsequently released to us each month.  If we would have excluded restricted cash from our calculation for the second quarter of 2019, our Net Debt to Last Quarter Annualized Adjusted EBITDA would have been 5.1x.

Components of Capital Expenditures:
 
For the Three Months Ended
(in millions)
June 30, 2019
 
June 30, 2018
 
Towers
Fiber
Other
Total
 
Towers
Fiber
Other
Total
Discretionary:
 
 
 
 
 
 
 
 
 
Purchases of land interests
$
10

$

$

$
10

 
$
10

$

$

$
10

Communications infrastructure construction and improvements
116

359


475

 
77

279


356

Sustaining:








 





Maintenance and corporate
10

12

8

30

 
11

11

4

26

Integration


4

4

 


1

1

Total
$
136

$
371

$
11

$
518

 
$
98

$
289

$
5

$
393

Note: See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for further discussion of our components of capital expenditures.


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News Release continued:
 
Page 18

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 our Outlook and plans, projections, and estimates regarding (1) potential benefits, growth, returns, opportunities and tenant and shareholder value which may be derived from our business, assets, investments, acquisitions and dividends, (2) our strategy, strategic position, business model and capabilities, the strength of our business and fundamentals of our business and industry, including spending by our major customers on network improvements and investments in 5G, (3) our long-term prospects and the trends impacting our business, (4) the potential benefits and contributions which may be derived from our acquisitions, including the contribution to or impact on our financial or operating results, (5) leasing environment and activity, including growth thereof and the contribution to our financial or operating results therefrom, (6) our small cell deployment and the corresponding driving factors, (7) our investments in our business and the potential growth, returns and benefits therefrom, (8) our dividends and our dividend (including on a per share basis) growth rate, including its driving factors, and targets, (9) our portfolio of assets, including demand therefor, strategic position thereof and opportunities created thereby, (10) financing costs and benefits which may be derived from our financing activities, (11) cash flows, including growth thereof, (12) tenant non-renewals, including the impact and timing thereof, (13) incentive compensation amounts, (14) capital expenditures, including sustaining and discretionary capital expenditures, and the timing thereof, (15) straight-line adjustments, (16) site rental revenues and estimated growth thereof, (17) site rental cost of operations, (18) net income (including on a per share basis) and estimated growth thereof, (19) Adjusted EBITDA, including the impact of the timing of certain components thereof and estimated growth thereof, (20) expenses, including interest expense and amortization of deferred financing costs, (21) FFO (including on a per share basis) and estimated growth thereof, (22) AFFO (including on a per share basis) and estimated growth thereof and corresponding driving factors, (23) Organic Contribution to Site Rental Revenues, (24) our weighted-average common shares outstanding (including on a diluted basis) and estimated growth thereof, (25) services contribution, including the timing thereof, and (26) the utility of certain financial measures, including non-GAAP financial measures. Such forward-looking statements are subject to certain risks, uncertainties and assumptions prevailing market conditions and the following:

Our business depends on the demand for our communications infrastructure, driven primarily by demand for data, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in the amount or change in the mix of network investment by our tenants may materially and adversely affect our business (including reducing demand for our communications infrastructure or services).
A substantial portion of our revenues is derived from a small number of tenants, and the loss, consolidation or financial instability of any of such tenants may materially decrease revenues or reduce demand for our communications infrastructure and services.
The expansion or development of our business, including through acquisitions, increased product offerings or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results.
Our Fiber segment has expanded rapidly, and the Fiber business model contains certain differences from our Towers business model, resulting in different operational risks. If we do not successfully operate our Fiber business model or identify or manage the related operational risks, such operations may produce results that are less than anticipated.
Failure to timely and efficiently execute on our construction projects could adversely affect our business.
Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments and our 6.875% Mandatory Convertible Preferred Stock limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated.
We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
Sales or issuances of a substantial number of shares of our common stock or securities convertible into shares of our common stock may adversely affect the market price of our common stock.
As a result of competition in our industry, we may find it more difficult to negotiate favorable rates on our new or renewing tenant contracts.
New technologies may reduce demand for our communications infrastructure or negatively impact our revenues.
If we fail to retain rights to our communications infrastructure, including the land interests under our towers and the right-of-way and other agreements related to our small cells and fiber solutions, our business may be adversely affected.
Our services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
New wireless technologies may not deploy or be adopted by tenants as rapidly or in the manner projected.

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Page 19

If we fail to comply with laws or regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.
If radio frequency emissions from wireless handsets or equipment on our communications infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
Certain provisions of our restated certificate of incorporation, amended and restated by-laws and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
We may be vulnerable to security breaches or other unforeseen events that could adversely affect our operations, business, and reputation.
Future dividend payments to our stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.
Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the U.S. Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash.
If we fail to pay scheduled dividends on our 6.875% Mandatory Convertible Preferred Stock, in cash, common stock, or any combination of cash and common stock, we will be prohibited from paying dividends on our common stock, which may jeopardize our status as a REIT.
Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives.
REIT related ownership limitations and transfer restrictions may prevent or restrict certain transfers of our capital stock.
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the SEC. Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com. We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when new or updated information is posted on the site.
As used in this release, the term "including," and any variation thereof, means "including without limitation."


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http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13012350&doc=22
CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in millions, except par values)

 
June 30,
2019
 
December 31,
2018
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
288

 
$
277

Restricted cash
136

 
131

Receivables, net
591

 
501

Prepaid expenses(a)
111

 
172

Other current assets
168

 
148

Total current assets
1,294

 
1,229

Deferred site rental receivables
1,391

 
1,366

Property and equipment, net
14,151

 
13,676

Operating lease right-of-use assets(a)
6,053



Goodwill
10,078

 
10,078

Other intangible assets, net(a)
5,074

 
5,516

Long-term prepaid rent and other assets, net(a)
106

 
920

Total assets
$
38,147

 
$
32,785

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
337

 
$
313

Accrued interest
166

 
148

Deferred revenues
503

 
498

Other accrued liabilities(a)
305

 
351

Current maturities of debt and other obligations
98

 
107

Current portion of operating lease liabilities(a)
289



Total current liabilities
1,698

 
1,417

Debt and other long-term obligations
17,471

 
16,575

Operating lease liabilities(a)
5,427



Other long-term liabilities(a)
2,028

 
2,759

Total liabilities
26,624

 
20,751

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: June 30, 2019—416 and December 31, 2018—415
4

 
4

6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: June 30, 2019—2 and December 31, 2018—2; aggregate liquidation value: June 30, 2019—$1,650 and December 31, 2018—$1,650

 

Additional paid-in capital
17,801

 
17,767

Accumulated other comprehensive income (loss)
(5
)
 
(5
)
Dividends/distributions in excess of earnings
(6,277
)
 
(5,732
)
Total equity
11,523

 
12,034

Total liabilities and equity
$
38,147

 
$
32,785

(a)
Effective January 1, 2019, we adopted new guidance on the recognition, measurement, presentation and disclosure of leases. The new guidance requires lessees to recognize a lease liability, initially measured at the present value of the lease payments for all leases, and a corresponding right-of-use asset. The accounting for lessors remained largely unchanged from previous guidance. As a result of the new guidance for leases, on the effective date, certain amounts related to our lessee arrangements that were previously reported separately have been de-recognized and reclassified into "Operating lease right-of-use assets" on the condensed consolidated balance sheet as of June 30, 2019.

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CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net revenues:
 
 
 
 
 
 
 
Site rental
$
1,238


$
1,169


$
2,457


$
2,323

Services and other
240


161


447


307

Net revenues
1,478


1,330


2,904


2,630

Operating expenses:











Costs of operations (exclusive of depreciation, amortization and accretion):











Site rental
365


355


726


702

Services and other
138


99


263


185

Selling, general and administrative
155


138


307


273

Asset write-down charges
6


6


12


9

Acquisition and integration costs
2


8


6


14

Depreciation, amortization and accretion
393


379


787


753

Total operating expenses
1,059


985


2,101


1,936

Operating income (loss)
419


345


803


694

Interest expense and amortization of deferred financing costs
(169
)

(158
)

(337
)

(318
)
Gains (losses) on retirement of long-term obligations
(1
)

(3
)

(2
)

(74
)
Interest income
1


1


3


2

Other income (expense)




(1
)

(1
)
Income (loss) before income taxes
250


185


466


303

Benefit (provision) for income taxes
(4
)

(5
)

(10
)

(9
)
Net income (loss)
246


180


456


294

Dividends on preferred stock
(28
)

(28
)

(57
)

(57
)
Net income (loss) attributable to CCIC common stockholders
$
218


$
152


$
399


$
237













Net income (loss) attributable to CCIC common stockholders, per common share:











Net income (loss) attributable to CCIC common stockholders, basic
$
0.52


$
0.37


$
0.96


$
0.58

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.52

 
$
0.36

 
$
0.95

 
$
0.57













Weighted-average common shares outstanding:











Basic
416


415


415


412

Diluted
418


416


417


413


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CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In millions of dollars)
 
Six Months Ended June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income (loss)
$
456


$
294

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
787


753

(Gains) losses on retirement of long-term obligations
2


74

Amortization of deferred financing costs and other non-cash interest
1

 
4

Stock-based compensation expense
62

 
47

Asset write-down charges
12

 
9

Deferred income tax (benefit) provision
1

 
1

Other non-cash adjustments, net
3

 
1

Changes in assets and liabilities, excluding the effects of acquisitions:


 


Increase (decrease) in liabilities
54

 
78

Decrease (increase) in assets
(151
)
 
(150
)
Net cash provided by (used for) operating activities
1,227

 
1,111

Cash flows from investing activities:


 


Payments for acquisitions, net of cash acquired
(13
)
 
(18
)
Capital expenditures
(998
)
 
(763
)
Other investing activities, net
1

 
3

Net cash provided by (used for) investing activities
(1,010
)
 
(778
)
Cash flows from financing activities:


 


Proceeds from issuance of long-term debt
995

 
1,743

Principal payments on debt and other long-term obligations
(36
)
 
(47
)
Purchases and redemptions of long-term debt
(12
)
 
(1,318
)
Borrowings under revolving credit facility
1,195

 
485

Payments under revolving credit facility
(1,785
)
 
(1,150
)
Net borrowings (repayments) under commercial paper program
500

 

Payments for financing costs
(14
)
 
(20
)
Net proceeds from issuance of common stock

 
841

Purchases of common stock
(43
)
 
(34
)
Dividends/distributions paid on common stock
(944
)
 
(879
)
Dividends paid on preferred stock
(57
)
 
(57
)
Net cash provided by (used for) financing activities
(201
)
 
(436
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
16

 
(103
)
Effect of exchange rate changes on cash

 
(1
)
Cash, cash equivalents, and restricted cash at beginning of period
413

 
440

Cash, cash equivalents, and restricted cash at end of period
$
429

 
$
336

Supplemental disclosure of cash flow information:


 


Interest paid
318

 
292

Income taxes paid
9

 
12




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CROWN CASTLE INTERNATIONAL CORP.
SEGMENT OPERATING RESULTS (UNAUDITED)
(In millions of dollars)

SEGMENT OPERATING RESULTS
 
Three Months Ended June 30, 2019
 
Three Months Ended June 30, 2018
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
816


$
422

 
 
 
$
1,238

 
$
771


$
398

 
 
 
$
1,169

Segment services and other revenues
237


3

 
 
 
240

 
158


3

 
 
 
161

Segment revenues
1,053

 
425

 
 
 
1,478

 
929

 
401

 
 
 
1,330

Segment site rental cost of operations
218


136

 
 
 
354

 
216


130

 
 
 
346

Segment services and other cost of operations
134


2

 
 
 
136

 
94


3

 
 
 
97

Segment cost of operations(a)(b)
352

 
138

 
 
 
490

 
310

 
133

 
 
 
443

Segment site rental gross margin(c)
598

 
286

 
 
 
884

 
555

 
268

 
 
 
823

Segment services and other gross margin(c)
103

 
1

 
 
 
104

 
64

 

 
 
 
64

Segment selling, general and administrative expenses(b)
24


51

 
 
 
75

 
27


44

 
 
 
71

Segment operating profit(c)
677

 
236

 

 
913

 
592

 
224

 

 
816

Other selling, general and administrative expenses(b)
 
 
 
 
$
56

 
56

 
 
 
 
 
$
47

 
47

Stock-based compensation expense
 
 
 
 
32

 
32

 
 
 
 
 
26

 
26

Depreciation, amortization and accretion
 
 
 
 
393

 
393

 
 
 
 
 
379

 
379

Interest expense and amortization of deferred financing costs
 
 
 
 
169

 
169

 
 
 
 
 
158

 
158

Other (income) expenses to reconcile to income (loss) before income taxes(d)
 
 
 
 
13

 
13

 
 
 
 
 
21

 
21

Income (loss) before income taxes
 
 
 
 
 
 
$
250

 
 
 
 
 
 
 
$
185

(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $8 million and $6 million for the three months ended June 30, 2019 and 2018, respectively, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended June 30, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $24 million and $20 million for the three months ended June 30, 2019 and 2018, respectively.
(c) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit.
(d)
See condensed consolidated statement of operations for further information.






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Page 24


SEGMENT OPERATING RESULTS
 
Six Months Ended June 30, 2019
 
Six Months Ended June 30, 2018
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
1,621

 
$
836

 
 
 
$
2,457

 
$
1,536

 
$
787

 
 
 
$
2,323

Segment services and other revenues
440

 
7

 
 
 
447

 
300

 
7

 
 
 
307

Segment revenues
2,061

 
843

 
 
 
2,904

 
1,836

 
794

 
 
 
2,630

Segment site rental cost of operations
429

 
277

 
 
 
706

 
427

 
256

 
 
 
683

Segment services and other cost of operations
254

 
5

 
 
 
259

 
176

 
5

 
 
 
181

Segment cost of operations(a)(b)
683

 
282

 
 
 
965

 
603

 
261

 
 
 
864

Segment site rental gross margin(c)
1,192

 
559

 
 
 
1,751

 
1,109

 
531

 
 
 
1,640

Segment services and other gross margin(c)
186

 
2

 
 
 
188

 
124

 
2

 
 
 
126

Segment selling, general and administrative expenses(b)
50

 
98

 
 
 
148

 
53

 
87

 
 
 
140

Segment operating profit(c)
1,328

 
463

 
 
 
1,791

 
1,180

 
446

 
 
 
1,626

Other selling, general and administrative expenses(b)
 
 
 
 
$
112

 
112

 
 
 
 
 
$
94

 
94

Stock-based compensation expense
 
 
 
 
61

 
61

 
 
 
 
 
52

 
52

Depreciation, amortization and accretion
 
 
 
 
787

 
787

 
 
 
 
 
753

 
753

Interest expense and amortization of deferred financing costs
 
 
 
 
337

 
337

 
 
 
 
 
318

 
318

Other (income) expenses to reconcile to income (loss) before income taxes(d)
 
 
 
 
28

 
28

 
 
 
 
 
106

 
106

Income (loss) before income taxes
 
 
 
 
 
 
$
466

 
 
 
 
 
 
 
$
303

(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $14 million and $13 million for the six months ended June 30, 2019 and 2018, respectively, and (2) prepaid lease purchase price adjustments of $10 million for both of the six months ended June 30, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $47 million and $39 million for the six months ended June 30, 2019 and 2018, respectively.
(c) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit.
(d)
See condensed consolidated statement of operations for further information.


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Exhibit
Exhibit 99.2








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Supplemental Information Package
and Non-GAAP Reconciliations
Second Quarter • June 30, 2019




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Crown Castle International Corp.
Second Quarter 2019

TABLE OF CONTENTS
 
Page
Company Overview
 
Company Profile
Strategy
AFFO per Share
Tower Portfolio Footprint
Corporate Information
Research Coverage
Historical Common Stock Data
Portfolio and Financial Highlights
Outlook
Financials & Metrics
 
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Operations
Segment Operating Results
FFO and AFFO Reconciliations
Condensed Consolidated Statement of Cash Flows
Components of Changes in Site Rental Revenues
Summary of Straight-Lined and Prepaid Rent Activity
Summary of Capital Expenditures
Lease Renewal and Lease Distribution
Tenant Overview
Asset Portfolio Overview
 
Summary of Tower Portfolio by Vintage
Portfolio Overview
Ground Interest Overview
Ground Interest Activity
Capitalization Overview
 
Capitalization Overview
Debt Maturity Overview
Liquidity Overview
Maintenance and Financial Covenants
Interest Rate Sensitivity
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," "positioned," 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 full year 2019.
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. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com. We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when new or updated information is posted on the site.
 

1


The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP financial measures, segment measures and other calculations 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.

2

Crown Castle International Corp.
Second Quarter 2019
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 communications infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber solutions. Our towers, fiber and small cells assets are collectively referred to herein as "communications infrastructure," and our customers on our communications infrastructure are referred to herein as "tenants." Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our fiber is located in major metropolitan areas, including a presence within every major U.S. market. Crown Castle owns, operates and leases shared communications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the U.S., and which consists of approximately (1) 40,000 towers and (2) 75,000 route miles of fiber primarily supporting small cells and fiber solutions.
Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including licenses, subleases and lease agreements (collectively, "contracts"). We seek to increase our site rental revenues by adding more tenants on our communications infrastructure, which we expect to result in significant incremental cash flows due to our low incremental operating costs.
We operate as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes.

STRATEGY 
As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our existing portfolio of communications infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our common stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and long-term dividends per share. Our U.S. focused strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. The key elements of our strategy are to:
Grow cash flows from our existing communications infrastructure. We seek to maximize our site rental cash flows by working with our tenants to provide them quick access to our existing communications infrastructure and entering into associated long-term contracts. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our tenants to expand coverage and capacity in order to meet increasing demand for data, while generating high incremental returns for our business. We believe our product offerings of towers and small cells provide a comprehensive solution to our wireless tenants' growing network needs through our shared communications infrastructure model, which is an efficient and cost effective way to serve our tenants. Additionally, we believe our ability to share our fiber assets across multiple tenants to deploy both small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return. We also believe that there will be considerable future demand for our communications infrastructure based on the location of our assets and the rapid growth in demand for data.
Return cash provided by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to common stockholders.
Invest capital efficiently to grow cash flows and long-term dividends per share. In addition to adding tenants to existing communications infrastructure, we seek to invest our available capital, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. These investments include constructing and acquiring new communications infrastructure that we expect will generate future cash flow growth and attractive long-term returns by adding tenants to those assets over time. Our historical investments have included the following (in no particular order):
construction of towers, fiber and small cells;
acquisitions of towers, fiber and small cells;
acquisitions of land interests (which primarily relate to land assets under towers);

3

Crown Castle International Corp.
Second Quarter 2019
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

improvements and structural enhancements to our existing communications infrastructure;
purchases of shares of our common stock from time to time; and
purchases, repayments or redemptions of our debt.
Our strategy to create long-term stockholder value is based on our belief that additional demand for our communications infrastructure will be created by the expected continued growth in the demand for data. We believe that such demand for our communications infrastructure will continue, will result in growth of our cash flows due to tenant additions on our existing communications infrastructure, and will create other growth opportunities for us, such as demand for newly constructed or acquired communications infrastructure, as described above.
AFFO PER SHARE(a)(b)
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TOWER PORTFOLIO FOOTPRINT
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(a)
See reconciliations and definitions provided herein.
(b)
Attributable to CCIC common stockholders.
(c)
Represents the midpoint of the full year 2019 Outlook as issued on July 17, 2019.

4

Crown Castle International Corp.
Second Quarter 2019
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
BBB
Moody’s - Long Term Corporate Family Rating
Baa3
Standard & Poor’s - Long Term Local Issuer Credit Rating
BBB-
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
Jay A. Brown
46
19
President and Chief Executive Officer
Daniel K. Schlanger
45
3
Senior Vice President and Chief Financial Officer
James D. Young
57
13
Senior Vice President and Chief Operating Officer - Fiber
Robert C. Ackerman
66
20
Senior Vice President and Chief Operating Officer - Towers and Small Cells
Kenneth J. Simon
58
3
Senior Vice President and General Counsel
Michael J. Kavanagh
50
8
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
46
21
Senior Vice President - Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(a)
73
23
P. Robert Bartolo
Director
Audit, Compensation
47
5
Cindy Christy
Director
Compensation, NCG(a), Strategy
53
11
Ari Q. Fitzgerald
Director
Compensation, NCG(a), Strategy
56
16
Robert E. Garrison II
Director
Audit, Compensation
77
13
Andrea J. Goldsmith
Director
NCG(a), Strategy
54
1
Lee W. Hogan
Director
Audit, Compensation, Strategy
74
18
Edward C. Hutcheson Jr.
Director
Strategy
73
23
Robert F. McKenzie
Director
Audit, Strategy
75
23
Anthony J. Melone
Director
NCG(a), Strategy
58
3
W. Benjamin Moreland
Director
Strategy
55
12
Jay A. Brown
Director
 
46
2
(a)
Nominating & Corporate Governance Committee


5

Crown Castle International Corp.
Second Quarter 2019