Crown Castle Inc 8-K, filed Apr 29, 2020
Crown Castle Inc. (CCI)
8-K
2020-04-29
For: 2020-04-29
View Original
Added on
April 08, 2026
About this 8-K
Crown Castle Inc filed this 8-K on April 29, 2020.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||
(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 (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Par value | Trading Symbol(s) | Name of each exchange on which registered |
$0.01 | |||
$0.01 | |||
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 ☐
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. ☐
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 29, 2020, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for first quarter 2020. The April 29, 2020 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 April 29, 2020. The supplemental information package is furnished herewith as Exhibit 99.2.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit Index
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document | |
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K ("Form 8-K") and Exhibits 99.1 and 99.2 attached hereto are furnished as part of this Form 8-K and 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.
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: | Executive Vice President and General Counsel | |||
Date: April 29, 2020
Exhibit 99.1
 | NEWS RELEASE April 29, 2020 | |
Contacts: Dan Schlanger, CFO | |
Ben Lowe, VP & Treasurer | |
FOR IMMEDIATE RELEASE | Crown Castle International Corp. |
713-570-3050 | |
CROWN CASTLE REPORTS FIRST QUARTER 2020 RESULTS AND
MAINTAINS OUTLOOK FOR FULL YEAR 2020
April 29, 2020 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the first quarter ended March 31, 2020 and maintained its full year 2020 Outlook.
(in millions, except per share amounts) | Midpoint of Current Full Year 2020 Outlook | Full Year 2019 Actual | % Change | Previous Full Year 2020 Outlook(c) | Current Compared to Previous Outlook |
Site rental revenues | $5,360 | $5,093 | +5% | $5,360 | $— |
Net income (loss) | $1,038 | $860 | +21% | $1,038 | $— |
Net income (loss) per share—diluted(a) | $2.32 | $1.79 | +30% | $2.32 | $— |
Adjusted EBITDA(b) | $3,502 | $3,299 | +6% | $3,502 | $— |
AFFO(a)(b) | $2,595 | $2,371 | +9% | $2,595 | $— |
AFFO per share(a)(b) | $6.12 | $5.68 | +8% | $6.12 | $— |
(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 February 26, 2020. |
"In the first quarter, we delivered strong results that were in line with our expectations, positioning us to generate attractive growth in cash flows and dividends per share for full year 2020," stated Jay Brown, Crown Castle’s Chief Executive Officer. "Our business continues to perform well during this period of unprecedented uncertainty with COVID-19, and we are focused on taking the appropriate steps to deliver on our long-term annual dividend per share growth target of 7% to 8%. To this end, we have prioritized the health and safety of our workforce, while continuing to deliver critical infrastructure for our customers and the communities in which we operate. I'd like to thank our team for quickly adjusting to a new operating environment and prioritizing the needs of our customers. Although COVID-19 has the potential to create challenges in the near term, we remain confident our long-term contracted revenues will allow us to deliver value to shareholders through a high quality and growing dividend.
"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 believe that the U.S. represents the best market in the world for communications infrastructure ownership, and we are pursuing that compelling opportunity with our comprehensive offering. As we look forward to what will likely be another decade-long investment cycle for our customers with the deployment of 5G, I am excited about the opportunity we see for Crown Castle to deliver long-term value to our shareholders."
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News Release continued: | Page 2 | |
RESULTS FOR THE QUARTER
The table below sets forth select financial results for the quarter ended March 31, 2020 and March 31, 2019.
(in millions, except per share amounts) | Q1 2020 | Q1 2019 | Change | % Change |
(As Restated)(c) | ||||
Site rental revenues | $1,310 | $1,242 | +$68 | +5% |
Net income (loss) | $185 | $193 | -$8 | -4% |
Net income (loss) per share—diluted(a) | $0.38 | $0.40 | -$0.02 | -5% |
Adjusted EBITDA(b) | $814 | $804 | +$10 | +1% |
AFFO(a)(b) | $593 | $588 | +$5 | +1% |
AFFO per share(a)(b) | $1.42 | $1.41 | +$0.01 | +1% |
(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) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
HIGHLIGHTS FROM THE QUARTER
• | Site rental revenues. Site rental revenues grew approximately 5.5%, or $68 million, from first quarter 2019 to first quarter 2020, inclusive of approximately $71 million in Organic Contribution to Site Rental Revenues and a $3 million decrease in straight-lined revenues. The $71 million in Organic Contribution to Site Rental Revenues represents approximately 5.8% growth, comprised of approximately 9.9% growth from new leasing activity and contracted tenant escalations, net of approximately 4.1% from tenant non-renewals. |
• | Capital Expenditures. Capital expenditures during the quarter were $447 million, comprised of $13 million of discretionary land purchases, $21 million of sustaining capital expenditures and $413 million of discretionary capital expenditures. The discretionary capital expenditures included approximately $319 million attributable to Fiber and approximately $87 million attributable to Towers. |
• | Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $513 million in the aggregate, or $1.20 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago. |
• | Financing Activity. In April, Crown Castle issued $1.25 billion in aggregate principal amount of senior unsecured notes, with a combination of 10-year and 30-year maturities, resulting in a weighted average maturity and coupon of 18 years and approximately 3.6%, respectively. Net proceeds from the offering were used to repay outstanding borrowings under its revolving credit facility, resulting in $5 billion of undrawn capacity available under its revolving credit facility. |
"The performance of our business during this period of significant disruption highlights the durability in the demand for our critical communications infrastructure and the strength of our strategy," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "We took steps to further improve our strong balance sheet position by opportunistically accessing the bond market in April to repay existing borrowings under our revolving credit facility. With an undrawn $5 billion revolving credit facility combined with our investment grade balance sheet and no debt maturities this year, we are well positioned to continue to navigate the current environment while investing in new assets that we believe will add to long-term 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 SEC.
The following table sets forth Crown Castle's current Outlook for full year 2020, which remains unchanged from the previous full year 2020 Outlook:
(in millions) | Full Year 2020 | ||
Site rental revenues | $5,337 | to | $5,382 |
Site rental cost of operations(a) | $1,482 | to | $1,527 |
Net income (loss) | $998 | to | $1,078 |
Adjusted EBITDA(b) | $3,479 | to | $3,524 |
Interest expense and amortization of deferred financing costs(c) | $691 | to | $736 |
FFO(b)(d) | $2,449 | to | $2,494 |
AFFO(b)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding - diluted | 424 | ||
(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. |
Full Year 2020 Outlook
The table below compares the results for full year 2019, the midpoint of the current full year 2020 Outlook and the midpoint of our previous full year 2020 Outlook for select metrics.
(in millions, except per share amounts) | Midpoint of Current Full Year 2020 Outlook | Full Year 2019 Actual | Change | % Change | Midpoint of Previous Full Year 2020 Outlook(c) | Current Compared to Previous Outlook |
Site rental revenues | $5,360 | $5,093 | +$267 | +5% | $5,360 | $— |
Net income (loss) | $1,038 | $860 | +$178 | +21% | $1,038 | $— |
Net income (loss) per share—diluted(a) | $2.32 | $1.79 | +$0.53 | +30% | $2.32 | $— |
Adjusted EBITDA(b) | $3,502 | $3,299 | +$203 | +6% | $3,502 | $— |
AFFO(a)(b) | $2,595 | $2,371 | +$224 | +9% | $2,595 | $— |
AFFO per share(a)(b) | $6.12 | $5.68 | +$0.44 | +8% | $6.12 | $— |
(a) | Attributable to CCIC common stockholders. |
(b) | See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein. |
(c) | As issued on February 26, 2020. |
• | The 2020 Outlook also reflects the impact of the assumed conversion of preferred stock in August 2020. This conversion is expected to increase the diluted weighted average common shares outstanding for 2020 by approximately 6 million and reduce the annual preferred stock dividends paid by approximately $28 million when compared to 2019. |
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News Release continued: | Page 4 | |
• | The chart below reconciles the components of expected growth in site rental revenues from 2019 to 2020 of $250 million to $295 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2020 of $295 million to $335 million. |
• | The chart below reconciles the components of expected growth in AFFO from 2019 to 2020 of $195 million to $240 million. |
• | Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of our website. |
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News Release continued: | Page 5 | |
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, April 30, 2020, at 10:30 a.m. Eastern time to discuss its first quarter 2020 results. The conference call may be accessed by dialing 800-239-9838 and asking for the Crown Castle call (access code 2629992) 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, April 30, 2020, through 1:30 p.m. Eastern time on Wednesday, July 29, 2020, and may be accessed by dialing 888-203-1112 and using access code 2629992. An audio archive will also be available on Crown Castle's website at investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
ABOUT CROWN CASTLE
Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 80,000 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 6 | |
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. 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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• | 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.
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 primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure 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) and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related
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investments necessary to support and scale future customer demand for our communications infrastructure, 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) ordinary corporate capital expenditures.
The tables set forth on the following pages 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 | ||||||||||
March 31, 2020 | March 31, 2019 | December 31, 2019 | |||||||||
(in millions) | (As Restated)(d) | ||||||||||
Net income (loss) | $ | 185 | $ | 193 | $ | 860 | |||||
Adjustments to increase (decrease) net income (loss): | |||||||||||
Asset write-down charges | 4 | 6 | 19 | ||||||||
Acquisition and integration costs | 5 | 4 | 13 | ||||||||
Depreciation, amortization and accretion | 399 | 394 | 1,572 | ||||||||
Amortization of prepaid lease purchase price adjustments | 5 | 5 | 20 | ||||||||
Interest expense and amortization of deferred financing costs(a) | 175 | 168 | 683 | ||||||||
(Gains) losses on retirement of long-term obligations | — | 1 | 2 | ||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | |||||
Other (income) expense | — | 1 | (1 | ) | |||||||
(Benefit) provision for income taxes | 5 | 6 | 21 | ||||||||
Stock-based compensation expense | 36 | 29 | 116 | ||||||||
Adjusted EBITDA(b)(c) | $ | 814 | $ | 804 | $ | 3,299 | |||||
(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. |
(d) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
Reconciliation of Current Outlook for Adjusted EBITDA:
Full Year 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $20 | to | $30 |
Acquisition and integration costs | $7 | to | $17 |
Depreciation, amortization and accretion | $1,503 | to | $1,598 |
Amortization of prepaid lease purchase price adjustments | $18 | to | $20 |
Interest expense and amortization of deferred financing costs(a) | $691 | to | $736 |
(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 | $16 | to | $24 |
Stock-based compensation expense | $126 | to | $130 |
Adjusted EBITDA(b)(c) | $3,479 | to | $3,524 |
(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. |
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Reconciliation of Historical FFO and AFFO:
For the Three Months Ended | For the Twelve Months Ended | ||||||||||
March 31, 2020 | March 31, 2019 | December 31, 2019 | |||||||||
(in millions) | (As Restated)(f) | ||||||||||
Net income (loss) | $ | 185 | $ | 193 | $ | 860 | |||||
Real estate related depreciation, amortization and accretion | 386 | 380 | 1,517 | ||||||||
Asset write-down charges | 4 | 6 | 19 | ||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | |||||
FFO(a)(b)(c)(d) | $ | 547 | $ | 550 | $ | 2,284 | |||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | ||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.31 | $ | 1.32 | $ | 5.47 | |||||
FFO (from above) | $ | 547 | $ | 550 | $ | 2,284 | |||||
Adjustments to increase (decrease) FFO: | |||||||||||
Straight-lined revenue | (14 | ) | (17 | ) | (80 | ) | |||||
Straight-lined expense | 20 | 22 | 93 | ||||||||
Stock-based compensation expense | 36 | 29 | 116 | ||||||||
Non-cash portion of tax provision | 4 | 5 | 5 | ||||||||
Non-real estate related depreciation, amortization and accretion | 13 | 14 | 55 | ||||||||
Amortization of non-cash interest expense | 1 | 1 | 1 | ||||||||
Other (income) expense | — | 1 | (1 | ) | |||||||
(Gains) losses on retirement of long-term obligations | — | 1 | 2 | ||||||||
Acquisition and integration costs | 5 | 4 | 13 | ||||||||
Sustaining capital expenditures | (21 | ) | (21 | ) | (117 | ) | |||||
AFFO(a)(b)(c)(d) | $ | 593 | $ | 588 | $ | 2,371 | |||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | ||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.42 | $ | 1.41 | $ | 5.68 | |||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
(f) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
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Reconciliation of Current Outlook for FFO and AFFO:
Full Year 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Real estate related depreciation, amortization and accretion | $1,454 | to | $1,534 |
Asset write-down charges | $20 | to | $30 |
Dividends/distributions on preferred stock | $(85) | to | $(85) |
FFO(a)(b)(c)(d) | $2,449 | to | $2,494 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
FFO per share(a)(b)(c)(d)(e) | $5.77 | to | $5.88 |
FFO (from above) | $2,449 | to | $2,494 |
Adjustments to increase (decrease) FFO: | |||
Straight-lined revenue | $(53) | to | $(33) |
Straight-lined expense | $70 | to | $90 |
Stock-based compensation expense | $126 | to | $130 |
Non-cash portion of tax provision | $(6) | to | $9 |
Non-real estate related depreciation, amortization and accretion | $49 | to | $64 |
Amortization of non-cash interest expense | $(4) | to | $6 |
Other (income) expense | $(1) | to | $1 |
(Gains) losses on retirement of long-term obligations | $0 | to | $0 |
Acquisition and integration costs | $7 | to | $17 |
Sustaining capital expenditures | $(123) | to | $(103) |
AFFO(a)(b)(c)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
AFFO per share(a)(b)(c)(d)(e) | $6.06 | to | $6.17 |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of March 31, 2020 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019 actual results. |
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News Release continued: | Page 12 | |
For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
Previously Issued | |||
Full Year 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $20 | to | $30 |
Acquisition and integration costs | $7 | to | $17 |
Depreciation, amortization and accretion | $1,503 | to | $1,598 |
Amortization of prepaid lease purchase price adjustments | $18 | to | $20 |
Interest expense and amortization of deferred financing costs | $691 | to | $736 |
(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 | $16 | to | $24 |
Stock-based compensation expense | $126 | to | $130 |
Adjusted EBITDA(a)(b) | $3,479 | to | $3,524 |
(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 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Real estate related depreciation, amortization and accretion | $1,454 | to | $1,534 |
Asset write-down charges | $20 | to | $30 |
Dividends/distributions on preferred stock | $(85) | to | $(85) |
FFO(a)(b)(c)(d) | $2,449 | to | $2,494 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
FFO per share(a)(b)(c)(d)(e) | $5.77 | to | $5.88 |
FFO (from above) | $2,449 | to | $2,494 |
Adjustments to increase (decrease) FFO: | |||
Straight-lined revenue | $(53) | to | $(33) |
Straight-lined expense | $70 | to | $90 |
Stock-based compensation expense | $126 | to | $130 |
Non-cash portion of tax provision | $(6) | to | $9 |
Non-real estate related depreciation, amortization and accretion | $49 | to | $64 |
Amortization of non-cash interest expense | $(4) | to | $6 |
Other (income) expense | $(1) | to | $1 |
(Gains) losses on retirement of long-term obligations | $0 | to | $0 |
Acquisition and integration costs | $7 | to | $17 |
Sustaining capital expenditures | $(123) | to | $(103) |
AFFO(a)(b)(c)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
AFFO per share(a)(b)(c)(d)(e) | $6.06 | to | $6.17 |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of March 31, 2020 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019 actual results. |
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News Release continued: | Page 13 | |
The components of changes in site rental revenues for the quarters ended March 31, 2020 and 2019 are as follows:
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(dollars in millions) | (As Restated)(g) | ||||||
Components of changes in site rental revenues(a): | |||||||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $ | 1,225 | $ | 1,156 | |||
New leasing activity(b)(c) | 99 | 92 | |||||
Escalators | 22 | 21 | |||||
Non-renewals | (51 | ) | (43 | ) | |||
Organic Contribution to Site Rental Revenues(d) | 71 | 70 | |||||
Contribution from straight-lined revenues associated with fixed escalators | 14 | 17 | |||||
Acquisitions(e) | — | — | |||||
Other | — | — | |||||
Total GAAP site rental revenues | $ | 1,310 | $ | 1,242 | |||
Year-over-year changes in revenue: | |||||||
Reported GAAP site rental revenues | 5.5 | % | |||||
Organic Contribution to Site Rental Revenues(d)(f) | 5.8 | % | |||||
(a) | Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, 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. |
(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. |
(g) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
The components of the changes in site rental revenues for the year ending December 31, 2020 are forecasted as follows:
(dollars in millions) | Full Year 2020 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) | $5,012 |
New leasing activity(b)(c) | 395-425 |
Escalators | 90-100 |
Non-renewals | (195)-(175) |
Organic Contribution to Site Rental Revenues(d) | 295-335 |
Contribution from full year straight-lined revenues associated with fixed escalators | 33-53 |
Acquisitions(e) | — |
Other | — |
Total GAAP site rental revenues | $5,337-$5,382 |
Year-over-year changes in revenue: | |
Reported GAAP site rental revenues(f) | 5.1% |
Organic Contribution to Site Rental Revenues(d)(f)(g) | 6.3% |
(a) | Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, 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. |
(f) | Calculated based on midpoint of full year 2020 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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News Release continued: | Page 14 | |
Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
For the Three Months Ended | |||||||
(in millions) | March 31, 2020 | March 31, 2019 | |||||
Interest expense on debt obligations | $ | 174 | $ | 167 | |||
Amortization of deferred financing costs and adjustments on long-term debt, net | 5 | 5 | |||||
Other, net | (4 | ) | (4 | ) | |||
Interest expense and amortization of deferred financing costs | $ | 175 | $ | 168 | |||
Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
Full Year 2020 | |||
(in millions) | Outlook | ||
Interest expense on debt obligations | $703 | to | $723 |
Amortization of deferred financing costs and adjustments on long-term debt, net | $20 | to | $25 |
Other, net | $(24) | to | $(19) |
Interest expense and amortization of deferred financing costs | $691 | to | $736 |
Debt balances and maturity dates as of March 31, 2020 are as follows(a):
(in millions) | Face Value | Final Maturity | |||
Cash, cash equivalents and restricted cash | $ | 472 | |||
3.849% Secured Notes | 1,000 | Apr. 2023 | |||
Secured Notes, Series 2009-1, Class A-2(b) | 66 | Aug. 2029 | |||
Tower Revenue Notes, Series 2015-1(c) | 300 | May 2042 | |||
Tower Revenue Notes, Series 2018-1(c) | 250 | July 2043 | |||
Tower Revenue Notes, Series 2015-2(c) | 700 | May 2045 | |||
Tower Revenue Notes, Series 2018-2(c) | 750 | July 2048 | |||
Finance leases and other obligations | 221 | Various | |||
Total secured debt | $ | 3,287 | |||
2016 Revolver | 1,270 | June 2024 | |||
2016 Term Loan A | 2,297 | June 2024 | |||
Commercial Paper Notes(d) | — | N/A | |||
3.400% Senior Notes | 850 | Feb. 2021 | |||
2.250% Senior Notes | 700 | Sept. 2021 | |||
4.875% Senior Notes | 850 | Apr. 2022 | |||
5.250% Senior Notes | 1,650 | Jan. 2023 | |||
3.150% Senior Notes | 750 | July 2023 | |||
3.200% Senior Notes | 750 | Sept. 2024 | |||
4.450% Senior Notes | 900 | Feb. 2026 | |||
3.700% Senior Notes | 750 | June 2026 | |||
4.000% Senior Notes | 500 | Mar. 2027 | |||
3.650% Senior Notes | 1,000 | Sept. 2027 | |||
3.800% Senior Notes | 1,000 | Feb. 2028 | |||
4.300% Senior Notes | 600 | Feb. 2029 | |||
3.100% Senior Notes | 550 | Nov. 2029 | |||
4.750% Senior Notes | 350 | May 2047 | |||
5.200% Senior Notes | 400 | Feb. 2049 | |||
4.000% Senior Notes | 350 | Nov. 2049 | |||
Total unsecured debt | $ | 15,517 | |||
Total net debt | $ | 18,332 | |||
(a) | The table above does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
(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 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. |
(d) | The maturities of the Commercial Paper Notes, when outstanding, may vary but may not exceed 397 days from the date of issue. |
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News Release continued: | Page 15 | |
Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(dollars in millions) | For the Three Months Ended March 31, 2020 | ||
Total face value of debt | $ | 18,804 | |
Ending cash, cash equivalents and restricted cash | 472 | ||
Total Net Debt | $ | 18,332 | |
Adjusted EBITDA for the three months ended March 31, 2020 | $ | 814 | |
Last quarter annualized Adjusted EBITDA | 3,256 | ||
Net Debt to Last Quarter Annualized Adjusted EBITDA | 5.6 | x | |
Components of Capital Expenditures:
For the Three Months Ended | |||||||||||||||||||||||||
(in millions) | March 31, 2020 | March 31, 2019 | |||||||||||||||||||||||
Towers | Fiber | Other | Total | Towers | Fiber | Other | Total | ||||||||||||||||||
Discretionary: | |||||||||||||||||||||||||
Purchases of land interests | $ | 13 | $ | — | $ | — | $ | 13 | $ | 15 | $ | — | $ | — | $ | 15 | |||||||||
Communications infrastructure construction and improvements | 87 | 319 | 7 | 413 | 98 | 344 | — | 442 | |||||||||||||||||
Sustaining | 5 | 9 | 7 | 21 | 6 | 11 | 4 | 21 | |||||||||||||||||
Integration | — | — | — | — | — | — | 2 | 2 | |||||||||||||||||
Total | $ | 105 | $ | 328 | $ | 14 | $ | 447 | $ | 119 | $ | 355 | $ | 6 | $ | 480 | |||||||||
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 16 | |
Cautionary Language Regarding Forward-Looking Statements
This news release contains forward-looking statements and information that are based on our management's current expectations as of the date of this news release. Statements that are not historical facts are hereby identified as forward-looking statements. In addition, words such as "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," "positioned," "continue," "target," and any variations of these words and similar expressions are intended to identify forward-looking statements. 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 business, strategy, business model and capabilities and the strength thereof, (3) industry fundamentals and driving factors for improvements in such fundamentals, (4) our customers' investment, including investment cycles, in network improvements (including 5G), the trends driving such improvements and opportunities created thereby, (5) impact of the COVID-19 pandemic on our business, (6) our long-term prospects and the trends impacting our business (including growth in mobile data demand), (7) opportunities we see to deliver long-term value to our shareholders, (8) our dividends and our dividend (including on a per share basis) growth rate, including its driving factors, and targets, (9) debt maturities, (10) our portfolio of assets, including durability in demand therefor, strategic position thereof and opportunities created thereby, (11) assumed conversion of preferred stock and the impact therefrom, (12) cash flows, including growth thereof, (13) leasing activity, (14) tenant non-renewals, including the impact and timing thereof, (15) capital expenditures, including sustaining and discretionary capital expenditures, and the timing thereof, (16) straight-line adjustments, (17) revenues and growth thereof and benefits derived therefrom, (18) net income (loss) (including on a per share basis) and growth thereof, (19) Adjusted EBITDA, including the impact of the timing of certain components thereof and growth thereof, (20) expenses, including interest expense and amortization of deferred financing costs, (21) FFO (including on a per share basis) and growth thereof, (22) AFFO (including on a per share basis) and growth thereof and corresponding driving factors, (23) Organic Contribution to Site Rental Revenues and its components, including contributions therefrom, (24) our weighted-average common shares outstanding (including on a diluted basis) and growth thereof, (25) services contribution, 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 lower 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, our business may be adversely affected. |
• | Our services business has historically experienced significant volatility in demand, which reduces the predictability of our results. |
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News Release continued: | Page 17 | |
• | The restatement of our previously issued financial statements, the errors that resulted in such restatement, the material weakness that was identified in our internal control over financial reporting and the determination that our internal control over financial reporting and disclosure controls and procedures were not effective, could result in loss of investor confidence, shareholder litigation or governmental proceedings or investigations, any of which could cause the market value of our common stock or debt securities to decline or impact our ability to access the capital markets. |
• | New wireless technologies may not deploy or be adopted by tenants as rapidly or in the manner projected. |
• | 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 (prior to the automatic conversion in August 2020), 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. |
• | The impact of COVID-19 and related risks could materially affect our financial position, results of operations and cash flows. |
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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News Release continued: | Page 18 | |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Amounts in millions, except par values) |
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 | 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 | |||||||
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 | |||
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News Release continued: | Page 19 | |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (Amounts in millions, except per share amounts) |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(As Restated)(a) | |||||||
Net revenues: | |||||||
Site rental | $ | 1,310 | $ | 1,242 | |||
Services and other | 111 | 166 | |||||
Net revenues | 1,421 | 1,408 | |||||
Operating expenses: | |||||||
Costs of operations (exclusive of depreciation, amortization and accretion): | |||||||
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) | 185 | 193 | |||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | |||
Net income (loss) attributable to CCIC common stockholders | $ | 157 | $ | 165 | |||
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) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
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News Release continued: | Page 20 | |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In millions of dollars) |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(As Restated)(a) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 185 | $ | 193 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||
Depreciation, amortization and accretion | 399 | 394 | |||||
(Gains) losses on retirement of long-term obligations | — | 1 | |||||
Amortization of deferred financing costs and other non-cash interest | 1 | 1 | |||||
Stock-based compensation expense | 37 | 29 | |||||
Asset write-down charges | 4 | 6 | |||||
Deferred income tax (benefit) provision | 1 | 1 | |||||
Other non-cash adjustments, net | — | 2 | |||||
Changes in assets and liabilities, excluding the effects of acquisitions: | |||||||
Increase (decrease) in liabilities | (68 | ) | (53 | ) | |||
Decrease (increase) in assets | 94 | (62 | ) | ||||
Net cash provided by (used for) operating activities | 653 | 512 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (447 | ) | (480 | ) | |||
Payments for acquisitions, net of cash acquired | (13 | ) | (10 | ) | |||
Other investing activities, net | (8 | ) | 1 | ||||
Net cash provided by (used for) investing activities | (468 | ) | (489 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of long-term debt | — | 996 | |||||
Principal payments on debt and other long-term obligations | (26 | ) | (25 | ) | |||
Purchases and redemptions of long-term debt | — | (12 | ) | ||||
Borrowings under revolving credit facility | 1,340 | 710 | |||||
Payments under revolving credit facility | (595 | ) | (1,140 | ) | |||
Net borrowings (repayments) under commercial paper program | (155 | ) | — | ||||
Payments for financing costs | — | (10 | ) | ||||
Purchases of common stock | (73 | ) | (42 | ) | |||
Dividends/distributions paid on common stock | (513 | ) | (477 | ) | |||
Dividends/distributions paid on preferred stock | (28 | ) | (28 | ) | |||
Net cash provided by (used for) financing activities | (50 | ) | (28 | ) | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 135 | (5 | ) | ||||
Effect of exchange rate changes on cash | (1 | ) | — | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 338 | 413 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 472 | $ | 408 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | 223 | 208 | |||||
Income taxes paid | 1 | — | |||||
(a) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 21 | |
| CROWN CASTLE INTERNATIONAL CORP. SEGMENT OPERATING RESULTS (UNAUDITED) (In millions of dollars) |
SEGMENT OPERATING RESULTS | |||||||||||||||||||||||||||||||
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||
(As Restated)(e) | |||||||||||||||||||||||||||||||
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(c) | 653 | 291 | 944 | 617 | 274 | 891 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 13 | 1 | 14 | 42 | 1 | 43 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 24 | 51 | 75 | 26 | 48 | 74 | |||||||||||||||||||||||||
Segment operating profit(c) | 642 | 241 | 883 | 633 | 227 | 860 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 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(d) | 13 | 13 | 15 | 15 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 190 | $ | 199 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $6 million for both the three months ended March 31, 2020 and 2019 and (2) prepaid lease purchase price adjustments of $5 million for both the three months ended March 31, 2020 and 2019. Selling, general and administrative expenses exclude stock-based compensation expense of $30 million and $23 million for the three months ended March 31, 2020 and 2019, 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. |
(e) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
The pathway to possible.
CrownCastle.com
Exhibit 99.2
Supplemental Information Package
and Non-GAAP Reconciliations
First Quarter • March 31, 2020
The pathway to possible.
CrownCastle.com
Crown Castle International Corp.
First Quarter 2020
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 | |
1
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 plans, projections and estimates regarding (1) demand for data and our communications infrastructure, and benefits derived therefrom, (2) cash flow growth, (3) tenant additions, (4) our Outlook for full year 2020, (5) our strategy, (6) strategic position of our assets, and (7) assumed conversion of preferred stock and the impact therefrom, (8) projected revenues from tenant contracts and (9) projected ground lease expenses from existing ground leases.
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 ("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.
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.
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Crown Castle International Corp.
First Quarter 2020
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," "the Company" or "us" as used herein refer) owns, operates and leases shared communications infrastructure that is geographically dispersed throughout the U.S., including (1) more than 40,000 towers and other structures, such as rooftops (collectively, "towers"), and (2) approximately 80,000 route miles of fiber primarily supporting small cell networks ("small cells") and fiber solutions. We refer to our towers, fiber and small cells assets collectively as "communications infrastructure," and to our customers on our communications infrastructure as "tenants." Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our small cells and fiber are located in major metropolitan areas, including a presence within every major U.S. market.
Our operating segments consist of (1) Towers and (2) Fiber. Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease and service agreements (collectively, "tenant contracts"). We seek to increase our site rental revenues by adding more tenants on our shared 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 generated 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 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 are focused on maximizing the recurring site rental cash flows generated from providing our tenants with long-term access to our shared infrastructure assets, which we believe is the core driver of value for our stockholders. 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. |
• | Return cash generated by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash generated by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still allowing us to retain 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 generated 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); |
◦ | 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. |
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Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Our strategy to create long-term stockholder value is based on our belief that there will be considerable future demand for our communications infrastructure based on the location of our assets and the rapid 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. Further, we seek to augment the long-term value creation associated with growing our recurring site rental cash flows by offering certain ancillary site development and installation services within our Towers segment.
4
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
AFFO PER SHARE(a)(b) |
2016(c) | 2017(c) | 2018(c) | 2019 | Midpoint of Full Year 2020 Outlook(d) |
TOWER PORTFOLIO FOOTPRINT | ||
 | ||
(a) | See reconciliations and definitions provided herein. |
(b) | Attributable to CCIC common stockholders. |
(c) | As restated. See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
(d) | Calculated based on midpoint of full year 2020 Outlook issued on April 29, 2020. |
5
Crown Castle International Corp.
First Quarter 2020
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 | 47 | 20 | President and Chief Executive Officer |
Daniel K. Schlanger | 46 | 4 | Executive Vice President and Chief Financial Officer |
James D. Young | 58 | 14 | Executive Vice President and Chief Operating Officer - Fiber |
Robert C. Ackerman | 67 | 21 | Executive Vice President and Chief Operating Officer - Towers |
Kenneth J. Simon | 59 | 4 | Executive Vice President and General Counsel |
Michael J. Kavanagh | 52 | 9 | Executive Vice President and Chief Commercial Officer |
Philip M. Kelley | 47 | 22 | Executive Vice President - Corporate Development and Strategy |
BOARD OF DIRECTORS | ||||
Name | Position | Committees | Age | Years as Director |
J. Landis Martin | Chairman | NCG(a) | 74 | 24 |
P. Robert Bartolo | Director | Audit, Compensation | 48 | 6 |
Cindy Christy | Director | Compensation, NCG(a), Strategy | 54 | 12 |
Ari Q. Fitzgerald | Director | Compensation, NCG(a), Strategy | 57 | 17 |
Robert E. Garrison II | Director | Audit, Compensation | 78 | 14 |
Andrea J. Goldsmith | Director | NCG(a), Strategy | 55 | 2 |
Lee W. Hogan | Director | Audit, Compensation, Strategy | 75 | 19 |
Edward C. Hutcheson Jr. | Director | Strategy | 74 | 24 |
Robert F. McKenzie | Director | Audit, Strategy | 76 | 24 |
Anthony J. Melone | Director | NCG(a), Strategy | 59 | 4 |
W. Benjamin Moreland | Director | Strategy | 56 | 13 |
Jay A. Brown | Director | 47 | 3 | |
(a) | Nominating & Corporate Governance Committee |
6
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
RESEARCH COVERAGE | ||
Equity Research | ||
Bank of America David Barden (646) 855-1320 | Citigroup Michael Rollins (212) 816-1116 | Cowen and Company Colby Synesael (646) 562-1355 |
Credit Suisse Sami Badri (212) 538-1727 | Goldman Sachs Brett Feldman (212) 902-8156 | JPMorgan Philip Cusick (212) 622-1444 |
KeyBanc Brandon Nispel (503) 821-3871 | MoffettNathanson Nick Del Deo (212) 519-0025 | Morgan Stanley Simon Flannery (212) 761-6432 |
New Street Research Spencer Kurn (212) 921-2067 | Oppenheimer & Co. Timothy Horan (212) 667-8137 | Raymond James Ric Prentiss (727) 567-2567 |
RBC Capital Markets Jonathan Atkin (415) 633-8589 | SunTrust Robinson Humphrey Greg Miller (212) 303-4169 | UBS Batya Levi (212) 713-8824 |
Wells Fargo Securities, LLC Jennifer Fritzsche (312) 920-3548 | ||
Rating Agency | ||
Fitch John Culver (312) 368-3216 | Moody’s Lori Marks (212) 553-1098 | Standard & Poor’s Ryan Gilmore (212) 438-0602 |
HISTORICAL COMMON STOCK DATA | |||||||||||||||
Three Months Ended | |||||||||||||||
(in millions, except per share amounts) | 3/31/20 | 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | ||||||||||
High price(a) | $ | 167.44 | $ | 142.59 | $ | 145.80 | $ | 134.48 | $ | 124.01 | |||||
Low price(a) | $ | 114.18 | $ | 127.67 | $ | 120.75 | $ | 115.79 | $ | 99.81 | |||||
Period end closing price(b) | $ | 144.40 | $ | 141.04 | $ | 136.70 | $ | 127.14 | $ | 123.81 | |||||
Dividends paid per common share | $ | 1.20 | $ | 1.20 | $ | 1.13 | $ | 1.13 | $ | 1.13 | |||||
Volume weighted average price for the period(a) | $ | 146.38 | $ | 134.07 | $ | 133.94 | $ | 124.66 | $ | 112.57 | |||||
Common shares outstanding, at period end | 417 | 416 | 416 | 416 | 416 | ||||||||||
Market value of outstanding common shares, at period end(c) | $ | 60,179 | $ | 58,642 | $ | 56,834 | $ | 52,859 | $ | 51,472 | |||||
(a) | Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg. |
(b) | Based on the period end closing price, adjusted for common stock dividends, as reported by Bloomberg. |
(c) | Period end market value of outstanding common shares is calculated as the product of (1) shares of common stock outstanding at period end and (2) closing share price at period end, adjusted for common stock dividends, as reported by Bloomberg. |
7
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY PORTFOLIO HIGHLIGHTS | |||
(as of March 31, 2020) | |||
Towers | |||
Number of towers (in thousands)(a) | 40 | ||
Average number of tenants per tower | 2.1 | ||
Remaining contracted tenant receivables ($ in billions)(b) | $ | 19 | |
Weighted average remaining tenant contract term (years)(c) | 5 | ||
Percent of towers in the Top 50 / 100 Basic Trading Areas | 56%/71% | ||
Percent of ground leased / owned (d) | 60%/40% | ||
Weighted average maturity of ground leases (years)(d)(e) | 36 | ||
Fiber | |||
Number of route miles of fiber (in thousands) | 80 | ||
Remaining contracted tenant receivables ($ in billions)(b) | $ | 6 | |
Weighted average remaining tenant contract term (years)(c) | 5 | ||
SUMMARY FINANCIAL HIGHLIGHTS | ||||||||
Three Months Ended March 31, | ||||||||
(dollars in millions, except per share amounts) | 2020 | 2019 | ||||||
(As Restated)(i) | ||||||||
Operating Data: | ||||||||
Net revenues | ||||||||
Site rental | $ | 1,310 | $ | 1,242 | ||||
Services and other | 111 | 166 | ||||||
Net revenues | $ | 1,421 | $ | 1,408 | ||||
Costs of operations (exclusive of depreciation, amortization and accretion) | ||||||||
Site rental | $ | 375 | $ | 361 | ||||
Services and other | 99 | 124 | ||||||
Total cost of operations | $ | 474 | $ | 485 | ||||
Net income (loss) attributable to CCIC common stockholders | $ | 157 | $ | 165 | ||||
Net income (loss) attributable to CCIC common stockholders per share—diluted(f) | $ | 0.38 | $ | 0.40 | ||||
Non-GAAP Data(g): | ||||||||
Adjusted EBITDA | $ | 814 | $ | 804 | ||||
FFO(h) | 547 | 550 | ||||||
AFFO(h) | 593 | 588 | ||||||
AFFO per share(f)(h) | $ | 1.42 | $ | 1.41 | ||||
(a) | Excludes third-party land interests. |
(b) | Excludes renewal terms at tenants' option. |
(c) | Excludes renewal terms at tenants' option, weighted by site rental revenues exclusive of straight-line revenues and amortization of prepaid rent. |
(d) | Weighted by Towers segment site rental gross margin exclusive of straight-line revenues, amortization of prepaid rent, and straight-line expenses. |
(e) | Includes all renewal terms at the Company's option. |
(f) | Based on diluted weighted-average common shares outstanding of 418 million and 417 million for the three months ended March 31, 2020 and 2019, respectively. |
(g) | See reconciliations of Non-GAAP financial measures provided herein. See also "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of Adjusted EBITDA, FFO and AFFO, including per share amounts. |
(h) | Attributable to CCIC common stockholders. |
(i) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
8
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED) | ||||||||
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2020 | 2019 | ||||||
(As Restated)(a) | ||||||||
Summary Cash Flow Data(b): | ||||||||
Net cash provided by (used for) operating activities | $ | 653 | $ | 512 | ||||
Net cash provided by (used for) investing activities(c) | (468 | ) | (489 | ) | ||||
Net cash provided by (used for) financing activities | (50 | ) | (28 | ) | ||||
(dollars in millions) | March 31, 2020 | December 31, 2019 | ||||||
Balance Sheet Data (at period end): | ||||||||
Cash and cash equivalents | $ | 310 | $ | 196 | ||||
Property and equipment, net | 14,815 | 14,666 | ||||||
Total assets | 38,616 | 38,457 | ||||||
Total debt and other long-term obligations | 18,695 | 18,121 | ||||||
Total CCIC stockholders' equity | 10,121 | 10,489 | ||||||
Three Months Ended March 31, 2020 | ||||
Other Data: | ||||
Net debt to last quarter annualized Adjusted EBITDA(d) | 5.6 | x | ||
Dividend per common share | $ | 1.20 | ||
OUTLOOK FOR FULL YEAR 2020 | |||
(dollars in millions, except per share amounts) | Full Year 2020 | ||
Site rental revenues | $5,337 | to | $5,382 |
Site rental cost of operations(e) | $1,482 | to | $1,527 |
Net income (loss) | $998 | to | $1,078 |
Net income (loss) attributable to CCIC common stockholders | $941 | to | $1,021 |
Net income (loss) per share—diluted(f)(g)(j) | $2.22 | to | $2.41 |
Adjusted EBITDA(h) | $3,479 | to | $3,524 |
Interest expense and amortization of deferred financing costs(i) | $691 | to | $736 |
FFO(h)(j) | $2,449 | to | $2,494 |
AFFO(h)(j) | $2,572 | to | $2,617 |
AFFO per share(f)(h)(j) | $6.06 | to | $6.17 |
(a) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
(b) | Includes impacts of restricted cash. See the condensed consolidated statement of cash flows for further information. |
(c) | Includes net cash used for acquisitions of approximately $13 million and $10 million for the three months ended March 31, 2020 and 2019, respectively. |
(d) | See the "Net debt to Last Quarter Annualized Adjusted EBITDA calculation" in the Appendix. |
(e) | Exclusive of depreciation, amortization and accretion. |
(f) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of March 31, 2020 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019 actual results. |
(g) | Calculated using net income (loss) attributable to CCIC common stockholders. |
(h) | See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein. |
(i) | See the reconciliation of "Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs" in the Appendix. |
(j) | Attributable to CCIC common stockholders. |
9
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FULL YEAR 2019 ACTUAL AND OUTLOOK FOR FULL YEAR 2020 COMPONENTS OF CHANGES IN SITE RENTAL REVENUES | |||
(dollars in millions) | Full Year 2019 Actual | Full Year 2020 Outlook(a) | |
Components of changes in site rental revenues(b): | |||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(c)(d) | $4,724 | $5,012 | |
New leasing activity(c)(d) | 383 | 395-425 | |
Escalators | 86 | 90-100 | |
Non-renewals | (181) | (195)-(175) | |
Organic Contribution to Site Rental Revenues(e) | 288 | 295-335 | |
Contribution from full year straight-lined revenues associated with fixed escalators | 81 | 33-53 | |
Acquisitions(f) | — | — | |
Other | — | — | |
Total GAAP site rental revenues | $5,093 | $5,337-$5,382 | |
Year-over-year changes in revenues: | |||
Reported GAAP site rental revenues(g) | 5.1% | ||
Organic Contribution to Site Rental Revenues(e)(g)(h) | 6.3% | ||
(a) | As issued on April 29, 2020. |
(b) | See additional information regarding Crown Castle's site rental revenues, including projected revenues from tenant licenses, straight-lined revenues and prepaid rent herein. |
(c) | Includes revenues from amortization of prepaid rent in accordance with GAAP. |
(d) | Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators. |
(e) | See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definition of Organic Contribution to Site Rental Revenues. |
(f) | 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. |
(g) | Calculated based on midpoint of full year 2020 Outlook issued on April 29, 2020. |
(h) | 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. |
10
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) | |||||||
(amounts in millions, except par values) | 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 | 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 | |||||||
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 | |||
11
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | |||||||
Three Months Ended March 31, | |||||||
(amounts in millions, except per share amounts) | 2020 | 2019 | |||||
(As Restated)(a) | |||||||
Net revenues: | |||||||
Site rental | $ | 1,310 | $ | 1,242 | |||
Services and other | 111 | 166 | |||||
Net revenues | 1,421 | 1,408 | |||||
Operating expenses: | |||||||
Costs of operations (exclusive of depreciation, amortization and accretion): | |||||||
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) | 185 | 193 | |||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | |||
Net income (loss) attributable to CCIC common stockholders | $ | 157 | $ | 165 | |||
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) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
12
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SEGMENT OPERATING RESULTS | |||||||||||||||||||||||||||||||
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||
(As Restated)(e) | |||||||||||||||||||||||||||||||
(dollars in millions) | 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(c) | 653 | 291 | 944 | 617 | 274 | 891 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 13 | 1 | 14 | 42 | 1 | 43 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 24 | 51 | 75 | 26 | 48 | 74 | |||||||||||||||||||||||||
Segment operating profit(c) | 642 | 241 | 883 | 633 | 227 | 860 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 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(d) | 13 | 13 | 15 | 15 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 190 | $ | 199 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $6 million for both the three months ended March 31, 2020 and 2019 and (2) prepaid lease purchase price adjustments of $5 million for both the three months ended March 31, 2020 and 2019. Selling, general and administrative expenses exclude stock-based compensation expense of $30 million and $23 million for the three months ended March 31, 2020 and 2019, 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. |
(e) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
FFO AND AFFO RECONCILIATIONS | |||||||
Three Months Ended March 31, | |||||||
(amounts in millions, except per share amounts) | 2020 | 2019 | |||||
(As Restated)(f) | |||||||
Net income (loss) | $ | 185 | $ | 193 | |||
Real estate related depreciation, amortization and accretion | 386 | 380 | |||||
Asset write-down charges | 4 | 6 | |||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | |||
FFO(a)(b)(c)(d) | $ | 547 | $ | 550 | |||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | |||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.31 | $ | 1.32 | |||
FFO (from above) | $ | 547 | $ | 550 | |||
Adjustments to increase (decrease) FFO: | |||||||
Straight-lined revenue | (14 | ) | (17 | ) | |||
Straight-lined expense | 20 | 22 | |||||
Stock-based compensation expense | 36 | 29 | |||||
Non-cash portion of tax provision | 4 | 5 | |||||
Non-real estate related depreciation, amortization and accretion | 13 | 14 | |||||
Amortization of non-cash interest expense | 1 | 1 | |||||
Other (income) expense | — | 1 | |||||
(Gains) losses on retirement of long-term obligations | — | 1 | |||||
Acquisition and integration costs | 5 | 4 | |||||
Sustaining capital expenditures | (21 | ) | (21 | ) | |||
AFFO(a)(b)(c)(d) | $ | 593 | $ | 588 | |||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | |||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.42 | $ | 1.41 | |||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
(f) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
13
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
(dollars in millions) | 2020 | 2019 | ||||||||||
(As Restated)(a) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 185 | $ | 193 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||||||
Depreciation, amortization and accretion | 399 | 394 | ||||||||||
(Gains) losses on retirement of long-term obligations | — | 1 | ||||||||||
Amortization of deferred financing costs and other non-cash interest | 1 | 1 | ||||||||||
Stock-based compensation expense | 37 | 29 | ||||||||||
Asset write-down charges | 4 | 6 | ||||||||||
Deferred income tax (benefit) provision | 1 | 1 | ||||||||||
Other non-cash adjustments, net | — | 2 | ||||||||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||||||
Increase (decrease) in liabilities | (68 | ) | (53 | ) | ||||||||
Decrease (increase) in assets | 94 | (62 | ) | |||||||||
Net cash provided by (used for) operating activities | 653 | 512 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (447 | ) | (480 | ) | ||||||||
Payments for acquisitions, net of cash acquired | (13 | ) | (10 | ) | ||||||||
Other investing activities, net | (8 | ) | 1 | |||||||||
Net cash provided by (used for) investing activities | (468 | ) | (489 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | — | 996 | ||||||||||
Principal payments on debt and other long-term obligations | (26 | ) | (25 | ) | ||||||||
Purchases and redemptions of long-term debt | — | (12 | ) | |||||||||
Borrowings under revolving credit facility | 1,340 | 710 | ||||||||||
Payments under revolving credit facility | (595 | ) | (1,140 | ) | ||||||||
Net borrowings (repayments) under commercial paper program | (155 | ) | — | |||||||||
Payments for financing costs | — | (10 | ) | |||||||||
Purchases of common stock | (73 | ) | (42 | ) | ||||||||
Dividends/distributions paid on common stock | (513 | ) | (477 | ) | ||||||||
Dividends/distributions paid on preferred stock | (28 | ) | (28 | ) | ||||||||
Net cash provided by (used for) financing activities | (50 | ) | (28 | ) | ||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 135 | (5 | ) | |||||||||
Effect of exchange rate changes on cash | (1 | ) | — | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 338 | 413 | ||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 472 | $ | 408 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Interest paid | 223 | 208 | ||||||||||
Income taxes paid | 1 | — | ||||||||||
(a) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
14
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
COMPONENTS OF CHANGES IN SITE RENTAL REVENUES | |||||||
Three Months Ended March 31, | |||||||
(dollars in millions) | 2020 | 2019 | |||||
(As Restated)(g) | |||||||
Components of changes in site rental revenues(a): | |||||||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $ | 1,225 | $ | 1,156 | |||
New leasing activity(b)(c) | 99 | 92 | |||||
Escalators | 22 | 21 | |||||
Non-renewals | (51 | ) | (43 | ) | |||
Organic Contribution to Site Rental Revenues(d) | 71 | 70 | |||||
Contribution from straight-lined revenues associated with fixed escalators | 14 | 17 | |||||
Acquisitions(e) | — | — | |||||
Other | — | — | |||||
Total GAAP site rental revenues | $ | 1,310 | $ | 1,242 | |||
Year-over-year changes in revenue: | |||||||
Reported GAAP site rental revenues | 5.5 | % | |||||
Organic Contribution to Site Rental Revenues(d)(f) | 5.8 | % | |||||
SUMMARY OF SITE RENTAL STRAIGHT-LINED REVENUES AND EXPENSES ASSOCIATED WITH FIXED ESCALATORS(h) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Site rental straight-lined revenues | $ | 13 | $ | 1 | $ | 14 | $ | 17 | $ | — | $ | 17 | |||||||||||
Site rental straight-lined expenses | 20 | — | 20 | 21 | 1 | 22 | |||||||||||||||||
SUMMARY OF PREPAID RENT ACTIVITY(i) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
(As Restated)(g) | |||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Prepaid rent additions | $ | 64 | $ | 71 | $ | 135 | $ | 81 | $ | 61 | $ | 142 | |||||||||||
Amortization of prepaid rent | 73 | 53 | 126 | 58 | 50 | 108 | |||||||||||||||||
(a) | See additional information herein regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, straight-lined revenues and prepaid rent. |
(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 "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definition of Organic Contribution to Site Rental Revenues. |
(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. |
(g) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
(h) | In accordance with GAAP accounting, if payment terms call for fixed escalations or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods. |
(i) | Reflects up-front consideration from long-term tenants and other deferred credits (commonly referred to as prepaid rent), and the amortization thereof for GAAP revenue recognition purposes. |
15
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF CAPITAL EXPENDITURES | |||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Other | Total | Towers | Fiber | Other | Total | |||||||||||||||||||||||
Discretionary: | |||||||||||||||||||||||||||||||
Purchases of land interests | $ | 13 | $ | — | $ | — | $ | 13 | $ | 15 | $ | — | $ | — | $ | 15 | |||||||||||||||
Communications infrastructure construction and improvements | 87 | 319 | 7 | 413 | 98 | 344 | — | 442 | |||||||||||||||||||||||
Sustaining | 5 | 9 | 7 | 21 | 6 | 11 | 4 | 21 | |||||||||||||||||||||||
Integration | — | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||||
Total | $ | 105 | $ | 328 | $ | 14 | $ | 447 | $ | 119 | $ | 355 | $ | 6 | $ | 480 | |||||||||||||||
PROJECTED REVENUES FROM TENANT CONTRACTS(a) | |||||||||||||||
Remaining Nine Months | Years Ending December 31, | ||||||||||||||
(as of March 31, 2020; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
Components of site rental revenues: | |||||||||||||||
Site rental revenues exclusive of straight-line associated with fixed escalators | $ | 3,908 | $ | 5,322 | $ | 5,417 | $ | 5,468 | $ | 5,478 | |||||
Straight-lined site rental revenues associated with fixed escalators | — | (96 | ) | (176 | ) | (181 | ) | (150 | ) | ||||||
GAAP site rental revenues | $ | 3,908 | $ | 5,226 | $ | 5,241 | $ | 5,287 | $ | 5,328 | |||||
PROJECTED GROUND LEASE EXPENSES FROM EXISTING GROUND LEASES(b) | |||||||||||||||
Remaining Nine Months | Years Ending December 31, | ||||||||||||||
(as of March 31, 2020; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
Components of ground lease expenses: | |||||||||||||||
Ground lease expenses exclusive of straight-line associated with fixed escalators | $ | 648 | $ | 882 | $ | 902 | $ | 921 | $ | 940 | |||||
Straight-lined site rental ground lease expenses associated with fixed escalators | 56 | 63 | 50 | 39 | 29 | ||||||||||
GAAP ground lease expenses | $ | 704 | $ | 945 | $ | 952 | $ | 960 | $ | 969 | |||||
(a) | Based on tenant licenses as of March 31, 2020. All tenant licenses are assumed to renew for a new term no later than the respective current term end date, and as such, projected revenue does not reflect the impact of estimated annual churn. CPI-linked tenant contracts are assumed to escalate at 3% per annum. |
(b) | Based on existing ground leases as of March 31, 2020. CPI-linked leases are assumed to escalate at 3% per annum. |
16
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
ANNUALIZED RENTAL CASH PAYMENTS AT TIME OF RENEWAL(a) | |||||||||||||||
Remaining Nine Months | Years Ending December 31, | ||||||||||||||
(as of March 31, 2020; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
AT&T | $ | 19 | $ | 35 | $ | 30 | $ | 353 | $ | 27 | |||||
Sprint | 12 | 30 | 35 | 211 | 24 | ||||||||||
T-Mobile | 11 | 21 | 356 | 52 | 55 | ||||||||||
Verizon | 35 | 40 | 46 | 49 | 508 | ||||||||||
All Others Combined | 149 | 184 | 160 | 123 | 77 | ||||||||||
Total | $ | 226 | $ | 310 | $ | 627 | $ | 788 | $ | 691 | |||||
TENANT OVERVIEW | |||
(as of March 31, 2020) | Percentage of Q1 2020 LQA Site Rental Revenues | Weighted Average Current Term Remaining(b) | Long-Term Credit Rating (S&P / Moody’s) |
AT&T | 22% | 6 | BBB / Baa2 |
T-Mobile | 21% | 6 | BB / Ba2 |
Verizon | 18% | 5 | BBB+ / Baa1 |
Sprint | 14% | 6 | BB |
All Others Combined | 25% | 3 | N/A |
Total / Weighted Average | 100% | 5 | |
(a) | Reflects lease renewals by year by tenant; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenues from Tenant Contracts." |
(b) | Weighted by site rental revenue contributions; excludes renewals at the tenants' option. |
17
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF TOWER PORTFOLIO BY VINTAGE | |
(as of March 31, 2020; dollars in thousands) | |
CASH YIELD(a) | NUMBER OF TENANTS PER TOWER |
LQA CASH SITE RENTAL REVENUE PER TOWER(b) | LQA TOWERS SEGMENT SITE RENTAL GROSS CASH MARGIN PER TOWER(c) |
NET INVESTED CAPITAL PER TOWER(d) | NUMBER OF TOWERS |
(a) | Yield is calculated as LQA Towers segment site rental gross margin, exclusive of straight-line revenues and amortization of prepaid rent, divided by invested capital. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
(c) | Exclusive of straight-line revenues, amortization of prepaid rent, and straight-line expenses. |
(d) | Reflects gross total assets (including incremental capital invested by the Company since time of acquisition or construction completion), less any prepaid rent. Inclusive of invested capital related to land at the tower site. |
18
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
PORTFOLIO OVERVIEW(a) | ||
(as of March 31, 2020; dollars in thousands) | ||
NUMBER OF TOWERS | TENANTS PER TOWER | LQA CASH SITE RENTAL REVENUE PER TOWER(b) |
(a) | Excludes small cells, fiber and third-party land interests. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
19
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
DISTRIBUTION OF TOWER TENANCY (as of March 31, 2020)(a) | |||||
PERCENTAGE OF TOWERS BY TENANTS PER TOWER | |||||
SITES ACQUIRED AND BUILT 2006 AND PRIOR | SITES ACQUIRED AND BUILT 2007 TO PRESENT | ||||
Average: 2.6 | Average: 2.0 |
GEOGRAPHIC TOWER DISTRIBUTION (as of March 31, 2020)(a) | |
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION | PERCENTAGE OF LQA CASH SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION(b) |
(a) | Excludes small cells, fiber and third-party land interests. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
20
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
GROUND INTEREST OVERVIEW | ||||||||||||||||
(as of March 31, 2020; dollars in millions) | LQA Cash Site Rental Revenues(a) | Percentage of LQA Cash Site Rental Revenues(a) | LQA Towers Segment Site Rental Gross Cash Margin(b) | Percentage of LQA Towers Segment Site Rental Gross Cash Margin(b) | Number of Towers(c) | Percentage of Towers | Weighted Average Term Remaining (by years)(d) | |||||||||
Less than 10 years | $ | 320 | 10 | % | $ | 169 | 7 | % | 4,960 | 12 | % | |||||
10 to 20 years | 420 | 14 | % | 245 | 11 | % | 6,404 | 16 | % | |||||||
Greater than 20 years | 1,350 | 44 | % | 968 | 42 | % | 17,847 | 45 | % | |||||||
Total leased | $ | 2,090 | 68 | % | $ | 1,382 | 60 | % | 29,211 | 73 | % | 36 | ||||
Owned | $ | 989 | 32 | % | $ | 939 | 40 | % | 10,871 | 27 | % | |||||
Total / Average | $ | 3,079 | 100 | % | $ | 2,321 | 100 | % | 40,082 | 100 | % | |||||
GROUND INTEREST ACTIVITY | |||
(dollars in millions) | Three Months Ended March 31, 2020 | ||
Ground Extensions Under Crown Castle Towers: | |||
Number of ground leases extended | 225 | ||
Average number of years extended | 34 | ||
Percentage increase in consolidated cash ground lease expense due to extension activities(e) | 0.2 | % | |
Ground Purchases Under Crown Castle Towers: | |||
Number of ground leases purchased | 44 | ||
Ground lease purchases (including capital expenditures, acquisitions and installment purchases) | $ | 17 | |
Percentage of Towers segment site rental gross margin from towers residing on land purchased | <1% | ||
(a) | Exclusive of straight-line revenues and amortization of prepaid rent. |
(b) | Exclusive of straight-line revenues, amortization of prepaid rent, and straight-line expenses. |
(c) | Excludes small cells, fiber and third-party land interests. |
(d) | Includes all renewal terms at the Company's option; weighted by Towers segment cash site rental gross margin. |
(e) | Includes the impact from the amortization of lump sum payments. |
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CAPITALIZATION OVERVIEW(a) | |||||||
(As of March 31, 2020; dollars in millions) | Face Value | Fixed vs. Variable | Interest Rate(b) | Net Debt to LQA EBITDA(c) | Maturity | ||
Cash, cash equivalents and restricted cash | $ | 472 | |||||
3.849% Secured Notes | 1,000 | Fixed | 3.9% | 2023 | |||
Senior Secured Notes, Series 2009-1, Class A-2 | 66 | Fixed | 9.0% | 2029 | |||
Senior Secured Tower Revenue Notes, Series 2015-1(d) | 300 | Fixed | 3.2% | 2042(d) | |||
Senior Secured Tower Revenue Notes, Series 2018-1(d) | 250 | Fixed | 3.7% | 2043(d) | |||
Senior Secured Tower Revenue Notes, Series 2015-2(d) | 700 | Fixed | 3.7% | 2045(d) | |||
Senior Secured Tower Revenue Notes, Series 2018-2(d) | 750 | Fixed | 4.2% | 2048(d) | |||
Finance leases & other obligations | 221 | Various | Various | Various | |||
Total secured debt | $ | 3,287 | 4.0% | 1.0x | |||
2016 Revolver(e) | 1,270 | Variable | 2.1% | 2024 | |||
2016 Term Loan A | 2,297 | Variable | 2.1% | 2024 | |||
Commercial Paper Notes(f) | — | Variable | N/A | N/A | |||
3.400% Senior Notes | 850 | Fixed | 3.4% | 2021 | |||
2.250% Senior Notes | 700 | Fixed | 2.3% | 2021 | |||
4.875% Senior Notes | 850 | Fixed | 4.9% | 2022 | |||
5.250% Senior Notes | 1,650 | Fixed | 5.3% | 2023 | |||
3.150% Senior Notes | 750 | Fixed | 3.2% | 2023 | |||
3.200% Senior Notes | 750 | Fixed | 3.2% | 2024 | |||
4.450% Senior Notes | 900 | Fixed | 4.5% | 2026 | |||
3.700% Senior Notes | 750 | Fixed | 3.7% | 2026 | |||
4.000% Senior Notes | 500 | Fixed | 4.0% | 2027 | |||
3.650% Senior Notes | 1,000 | Fixed | 3.7% | 2027 | |||
3.800% Senior Notes | 1,000 | Fixed | 3.8% | 2028 | |||
4.300% Senior Notes | 600 | Fixed | 4.3% | 2029 | |||
3.100% Senior Notes | 550 | Fixed | 3.1% | 2029 | |||
4.750% Senior Notes | 350 | Fixed | 4.8% | 2047 | |||
5.200% Senior Notes | 400 | Fixed | 5.2% | 2049 | |||
4.000% Senior Notes | 350 | Fixed | 4.0% | 2049 | |||
Total unsecured debt | $ | 15,517 | 3.6% | 4.8x | |||
Total net debt | $ | 18,332 | 3.6% | 5.6x | |||
Preferred Stock, at liquidation value | 1,650 | ||||||
Market Capitalization(g) | 60,179 | ||||||
Firm Value(h) | $ | 80,161 | |||||
(a) | The capitalization overview does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
(b) | Represents the weighted-average stated interest rate, as applicable. |
(c) | Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA. See the "Net debt to Last Quarter Annualized Adjusted EBITDA calculation" in the Appendix. |
(d) | If the respective series of such debt is not paid in full on or prior to an applicable date, then the Excess Cash Flow (as defined in the indenture) of the issuers of such notes will be used to repay principal of the applicable series, and additional interest (of an additional approximately 5% per annum) will accrue on the respective series. 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, 2018-1 and 2018-2 have anticipated repayment dates in 2023 and 2028, respectively. Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration. |
(e) | As of March 31, 2020, the undrawn availability under the $5.0 billion 2016 Revolver was $3.7 billion. |
(f) | As of March 31, 2020, there were no outstanding notes under the $1.0 billion unsecured commercial paper program ("CP Program"). The maturities of commercial paper notes under the CP Program, when outstanding, may vary but may not exceed 397 days from the date of issue. |
(g) | Market capitalization calculated based on $144.40 closing price and 417 million shares outstanding as of March 31, 2020. |
(h) | Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization. |
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DEBT MATURITY OVERVIEW(a)(b) |
(as of March 31, 2020; dollars in millions)
(a) | Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes finance leases and other obligations; amounts presented at face value, net of repurchases held at CCIC. |
(b) | The debt maturity overview does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
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LIQUIDITY OVERVIEW(a) | |||
(dollars in millions) | March 31, 2020 | ||
Cash and cash equivalents(b) | $ | 310 | |
Undrawn 2016 Revolver availability(c)(d) | 3,710 | ||
Restricted cash(e) | 162 | ||
Debt and other long-term obligations(d) | 18,695 | ||
Total equity | 10,121 | ||
(a) | In addition, we have the following sources of liquidity: |
i. | In April 2018, we established an at-the-market stock offering program ("ATM Program") through which we may, from time to time, issue and sell shares of our common stock having an aggregate gross sales price of up to $750 million to or through sales agents. No shares of common stock have been sold under the ATM Program. |
ii. | In April 2019, we established a CP Program through which we may issue short term, unsecured commercial paper notes ("CP Notes"). Amounts available under the CP Program may be issued, repaid and re-issued from time to time, with the aggregate principal amount of CP Notes outstanding under the CP Program at any time not to exceed $1.0 billion. As of March 31, 2020, there were no CP Notes outstanding under our CP Program. We intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of CP Notes outstanding at any point in time. |
(b) | Exclusive of restricted cash. |
(c) | Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, the credit agreement governing our 2016 Revolver. |
(d) | Does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
(e) | Inclusive of $5 million included within "long-term prepaid rent and other assets, net" on our condensed consolidated balance sheet. |
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SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS(a) | |||||
Debt | Borrower / Issuer | Covenant(b) | Covenant Level Requirement | As of March 31, 2020 | |
Maintenance Financial Covenants(c) | |||||
2016 Credit Facility | CCIC | Total Net Leverage Ratio | ≤ 6.50x | 5.6x | |
2016 Credit Facility | CCIC | Total Senior Secured Leverage Ratio | ≤ 3.50x | 0.9x | |
2016 Credit Facility | CCIC | Consolidated Interest Coverage Ratio(d) | N/A | N/A | |
Restrictive Negative Financial Covenants | |||||
Financial covenants restricting ability to incur additional debt | |||||
2012 Secured Notes | CC Holdings GS V LLC and Crown Castle GS III Corp. | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 3.50x | 2.3x | |
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released | |||||
2015 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (e) | 10.9x |
2018 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (e) | 10.9x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (e) | 11.8x |
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture | |||||
2015 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.00x | (f) | 10.9x |
2018 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.00x | (f) | 10.9x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.34x | () | 11.8x |
(a) | Summary does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
(b) | As defined in the respective debt agreement. In the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR." |
(c) | Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2016 Credit Facility. |
(d) | Applicable solely to the extent that the senior unsecured debt rating by any two of S&P, Moody's and Fitch is lower than BBB-, Baa3 or BBB-, respectively. If applicable, the consolidated interest coverage ratio must be greater than or equal to 2.50. |
(e) | The 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.45x or 1.15x, in each case as described under the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes or 2009 Securitized Notes, respectively. |
(f) | Rating Agency Confirmation (as defined in the respective debt agreement) is also required. |
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INTEREST RATE SENSITIVITY(a)(b) | |||||||||
Remaining Nine Months | Years Ending December 31, | ||||||||
(as of March 31, 2020; dollars in millions) | 2020 | 2021 | 2022 | ||||||
Fixed Rate Debt: | |||||||||
Face Value of Principal Outstanding(c) | $ | 15,010 | $ | 15,002 | $ | 14,995 | |||
Current Interest Payment Obligations(d) | 448 | 597 | 596 | ||||||
Effect of 0.125% Change in Interest Rates(e) | — | — | — | ||||||
Floating Rate Debt: | |||||||||
Face Value of Principal Outstanding(c) | $ | 3,523 | $ | 3,435 | $ | 3,318 | |||
Current Interest Payment Obligations(f) | 36 | 48 | 48 | ||||||
Effect of 0.125% Change in Interest Rates(g) | 3 | 4 | 4 | ||||||
(a) | Excludes finance leases and other obligations and does not reflect the Company's April 2020 issuance of senior notes and the associated use of proceeds, including the repayment of outstanding balances under the 2016 Revolver. |
(b) | Excludes the commitment fee the Company pays on the undrawn available amount under the 2016 Revolver. The commitment fee ranges from 0.125% to 0.350%, based on the Company's senior unsecured debt rating, per annum. |
(c) | Face value, net of required amortizations; assumes no maturity or balloon principal payments; excludes finance leases. |
(d) | Interest expense calculated based on current interest rates. |
(e) | Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates, plus 12.5 bps. |
(f) | Interest expense calculated based on current interest rates as of March 31, 2020. Calculation assumes no changes to future interest rate margin spread over LIBOR due to changes in the borrower’s senior unsecured credit rating. |
(g) | Interest expense calculated based on current interest rates as of March 31, 2020, plus 12.5 bps. |
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DEFINITIONS |
Non-GAAP Financial Measures, Segment Measures and Other Calculations
This Supplement 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 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. 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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• | 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.
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.
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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 primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure 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) and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure, 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) ordinary corporate capital expenditures.
The tables set forth on the following pages 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 to Comparable GAAP Financial Measures and Other Calculations:
Reconciliation of Historical Adjusted EBITDA:
Three Months Ended March 31, | |||||||
(dollars in millions) | 2020 | 2019 | |||||
(As Restated)(a) | |||||||
Net income (loss) | $ | 185 | $ | 193 | |||
Adjustments to increase (decrease) net income (loss): | |||||||
Asset write-down charges | 4 | 6 | |||||
Acquisition and integration costs | 5 | 4 | |||||
Depreciation, amortization and accretion | 399 | 394 | |||||
Amortization of prepaid lease purchase price adjustments | 5 | 5 | |||||
Interest expense and amortization of deferred financing costs(b) | 175 | 168 | |||||
(Gains) losses on retirement of long-term obligations | — | 1 | |||||
Interest income | (1 | ) | (2 | ) | |||
Other (income) expense | — | 1 | |||||
(Benefit) provision for income taxes | 5 | 6 | |||||
Stock-based compensation expense | 36 | 29 | |||||
Adjusted EBITDA(c)(d) | $ | 814 | $ | 804 | |||
Reconciliation of Current Outlook for Adjusted EBITDA:
(dollars in millions) | Full Year 2020 Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $20 | to | $30 |
Acquisition and integration costs | $7 | to | $17 |
Depreciation, amortization and accretion | $1,503 | to | $1,598 |
Amortization of prepaid lease purchase price adjustments | $18 | to | $20 |
Interest expense and amortization of deferred financing costs(b) | $691 | to | $736 |
(Gains) losses on retirement of long-term obligations | $0 | to | $— |
Interest income | $(7) | to | $(3) |
Other (income) expense | $(1) | to | $1 |
(Benefit) provision for income taxes | $16 | to | $24 |
Stock-based compensation expense | $126 | to | $130 |
Adjusted EBITDA(c)(d) | $3,479 | to | $3,524 |
Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
Three Months Ended March 31, | |||||||
(dollars in millions) | 2020 | 2019 | |||||
Interest expense on debt obligations | $ | 174 | $ | 167 | |||
Amortization of deferred financing costs and adjustments on long-term debt, net | 5 | 5 | |||||
Other, net | (4 | ) | (4 | ) | |||
Interest expense and amortization of deferred financing costs | $ | 175 | $ | 168 | |||
(a) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
(b) | See the reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein. |
(c) | See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
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Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
Full Year 2020 | |||
(dollars in millions) | Outlook | ||
Interest expense on debt obligations | $703 | to | $723 |
Amortization of deferred financing costs and adjustments on long-term debt, net | $20 | to | $25 |
Other, net | $(24) | to | $(19) |
Interest expense and amortization of deferred financing costs | $691 | to | $736 |
Reconciliation of Historical FFO and AFFO:
Three Months Ended March 31, | |||||||
(amounts in millions, except per share amounts) | 2020 | 2019 | |||||
(As Restated)(f) | |||||||
Net income (loss) | $ | 185 | $ | 193 | |||
Real estate related depreciation, amortization and accretion | 386 | 380 | |||||
Asset write-down charges | 4 | 6 | |||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | |||
FFO(a)(b)(c)(d) | $ | 547 | $ | 550 | |||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | |||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.31 | $ | 1.32 | |||
FFO (from above) | $ | 547 | $ | 550 | |||
Adjustments to increase (decrease) FFO: | |||||||
Straight-lined revenue | (14 | ) | (17 | ) | |||
Straight-lined expense | 20 | 22 | |||||
Stock-based compensation expense | 36 | 29 | |||||
Non-cash portion of tax provision | 4 | 5 | |||||
Non-real estate related depreciation, amortization and accretion | 13 | 14 | |||||
Amortization of non-cash interest expense | 1 | 1 | |||||
Other (income) expense | — | 1 | |||||
(Gains) losses on retirement of long-term obligations | — | 1 | |||||
Acquisition and integration costs | 5 | 4 | |||||
Sustaining capital expenditures | (21 | ) | (21 | ) | |||
AFFO(a)(b)(c)(d) | $ | 593 | $ | 588 | |||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | |||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.42 | $ | 1.41 | |||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
(f) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
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First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Reconciliation of Historical FFO and AFFO:
Year Ended December 31, | |||||||||||||||
(amounts in millions, except per share amounts) | 2019 | 2018 | 2017 | 2016 | |||||||||||
(As Restated)(f) | |||||||||||||||
Net income (loss) | $ | 860 | $ | 622 | $ | 366 | $ | 306 | |||||||
Real estate related depreciation, amortization and accretion | 1,517 | 1,471 | 1,210 | 1,082 | |||||||||||
Asset write-down charges | 19 | 26 | 17 | 35 | |||||||||||
Dividends/distributions on preferred stock | (113 | ) | (113 | ) | (30 | ) | (44 | ) | |||||||
FFO(a)(b)(c)(d) | $ | 2,284 | $ | 2,005 | $ | 1,563 | $ | 1,379 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 415 | 383 | 341 | |||||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 5.47 | $ | 4.83 | $ | 4.08 | $ | 4.04 | |||||||
FFO (from above) | $ | 2,284 | $ | 2,005 | $ | 1,563 | $ | 1,379 | |||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||
Straight-lined revenue | (80 | ) | (72 | ) | — | (47 | ) | ||||||||
Straight-lined expense | 93 | 90 | 93 | 94 | |||||||||||
Stock-based compensation expense | 116 | 108 | 96 | 97 | |||||||||||
Non-cash portion of tax provision | 5 | 2 | 9 | 7 | |||||||||||
Non-real estate related depreciation, amortization and accretion | 55 | 56 | 31 | 27 | |||||||||||
Amortization of non-cash interest expense | 1 | 7 | 9 | 14 | |||||||||||
Other (income) expense | (1 | ) | (1 | ) | (1 | ) | 9 | ||||||||
(Gains) losses on retirement of long-term obligations | 2 | 106 | 4 | 52 | |||||||||||
Acquisition and integration costs | 13 | 27 | 61 | 18 | |||||||||||
Sustaining capital expenditures | (117 | ) | (105 | ) | (85 | ) | (90 | ) | |||||||
AFFO(a)(b)(c)(d) | $ | 2,371 | $ | 2,223 | $ | 1,781 | $ | 1,559 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 415 | 383 | 341 | |||||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 5.68 | $ | 5.36 | $ | 4.65 | $ | 4.57 | |||||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
(f) | See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
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Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Reconciliation of Current Outlook for FFO and AFFO:
(amounts in millions, except per share amounts) | Full Year 2020 Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Real estate related depreciation, amortization and accretion | $1,454 | to | $1,534 |
Asset write-down charges | $20 | to | $30 |
Dividends/distributions on preferred stock | $(85) | to | $(85) |
FFO(a)(b)(c)(d) | $2,449 | to | $2,494 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
FFO per share(a)(b)(c)(d)(e) | $5.77 | to | $5.88 |
FFO (from above) | $2,449 | to | $2,494 |
Adjustments to increase (decrease) FFO: | |||
Straight-lined revenue | $(53) | to | $(33) |
Straight-lined expense | $70 | to | $90 |
Stock-based compensation expense | $126 | to | $130 |
Non-cash portion of tax provision | $(6) | to | $9 |
Non-real estate related depreciation, amortization and accretion | $49 | to | $64 |
Amortization of non-cash interest expense | $(4) | to | $6 |
Other (income) expense | $(1) | to | $1 |
(Gains) losses on retirement of long-term obligations | $0 | to | $0 |
Acquisition and integration costs | $7 | to | $17 |
Sustaining capital expenditures | $(123) | to | $(103) |
AFFO(a)(b)(c)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
AFFO per share(a)(b)(c)(d)(e) | $6.06 | to | $6.17 |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of March 31, 2020 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019 actual results. |
33
Crown Castle International Corp.
First Quarter 2020
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Net debt to Last Quarter Annualized Adjusted EBITDA calculation:
Three Months Ended March 31, | |||||||||
(dollars in millions) | 2020 | 2019 | |||||||
Total face value of debt | $ | 18,804 | $ | 17,333 | |||||
Ending cash, cash equivalents and restricted cash(a) | 472 | 408 | |||||||
Total net debt | $ | 18,332 | $ | 16,925 | |||||
Adjusted EBITDA | $ | 814 | $ | 804 | (b) | ||||
Last quarter annualized Adjusted EBITDA | 3,256 | 3,216 | (b) | ||||||
Net debt to Last Quarter Annualized Adjusted EBITDA(a) | 5.6 | x | 5.3 | x | (b) | ||||
Cash Interest Coverage Ratio Calculation:
Three Months Ended March 31, | |||||||||
(dollars in millions) | 2020 | 2019 | |||||||
Adjusted EBITDA | $ | 814 | $ | 804 | (b) | ||||
Interest expense on debt obligations | 174 | 167 | |||||||
Interest Coverage Ratio | 4.7 | x | 4.8 | x | |||||
(a) | For purposes of calculating Net Debt to Last Quarter Annualized Adjusted EBITDA, beginning in the second quarter 2019, we 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 fourth quarter of 2019, our Net Debt to Last Quarter Annualized Adjusted EBITDA would have been 5.4x. |
(b) | As restated. See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. |
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