Crown Castle Inc 10-Q for FY2020 Q1

About this 10-Q

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Crown Castle Inc. (CCI)

10-Q 2020-05-01 For: 2020-03-31

Added on April 08, 2026

Crown Castle Inc filed this 10-Q on May 1, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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. ☐

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.42B; up 0.9% from $1.41B a year earlier
Net income: $185M; down 4.1% from net income of $193M a year earlier
Diluted EPS: $0.38; down 5.0% from $0.40 a year earlier

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Delaware		76-0470458
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	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



		Page
PART I—FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS	3
	CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)	3
	CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited)	4
	CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)	5
	CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited)	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited	7
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 4.	CONTROLS AND PROCEDURES	32
PART II—OTHER INFORMATION		32
ITEM 1.	LEGAL PROCEEDINGS	32
ITEM 1A.	RISK FACTORS	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33
ITEM 6.	EXHIBITS	34
EXHIBIT INDEX		34
SIGNATURES		35



	March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	310		$	196
Restricted cash	157			137
Receivables, net	495			596
Prepaid expenses	107			107
Other current assets	178			168
Total current assets	1,247			1,204
Deferred site rental receivables	1,428			1,424
Property and equipment, net of accumulated depreciation of $9,953 and $9,668, respectively	14,815			14,666
Operating lease right-of-use assets	6,198			6,133
Goodwill	10,078			10,078
Other intangible assets, net	4,734			4,836
Other assets, net	116			116
Total assets	$	38,616		$	38,457

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	296		$	334
Accrued interest	119			169
Deferred revenues	741			657
Other accrued liabilities	264			361
Current maturities of debt and other obligations	949			100
Current portion of operating lease liabilities	300			299
Total current liabilities	2,669			1,920
Debt and other long-term obligations	17,746			18,021
Operating lease liabilities	5,567			5,511
Other long-term liabilities	2,513			2,516
Total liabilities	28,495			27,968
Commitments and contingencies (note 9)
CCIC stockholders' equity:
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: March 31, 2020—417 and December 31, 2019—416	4			4
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: March 31, 2020—2 and December 31, 2019—2; aggregate liquidation value: March 31, 2020—$1,650 and December 31, 2019—$1,650	—			—
Additional paid-in capital	17,835			17,855
Accumulated other comprehensive income (loss)	(6		)	(5		)
Dividends/distributions in excess of earnings	(7,712		)	(7,365		)
Total equity	10,121			10,489
Total liabilities and equity	$	38,616		$	38,457



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended March 31,
	2020			2019
				(As Restated)
Net revenues:
Site rental	$	1,310		$	1,242
Services and other	111			166
Net revenues	1,421			1,408
Operating expenses:
Costs of operations^(a):
Site rental	375			361
Services and other	99			124
Selling, general and administrative	175			152
Asset write-down charges	4			6
Acquisition and integration costs	5			4
Depreciation, amortization and accretion	399			394
Total operating expenses	1,057			1,041
Operating income (loss)	364			367
Interest expense and amortization of deferred financing costs	(175		)	(168		)
Gains (losses) on retirement of long-term obligations	—			(1		)
Interest income	1			2
Other income (expense)	—			(1		)
Income (loss) before income taxes	190			199
Benefit (provision) for income taxes	(5		)	(6		)
Net income (loss) attributable to CCIC stockholders	185			193
Dividends/distributions on preferred stock	(28		)	(28		)
Net income (loss) attributable to CCIC common stockholders	$	157		$	165
Net income (loss)	$	185		$	193
Other comprehensive income (loss):
Foreign currency translation adjustments	(1		)	—
Total other comprehensive income (loss)	(1		)	—
Comprehensive income (loss) attributable to CCIC stockholders	$	184		$	193
Net income (loss) attributable to CCIC common stockholders, per common share:
Net income (loss) attributable to CCIC common stockholders—basic	$	0.38		$	0.40
Net income (loss) attributable to CCIC common stockholders—diluted	$	0.38		$	0.40
Weighted-average common shares outstanding:
Basic	416			415
Diluted	418			417


(a)	Exclusive of depreciation, amortization and accretion shown separately.



	Common Stock			6.875% Mandatory Convertible Preferred Stock						Accumulated Other Comprehensive Income (Loss) ("AOCI")
	Shares	($0.01 Par)		Shares	($0.01 Par)		Additional paid-in capital			Foreign Currency Translation Adjustments			Dividends/Distributions in Excess of Earnings			Total
Balance, December 31, 2019	416	$	4	2	$	—	$	17,855		$	(5	)	$	(7,365	)	$	10,489
Stock-based compensation related activity, net of forfeitures	1	—		—	—		53			—			—			53
Purchases and retirement of common stock	—	—		—	—		(73		)	—			—			(73		)
Other comprehensive income (loss)^(a)	—	—		—	—		—			(1		)	—			(1		)
Common stock dividends/distributions^(b)	—	—		—	—		—			—			(504		)	(504		)
Preferred stock dividends/distributions^(b)	—	—		—	—		—			—			(28		)	(28		)
Net income (loss)	—	—		—	—		—			—			185			185
Balance, March 31, 2020	417	$	4	2	$	—	$	17,835		$	(6	)	$	(7,712	)	$	10,121



	Common Stock			6.875% Mandatory Convertible Preferred Stock						AOCI
	Shares	($0.01 Par)		Shares	($0.01 Par)		Additional paid-in capital			Foreign Currency Translation Adjustments			Dividends/Distributions in Excess of Earnings			Total
Balance, December 31, 2018 (As Restated)	415	$	4	2	$	—	$	17,767		$	(5	)	$	(6,195	)	$	11,571
Stock-based compensation related activity, net of forfeitures	1	—		—	—		45			—			—			45
Purchases and retirement of common stock	—	—		—	—		(42		)	—			—			(42		)
Net proceeds from issuance of common stock	—	—		—	—		—			—			—			—
Common stock dividends/distributions^(b)	—	—		—	—		—			—			(472		)	(472		)
Preferred stock dividends/distributions^(b)	—	—		—	—		—			—			(28		)	(28		)
Net income (loss) (As Restated)	—	—		—	—		—			—			193			193
Balance, March 31, 2019 (As Restated)	416	$	4	2	$	—	$	17,770		$	(5	)	$	(6,502	)	$	11,267


(a)	See the condensed consolidated statement of operations and other comprehensive income (loss) for the components of other comprehensive income (loss).


(b)	See note 8 for information regarding common and preferred stock dividends declared per share.


2.	Restatement of Previously Issued Condensed Consolidated Financial Statements



	March 31, 2019
	As Reported			Restatement Adjustments			Other Adjustments			As Restated
ASSETS
Property and equipment, net	$	13,883		$	—		$	(23	)	$	13,860
Total assets	37,778			—			(23		)	37,755
LIABILITIES AND EQUITY
Current liabilities:
Deferred revenues	502			96			—			598
Total current liabilities	1,565			96			—			1,661
Other long-term liabilities	2,009			360			—			2,369
Total liabilities	26,032			456			—			26,488
CCIC stockholders' equity:
Dividends/distributions in excess of earnings	(6,022		)	(456		)	(23		)	(6,501		)
Total equity	11,746			(456		)	(23		)	11,267
Total liabilities and equity	$	37,778		$	—		$	(23	)	$	37,755


1.	General


3.	Summary of Significant Accounting Policies


4.	Revenues



	Nine Months Ending December 31,		Years Ending December 31,
	2020		2021		2022		2023		2024		Thereafter		Total
Contracted amounts^(a)	$	3,257	$	4,071	$	3,842	$	3,213	$	2,489	$	7,219	$	24,091



	Three Months Ended March 31, 2019
	As Reported		Restatement Adjustments			Other Adjustments			As Restated
Net revenues:
Site rental	$	1,219	$	23		$	—		$	1,242
Services and other	207		(40		)	(1		)	166
Net revenues	1,426		(17		)	(1		)	1,408
Operating expenses:
Costs of operations^(a):
Services and other	125		—			(1		)	124
Total operating expenses	1,042		—			(1		)	1,041
Operating income (loss)	384		(17		)	—			367
Income (loss) before income taxes	216		(17		)	—			199
Net income (loss) attributable to CCIC stockholders	210		(17		)	—			193
Net income (loss) attributable to CCIC common stockholders	$	182	$	(17	)	$	—		$	165
Net income (loss)	$	210	$	(17	)	$	—		$	193
Comprehensive income (loss) attributable to CCIC stockholders	$	210	$	(17	)	$	—		$	193
Net income (loss) attributable to CCIC common stockholders, per common share:
Net income (loss) attributable to CCIC common stockholders - basic	$	0.44	$	(0.04	)	$	—		$	0.40
Net income (loss) attributable to CCIC common stockholders - diluted	$	0.44	$	(0.04	)	$	—		$	0.40


(a)	Based on the nature of the contract, tenant contracts are accounted for pursuant to relevant lease accounting (ASC 842) or revenue accounting (ASC 606) guidance. Excludes amounts related to services, as those contracts generally have a duration of one year or less.



	Original Issue Date		Final Maturity Date^(a)		Balance as of March 31, 2020			Balance as of December 31, 2019		Stated Interest Rate as of March 31, 2020^(a)
3.849% Secured Notes	Dec. 2012		Apr. 2023		$	996		$	995	3.9	%
Secured Notes, Series 2009-1, Class A-2	July 2009		Aug. 2029		66			67		9.0	%
Tower Revenue Notes, Series 2015-1	May 2015		May 2042	_(b)	299			298		3.2	%
Tower Revenue Notes, Series 2018-1	July 2018		July 2043	_(b)	248			248		3.7	%
Tower Revenue Notes, Series 2015-2	May 2015		May 2045	_(b)	695			694		3.7	%
Tower Revenue Notes, Series 2018-2	July 2018		July 2048	_(b)	742			742		4.2	%
Finance leases and other obligations	Various		Various	_(c)	221			227		Various
Total secured debt					$	3,267		$	3,271
2016 Revolver	Jan. 2016		June 2024		$	1,270	_(d)	$	525	2.1	%	_(e)
2016 Term Loan A	Jan. 2016		June 2024		2,295			2,310		2.1	%	_(e)
Commercial Paper Notes	N/A	_(f)	N/A	_(f)	—		_(f)	155		N/A
3.400% Senior Notes	Feb./May 2016		Feb. 2021		850			850		3.4	%
2.250% Senior Notes	Sept. 2016		Sept. 2021		698			698		2.3	%
4.875% Senior Notes	Apr. 2014		Apr. 2022		846			846		4.9	%
5.250% Senior Notes	Oct. 2012		Jan. 2023		1,644			1,644		5.3	%
3.150% Senior Notes	Jan. 2018		July 2023		744			744		3.2	%
3.200% Senior Notes	Aug. 2017		Sept. 2024		745			744		3.2	%
4.450% Senior Notes	Feb. 2016		Feb. 2026		893			893		4.5	%
3.700% Senior Notes	May 2016		June 2026		745			744		3.7	%
4.000% Senior Notes	Feb. 2017		Mar. 2027		495			495		4.0	%
3.650% Senior Notes	Aug. 2017		Sept. 2027		993			993		3.7	%
3.800% Senior Notes	Jan. 2018		Feb. 2028		990			990		3.8	%
4.300% Senior Notes	Feb. 2019		Feb. 2029		592			592		4.3	%
3.100% Senior Notes	Aug. 2019		Nov. 2029		544			543		3.1	%
4.750% Senior Notes	May 2017		May 2047		344			344		4.8	%
5.200% Senior Notes	Feb. 2019		Feb. 2049		395			395		5.2	%
4.000% Senior Notes	Aug. 2019		Nov. 2049		345			345		4.0	%
Total unsecured debt					$	15,428		$	14,850
Total debt and other obligations					18,695			18,121
Less: current maturities and short-term debt and other current obligations					949			100
Non-current portion of long-term debt and other long-term obligations					$	17,746		$	18,021


(a)	See the 2019 Form 10-K, including note 9, for additional information regarding the maturity and principal amortization provisions and interest rates relating to the Company's indebtedness.


(c)	The Company's finance leases and other obligations relate to land, fiber, vehicles, and other assets and bear interest rates ranging up to 10% and mature in periods ranging from less than one year to approximately 30 years.


(d)	As of March 31, 2020, the undrawn availability under the 2016 Revolver was $3.7 billion.



	Nine Months Ending December 31,		Years Ending December 31,												Unamortized Adjustments, Net			Total Debt and Other Obligations Outstanding
	2020		2021		2022		2023		2024		Thereafter		Total Cash Obligations		Unamortized Adjustments, Net			Total Debt and Other Obligations Outstanding
Scheduled principal payments and final maturities	$	76	$	1,675	$	1,000	$	3,604	$	3,917	$	8,532	$	18,804	$	(109	)	$	18,695



	Level in Fair Value Hierarchy	March 31, 2020				December 31, 2019
	Level in Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	1	$	310	$	310	$	196	$	196
Restricted cash, current and non-current	1	162		162		142		142
Liabilities:
Total debt and other obligations	2	18,695		19,175		18,121		19,170


(a)	Inclusive of dividends accrued for holders of unvested restricted stock units, which will be paid when and if the restricted stock units vest.



	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019 (As Restated)
	Towers		Fiber		Other		Consolidated Total		Towers		Fiber		Other		Consolidated Total
Segment site rental revenues	$	867	$	443			$	1,310	$	828	$	414			$	1,242
Segment services and other revenues	108		3				111		162		4				166
Segment revenues	975		446				1,421		990		418				1,408
Segment site rental cost of operations	214		152				366		211		140				351
Segment services and other cost of operations	95		2				97		120		3				123
Segment cost of operations^(a)(b)	309		154				463		331		143				474
Segment site rental gross margin	653		291				944		617		274				891
Segment services and other gross margin	13		1				14		42		1				43
Segment selling, general and administrative expenses^(b)	24		51				75		26		48				74
Segment operating profit (loss)	642		241				883		633		227				860
Other selling, general and administrative expenses					$	70	70						$	55	55
Stock-based compensation expense					36		36						29		29
Depreciation, amortization and accretion					399		399						394		394
Interest expense and amortization of deferred financing costs					175		175						168		168
Other (income) expenses to reconcile to income (loss) before income taxes^(c)					13		13						15		15
Income (loss) before income taxes							$	190							$	199
Capital expenditures	$	105	$	328	$	14	$	447	$	119	$	355	$	6	$	480
Total assets (at period end)	$	22,234	$	15,520	$	862	$	38,616	$	22,091	$	14,930	$	734	$	37,755


(c)	See condensed consolidated statement of operations for further information.


(a)	Excludes the Company's contingent payment pursuant to operating leases, which are recorded as expense in the period such contingencies are resolved.


◦	acquisitions of land interests (which primarily relate to land assets under towers);


◦	improvements and structural enhancements to our existing communications infrastructure;


◦	purchases of shares of our common stock from time to time; and


•	We operate as a REIT for U.S. federal income tax purposes


◦	As a REIT, we are generally entitled to a deduction for dividends that we pay and therefore are not subject to U.S. federal corporate income tax on our taxable income that is distributed to our stockholders.


◦	To remain qualified and taxed as a REIT, we will generally be required to annually distribute to our stockholders at least 90% of our REIT taxable income, after the utilization of our NOLs (determined without regard to the dividends paid deduction and excluding net capital gain).


◦	See note 7 to our condensed consolidated financial statements for further discussion of our REIT status.


•	Potential growth resulting from the increasing demand for data