Crown Castle Reports Third Quarter 2015 Results, Provides Outlook for 2016 and Announces Increase to Common Stock Dividend
HIGHLIGHTS
- Exceeded high end of previously provided third quarter 2015 Outlook for site rental revenues, Adjusted EBITDA and AFFO
- Increased midpoint of full year 2015 Outlook for site rental revenues, Adjusted EBITDA and AFFO by
$60 million ,$37 million and$23 million , respectively, to reflect strong third quarter 2015 results and Sunesys acquisition - Provided midpoint 2016 Outlook for AFFO per share of
$4.66 , representing year-over-year growth of 8% - Announced increase to annual common stock dividend from
$3.28 to $3.54 per share, or$0.885 per quarter, representing an increase of 8%; increase to take effect with dividend payment onDecember 31, 2015
"As demonstrated by our increased Outlook for 2015 and initial Outlook for 2016, we strongly believe in the long-term prospects for
RESULTS FOR THE QUARTER
The table below sets forth select financial results for the three month period ended September 30, 2015. For further information, refer to the financial statements and non-GAAP and other calculation reconciliations included in this press release.
($ in millions, except per share amounts) |
Actual | Midpoint Q3 2015 Outlook |
Actual Compared to Outlook |
|||||||||||||||||
Q3 2014 | Q3 2015 | $ Change | % Change | |||||||||||||||||
Site Rental Revenues | $ | 718 | $ | 765 | +$ | 47 | 7 | % | $ | 743 | +$ | 22 | ||||||||
Site Rental Gross Margin | $ | 487 | $ | 518 | +$ | 31 | 6 | % | $ | 503 | +$ | 15 | ||||||||
Adjusted EBITDA | $ | 514 | $ | 529 | +$ | 15 | 3 | % | $ | 513 | +$ | 16 | ||||||||
AFFO | $ | 332 | $ | 356 | +$ | 24 | 7 | % | $ | 344 | +$ | 12 | ||||||||
AFFO per Share | $ | 1.00 | $ | 1.07 | +$ | 0.07 | 7 | % | $ | 1.03 | +$ | 0.04 | ||||||||
Crown Castle exceeded the high end of its previously provided third quarter 2015 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO.- During third quarter 2015, the Sunesys acquisition generated
$16 million in site rental revenues,$11 million in site rental gross margin and$2 million in general and administrative expenses. The previously provided third quarter 2015 Outlook did not include the Sunesys acquisition, which closed onAugust 4, 2015 . - Site rental revenue growth of
$47 million from third quarter 2014 to third quarter 2015 is comprised of$16 million in contribution from Sunesys and$43 million in Organic Site Rental Revenue growth, net of$12 million in adjustments for straight-line accounting and other items. The Organic Site Rental Revenue growth of$43 million represents approximately 6% year-over-year growth, comprised of 10% growth from new leasing activity and contracted tenant escalations, net of 4% from tenant non-renewals.
DIVIDEND INCREASE ANNOUNCEMENT
INVESTING AND FINANCING ACTIVITIES DURING THE QUARTER
During the third quarter of 2015,
On
On
As of
"The excellent third quarter results allow us to raise the midpoint of our full year 2015 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO," stated
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
The following table sets forth
(in millions, except per share amounts) | Fourth Quarter 2015 | Full Year 2015 | Full Year 2016 | |||||||||||||||||||
Site rental revenues | $ | 778 | to | $ | 783 | $ | 3,011 | to | $ | 3,016 | $ | 3,152 | to | $ | 3,177 | |||||||
Site rental cost of operations | $ | 241 | to | $ | 246 | $ | 957 | to | $ | 962 | $ | 989 | to | $ | 1,014 | |||||||
Site rental gross margin | $ | 534 | to | $ | 539 | $ | 2,050 | to | $ | 2,055 | $ | 2,153 | to | $ | 2,178 | |||||||
Adjusted EBITDA(a) | $ | 536 | to | $ | 541 | $ | 2,115 | to | $ | 2,120 | $ | 2,156 | to | $ | 2,181 | |||||||
Interest expense and amortization of deferred financing costs(b) | $ | 126 | to | $ | 131 | $ | 525 | to | $ | 530 | $ | 517 | to | $ | 537 | |||||||
FFO(a) | $ | 368 | to | $ | 373 | $ | 1,491 | to | $ | 1,496 | $ | 1,467 | to | $ | 1,492 | |||||||
AFFO(a) | $ | 368 | to | $ | 373 | $ | 1,433 | to | $ | 1,438 | $ | 1,550 | to | $ | 1,575 | |||||||
AFFO per share(a)(c) | $ | 1.10 | to | $ | 1.12 | $ | 4.29 | to | $ | 4.31 | $ | 4.62 | to | $ | 4.69 | |||||||
Net income (loss) | $ | 99 | to | $ | 132 | $ | 1,481 | to | $ | 1,514 | $ | 409 | to | $ | 508 | |||||||
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(c) Based on diluted shares outstanding as of September 30, 2015 of approximately 334 million shares for fourth quarter 2015 and full year 2015. Full year 2016 assumes diluted shares outstanding of approximately 336 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in
Full Year 2015 Outlook
The table below compares the previously provided and current full year 2015 Outlook for select metrics:
Midpoint | Current Outlook Compared to Previous Outlook |
|||||||||
($ in millions) | Previously Provided Full Year 2015 Outlook |
Current Full Year 2015 Outlook |
||||||||
Site Rental Revenues | $ | 2,954 | $ | 3,014 | +$ | 60 | ||||
Site Rental Gross Margin | $ | 2,005 | $ | 2,053 | +$ | 48 | ||||
Adjusted EBITDA | $ | 2,081 | $ | 2,118 | +$ | 37 | ||||
AFFO | $ | 1,413 | $ | 1,436 | +$ | 23 | ||||
- The increase in full year 2015 Outlook reflects the contribution from the Sunesys acquisition, the results from the third quarter and the expected timing benefit from tenant non-renewals occurring later than previously expected.
- The Sunesys acquisition is expected to generate approximately
$40 million in site rental revenues,$30 million in site rental gross margin and$6 million in general and administrative expenses during 2015. - Additional information regarding
Crown Castle's expectations for site rental revenue growth, including tenant non-renewals, is available inCrown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
Full Year 2016 Outlook
The table below compares the full year 2015 Outlook and full year 2016 Outlook for select metrics:
Midpoint | $ Growth | % Growth | |||||||||||
($ in millions, except for per share amounts) |
Full Year 2015 Outlook |
Full Year 2016 Outlook |
|||||||||||
Site Rental Revenues | $ | 3,014 | $ | 3,165 | +$ | 151 | 5 | % | |||||
Site Rental Gross Margin | $ | 2,053 | $ | 2,166 | +$ | 113 | 6 | % | |||||
Adjusted EBITDA | $ | 2,118 | $ | 2,169 | +$ | 51 | 2 | % | |||||
AFFO | $ | 1,436 | $ | 1,563 | +$ | 127 | 9 | % | |||||
AFFO per Share | $ | 4.30 | $ | 4.66 | +$ | 0.36 | 8 | % | |||||
- The chart below reconciles the components of expected growth in site rental revenues from 2015 to 2016 of approximately
$151 million at the midpoint.
A chart accompanying this release is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/2b9d6332-d73a-40ab-a6cf-77623b8835fe
- The full year 2016 Outlook for Organic Site Rental Revenue growth of approximately
$160 million is comprised of approximately$170 million from new leasing activity and$95 million from escalations on existing tenant lease contracts, less approximately$105 million from non-renewals. Of the approximately$170 million in new leasing activity, expected contributions from tower leasing and small cells leasing are approximately$115 million and$55 million , respectively. - The chart below reconciles the components of expected growth in AFFO from 2015 to 2016 of approximately
$127 million at the midpoint.
A chart accompanying this release is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/8d1202d7-afb0-4bc8-9a6a-c451fbd5f80c
- Network services gross margin contribution for full year 2016 is expected to be approximately
$230 million to $250 million compared to full year 2015 expectation of$280 million to $285 million . The year-over-year decline is primarily driven by equipment decommissioning fees generated during 2015 which are not expected to recur in 2016. - Sunesys is expected to generate approximately
$105 million in site rental revenues,$75 million site rental gross margin and$15 million in general and administrative expenses.
CONFERENCE CALL DETAILS
A telephonic replay of the conference call will be available from
ABOUT
Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
Adjusted EBITDA.
Funds from Operations ("FFO").
FFO per share.
Adjusted Funds from Operations ("AFFO").
AFFO per share.
Site Rental Revenues, as Adjusted.
Organic Site Rental Revenues.
Sustaining capital expenditures.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures and Other Calculations:
Adjusted EBITDA for the three months ended September 30, 2015 and 2014 is computed as follows:
For the Three Months Ended | |||||||
September 30, 2015 | September 30, 2014 | ||||||
(in millions) | |||||||
Net income (loss) | $ | 103.8 | $ | 108.0 | |||
Adjustments to increase (decrease) net income (loss): | |||||||
Income (loss) from discontinued operations | 0.5 | (8.9 | ) | ||||
Asset write-down charges | 7.5 | 4.9 | |||||
Acquisition and integration costs | 7.6 | 4.1 | |||||
Depreciation, amortization and accretion | 261.7 | 247.2 | |||||
Amortization of prepaid lease purchase price adjustments | 5.1 | 5.0 | |||||
Interest expense and amortization of deferred financing costs(a) | 129.9 | 141.3 | |||||
Interest income | (0.8 | ) | (0.1 | ) | |||
Other income (expense) | 1.2 | 0.7 | |||||
Benefit (provision) for income taxes | (3.8 | ) | (2.0 | ) | |||
Stock-based compensation expense | 16.5 | 13.4 | |||||
Adjusted EBITDA(b) | $ | 529.2 | $ | 513.6 | |||
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
Adjusted EBITDA for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
Q4 2015 | Full Year 2015 | Full Year 2016 | |||||||||||||||||||||
(in millions) | Outlook | Outlook | Outlook | ||||||||||||||||||||
Net income (loss) | $ | 99 | to | $ | 132 | $ | 1,481 | to | $ | 1,514 | $ | 409 | to | $ | 508 | ||||||||
Adjustments to increase (decrease) net income (loss): | |||||||||||||||||||||||
Income (loss) from discontinued operations | $ | 0 | to | $ | 0 | $ | (1,001 | ) | to | $ | (1,001 | ) | $ | 0 | to | $ | 0 | ||||||
Asset write-down charges | $ | 4 | to | $ | 6 | $ | 24 | to | $ | 26 | $ | 15 | to | $ | 25 | ||||||||
Acquisition and integration costs | $ | 2 | to | $ | 5 | $ | 14 | to | $ | 17 | $ | 10 | to | $ | 15 | ||||||||
Depreciation, amortization and accretion | $ | 263 | to | $ | 268 | $ | 1,030 | to | $ | 1,035 | $ | 1,050 | to | $ | 1,070 | ||||||||
Amortization of prepaid lease purchase price adjustments | $ | 4 | to | $ | 6 | $ | 20 | to | $ | 22 | $ | 20 | to | $ | 22 | ||||||||
Interest expense and amortization of deferred financing costs(a) | $ | 126 | to | $ | 131 | $ | 525 | to | $ | 530 | $ | 517 | to | $ | 537 | ||||||||
Gains (losses) on retirement of long-term obligations | $ | 0 | to | $ | 0 | $ | 4 | to | $ | 4 | $ | 0 | to | $ | 0 | ||||||||
Interest income | $ | (2 | ) | to | $ | 0 | $ | (3 | ) | to | $ | (1 | ) | $ | (3 | ) | to | $ | (1 | ) | |||
Other income (expense) | $ | 0 | to | $ | 3 | $ | (59 | ) | to | $ | (56 | ) | $ | 1 | to | $ | 3 | ||||||
Benefit (provision) for income taxes | $ | (3 | ) | to | $ | 1 | $ | (13 | ) | to | $ | (9 | ) | $ | (10 | ) | to | $ | (2 | ) | |||
Stock-based compensation expense | $ | 15 | to | $ | 17 | $ | 65 | to | $ | 67 | $ | 73 | to | $ | 78 | ||||||||
Adjusted EBITDA(b) | $ | 536 | to | $ | 541 | $ | 2,115 | to | $ | 2,120 | $ | 2,156 | to | $ | 2,181 | ||||||||
(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 definition which are not applicable for the periods shown.
FFO and AFFO for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
Q4 2015 | Full Year 2015 | Full Year 2016 | |||||||||||||||||||||
(in millions, except share and per share amounts) | Outlook | Outlook | Outlook | ||||||||||||||||||||
Net income(a) | $ | 99 | to | $ | 132 | $ | 480 | to | $ | 513 | $ | 409 | to | $ | 508 | ||||||||
Real estate related depreciation, amortization and accretion | $ | 259 | to | $ | 262 | $ | 1,013 | to | $ | 1,016 | $ | 1,034 | to | $ | 1,049 | ||||||||
Asset write-down charges | $ | 4 | to | $ | 6 | $ | 24 | to | $ | 26 | $ | 15 | to | $ | 25 | ||||||||
Dividends on preferred stock | $ | (11 | ) | to | $ | (11 | ) | $ | (44 | ) | to | $ | (44 | ) | $ | (44 | ) | to | $ | (44 | ) | ||
FFO(c)(d)(f) | $ | 368 | to | $ | 373 | $ | 1,491 | to | $ | 1,496 | $ | 1,467 | to | $ | 1,492 | ||||||||
FFO (from above) | $ | 368 | to | $ | 373 | $ | 1,491 | to | $ | 1,496 | $ | 1,467 | to | $ | 1,492 | ||||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||||||||||
Straight-line revenue | $ | (26 | ) | to | $ | (21 | ) | $ | (115 | ) | to | $ | (110 | ) | $ | (48 | ) | to | $ | (33 | ) | ||
Straight-line expense | $ | 21 | to | $ | 26 | $ | 95 | to | $ | 100 | $ | 80 | to | $ | 95 | ||||||||
Stock-based compensation expense | $ | 15 | to | $ | 17 | $ | 65 | to | $ | 67 | $ | 73 | to | $ | 78 | ||||||||
Non-cash portion of tax provision | $ | (6 | ) | to | $ | (1 | ) | $ | (26 | ) | to | $ | (21 | ) | $ | (21 | ) | to | $ | (6 | ) | ||
Non-real estate related depreciation, amortization and accretion | $ | 4 | to | $ | 6 | $ | 17 | to | $ | 19 | $ | 16 | to | $ | 21 | ||||||||
Amortization of non-cash interest expense | $ | 4 | to | $ | 7 | $ | 37 | to | $ | 40 | $ | 17 | to | $ | 23 | ||||||||
Other (income) expense | $ | 0 | to | $ | 3 | $ | (59 | ) | to | $ | (56 | ) | $ | 1 | to | $ | 3 | ||||||
Gains (losses) on retirement of long-term obligations | $ | 0 | to | $ | 0 | $ | 4 | to | $ | 4 | $ | 0 | to | $ | 0 | ||||||||
Acquisition and integration costs | $ | 2 | to | $ | 5 | $ | 14 | to | $ | 17 | $ | 10 | to | $ | 15 | ||||||||
Capital improvement capital expenditures | $ | (13 | ) | to | $ | (11 | ) | $ | (45 | ) | to | $ | (43 | ) | $ | (48 | ) | to | $ | (43 | ) | ||
Corporate capital expenditures | $ | (16 | ) | to | $ | (14 | ) | $ | (59 | ) | to | $ | (57 | ) | $ | (31 | ) | to | $ | (26 | ) | ||
AFFO(c)(d)(f) | $ | 368 | to | $ | 373 | $ | 1,433 | to | $ | 1,438 | $ | 1,550 | to | $ | 1,575 | ||||||||
Weighted average common shares outstanding — diluted(b)(e) | 333.8 | 333.8 | 335.8 | ||||||||||||||||||||
AFFO per share(c)(f) | $ | 1.10 | to | $ | 1.12 | $ | 4.29 | to | $ | 4.31 | $ | 4.62 | to | $ | 4.69 | ||||||||
(a) For full year 2015 Outlook, net income is exclusive of income from discontinued operations of
(b) Based on diluted shares outstanding as of September 30, 2015 of approximately 334 million shares for fourth quarter 2015 and full year 2015. Full year 2016 assumes diluted shares outstanding of approximately 336 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in November 2016.
(c) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(d) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(e) The diluted weighted average common shares outstanding assumes no conversion of preferred stock in the share count other than as discussed in footnote (b).
(f) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
Organic Site Rental Revenue growth for the years ending December 31, 2015 and December 31, 2016 is forecasted as follows:
Midpoint of Full Year | Midpoint of Full Year | ||||||||||
(in millions of dollars) | Full Year 2014 | 2015 Outlook | 2016 Outlook | ||||||||
GAAP site rental revenues | $ | 2,867 | $ | 3,014 | $ | 3,165 | |||||
Site rental straight-line revenues | (183 | ) | (113 | ) | (41 | ) | |||||
Other - Non-recurring | (5 | ) | — | — | |||||||
Site Rental Revenues, as Adjusted(a)(c) | $ | 2,678 | $ | 2,901 | $ | 3,124 | |||||
Cash adjustments: | |||||||||||
Other | – | – | |||||||||
Acquisitions and builds(b) | (63 | ) | (62 | ) | |||||||
Organic Site Rental Revenues(a)(c)(d) | $ | 2,838 | $ | 3,062 | |||||||
Year-Over-Year Revenue Growth | |||||||||||
GAAP site rental revenues | 5.1 | % | 5.0 | % | |||||||
Site Rental Revenues, as Adjusted | 8.3 | % | 7.7 | % | |||||||
Organic Site Rental Revenues(e)(f) | 6.0 | % | 5.5 | % | |||||||
(a) Includes amortization of prepaid rent.
(b) The financial impact of acquisitions and tower builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(c) Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(d) See "Non-GAAP Financial Measures and Other Calculations" herein.
(e) Year-over-year Organic Site Rental Revenue growth for the years ending December 31, 2015 and December 31, 2016:
Midpoint of Full Year 2015 Outlook |
Midpoint of Full Year 2016 Outlook |
||||
New leasing activity | 6.3 | % | 5.9 | % | |
Escalators | 3.5 | % | 3.3 | % | |
Organic Site Rental Revenue growth, before non-renewals | 9.8 | % | 9.2 | % | |
Non-renewals | (3.8 | )% | (3.7 | )% | |
Organic Site Rental Revenue growth | 6.0 | % | 5.5 | % | |
(f) Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period.
Organic Site Rental Revenue growth for the quarter ended September 30, 2015 is as follows:
Three Months Ended September 30, | |||||||
(in millions of dollars) | 2015 | 2014 | |||||
Reported GAAP site rental revenues | $ | 765 | $ | 718 | |||
Site rental straight-line revenues | (27 | ) | (46 | ) | |||
Other - Non-recurring | – | – | |||||
Site Rental Revenues, as Adjusted(a)(c) | $ | 737 | $ | 672 | |||
Cash adjustments: | |||||||
Other | – | ||||||
Acquisitions and builds(b) | (22 | ) | |||||
Organic Site Rental Revenues(a)(c)(d) | $ | 715 | |||||
Year-Over-Year Revenue Growth | |||||||
Reported GAAP site rental revenues | 6.5 | % | |||||
Site Rental Revenues, as Adjusted | 9.8 | % | |||||
Organic Site Rental Revenues(e)(f) | 6.4 | % | |||||
(a) Includes amortization of prepaid rent.
(b) The financial impact of acquisitions and tower builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(c) Includes Site Rental Revenues, as Adjusted from the construction of new small cell nodes.
(d) See "Non-GAAP Financial Measures and Other Calculations" herein.
(e) Quarter-over-quarter Organic Site Rental Revenue growth for the quarter ending September 30, 2015:
Three Months Ended September 30, 2015 |
||
New leasing activity | 6.6 | % |
Escalators | 3.5 | % |
Organic Site Rental Revenue growth, before non-renewals | 10.0 | % |
Non-renewals | (3.6 | )% |
Organic Site Rental Revenue Growth | 6.4 | % |
(f) Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.
FFO and AFFO for the three and nine months ended September 30, 2015 and 2014 are computed as follows:
For the Three Months | For the Nine Months Ended | ||||||||||||||
(in millions, except share and per share amounts) | September 30, 2015 |
September 30, 2014 |
September 30, 2015 |
September 30, 2014 |
|||||||||||
Net income(a) | $ | 104.3 | $ | 99.2 | $ | 382.6 | $ | 217.7 | |||||||
Real estate related depreciation, amortization and accretion | 257.0 | 243.6 | 753.6 | 728.5 | |||||||||||
Asset write-down charges | 7.5 | 4.9 | 19.7 | 10.7 | |||||||||||
Dividends on preferred stock | (11.0 | ) | (11.0 | ) | (33.0 | ) | (33.0 | ) | |||||||
FFO(b)(c)(e) | $ | 357.8 | $ | 336.7 | $ | 1,122.8 | $ | 923.9 | |||||||
Weighted average common shares outstanding — diluted(d) | 333.7 | 333.2 | 333.7 | 333.0 | |||||||||||
FFO per share(b)(e) | $ | 1.07 | $ | 1.01 | $ | 3.36 | $ | 2.77 | |||||||
FFO (from above) | $ | 357.8 | $ | 336.7 | $ | 1,122.8 | $ | 923.9 | |||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||
Straight-line revenue | (27.1 | ) | (45.7 | ) | (89.0 | ) | (144.7 | ) | |||||||
Straight-line expense | 24.4 | 24.1 | 74.0 | 76.0 | |||||||||||
Stock-based compensation expense | 16.5 | 13.4 | 49.3 | 43.2 | |||||||||||
Non-cash portion of tax provision | (5.9 | ) | (4.7 | ) | (20.3 | ) | (14.6 | ) | |||||||
Non-real estate related depreciation, amortization and accretion | 4.6 | 3.6 | 13.0 | 10.5 | |||||||||||
Amortization of non-cash interest expense | 8.6 | 19.8 | 32.4 | 61.3 | |||||||||||
Other (income) expense | 1.2 | 0.7 | (58.5 | ) | 9.4 | ||||||||||
Gains (losses) on retirement of long-term obligations | — | — | 4.2 | 44.6 | |||||||||||
Acquisition and integration costs | 7.6 | 4.1 | 12.0 | 28.9 | |||||||||||
Capital improvement capital expenditures | (14.4 | ) | (7.5 | ) | (32.5 | ) | (15.5 | ) | |||||||
Corporate capital expenditures | (17.0 | ) | (12.1 | ) | (42.9 | ) | (27.2 | ) | |||||||
AFFO(b)(c)(e) | $ | 356.4 | $ | 332.2 | $ | 1,064.4 | $ | 995.7 | |||||||
Weighted average common shares outstanding — diluted(d) | 333.7 | 333.2 | 333.7 | 333.0 | |||||||||||
AFFO per share(b)(e) | $ | 1.07 | $ | 1.00 | $ | 3.19 | $ | 2.99 | |||||||
(a) Exclusive of income (loss) from discontinued operations and related noncontrolling interest of
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) The diluted weighted average common shares outstanding assumes no conversion of preferred stock in the share count.
(e) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
The components of interest expense and amortization of deferred financing costs for the three months ended September 30, 2015 and 2014 are as follows:
For the Three Months Ended | |||||||
(in millions) | September 30, 2015 |
September 30, 2014 |
|||||
Interest expense on debt obligations | $ | 121.3 | $ | 121.5 | |||
Amortization of deferred financing costs | 5.5 | 5.5 | |||||
Amortization of adjustments on long-term debt | 0.1 | (0.9 | ) | ||||
Amortization of interest rate swaps(a) | 3.7 | 15.6 | |||||
Other, net | (0.7 | ) | (0.3 | ) | |||
Interest expense and amortization of deferred financing costs | $ | 129.9 | $ | 141.3 | |||
(a) Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.
The components of interest expense and amortization of deferred financing costs for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
Q4 2015 | Full Year 2015 | Full Year 2016 | |||||||||||||||||||||
(in millions) | Outlook | Outlook | Outlook | ||||||||||||||||||||
Interest expense on debt obligations | $ | 123 | to | $ | 125 | $ | 489 | to | $ | 491 | $ | 502 | to | $ | 512 | ||||||||
Amortization of deferred financing costs | $ | 4 | to | $ | 6 | $ | 21 | to | $ | 23 | $ | 21 | to | $ | 23 | ||||||||
Amortization of adjustments on long-term debt | $ | 0 | to | $ | 1 | $ | (1 | ) | to | $ | 0 | $ | (1 | ) | to | $ | 1 | ||||||
Amortization of interest rate swaps(a) | $ | 0 | to | $ | 0 | $ | 19 | to | $ | 19 | $ | 0 | to | $ | 0 | ||||||||
Other, net | $ | 0 | to | $ | 0 | $ | (2 | ) | to | $ | (2 | ) | $ | (3 | ) | to | $ | (1 | ) | ||||
Interest expense and amortization of deferred financing costs | $ | 126 | to | $ | 131 | $ | 525 | to | $ | 530 | $ | 517 | to | $ | 537 | ||||||||
(a) Relates to the amortization of interest rate swaps, all of which has been cash settled in prior periods.
Sustaining capital expenditures for the three months ended September 30, 2015 and 2014 is computed as follows:
For the Three Months Ended | |||||||
(in millions) | September 30, 2015 |
September 30, 2014 |
|||||
Capital Expenditures | $ | 237.4 | $ | 199.7 | |||
Less: Land purchases | 16.0 | 15.1 | |||||
Less: Wireless infrastructure construction and improvements | 190.1 | 164.9 | |||||
Sustaining capital expenditures | $ | 31.3 | $ | 19.7 | |||
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, returns and shareholder value which may be derived from our business, assets, investments, dividends and acquisitions, including on a long-term basis, (2) our strategy and strategic position and strength of our business, (3) wireless consumer demand, (4) demand for our wireless infrastructure and services, (5) carrier network investments and upgrades, and the benefits which may be derived therefrom, (6) our growth and long-term prospects, (7) our dividends, including our dividend plans, the amount and growth of our dividends, the potential benefits therefrom and the tax characterization thereof, (8) leasing activity, including the impact of such leasing activity on our results and Outlook, (9) capital allocation, (10) the Sunesys acquisition, including potential benefits and impact therefrom and growth related thereto, (11) our investments, including in small cells, and the potential benefits therefrom, (12) availability and adequacy of cash flows and liquidity for, or plans regarding, future discretionary investments, (13) the location and level of our activities, including with respect to small cells, (14) non-renewal of leases and decommissioning of networks, including timing, the impact thereof and decommissioning fees, (15) capital expenditures, including sustaining capital expenditures, (16) timing items, (17) straight-line adjustments, (18) tower acquisitions and builds, (19) expenses, including general and administrative expense, (20) site rental revenues and Site Rental Revenues, as Adjusted, (21) site rental cost of operations, (22) site rental gross margin and network services gross margin, (23) Adjusted EBITDA, (24) interest expense and amortization of deferred financing costs, (25) FFO, including on a per share basis, (26) AFFO, including on a per share basis, (27) Organic Site Rental Revenues and Organic Site Rental Revenue growth, (28) net income (loss), including on a per share basis, (29) our common shares outstanding, including on a diluted basis, and (30) 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 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 and 4.50% 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 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.
- 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 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.
- REIT 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. As used in this release, the term "including," and any variation thereof, means "including without limitation."
CROWN CASTLE INTERNATIONAL CORP. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) | |||||||
(in thousands, except share amounts) | |||||||
September 30, 2015 |
December 31, 2014 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 184,116 | $ | 151,312 | |||
Restricted cash | 116,653 | 147,411 | |||||
Receivables, net | 324,566 | 313,308 | |||||
Prepaid expenses | 143,675 | 138,873 | |||||
Deferred income tax assets | 33,110 | 24,806 | |||||
Other current assets | 222,251 | 94,503 | |||||
Assets from discontinued operations | — | 412,783 | |||||
Total current assets | 1,024,371 | 1,282,996 | |||||
Deferred site rental receivables | 1,282,752 | 1,202,058 | |||||
Property and equipment, net | 9,498,568 | 8,982,783 | |||||
Goodwill | 5,527,134 | 5,196,485 | |||||
Other intangible assets, net | 3,837,360 | 3,681,551 | |||||
Long-term prepaid rent, deferred financing costs and other assets, net | 825,459 | 797,403 | |||||
Total assets | $ | 21,995,644 | $ | 21,143,276 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 157,024 | $ | 162,397 | |||
Accrued interest | 69,184 | 66,943 | |||||
Deferred revenues | 314,648 | 279,882 | |||||
Other accrued liabilities | 181,498 | 182,081 | |||||
Current maturities of debt and other obligations | 102,188 | 113,335 | |||||
Liabilities from discontinued operations | — | 127,493 | |||||
Total current liabilities | 824,542 | 932,131 | |||||
Debt and other long-term obligations | 12,039,178 | 11,807,526 | |||||
Deferred income tax liabilities | 32,317 | 39,889 | |||||
Other long-term liabilities | 1,859,304 | 1,626,502 | |||||
Total liabilities | 14,755,341 | 14,406,048 | |||||
Commitments and contingencies | |||||||
CCIC stockholders' equity: | |||||||
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2015—333,771,499 and December 31, 2014—333,856,632 | 3,339 | 3,339 | |||||
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: September 30, 2015 and December 31, 2014—$977,500 | 98 | 98 | |||||
Additional paid-in capital | 9,532,597 | 9,512,396 | |||||
Accumulated other comprehensive income (loss) | (3,754 | ) | 15,820 | ||||
Dividends/distributions in excess of earnings | (2,291,977 | ) | (2,815,428 | ) | |||
Total CCIC stockholders' equity | 7,240,303 | 6,716,225 | |||||
Noncontrolling interest from discontinued operations | — | 21,003 | |||||
Total equity | 7,240,303 | 6,737,228 | |||||
Total liabilities and equity | $ | 21,995,644 | $ | 21,143,276 |
CROWN CASTLE INTERNATIONAL CORP. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | |||||||||||||||
(in thousands, except share and per share amounts) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 764,606 | $ | 717,623 | $ | 2,233,077 | $ | 2,143,198 | |||||||
Network services and other | 153,501 | 175,260 | 484,938 | 469,690 | |||||||||||
Net revenues | 918,107 | 892,883 | 2,718,015 | 2,612,888 | |||||||||||
Operating expenses: | |||||||||||||||
Costs of operations (exclusive of depreciation, amortization and accretion): | |||||||||||||||
Site rental | 247,000 | 230,599 | 716,244 | 676,275 | |||||||||||
Network services and other | 86,859 | 101,814 | 263,177 | 275,514 | |||||||||||
General and administrative | 76,699 | 65,212 | 223,880 | 187,171 | |||||||||||
Asset write-down charges | 7,477 | 4,932 | 19,652 | 10,673 | |||||||||||
Acquisition and integration costs | 7,608 | 4,068 | 12,001 | 28,852 | |||||||||||
Depreciation, amortization and accretion | 261,662 | 247,206 | 766,621 | 738,965 | |||||||||||
Total operating expenses | 687,305 | 653,831 | 2,001,575 | 1,917,450 | |||||||||||
Operating income (loss) | 230,802 | 239,052 | 716,440 | 695,438 | |||||||||||
Interest expense and amortization of deferred financing costs | (129,877 | ) | (141,287 | ) | (398,782 | ) | (432,221 | ) | |||||||
Gains (losses) on retirement of long-term obligations | — | — | (4,157 | ) | (44,629 | ) | |||||||||
Interest income | 789 | 107 | 1,170 | 329 | |||||||||||
Other income (expense) | (1,214 | ) | (694 | ) | 58,510 | (9,350 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 100,500 | 97,178 | 373,181 | 209,567 | |||||||||||
Benefit (provision) for income taxes | 3,801 | 1,977 | 9,380 | 8,118 | |||||||||||
Income (loss) from continuing operations | 104,301 | 99,155 | 382,561 | 217,685 | |||||||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations, net of tax | — | 8,882 | 19,690 | 28,502 | |||||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | (522 | ) | — | 981,018 | — | ||||||||||
Income (loss) from discontinued operations, net of tax | (522 | ) | 8,882 | 1,000,708 | 28,502 | ||||||||||
Net income (loss) | 103,779 | 108,037 | 1,383,269 | 246,187 | |||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | — | 1,100 | 3,343 | 3,744 | |||||||||||
Net income (loss) attributable to CCIC stockholders | 103,779 | 106,937 | 1,379,926 | 242,443 | |||||||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | (32,991 | ) | (32,991 | ) | |||||||
Net income (loss) attributable to CCIC common stockholders | $ | 92,782 | $ | 95,940 | $ | 1,346,935 | $ | 209,452 | |||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Income (loss) from continuing operations, basic | $ | 0.28 | $ | 0.27 | $ | 1.05 | $ | 0.56 | |||||||
Income (loss) from discontinued operations, basic | $ | — | $ | 0.02 | $ | 3.00 | $ | 0.07 | |||||||
Net income (loss) attributable to CCIC common stockholders, basic | $ | 0.28 | $ | 0.29 | $ | 4.05 | $ | 0.63 | |||||||
Income (loss) from continuing operations, diluted | $ | 0.28 | $ | 0.26 | $ | 1.05 | $ | 0.55 | |||||||
Income (loss) from discontinued operations, diluted | $ | — | $ | 0.03 | $ | 2.99 | $ | 0.08 | |||||||
Net income (loss) attributable to CCIC common stockholders, diluted | $ | 0.28 | $ | 0.29 | $ | 4.04 | $ | 0.63 | |||||||
Weighted-average common shares outstanding (in thousands): | |||||||||||||||
Basic | 333,049 | 332,413 | 332,951 | 332,264 | |||||||||||
Diluted | 333,711 | 333,241 | 333,735 | 333,020 |
CROWN CASTLE INTERNATIONAL CORP. | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) | ||||||||
(in thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) from continuing operations | $ | 382,561 | $ | 217,685 | ||||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities: | ||||||||
Depreciation, amortization and accretion | 766,621 | 738,965 | ||||||
Gains (losses) on retirement of long-term obligations | 4,157 | 44,629 | ||||||
Gains (losses) on settled swaps | (54,475 | ) | — | |||||
Amortization of deferred financing costs and other non-cash interest | 32,394 | 61,322 | ||||||
Stock-based compensation expense | 44,711 | 39,497 | ||||||
Asset write-down charges | 19,652 | 10,673 | ||||||
Deferred income tax benefit (provision) | (16,199 | ) | (14,589 | ) | ||||
Other non-cash adjustments, net | (7,240 | ) | (1,967 | ) | ||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||
Increase (decrease) in liabilities | 208,538 | 289,676 | ||||||
Decrease (increase) in assets | (89,844 | ) | (234,965 | ) | ||||
Net cash provided by (used for) operating activities | 1,290,876 | 1,150,926 | ||||||
Cash flows from investing activities: | ||||||||
Payments for acquisition of businesses, net of cash acquired | (1,083,319 | ) | (174,356 | ) | ||||
Capital expenditures | (658,240 | ) | (498,960 | ) | ||||
Receipts from foreign currency swaps | 54,475 | — | ||||||
Other investing activities, net | (1,561 | ) | 2,787 | |||||
Net cash provided by (used for) investing activities | (1,688,645 | ) | (670,529 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 1,000,000 | 845,750 | ||||||
Principal payments on debt and other long-term obligations | (78,049 | ) | (86,197 | ) | ||||
Purchases and redemptions of long-term debt | (1,069,337 | ) | (836,899 | ) | ||||
Purchases of capital stock | (29,576 | ) | (21,778 | ) | ||||
Borrowings under revolving credit facility | 1,560,000 | 567,000 | ||||||
Payments under revolving credit facility | (1,240,000 | ) | (587,000 | ) | ||||
Payments for financing costs | (17,415 | ) | (15,899 | ) | ||||
Net decrease (increase) in restricted cash | 28,435 | 39,882 | ||||||
Dividends/distributions paid on common stock | (821,056 | ) | (350,535 | ) | ||||
Dividends paid on preferred stock | (32,991 | ) | (33,357 | ) | ||||
Net cash provided by (used for) financing activities | (699,989 | ) | (479,033 | ) | ||||
Net increase (decrease) in cash and cash equivalents - continuing operations | (1,097,758 | ) | 1,364 | |||||
Discontinued operations: | ||||||||
Net cash provided by (used for) operating activities | 4,359 | 41,304 | ||||||
Net cash provided by (used for) investing activities | 1,103,577 | (20,154 | ) | |||||
Net increase (decrease) in cash and cash equivalents - discontinued operations | 1,107,936 | 21,150 | ||||||
Effect of exchange rate changes | (1,682 | ) | (7,358 | ) | ||||
Cash and cash equivalents at beginning of period | 175,620 | (a) | 223,394 | (a) | ||||
Cash and cash equivalents at end of period | $ | 184,116 | $ | 238,550 | (a) | |||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | 364,147 | 368,437 | ||||||
Income taxes paid | 23,865 | 15,353 |
________________
(a) Inclusive of cash and cash equivalents included in discontinued operations.
Contacts:
Jay Brown, CFO
Son Nguyen, VP - Corporate Finance
Crown Castle International Corp.
713-570-3050