Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today
reported results for the second quarter ended June 30, 2022
and updated its full year 2022 outlook to reflect improving
operating conditions offset by increasing interest expense.
(dollars in millions, except per share amounts) |
Current Full Year 2022 Outlook(a) |
Full Year 2021 Actual |
% Change |
Previous Full Year 2022 Outlook(b) |
Current Compared to Previous Outlook |
Site rental revenues |
$6,265 |
$5,719 |
10% |
$6,265 |
$— |
Income (loss) from continuing
operations |
$1,694 |
$1,158(c) |
46% |
$1,714 |
-$20 |
Income (loss) from continuing
operations per share—diluted |
$3.90 |
$2.67(c) |
46% |
$3.94 |
-$0.04 |
Adjusted EBITDA(d) |
$4,352 |
$3,816 |
14% |
$4,332 |
+$20 |
AFFO(d) |
$3,201 |
$3,013 |
6% |
$3,201 |
$— |
AFFO per share(d) |
$7.36 |
$6.95 |
6% |
$7.36 |
$— |
(a) Reflects midpoint of full
year 2022 Outlook as issued on July 20,
2022.(b) Reflects midpoint of full year 2022
Outlook as issued on April 20, 2022.(c) Does not
reflect the impact related to the ATO Settlement (as defined in the
Form 8-K filed with the Securities and Exchange Commission on April
26, 2021 ("April 2021 8-K"), which is attributable to discontinued
operations in the first quarter of 2021 as discussed in the April
2021 8-K.(d) See "Non-GAAP Financial Measures,
Segment Measures and Other Calculations" for further information
and reconciliation of non-GAAP financial measures to income (loss)
from continuing operations, as computed in accordance with
GAAP.
"We delivered another solid quarter of growth in
the second quarter and once again increased our operating
expectations for the full year 2022," stated Jay Brown, Crown
Castle’s Chief Executive Officer. "Consistent with the last couple
of decades, it is clear to us that the U.S. represents the highest
growth and lowest risk market in the world for communications
infrastructure ownership. We are busy supporting our customers as
they have begun to upgrade their existing cell sites and deploy
thousands of new sites on our macro towers as part of the first
phase of the 5G build out, which drove 6% organic revenue growth in
our Towers segment through the first half of this year. At the same
time, 2022 represents an important transition year for our small
cells and fiber business as we prepare to double the rate of
expected small cell deployments next year when compared to the
approximately 5,000 small cell nodes we expect to deploy this year.
We believe our comprehensive offering of 40,000 towers, 115,000
small cells on air or under contract and 85,000 route miles of
fiber provides shareholders with the most exposure to the
development of next-generation wireless networks in the best market
in the world and extends our opportunity to create value for our
shareholders by delivering long-term annual dividend per share
growth of 7% to 8%."
RESULTS FOR THE QUARTER
The table below sets forth select financial
results for the quarter ended June 30, 2022 and June 30,
2021.
(dollars in millions, except per share amounts) |
Q2 2022 |
Q2 2021 |
Change |
Change % |
Site rental revenues |
$1,567 |
$1,425 |
$142 |
10% |
Income (loss) from continuing operations |
$421 |
$333 |
$88 |
26% |
Income (loss) from continuing operations per share—diluted |
$0.97 |
$0.77 |
$0.20 |
26% |
Adjusted EBITDA(a) |
$1,078 |
$958 |
$120 |
13% |
AFFO(a) |
$783 |
$741 |
$42 |
6% |
AFFO per share(a) |
$1.80 |
$1.71 |
$0.09 |
5% |
(a) See "Non-GAAP Financial
Measures, Segment Measures and Other Calculations" for further
information and reconciliation of non-GAAP financial measures to
income (loss) from continuing operations, as computed in accordance
with GAAP.
HIGHLIGHTS FROM THE QUARTER
- Site rental
revenues. Site rental revenues grew 10%, or $142 million,
from second quarter 2021 to second quarter 2022, inclusive of
approximately $58 million in Organic Contribution to Site Rental
Billings and a $75 million increase in straight-lined revenues. The
$58 million in Organic Contribution to Site Rental Billings
represents approximately 4.7% growth, comprised of approximately
7.8% growth from core leasing activity and contracted tenant
escalations, net of approximately 3.1% from tenant
non-renewals.
- Income from continuing
operations. Income from continuing operations for the
second quarter 2022 was $421 million compared to $333 million for
the second quarter 2021.
- Adjusted EBITDA.
Second quarter 2022 Adjusted EBITDA was $1.1 billion compared to
$958 million for the second quarter 2021, representing 13% growth
from the second quarter 2021 as a result of the growth in site
rental revenues and higher services contribution.
- AFFO and AFFO per
share. Second quarter 2022 AFFO was $783 million, or $1.80
per share, representing growth from the second quarter 2021 of 6%
and 5%, respectively.
- Capital
expenditures. Capital expenditures during the quarter were
$303 million, comprised of $21 million of sustaining capital
expenditures and $282 million of discretionary capital
expenditures. Discretionary capital expenditures during the quarter
primarily included approximately $235 million attributable to Fiber
and approximately $42 million attributable to Towers.
- Common stock
dividend. During the quarter, Crown Castle paid common
stock dividends of approximately $637 million in the
aggregate, or $1.47 per common share, an increase of approximately
11% on a per share basis compared to the same period a year
ago.
HIGHLIGHTS SUBSEQUENT TO THE
QUARTER
- Crown Castle International
Corp. to change name to Crown Castle Inc. Crown Castle
plans to change its corporate name to Crown Castle Inc., effective
August 1, 2022, while its common stock will continue to trade under
the ticker symbol "CCI" on the New York Stock Exchange.
- Financing
activities. In July 2022, Crown Castle increased the
commitments under its Senior Unsecured Revolving Credit Facility by
$2 billion, for aggregate commitments of $7 billion, and extended
the maturity date on its Senior Unsecured Credit Facility from June
2026 to July 2027.
"We are excited about the growth in our business
as our customers are deploying 5G at scale, which is resulting in
meaningfully higher operating performance relative to our
expectations at the beginning of the year," stated Dan Schlanger,
Crown Castle’s Chief Financial Officer. "Although we expect the
rapid rise in interest rates to prevent that outperformance from
flowing through to additional AFFO growth this year, we believe our
business and balance sheet will allow us to deliver compelling
growth through various economic cycles. Our cost structure is
largely fixed in nature, and we have taken deliberate steps to
further strengthen our balance sheet position to where we sit today
with nine years of weighted average term remaining and 85%
fixed-rate debt. With significant liquidity following the increase
in our Revolving Credit Facility to $7 billion and limited debt
maturities through 2024, we are well positioned to pursue
investment opportunities that are consistent with our strategy and
support our ability to deliver attractive risk-adjusted returns
through a combination of dividends and growth."
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
2022.
(in
millions, except per share amounts) |
Full Year 2022 |
|
Change to Midpoint from Previous Outlook(d) |
Site rental revenues |
$6,242 |
to |
$6,287 |
|
$— |
Site rental costs of operations(a) |
$1,548 |
to |
$1,593 |
|
$— |
Income (loss) from continuing operations |
$1,654 |
to |
$1,734 |
|
-$20 |
Adjusted EBITDA(b) |
$4,329 |
to |
$4,374 |
|
+$20 |
Interest expense and
amortization of deferred financing costs(c) |
$680 |
to |
$725 |
|
+$45 |
FFO(b) |
$3,343 |
to |
$3,388 |
|
-$15 |
AFFO(b) |
$3,178 |
to |
$3,223 |
|
$— |
AFFO per share(b) |
$7.31 |
to |
$7.41 |
|
$— |
(a) Exclusive of depreciation,
amortization and accretion. (b) See "Non-GAAP
Financial Measures, Segment Measures and Other Calculations" for
further information and reconciliation of non-GAAP financial
measures to income (loss) from continuing operations, as computed
in accordance with GAAP.(c) See reconciliation of
"Components of Outlook for Interest Expense and Amortization of
Deferred Financing Costs" for a discussion of non-cash interest
expense. (d) As issued on April 20, 2022.
- The increase to the
midpoint of the full year 2022 Outlook for Adjusted EBITDA reflects
a $20 million increase in expected services contribution.
- The full year 2022 Outlook for AFFO
is unchanged, with the $20 million increase to the Outlook for
Adjusted EBITDA combined with $25 million in lower expected
sustaining capital expenditures and cash taxes offset by a $45
million increase to the expected full year interest expense
resulting from higher expected interest rates.
- The chart below
reconciles the components of expected growth in site rental
revenues from 2021 to 2022 of $535 million to $580 million,
inclusive of Organic Contribution to Site Rental Billings during
2022 of $230 million to $270 million, or approximately 5%.
- The chart below reconciles the
components of expected growth in AFFO from 2021 to 2022 of $165
million to $210 million.
Additional information is available in Crown
Castle's quarterly Supplemental Information Package posted in the
Investors section of our website.
CONFERENCE CALL DETAILS Crown
Castle has scheduled a conference call for Thursday, July 21, 2022,
at 10:30 a.m. Eastern time to discuss its second quarter 2022
results. The conference call may be accessed by dialing
800-263-0877 and asking for the Crown Castle call (access code
7823263) at least 30 minutes prior to the start time. The
conference call may also be accessed live over the Internet at
investor.crowncastle.com. Supplemental materials for the call have
been posted on the Crown Castle website at
investor.crowncastle.com. A telephonic replay of the conference
call will be available from 1:30 p.m. Eastern time on Thursday,
July 21, 2022, through 1:30 p.m. Eastern time on Wednesday, October
19, 2022, and may be accessed by dialing 888-203-1112 and using
access code 7823263. 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 CASTLECrown Castle
owns, operates and leases more than 40,000 cell towers and
approximately 85,000 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.
|
Contacts: Dan Schlanger, CFO |
|
Ben Lowe, SVP & Treasurer |
|
Crown Castle International Corp. |
|
713-570-3050 |
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 Billings,
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").
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 site
rental revenues and 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 income (loss) from continuing operations 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 (in periods
where applicable)) and (2) sustaining capital expenditures, and
excludes the impact of our (1) asset base (primarily depreciation,
amortization and accretion) and (2) 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 revenues or
expenses are 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 income (loss) from continuing
operations computed in accordance with GAAP as a measure of our
performance and should not be considered as an alternative to cash
flow 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 real estate depreciation, amortization and accretion).
FFO is not a key performance indicator used by Crown Castle. FFO
should be considered only as a supplement to income (loss) from
continuing operations computed in accordance with GAAP as a measure
of our performance and should not be considered as an alternative
to cash flow from operations.
- Organic
Contribution to Site Rental Billings 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 Organic Contribution to Site
Rental Billings to assess year-over-year growth rates for our
rental activities, to evaluate current performance, to capture
trends in rental rates, core leasing activities and tenant
non-renewals in our core business, as well as to forecast future
results. Organic Contribution to Site Rental Billings 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
income (loss) from continuing operations 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 and stock-based compensation
expense.
Adjusted Funds from Operations. We define
Adjusted Funds from Operations as FFO before straight-lined
revenues, straight-lined expenses, 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, impairment of
available-for-sale securities, acquisition and integration costs,
restructuring charges (credits), cumulative effect of a change in
accounting principle and adjustments for noncontrolling interests,
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 income (loss) from continuing operations plus real
estate related depreciation, amortization and accretion and asset
write-down charges, less noncontrolling interest and cash paid for
preferred stock dividends (in periods where applicable), and is a
measure of funds from operations attributable to common
stockholders.
FFO per share. We define FFO per share as FFO
divided by diluted weighted-average common shares outstanding.
Organic Contribution to Site Rental Billings. We
define Organic Contribution to Site Rental Billings as the sum of
the change in GAAP site rental revenues related to core leasing
activity and escalators, less 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 costs of operations, excluding stock-based
compensation expense and amortization of prepaid lease purchase
price adjustments recorded in consolidated site rental costs 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 costs of
operations, excluding stock-based compensation expense recorded in
consolidated services and other costs of operations.
Segment operating profit. We define segment
operating profit as segment site rental gross margin plus segment
services and other gross margin, and segment other operating
(income) expense, 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
Site rental billings. We define site rental
billings as site rental revenues exclusive of the impacts from (1)
straight-lined revenues, (2) amortization of prepaid rent in
accordance with GAAP and (3) contribution from recent acquisitions
until the one-year anniversary of such acquisitions.
Core leasing activity. We define core leasing
activity as site rental revenues growth from tenant additions
across our entire portfolio and renewals or extensions of tenant
contracts, exclusive of the impacts from both straight-lined
revenues and amortization of prepaid rent in accordance with
GAAP.
Non-renewals. We define non-renewals of tenant
contracts as the reduction in site rental revenues as a result of
tenant churn, terminations and, in limited circumstances,
reductions of existing lease rates.
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.
Sustaining capital expenditures. We define
sustaining capital expenditures as those capital expenditures not
otherwise categorized as discretionary 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.
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 Six Months Ended |
|
For the Twelve Months Ended |
|
(in millions) |
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
December 31, 2021 |
|
Income (loss) from continuing operations |
$ |
421 |
|
$ |
333 |
|
|
$ |
842 |
|
|
$ |
455 |
|
(a) |
$ |
1,158 |
|
(a) |
Adjustments to increase
(decrease) income (loss) from continuing operations: |
|
|
|
|
|
|
|
|
|
|
Asset write-down charges |
|
9 |
|
|
6 |
|
|
|
23 |
|
|
|
9 |
|
|
|
21 |
|
|
Acquisition and integration costs |
|
1 |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Depreciation, amortization and accretion |
|
427 |
|
|
408 |
|
|
|
847 |
|
|
|
816 |
|
|
|
1,644 |
|
|
Amortization of prepaid lease purchase price adjustments |
|
4 |
|
|
4 |
|
|
|
8 |
|
|
|
9 |
|
|
|
18 |
|
|
Interest expense and amortization of deferred financing
costs(b) |
|
165 |
|
|
161 |
|
|
|
329 |
|
|
|
330 |
|
|
|
657 |
|
|
(Gains) losses on retirement of long-term obligations |
|
— |
|
|
1 |
|
|
|
26 |
|
|
|
144 |
|
|
|
145 |
|
|
Interest income |
|
— |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
Other (income) expense |
|
2 |
|
|
5 |
|
|
|
4 |
|
|
|
12 |
|
|
|
21 |
|
|
(Benefit) provision for income taxes |
|
5 |
|
|
6 |
|
|
|
11 |
|
|
|
13 |
|
|
|
21 |
|
|
Stock-based compensation expense |
|
44 |
|
|
34 |
|
|
|
83 |
|
|
|
68 |
|
|
|
131 |
|
|
Adjusted EBITDA(c)(d) |
$ |
1,078 |
|
$ |
958 |
|
|
$ |
2,173 |
|
|
$ |
1,856 |
|
|
$ |
3,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Current Outlook for
Adjusted EBITDA:
|
Full Year 2022 |
(in millions) |
Outlook(f) |
Income (loss) from continuing operations |
$1,654 |
|
to |
$1,734 |
|
Adjustments to increase (decrease) income (loss) from continuing
operations: |
|
|
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
Acquisition and integration costs |
$1 |
|
to |
$9 |
|
Depreciation, amortization and accretion |
$1,650 |
|
to |
$1,745 |
|
Amortization of prepaid lease purchase price adjustments |
$16 |
|
to |
$18 |
|
Interest expense and amortization of deferred financing
costs(e) |
$680 |
|
to |
$725 |
|
(Gains) losses on retirement of long-term obligations |
$25 |
|
to |
$75 |
|
Interest income |
$(3) |
|
to |
$(2) |
|
Other (income) expense |
$0 |
|
to |
$5 |
|
(Benefit) provision for income taxes |
$20 |
|
to |
$28 |
|
Stock-based compensation expense |
$135 |
|
to |
$139 |
|
Adjusted EBITDA(c)(d) |
$4,329 |
|
to |
$4,374 |
|
(a) Does not reflect the impact related to the
ATO Settlement (as defined in the April 2021 8-K), which is
attributable to discontinued operations in the first quarter of
2021 as discussed in the April 2021 8-K.(b) See reconciliation of
"Components of Historical Interest Expense and Amortization of
Deferred Financing Costs" for a discussion of non-cash interest
expense.(c) See "Non-GAAP Financial Measures, Segment Measures and
Other Calculations" 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.(e) See reconciliation of "Components of Outlook for Interest
Expense and Amortization of Deferred Financing Costs" for a
discussion of non-cash interest expense.(f) As issued on July 20,
2022.
Reconciliation of Historical FFO and
AFFO:
|
For the Three Months Ended |
|
For the Six Months Ended |
|
For the Twelve Months Ended |
|
(in millions, except per share amounts) |
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
December 31, 2021 |
|
Income (loss) from continuing operations |
$ |
421 |
|
|
$ |
333 |
|
|
$ |
842 |
|
|
$ |
455 |
|
(a) |
$ |
1,158 |
|
(a) |
Real estate related depreciation, amortization and accretion |
|
412 |
|
|
|
395 |
|
|
|
820 |
|
|
|
790 |
|
|
|
1,593 |
|
|
Asset write-down charges |
|
9 |
|
|
|
6 |
|
|
|
23 |
|
|
|
9 |
|
|
|
21 |
|
|
FFO(b)(c) |
$ |
842 |
|
|
$ |
734 |
|
|
$ |
1,685 |
|
|
$ |
1,254 |
|
|
$ |
2,772 |
|
|
Weighted-average common shares outstanding—diluted |
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
FFO per share(b)(c) |
$ |
1.94 |
|
|
$ |
1.69 |
|
|
$ |
3.88 |
|
|
$ |
2.89 |
|
|
$ |
6.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
$ |
842 |
|
|
$ |
734 |
|
|
$ |
1,685 |
|
|
$ |
1,254 |
|
|
$ |
2,772 |
|
|
Adjustments to increase (decrease) FFO: |
|
|
|
|
|
|
|
|
|
|
Straight-lined revenues |
|
(120 |
) |
|
|
(45 |
) |
|
|
(235 |
) |
|
|
(35 |
) |
|
|
(111 |
) |
|
Straight-lined expenses |
|
19 |
|
|
|
20 |
|
|
|
37 |
|
|
|
39 |
|
|
|
76 |
|
|
Stock-based compensation expense |
|
44 |
|
|
|
34 |
|
|
|
83 |
|
|
|
68 |
|
|
|
131 |
|
|
Non-cash portion of tax provision |
|
(3 |
) |
|
|
(7 |
) |
|
|
2 |
|
|
|
— |
|
|
|
1 |
|
|
Non-real estate related depreciation, amortization and
accretion |
|
15 |
|
|
|
13 |
|
|
|
27 |
|
|
|
26 |
|
|
|
51 |
|
|
Amortization of non-cash interest expense |
|
4 |
|
|
|
4 |
|
|
|
7 |
|
|
|
6 |
|
|
|
13 |
|
|
Other (income) expense |
|
2 |
|
|
|
5 |
|
|
|
4 |
|
|
|
12 |
|
|
|
21 |
|
|
(Gains) losses on retirement of long-term obligations |
|
— |
|
|
|
1 |
|
|
|
26 |
|
|
|
144 |
|
|
|
145 |
|
|
Acquisition and integration costs |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Sustaining capital expenditures |
|
(21 |
) |
|
|
(19 |
) |
|
|
(42 |
) |
|
|
(36 |
) |
|
|
(87 |
) |
|
AFFO(b)(c) |
$ |
783 |
|
|
$ |
741 |
|
|
$ |
1,595 |
|
|
$ |
1,479 |
|
|
$ |
3,013 |
|
|
Weighted-average common shares outstanding—diluted |
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
AFFO per share(b)(c) |
$ |
1.80 |
|
|
$ |
1.71 |
|
|
$ |
3.67 |
|
|
$ |
3.41 |
|
|
$ |
6.95 |
|
|
(a) Does not reflect the impact related to the
ATO Settlement (as defined in the April 2021 8-K), which is
attributable to discontinued operations in the first quarter of
2021 as discussed in the April 2021 8-K.(b) See "Non-GAAP Financial
Measures, Segment Measures and Other Calculations" for a discussion
of our definitions of FFO and AFFO, including per share amounts.
(c) The above reconciliation excludes line items included in our
definition which are not applicable for the periods shown.
Reconciliation of Current Outlook for
FFO and AFFO:
|
Full Year 2022 |
(in millions, except per share amounts) |
Outlook(a) |
Income (loss) from continuing operations |
$1,654 |
|
to |
$1,734 |
|
Real estate related depreciation, amortization and accretion |
$1,607 |
|
to |
$1,687 |
|
Asset write-down charges |
$20 |
|
to |
$30 |
|
FFO(b)(c) |
$3,343 |
|
to |
$3,388 |
|
Weighted-average common shares outstanding—diluted(d) |
435 |
FFO per share(b)(c)(d) |
$7.69 |
|
to |
$7.79 |
|
|
|
|
|
|
|
FFO (from above) |
$3,343 |
|
to |
$3,388 |
|
Adjustments to increase (decrease) FFO: |
|
|
|
|
|
Straight-lined revenues |
$(419) |
|
to |
$(399) |
|
Straight-lined expenses |
$56 |
|
to |
$76 |
|
Stock-based compensation expense |
$135 |
|
to |
$139 |
|
Non-cash portion of tax provision |
$0 |
|
to |
$15 |
|
Non-real estate related depreciation, amortization and
accretion |
$43 |
|
to |
$58 |
|
Amortization of non-cash interest expense |
$5 |
|
to |
$15 |
|
Other (income) expense |
$0 |
|
to |
$5 |
|
(Gains) losses on retirement of long-term obligations |
$25 |
|
to |
$75 |
|
Acquisition and integration costs |
$1 |
|
to |
$9 |
|
Sustaining capital expenditures |
$(98) |
|
to |
$(78) |
|
AFFO(b)(c) |
$3,178 |
|
to |
$3,223 |
|
Weighted-average common shares outstanding—diluted(d) |
435 |
AFFO per share(b)(c)(d) |
$7.31 |
|
to |
$7.41 |
|
(a) As issued on July 20, 2022.(b) See "Non-GAAP
Financial Measures, Segment Measures and Other Calculations" for a
discussion of our definitions of FFO and AFFO, including per share
amounts.(c) The above reconciliation excludes line items included
in our definition which are not applicable for the periods
shown.(d) The assumption for diluted weighted-average common shares
outstanding for full year 2022 Outlook is based on the diluted
common shares outstanding as of June 30, 2022.For
Comparative Purposes - Reconciliation of Previous Outlook for
Adjusted EBITDA:
|
Previously Issued |
|
Full Year 2022 |
(in millions) |
Outlook(a) |
Income (loss) from continuing operations |
$1,674 |
|
to |
$1,754 |
Adjustments to increase
(decrease) income (loss) from continuing operations: |
|
|
|
Asset write-down charges |
$15 |
|
to |
$25 |
Acquisition and integration costs |
$0 |
|
to |
$8 |
Depreciation, amortization and accretion |
$1,650 |
|
to |
$1,745 |
Amortization of prepaid lease purchase price adjustments |
$16 |
|
to |
$18 |
Interest expense and amortization of deferred financing
costs(b) |
$635 |
|
to |
$680 |
(Gains) losses on retirement of long-term obligations |
$25 |
|
to |
$75 |
Interest income |
$(1) |
|
to |
$0 |
Other (income) expense |
$0 |
|
to |
$5 |
(Benefit) provision for income taxes |
$25 |
|
to |
$33 |
Stock-based compensation expense |
$135 |
|
to |
$139 |
Adjusted EBITDA(c)(d) |
$4,309 |
|
to |
$4,354 |
|
|
|
|
|
For Comparative Purposes - Reconciliation
of Previous Outlook for FFO and AFFO:
|
Previously Issued |
|
Full Year 2022 |
(in millions, except per share amounts) |
Outlook(a) |
Income (loss) from continuing operations |
$1,674 |
|
to |
$1,754 |
|
Real estate related depreciation, amortization and accretion |
$1,607 |
|
to |
$1,687 |
|
Asset write-down charges |
$15 |
|
to |
$25 |
|
FFO(c)(d) |
$3,358 |
|
to |
$3,403 |
|
Weighted-average common shares outstanding—diluted(e) |
435 |
FFO per share(c)(d)(e) |
$7.72 |
|
to |
$7.82 |
|
|
|
|
|
FFO (from above) |
$3,358 |
|
to |
$3,403 |
|
Adjustments to increase (decrease) FFO: |
|
|
|
Straight-lined revenues |
$(419) |
|
to |
$(399) |
|
Straight-lined expenses |
$56 |
|
to |
$76 |
|
Stock-based compensation expense |
$135 |
|
to |
$139 |
|
Non-cash portion of tax provision |
$0 |
|
to |
$15 |
|
Non-real estate related depreciation, amortization and
accretion |
$43 |
|
to |
$58 |
|
Amortization of non-cash interest expense |
$5 |
|
to |
$15 |
|
Other (income) expense |
$0 |
|
to |
$5 |
|
(Gains) losses on retirement of long-term obligations |
$25 |
|
to |
$75 |
|
Acquisition and integration costs |
$0 |
|
to |
$8 |
|
Sustaining capital expenditures |
$(113) |
|
to |
$(93) |
|
AFFO(c)(d) |
$3,178 |
|
to |
$3,223 |
|
Weighted-average common shares outstanding—diluted(e) |
435 |
AFFO per share(c)(d)(e) |
$7.31 |
|
to |
$7.41 |
|
(a) As issued on April 20, 2022.(b) See
reconciliation of "Components of Outlook for Interest Expense and
Amortization of Deferred Financing Costs" for a discussion of
non-cash interest expense.(c) See "Non-GAAP Financial Measures,
Segment Measures and Other Calculations" for a discussion of our
definitions of Adjusted EBITDA as well as FFO and AFFO, including
per share amounts(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 2022 Outlook is based on the diluted
common shares outstanding as of June 30,
2022.Components of Changes in Site Rental Revenues for the
Quarters Ended June 30, 2022 and 2021:
|
Three Months Ended June 30, |
(dollars in millions) |
|
2022 |
|
|
|
2021 |
|
Components of changes in site rental revenues:(a) |
|
|
|
Prior year site rental billings(b) |
$ |
1,245 |
|
|
$ |
1,181 |
|
|
|
|
|
Core leasing activity(b) |
|
75 |
|
|
|
82 |
|
Escalators |
|
22 |
|
|
|
23 |
|
Non-renewals(b) |
|
(39 |
) |
|
|
(43 |
) |
Organic Contribution to Site Rental Billings(b) |
|
58 |
|
|
|
62 |
|
Impact from straight-lined revenues associated with fixed
escalators |
|
120 |
|
|
|
45 |
|
Impact from prepaid rent amortization |
|
143 |
|
|
|
136 |
|
Acquisitions(c) |
|
1 |
|
|
|
1 |
|
Other |
|
— |
|
|
|
— |
|
Total GAAP site rental revenues |
$ |
1,567 |
|
|
$ |
1,425 |
|
|
|
|
|
Year-over-year changes in revenues: |
|
|
|
Reported GAAP site rental revenues |
|
10.0 |
% |
|
|
Contribution from core leasing and escalators(b)(d) |
|
7.8 |
% |
|
|
Organic Contribution to Site Rental Billings(b)(e) |
|
4.7 |
% |
|
|
|
|
|
|
|
|
Components of Changes in Site Rental
Revenues for Full Year 2022 Outlook:
(dollars in millions) |
Current Full Year 2022 Outlook(f) |
Components of changes in site rental revenues:(a) |
|
Prior year site rental billings(b) |
$5,048 |
|
|
|
Core leasing activity(b) |
$320 |
|
to |
$350 |
|
Escalators |
$95 |
|
to |
$105 |
|
Non-renewals(b) |
$(195) |
|
to |
$(175) |
|
Organic Contribution to Site Rental Billings(b) |
$230 |
|
to |
$270 |
|
Impact from straight-lined revenues associated with fixed
escalators |
$399 |
|
to |
$419 |
|
Impact from prepaid rent amortization |
$560 |
|
to |
$570 |
|
Acquisitions(c) |
— |
|
Other |
— |
|
Total GAAP site rental revenues |
$6,242 |
|
to |
$6,287 |
|
|
|
Year-over-year changes in revenues: |
|
Reported GAAP site rental revenues |
9.5%(g) |
Contribution from core leasing and escalators(b)(d) |
8.6%(g) |
Organic Contribution to Site Rental Billings(b)(e) |
5.0%(g) |
(a) Additional information regarding our site
rental revenues, including projected revenues from tenant
contracts, straight-lined revenues and prepaid rent is available in
our quarterly Supplemental Information Package posted in the
Investors section of our website. (b) See "Non-GAAP Financial
Measures, Segment Measures and Other Calculations" for our
definitions of site rental billings, core leasing activity,
non-renewals and Organic Contribution to Site Rental Billings.(c)
Represents the contribution from recent acquisitions. The financial
impact of recent acquisitions is excluded from Organic Contribution
to Site Rental Billings until the one-year anniversary of such
acquisitions.(d) Calculated as the percentage change from prior
year site rental billings compared to the sum of core leasing and
escalators for the current period.(e) Calculated as the percentage
change from prior year site rental billings compared to Organic
Contribution to Site Rental Billings for the current period.(f) As
issued on July 20, 2022.(g) Calculated based on midpoint of full
year 2022 Outlook.
Components of Historical Interest
Expense and Amortization of Deferred Financing Costs:
|
For the Three Months Ended |
(in millions) |
June 30, 2022 |
|
June 30, 2021 |
Interest expense on debt obligations |
$ |
161 |
|
|
$ |
157 |
|
Amortization of deferred financing costs and adjustments on
long-term debt, net |
|
7 |
|
|
|
7 |
|
Capitalized interest |
|
(3 |
) |
|
|
(3 |
) |
Interest expense and amortization of deferred financing
costs |
$ |
165 |
|
|
$ |
161 |
|
|
|
|
|
|
|
|
|
Components of Outlook for Interest
Expense and Amortization of Deferred Financing Costs:
(in millions) |
Current Full Year 2022 Outlook(a) |
|
Previous Full Year 2022 Outlook(b) |
Interest expense on debt obligations |
$682 |
|
to |
$702 |
|
|
$637 |
|
to |
$657 |
|
Amortization of deferred financing costs and adjustments on
long-term debt, net |
$25 |
|
to |
$30 |
|
|
$25 |
|
to |
$30 |
|
Capitalized interest |
$(20) |
|
to |
$(15) |
|
|
$(20) |
|
to |
$(15) |
|
Interest expense and amortization of deferred financing
costs |
$680 |
|
to |
$725 |
|
|
$635 |
|
to |
$680 |
|
(a) As issued on July 20, 2022.(b) As issued on
April 20, 2022.
Debt Balances and Maturity Dates as of
June 30, 2022:
(in millions) |
Face Value |
|
Final Maturity |
Cash, cash equivalents and restricted cash |
$ |
446 |
|
|
|
|
|
|
Secured Notes, Series 2009-1, Class A-2(a) |
|
50 |
|
Aug. 2029 |
Tower Revenue Notes, Series 2015-2(b) |
|
700 |
|
May 2045 |
Tower Revenue Notes, Series 2018-2(b) |
|
750 |
|
July 2048 |
Finance leases and other obligations |
|
235 |
|
Various |
Total secured debt |
$ |
1,735 |
|
|
2016 Revolver(c)(d) |
|
1,150 |
|
July 2027 |
2016 Term Loan A(c) |
|
1,207 |
|
July 2027 |
Commercial Paper Notes(e) |
|
952 |
|
Various |
3.150% Senior Notes |
|
750 |
|
July 2023 |
3.200% Senior Notes |
|
750 |
|
Sept. 2024 |
1.350% Senior Notes |
|
500 |
|
July 2025 |
4.450% Senior Notes |
|
900 |
|
Feb. 2026 |
3.700% Senior Notes |
|
750 |
|
June 2026 |
1.050% Senior Notes |
|
1,000 |
|
July 2026 |
2.900% Senior Notes |
|
750 |
|
Mar. 2027 |
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 |
3.300% Senior Notes |
|
750 |
|
July 2030 |
2.250% Senior Notes |
|
1,100 |
|
Jan. 2031 |
2.100% Senior Notes |
|
1,000 |
|
Apr. 2031 |
2.500% Senior Notes |
|
750 |
|
July 2031 |
2.900% Senior Notes |
|
1,250 |
|
Apr. 2041 |
4.750% Senior Notes |
|
350 |
|
May 2047 |
5.200% Senior Notes |
|
400 |
|
Feb. 2049 |
4.000% Senior Notes |
|
350 |
|
Nov. 2049 |
4.150% Senior Notes |
|
500 |
|
July 2050 |
3.250% Senior Notes |
|
900 |
|
Jan. 2051 |
Total unsecured debt |
$ |
19,709 |
|
|
Total net debt |
$ |
20,998 |
|
|
|
|
|
|
|
(a) The Senior Secured Notes, 2009-1, Class A-2
principal amortizes over a period ending in August 2029.(b) If the
respective series of Tower Revenue Notes are not paid in full on or
prior to an applicable anticipated repayment 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, 2015-2 and 2018-2 have anticipated repayment dates
in 2025 and 2028, respectively. Notes are prepayable at par if
voluntarily repaid within eighteen months of maturity; earlier
prepayment may require additional consideration.(c) Gives effect to
the July 2022 amendment to the credit agreement governing the
Senior Unsecured Credit Facility ("2022 Credit Agreement
Amendment").(d) As of June 30, 2022, after giving effect to
the 2022 Credit Agreement Amendment, the undrawn availability under
the $7.0 billion 2016 Revolver was $5.8 billion.(e) As of
June 30, 2022, the Company had $1.0 billion available for
issuance under the $2.0 billion unsecured commercial paper program.
The maturities of the Commercial Paper Notes, when outstanding, may
vary but may not exceed 397 days from the date of issue.
Net Debt to Last Quarter Annualized
Adjusted EBITDA Calculation:
(dollars in millions) |
For the Three Months Ended June 30, 2022 |
Total face value of debt |
$ |
21,444 |
Less: Ending cash, cash equivalents and restricted cash |
|
446 |
Total Net Debt |
$ |
20,998 |
|
|
Adjusted EBITDA for the three months ended June 30, 2022 |
$ |
1,078 |
Last quarter annualized Adjusted EBITDA |
|
4,312 |
Net Debt to Last Quarter Annualized Adjusted
EBITDA |
4.9x |
|
|
Components of Capital
Expenditures:(a)
|
For the Three Months Ended |
(in millions) |
June 30, 2022 |
|
June 30, 2021 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
15 |
$ |
— |
$ |
— |
$ |
15 |
|
$ |
21 |
$ |
— |
$ |
— |
$ |
21 |
Communications infrastructure improvements and other capital
projects |
|
27 |
|
235 |
|
5 |
|
267 |
|
|
39 |
|
223 |
|
6 |
|
268 |
Sustaining |
|
3 |
|
12 |
|
6 |
|
21 |
|
|
3 |
|
12 |
|
4 |
|
19 |
Total |
$ |
45 |
$ |
247 |
$ |
11 |
$ |
303 |
|
$ |
63 |
$ |
235 |
$ |
10 |
$ |
308 |
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
(in millions) |
June 30, 2022 |
|
June 30, 2021 |
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary: |
|
|
|
|
|
|
|
|
|
Purchases of land interests |
$ |
25 |
$ |
— |
$ |
— |
$ |
25 |
|
$ |
35 |
$ |
— |
$ |
— |
$ |
35 |
Communications infrastructure improvements and other capital
projects |
|
62 |
|
444 |
|
11 |
|
517 |
|
|
73 |
|
449 |
|
16 |
|
538 |
Sustaining |
|
5 |
|
25 |
|
12 |
|
42 |
|
|
6 |
|
23 |
|
7 |
|
36 |
Total |
$ |
92 |
$ |
469 |
$ |
23 |
$ |
584 |
|
$ |
114 |
$ |
472 |
$ |
23 |
$ |
609 |
(a) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" for further discussion of our
components of capital expenditures.
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,"
"see," "anticipate," "project," "plan," "intend," "believe,"
"expect," "likely," "predicted," "positioned," "continue,"
"target," "focus," and any variations of these words and similar
expressions are intended to identify forward-looking statements.
Such statements include our full year 2022 Outlook and plans,
projections, and estimates regarding (1) potential benefits,
growth, returns, capabilities, opportunities and shareholder value
which may be derived from our business, strategy, risk profile,
assets and customer solutions, investments, acquisitions and
dividends, (2) our business, strategy, strategic position, business
model and capabilities and the strength thereof, (3) 5G deployment
in the United States and our customers' strategy and plans with
respect thereto and demand for our assets and solutions created by
such deployment and our customers' strategy and plans, (4) our
long- and short-term prospects and the trends, events and industry
activities impacting our business, (5) opportunities we see to
deliver value to our shareholders, (6) our dividends (including
timing of payment thereof), dividend targets, dividend payout
ratio, and our long- and short-term dividend (including on a per
share basis) growth rate, and its driving factors, (7) our debt and
debt maturities, (8) cash flows, including growth thereof,
(9) leasing environment and the leasing activity we see in our
business (including with respect to our Towers segment), and
benefits and opportunities created thereby, (10) tenant
non-renewals, including the impact and timing thereof, (11) capital
expenditures, including sustaining and discretionary capital
expenditures, the timing and funding thereof and any benefits that
may result therefrom, (12) revenues and growth thereof (including
with respect to our Towers business) and benefits derived
therefrom, (13) Income (loss) from continuing operations (including
on a per share basis), (14) Adjusted EBITDA, including
components thereof and growth thereof, (15) costs and
expenses, including interest expense (and the increase thereof) and
amortization of deferred financing costs, (16) FFO (including on a
per share basis) and growth thereof, (17) AFFO (including on a per
share basis) and its components and growth thereof and
corresponding driving factors, (18) Organic Contribution to
Site Rental Billings and its components, including growth thereof
and contributions therefrom, (19) our weighted-average common
shares outstanding (including on a diluted basis) and growth
thereof, (20) site rental revenues and the growth thereof, (21)
annual small cell deployment and the impacts therefrom, including
its driving factors, (22) prepaid rent, including the additions and
the amortization and growth thereof, (23) the strength of the U.S.
market for communications infrastructure ownership, (24) the
strength of our balance sheet, (25) the utility of certain
financial measures, including non-GAAP financial measures, (26)
investment opportunities and the benefits that may be derived
therefrom, (27) interest rates, including the increase thereof, and
the impacts therefrom, (28) our liquidity, (29) the change to our
corporate name, including the timing thereof, (30) our operating
conditions and expectations and (31) services contribution. All
future dividends are subject to declaration by our board of
directors.
Such forward-looking statements are subject to
certain risks, uncertainties and assumptions, including 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, efficiently and
safely execute on our construction projects could adversely affect
our business.
- 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 rights to land 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.
- 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.
- Cybersecurity breaches or other
information technology disruptions could adversely affect our
operations, business and reputation.
- Our business may be adversely
impacted by climate-related events, natural disasters, including
wildfires, and other unforeseen events.
- The impact of COVID-19 and related
risks could materially affect our financial position, results of
operations and cash flows.
- 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 wireless technologies may not
deploy or be adopted by tenants as rapidly or in the manner
projected.
- Our substantial level of
indebtedness could adversely affect our ability to react to changes
in our business, and the terms of our debt instruments limit our
ability to take a number of actions that our management might
otherwise believe to be in our best interests. In addition, if we
fail to comply with our covenants, our debt could be
accelerated.
- We have a substantial amount of
indebtedness. In the event we do not repay or refinance such
indebtedness, we could face substantial liquidity issues and might
be required to issue equity securities or securities convertible
into equity securities, or sell some of our assets to meet our debt
payment obligations.
- Sales or issuances of a substantial
number of shares of our common stock or securities convertible into
shares of our common stock may adversely affect the market price of
our common stock.
- 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.
- 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.
- 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.
- Complying with REIT requirements,
including the 90% distribution requirement, may limit our
flexibility or cause us to forgo otherwise attractive
opportunities, including certain discretionary investments and
potential financing alternatives.
- REIT related ownership limitations
and transfer restrictions may prevent or restrict certain transfers
of our capital stock.
Should one or more of these or other risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expected.
More information about potential risk factors which could affect
our results is included in our filings with the SEC. Our filings
with the SEC are available through the SEC website at www.sec.gov
or through our investor relations website at
investor.crowncastle.com. We use our investor relations website to
disclose information about us that may be deemed to be material. We
encourage investors, the media and others interested in us to visit
our investor relations website from time to time to review
up-to-date information or to sign up for e-mail alerts to be
notified when new or updated information is posted on the site.
As used in this release, the term "including,"
and any variation thereof, means "including without
limitation."
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED BALANCE SHEET (UNAUDITED)(Amounts in
millions, except par values) |
|
June 30,2022 |
|
December 31,2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
281 |
|
|
$ |
292 |
|
Restricted cash |
|
160 |
|
|
|
169 |
|
Receivables, net |
|
516 |
|
|
|
543 |
|
Prepaid expenses |
|
158 |
|
|
|
105 |
|
Other current assets |
|
175 |
|
|
|
145 |
|
Total current assets |
|
1,290 |
|
|
|
1,254 |
|
Deferred site rental receivables |
|
1,796 |
|
|
|
1,588 |
|
Property and equipment, net |
|
15,219 |
|
|
|
15,269 |
|
Operating lease right-of-use assets |
|
6,663 |
|
|
|
6,682 |
|
Goodwill |
|
10,087 |
|
|
|
10,078 |
|
Other intangible assets, net |
|
3,822 |
|
|
|
4,046 |
|
Other assets, net |
|
136 |
|
|
|
123 |
|
Total assets |
$ |
39,013 |
|
|
$ |
39,040 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
230 |
|
|
$ |
246 |
|
Accrued interest |
|
180 |
|
|
|
182 |
|
Deferred revenues |
|
701 |
|
|
|
776 |
|
Other accrued liabilities |
|
342 |
|
|
|
401 |
|
Current maturities of debt and other obligations |
|
70 |
|
|
|
72 |
|
Current portion of operating lease liabilities |
|
348 |
|
|
|
349 |
|
Total current liabilities |
|
1,871 |
|
|
|
2,026 |
|
Debt and other long-term obligations |
|
21,212 |
|
|
|
20,557 |
|
Operating lease liabilities |
|
6,017 |
|
|
|
6,031 |
|
Other long-term liabilities |
|
2,052 |
|
|
|
2,168 |
|
Total liabilities |
|
31,152 |
|
|
|
30,782 |
|
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Common stock, $0.01 par value; 1,200 shares authorized; shares
issued and outstanding: June 30, 2022—433 and December 31,
2021—432 |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
18,050 |
|
|
|
18,011 |
|
Accumulated other comprehensive income (loss) |
|
(5 |
) |
|
|
(4 |
) |
Dividends/distributions in excess of earnings |
|
(10,188 |
) |
|
|
(9,753 |
) |
Total equity |
|
7,861 |
|
|
|
8,258 |
|
Total liabilities and equity |
$ |
39,013 |
|
|
$ |
39,040 |
|
|
|
|
|
|
|
|
|
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)(Amounts
in millions, except per share amounts) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net revenues: |
|
|
|
|
|
|
|
Site rental |
$ |
1,567 |
|
|
$ |
1,425 |
|
|
$ |
3,143 |
|
|
$ |
2,794 |
|
Services and other |
|
167 |
|
|
|
158 |
|
|
|
333 |
|
|
|
274 |
|
Net revenues |
|
1,734 |
|
|
|
1,583 |
|
|
|
3,476 |
|
|
|
3,068 |
|
Operating expenses: |
|
|
|
|
|
|
|
Costs of operations:(a) |
|
|
|
|
|
|
|
Site rental |
|
402 |
|
|
|
389 |
|
|
|
798 |
|
|
|
770 |
|
Services and other |
|
112 |
|
|
|
105 |
|
|
|
225 |
|
|
|
186 |
|
Selling, general and administrative |
|
190 |
|
|
|
169 |
|
|
|
371 |
|
|
|
333 |
|
Asset write-down charges |
|
9 |
|
|
|
6 |
|
|
|
23 |
|
|
|
9 |
|
Acquisition and integration costs |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Depreciation, amortization and accretion |
|
427 |
|
|
|
408 |
|
|
|
847 |
|
|
|
816 |
|
Total operating expenses |
|
1,141 |
|
|
|
1,078 |
|
|
|
2,265 |
|
|
|
2,115 |
|
Operating income (loss) |
|
593 |
|
|
|
505 |
|
|
|
1,211 |
|
|
|
953 |
|
Interest expense and amortization of deferred financing costs |
|
(165 |
) |
|
|
(161 |
) |
|
|
(329 |
) |
|
|
(330 |
) |
Gains (losses) on retirement of long-term obligations |
|
— |
|
|
|
(1 |
) |
|
|
(26 |
) |
|
|
(144 |
) |
Interest income |
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Other income (expense) |
|
(2 |
) |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
(12 |
) |
Income (loss) before income taxes |
|
426 |
|
|
|
339 |
|
|
|
853 |
|
|
|
468 |
|
Benefit (provision) for income taxes |
|
(5 |
) |
|
|
(6 |
) |
|
|
(11 |
) |
|
|
(13 |
) |
Income (loss) from continuing operations |
|
421 |
|
|
|
333 |
|
|
|
842 |
|
|
|
455 |
|
Discontinued operations: |
|
|
|
|
|
|
|
Net gain (loss) from disposal of discontinued operations, net of
tax |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(62 |
) |
Income (loss) from discontinued operations, net of tax |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(62 |
) |
Net income (loss) |
$ |
421 |
|
|
$ |
334 |
|
|
$ |
842 |
|
|
$ |
393 |
|
|
|
|
|
|
|
|
|
Net income (loss), per common
share: |
|
|
|
|
|
|
|
Income (loss) from continuing operations, basic |
$ |
0.97 |
|
|
$ |
0.77 |
|
|
$ |
1.95 |
|
|
$ |
1.05 |
|
Income (loss) from discontinued operations, basic |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.14 |
) |
Net income (loss), basic |
$ |
0.97 |
|
|
$ |
0.77 |
|
|
$ |
1.95 |
|
|
$ |
0.91 |
|
Income (loss) from continuing operations, diluted |
$ |
0.97 |
|
|
$ |
0.77 |
|
|
$ |
1.94 |
|
|
$ |
1.04 |
|
Income (loss) from discontinued operations, diluted |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.14 |
) |
Net income (loss), diluted |
$ |
0.97 |
|
|
$ |
0.77 |
|
|
$ |
1.94 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
433 |
|
|
|
432 |
|
|
|
433 |
|
|
|
432 |
|
Diluted |
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
(a) Exclusive of depreciation, amortization and
accretion shown separately.
|
CROWN CASTLE INTERNATIONAL CORP.CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)(In
millions of dollars) |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
Income (loss) from continuing operations |
$ |
842 |
|
|
$ |
455 |
|
Adjustments to reconcile
income (loss) from continuing operations to net cash provided by
(used for) operating activities: |
|
|
|
Depreciation, amortization and accretion |
|
847 |
|
|
|
816 |
|
(Gains) losses on retirement of long-term obligations |
|
26 |
|
|
|
144 |
|
Amortization of deferred financing costs and other non-cash
interest, net |
|
7 |
|
|
|
6 |
|
Stock-based compensation expense |
|
83 |
|
|
|
67 |
|
Asset write-down charges |
|
23 |
|
|
|
9 |
|
Deferred income tax (benefit) provision |
|
1 |
|
|
|
3 |
|
Other non-cash adjustments, net |
|
3 |
|
|
|
14 |
|
Changes in assets and liabilities, excluding the effects of
acquisitions: |
|
|
|
Increase (decrease) in liabilities |
|
(232 |
) |
|
|
(56 |
) |
Decrease (increase) in assets |
|
(263 |
) |
|
|
(87 |
) |
Net cash provided by (used for) operating activities |
|
1,337 |
|
|
|
1,371 |
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
|
(584 |
) |
|
|
(609 |
) |
Payments for acquisitions, net of cash acquired |
|
(15 |
) |
|
|
(15 |
) |
Other investing activities, net |
|
(10 |
) |
|
|
8 |
|
Net cash provided by (used for) investing activities |
|
(609 |
) |
|
|
(616 |
) |
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of long-term debt |
|
748 |
|
|
|
3,985 |
|
Principal payments on debt and other long-term obligations |
|
(36 |
) |
|
|
(1,038 |
) |
Purchases and redemptions of long-term debt |
|
(1,274 |
) |
|
|
(1,789 |
) |
Borrowings under revolving credit facility |
|
2,050 |
|
|
|
580 |
|
Payments under revolving credit facility |
|
(1,565 |
) |
|
|
(870 |
) |
Net borrowings (repayments) under commercial paper program |
|
687 |
|
|
|
(210 |
) |
Payments for financing costs |
|
(8 |
) |
|
|
(39 |
) |
Purchases of common stock |
|
(63 |
) |
|
|
(68 |
) |
Dividends/distributions paid on common stock |
|
(1,287 |
) |
|
|
(1,163 |
) |
Net cash provided by (used for) financing activities |
|
(748 |
) |
|
|
(612 |
) |
Net increase (decrease) in cash, cash equivalents, and
restricted cash |
|
(20 |
) |
|
|
143 |
|
Effect of exchange rate changes on cash |
|
— |
|
|
|
1 |
|
Cash, cash equivalents, and restricted cash at beginning of
period |
|
466 |
|
|
|
381 |
|
Cash, cash equivalents, and restricted cash at end of
period |
$ |
446 |
|
|
$ |
525 |
|
Supplemental disclosure of cash flow
information: |
|
|
|
Interest paid |
|
324 |
|
|
|
344 |
|
Income taxes paid |
|
9 |
|
|
|
13 |
|
|
CROWN CASTLE INTERNATIONAL CORP.SEGMENT
OPERATING RESULTS (UNAUDITED)(In millions of dollars) |
SEGMENT OPERATING RESULTS |
|
Three Months Ended June 30, 2022 |
|
Three Months Ended June 30, 2021 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
1,078 |
|
$ |
489 |
|
|
|
$ |
1,567 |
|
$ |
952 |
|
$ |
473 |
|
|
|
$ |
1,425 |
Segment services and other revenues |
|
164 |
|
|
3 |
|
|
|
|
167 |
|
|
154 |
|
|
4 |
|
|
|
|
158 |
Segment revenues |
|
1,242 |
|
|
492 |
|
|
|
|
1,734 |
|
|
1,106 |
|
|
477 |
|
|
|
|
1,583 |
Segment site rental costs of operations |
|
232 |
|
|
162 |
|
|
|
|
394 |
|
|
221 |
|
|
161 |
|
|
|
|
382 |
Segment services and other costs of operations |
|
107 |
|
|
2 |
|
|
|
|
109 |
|
|
100 |
|
|
3 |
|
|
|
|
103 |
Segment costs of operations(a)(b) |
|
339 |
|
|
164 |
|
|
|
|
503 |
|
|
321 |
|
|
164 |
|
|
|
|
485 |
Segment site rental gross margin(c) |
|
846 |
|
|
327 |
|
|
|
|
1,173 |
|
|
731 |
|
|
312 |
|
|
|
|
1,043 |
Segment services and other gross margin(c) |
|
57 |
|
|
1 |
|
|
|
|
58 |
|
|
54 |
|
|
1 |
|
|
|
|
55 |
Segment selling, general and administrative expenses(b) |
|
28 |
|
|
46 |
|
|
|
|
74 |
|
|
26 |
|
|
44 |
|
|
|
|
70 |
Segment operating
profit(c) |
|
875 |
|
|
282 |
|
|
|
|
1,157 |
|
|
759 |
|
|
269 |
|
|
|
|
1,028 |
Other selling, general and
administrative expenses(b) |
|
|
|
|
$ |
79 |
|
|
79 |
|
|
|
|
|
$ |
70 |
|
|
70 |
Stock-based compensation expense |
|
|
|
|
|
44 |
|
|
44 |
|
|
|
|
|
|
34 |
|
|
34 |
Depreciation, amortization and
accretion |
|
|
|
|
|
427 |
|
|
427 |
|
|
|
|
|
|
408 |
|
|
408 |
Interest expense and
amortization of deferred financing costs |
|
|
|
|
|
165 |
|
|
165 |
|
|
|
|
|
|
161 |
|
|
161 |
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
|
16 |
|
|
16 |
|
|
|
|
|
|
16 |
|
|
16 |
Income (loss) before income
taxes |
|
|
|
|
|
|
$ |
426 |
|
|
|
|
|
|
|
$ |
339 |
FIBER SEGMENT SITE RENTAL REVENUES SUMMARY |
|
Three Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
Fiber Solutions |
|
Small Cells |
|
Total |
|
Fiber Solutions |
|
Small Cells |
|
Total |
Site rental revenues |
$ |
333 |
|
$ |
156 |
|
$ |
489 |
|
$ |
329 |
|
$ |
144 |
|
$ |
473 |
(a) Exclusive of depreciation, amortization and
accretion shown separately.(b) Segment costs of operations exclude
(1) stock-based compensation expense of $7 million and
$5 million for the three months ended June 30, 2022 and
2021, respectively, (2) prepaid lease purchase price adjustments of
$4 million for each of the the three months ended June 30,
2022 and 2021. Selling, general and administrative expenses exclude
stock-based compensation expense of $37 million and $29
million for the three months ended June 30, 2022 and 2021,
respectively.(c) See "Non-GAAP Financial Measures, Segment Measures
and Other Calculations" 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.
SEGMENT OPERATING RESULTS |
|
Six Months Ended June 30, 2022 |
|
Six Months Ended June 30, 2021 |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
$ |
2,153 |
|
$ |
990 |
|
|
|
$ |
3,143 |
|
$ |
1,847 |
|
$ |
947 |
|
|
|
$ |
2,794 |
Segment services and other revenues |
|
327 |
|
|
6 |
|
|
|
|
333 |
|
|
265 |
|
|
9 |
|
|
|
|
274 |
Segment revenues |
|
2,480 |
|
|
996 |
|
|
|
|
3,476 |
|
|
2,112 |
|
|
956 |
|
|
|
|
3,068 |
Segment site rental costs of operations |
|
458 |
|
|
323 |
|
|
|
|
781 |
|
|
433 |
|
|
322 |
|
|
|
|
755 |
Segment services and other costs of operations |
|
216 |
|
|
4 |
|
|
|
|
220 |
|
|
175 |
|
|
6 |
|
|
|
|
181 |
Segment costs of operations(a)(b) |
|
674 |
|
|
327 |
|
|
|
|
1,001 |
|
|
608 |
|
|
328 |
|
|
|
|
936 |
Segment site rental gross margin(c) |
|
1,695 |
|
|
667 |
|
|
|
|
2,362 |
|
|
1,414 |
|
|
625 |
|
|
|
|
2,039 |
Segment services and other gross margin(c) |
|
111 |
|
|
2 |
|
|
|
|
113 |
|
|
90 |
|
|
3 |
|
|
|
|
93 |
Segment selling, general and administrative expenses(b) |
|
56 |
|
|
93 |
|
|
|
|
149 |
|
|
51 |
|
|
89 |
|
|
|
|
140 |
Segment operating profit(c) |
|
1,750 |
|
|
576 |
|
|
|
|
2,326 |
|
|
1,453 |
|
|
539 |
|
|
|
|
1,992 |
Other selling, general and administrative expenses(b) |
|
|
|
|
$ |
153 |
|
|
153 |
|
|
|
|
|
$ |
136 |
|
|
136 |
Stock-based compensation expense |
|
|
|
|
|
83 |
|
|
83 |
|
|
|
|
|
|
68 |
|
|
68 |
Depreciation, amortization and accretion |
|
|
|
|
|
847 |
|
|
847 |
|
|
|
|
|
|
816 |
|
|
816 |
Interest expense and amortization of deferred financing costs |
|
|
|
|
|
329 |
|
|
329 |
|
|
|
|
|
|
330 |
|
|
330 |
Other (income) expenses to reconcile to income (loss) before income
taxes(d) |
|
|
|
|
|
61 |
|
|
61 |
|
|
|
|
|
|
174 |
|
|
174 |
Income (loss) before income taxes |
|
|
|
|
|
|
$ |
853 |
|
|
|
|
|
|
|
$ |
468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIBER SEGMENT SITE RENTAL REVENUES SUMMARY |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
Fiber Solutions |
|
Small Cells |
|
Total |
|
Fiber Solutions |
|
Small Cells |
|
Total |
Site rental revenues |
$ |
679 |
|
$ |
311 |
|
$ |
990 |
|
$ |
659 |
|
$ |
288 |
|
$ |
947 |
(a) Exclusive of depreciation, amortization and
accretion shown separately.(b) Segment costs of operations exclude
(1) stock-based compensation expense of $14 million and
$11 million for the six months ended June 30, 2022 and 2021,
respectively, and (2) prepaid lease purchase price adjustments of
$8 million and $9 million for the six months ended June
30, 2022 and 2021, respectively. Selling, general and
administrative expenses exclude stock-based compensation expense of
$69 million and $57 million for the six months ended June
30, 2022 and 2021, respectively.(c) See "Non-GAAP Financial
Measures, Segment Measures and Other Calculations" for a discussion
of our definitions of segment site rental gross margin, segment
services and other gross margin and segment operating profit.(d)
See condensed consolidated statement of operations for further
information.
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