HOUSTON, Oct. 20, 2016 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) ("Crown Castle") today reported results for the quarter ended September 30, 2016.
2017 Outlook for AFFO Growth
2017 Outlook for Organic Contribution to Site Rental Revenues and Growth in Site Rental Revenues
"Our business continues to grow at a healthy pace as U.S. wireless carriers further invest to enhance the consumer mobile experience," stated Jay Brown, Crown Castle’s Chief Executive Officer. "Driven by the continued adoption and introduction of data-intensive applications and consistent with many industry forecasts, we believe over the next decade there will be tremendous growth in wireless data traffic that will necessitate further investment in wireless networks, which we expect will result in revenue and cash flow growth for Crown Castle. Today, as a result of our investments over the last several years to acquire towers and deploy small cells, we have the leading portfolio of U.S. wireless infrastructure, which we expect will continue to generate significant incremental returns. Consistent with the growth we are seeing in our business, we are increasing our quarterly stock dividend by 7% to $0.95 per share, commencing with our fourth quarter 2016 dividend payment."
RESULTS FOR THE QUARTER The table below sets forth select financial results for the three month period ended September 30, 2016. For further information, refer to the financial statements and non-GAAP and other calculation reconciliations included in this press release.
(in millions)
Actual
Midpoint Q3 2016 Outlook(b)
Actual Compared to Outlook
Q3 2016
Q3 2015
$ Change
% Change
Site rental revenues
$
812
$
765
+$
47
6
%
$
808
+$
4
Site rental gross margin
$
555
$
518
+$
37
7
%
$
552
+$
3
Net income (loss)
$
98
$
104
-$
6
-6
%
$
101
-$
3
Adjusted EBITDA(a)
$
564
$
529
+$
35
7
%
$
560
+$
4
AFFO(a)(c)
$
416
$
356
+$
60
17
%
$
403
+$
13
Weighted-average common shares outstanding - diluted
338
334
+
4
1
%
339
-
1
Note: Figures may not tie due to rounding
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) As issued on July 21, 2016.
(c) Attributable to CCIC common stockholders.
HIGHLIGHTS FROM THE QUARTER
Site rental revenues. Site rental revenues grew approximately 6%, or $47 million, from third quarter 2015 to third quarter 2016, inclusive of approximately $47 million in Organic Contribution to Site Rental Revenues plus $19 million in contributions from acquisitions and other items, less a $19 million reduction in straight-line revenues. The $47 million in Organic Contribution to Site Rental Revenues represents approximately 6% growth, comprised of approximately 9% growth from new leasing activity and contracted tenant escalations, net of approximately 3% from tenant non-renewals.
Net income (loss). Net income (loss) for third quarter 2016 was negatively impacted by approximately $10 million in losses on retirement of long-term obligations related to refinancing activities during the quarter.
AFFO. AFFO for third quarter 2016 benefited from approximately $7 million in lower than expected sustaining capital expenditures during the quarter. This benefit is primarily attributable to timing, as the unspent amount from third quarter 2016 is expected to be spent during fourth quarter 2016.
Capital expenditures. Capital expenditures during the quarter were approximately $221 million, comprised of approximately $17 million of land purchases, approximately $19 million of sustaining capital expenditures and approximately $185 million of revenue generating capital expenditures.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $299 million in the aggregate, or $0.885 per common share.
Financing activities. During the quarter, Crown Castle issued $700 million in aggregate principal amount of senior unsecured notes, the proceeds of which were used to refinance existing debt.
"Our excellent third quarter results allowed us to increase our full year 2016 Outlook, setting the stage for expected continued growth in 2017," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "We expect the healthy leasing environment from 2016 to continue into 2017 as the wireless carriers continue to upgrade and enhance their networks to meet increasing demand for wireless connectivity. This leasing backdrop combined with the strength of our business model, the quality of our assets and the strength of our balance sheet give us the confidence to increase our dividend and provide us with opportunities to continue to invest in our business to drive long-term growth in AFFO and dividends."
DIVIDEND INCREASE ANNOUNCEMENT Crown Castle's Board of Directors has declared a quarterly cash dividend of $0.95 per common share, representing an increase of approximately 7% over the previous quarterly dividend of $0.885 per share. The quarterly dividend will be payable on December 30, 2016 to common stockholders of record at the close of business on December 16, 2016. Future dividends are subject to the approval of Crown Castle's Board of Directors.
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 fourth quarter 2016, full year 2016 and full year 2017:
(in millions)
Fourth Quarter 2016
Full Year 2016
Full Year 2017
Site rental revenues
$
811
to
$
816
$
3,227
to
$
3,232
$
3,314
to
$
3,344
Site rental cost of operations
$
253
to
$
258
$
1,015
to
$
1,020
$
1,023
to
$
1,053
Site rental gross margin
$
556
to
$
561
$
2,210
to
$
2,215
$
2,276
to
$
2,306
Net income (loss)
$
90
to
$
110
$
318
to
$
338
$
375
to
$
425
Adjusted EBITDA(a)
$
566
to
$
571
$
2,219
to
$
2,224
$
2,263
to
$
2,293
Interest expense and amortization of deferred financing costs(b)
$
128
to
$
133
$
514
to
$
519
$
515
to
$
545
FFO(a)(d)
$
383
to
$
388
$
1,426
to
$
1,431
$
1,566
to
$
1,596
AFFO(a)(d)
$
403
to
$
408
$
1,606
to
$
1,611
$
1,739
to
$
1,769
Weighted-average common shares outstanding - diluted(c)
346
340
350
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(c) The assumption for fourth quarter 2016, full year 2016 and full year 2017 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(d) Attributable to CCIC common stockholders.
Full Year 2016 Outlook The table below compares the results for full year 2015, the midpoint of the current full year 2016 Outlook and the midpoint of the previously provided full year 2016 Outlook for select metrics.
Midpoint of FY 2016 Outlook to FY 2015 Actual Comparison
Previous Full Year 2016 Outlook(b)
Current Compared to Previous Outlook
($ in millions)
Current Full Year 2016 Outlook
Full Year 2015 Actual
$ Change
% Change
Site rental revenues
$
3,230
$
3,018
+$
212
+7
%
$
3,223
+$
7
Site rental gross margin
$
2,213
$
2,055
+$
158
+8
%
$
2,207
+$
6
Net income (loss)
$
328
$
1,524
-$
1,196
-78
%
$
338
-$
10
Adjusted EBITDA(a)
$
2,222
$
2,119
+$
103
+5
%
$
2,215
+$
7
AFFO(a)(d)
$
1,609
$
1,437
+$
172
+12
%
$
1,605
+$
4
Weighted-average common shares outstanding - diluted(c)
340
334
+
6
+2
%
341
-
1
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) As issued on July 21, 2016. Represents midpoint of Outlook.
(c) The assumption for full year 2016 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(d) Attributable to CCIC common stockholders.
The increase in full year 2016 Outlook primarily reflects the higher than expected results from the third quarter and the expected timing benefit from tenant non-renewals occurring later than previously expected, partially offset by an expected increase in sustaining capital expenditures for the full year.
Full Year 2017 Outlook The table below compares the midpoint of the current full year 2016 Outlook and the midpoint of the full year 2017 Outlook for select metrics:
Midpoint
($ in millions)
Full Year 2016 Outlook
Full Year 2017 Outlook
$ Change
% Change
Site rental revenues
$
3,230
$
3,329
+$
99
+3
%
Site rental gross margin
$
2,213
$
2,291
+$
78
+4
%
Net income (loss)
$
328
$
400
+$
72
+22
%
Adjusted EBITDA(a)
$
2,222
$
2,278
+$
56
+3
%
AFFO(a)(c)
$
1,609
$
1,754
+$
145
+9
%
Weighted-average common shares outstanding - diluted(b)
340
350
+
10
+3
%
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) The assumption for full year 2016 and 2017 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(c) Attributable to CCIC common stockholders.
The chart below reconciles the components of expected growth from 2016 to 2017 in site rental revenues of $85 million to $115 million, including expected Organic Contribution to Site Rental Revenues of approximately $140 million to $170 million.
At the midpoint, growth from new leasing activity for full year 2017 is approximately $10 million lower than full year 2016. This lower growth reflects similar growth from towers and approximately $15 million higher growth from small cells, offset by approximately $25 million in lower growth from amortization of deferred credits (commonly referred to as prepaid rent). Further, full year 2017 Outlook assumes prepaid rent to be received during the year to be similar to full year 2016.
The chart below reconciles the components of expected growth in AFFO from 2016 to 2017 of approximately $145 million at the midpoint.
Network services gross margin contribution for full year 2017 is expected to be approximately $235 million to $255 million compared to full year 2016 expectation of $255 million to $260 million.
The conversion of the 4.5% Mandatory Convertible Preferred Stock ("Preferred Stock") on November 1, 2016 will eliminate $44 million in annual preferred dividend payments, which are deducted to arrive at AFFO. As a result of the anticipated conversion of the Preferred Stock, 11.6 million common shares are expected to be issued on November 1, 2016. The amount of common shares to be issued is subject to change depending on the average common share price for the 20 business days preceding November 1, 2016.
Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
CONFERENCE CALL DETAILS Crown Castle has scheduled a conference call for Friday, October 21, 2016, at 10:30 a.m. Eastern time. The conference call may be accessed by dialing 888-811-5441 and asking for the Crown Castle call (access code 6156887) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Friday, October 21, 2016, through 1:30 p.m. Eastern time on Thursday, January 19, 2017 and may be accessed by dialing 888-203-1112 and using access code 6156887. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
ABOUT CROWN CASTLE Crown Castle provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 17,000 miles of fiber supporting small cells, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets. For more information on Crown Castle, please visit www.crowncastle.com.
Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), Funds from Operations ("FFO"), 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 measures of Adjusted EBITDA, AFFO, FFO, Organic Contribution to Site Rental Revenues, Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit may not be comparable to similarly titled measures of other companies, including other companies in the tower 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.
Adjusted EBITDA, AFFO, FFO, and Organic Contribution to Site Rental Revenues 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 excluding 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 REITs. 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 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 they include (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 exclude 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 revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. Management notes that the Company 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 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 the Company. 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.
•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 customer 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.
In addition to the non-GAAP financial measures used herein, we also provide Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments for purposes of making decisions about allocating capital and assessing performance. These segment measures are provided pursuant to GAAP requirements related to segment reporting. In addition, we provide the components of certain GAAP measures, such as capital expenditures.
We define our non-GAAP financial measures and other measures as follows:
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-line 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, gain (loss) 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 capital improvement capital expenditures and corporate capital expenditures.
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.
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 customer contracts.
Discretionary capital expenditures. We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of (1) improvements to existing wireless infrastructure and construction of new wireless infrastructure (collectively referred to as "revenue generating") and (2) purchases of land assets under towers as we seek to manage our interests in the land beneath our towers.
Sustaining capital expenditures. We define sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
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 cost of operations.
Segment Network Services and Other Gross Margin. We define Segment Network Services and Other Gross Margin as segment network services and other revenues less segment network services and other cost of operations, excluding stock-based compensation expense recorded in cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment revenues less segment cost of operations and segment general and administrative expenses, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in cost of operations.
The tables set forth below reconcile the non-GAAP financial measures used herein to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures and Other Calculations:
Reconciliation of Historical Adjusted EBITDA:
For the Three Months Ended
For the Twelve Months Ended
September 30, 2016
September 30, 2015
December 31, 2015
(in millions)
Net income (loss)
$
98.4
$
103.8
$
1,524.3
Adjustments to increase (decrease) net income (loss):
Income (loss) from discontinued operations
—
0.5
(999.0
)
Asset write-down charges
8.3
7.5
33.5
Acquisition and integration costs
2.7
7.6
15.7
Depreciation, amortization and accretion
280.8
261.7
1,036.2
Amortization of prepaid lease purchase price adjustments
5.4
5.1
20.5
Interest expense and amortization of deferred financing costs(a)
129.9
129.9
527.1
Gains (losses) on retirement of long-term obligations
10.3
—
4.2
Interest income
(0.2
)
(0.8
)
(1.9
)
Other income (expense)
0.8
1.2
(57.0
)
Benefit (provision) for income taxes
5.0
(3.8
)
(51.5
)
Stock-based compensation expense
22.6
16.5
67.1
Adjusted EBITDA(b)
$
564.1
$
529.2
$
2,119.2
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
Reconciliation of Current Outlook for Adjusted EBITDA:
Q4 2016
Full Year 2016
Full Year 2017
(in millions)
Outlook
Outlook
Outlook
Net income (loss)
$
90
to
$
110
$
318
to
$
338
$
375
to
$
425
Adjustments to increase (decrease) net income (loss):
Asset write-down charges
$
9
to
$
11
$
37
to
$
39
$
35
to
$
45
Acquisition and integration costs
$
3
to
$
6
$
14
to
$
17
$
3
to
$
8
Depreciation, amortization and accretion
$
283
to
$
298
$
1,123
to
$
1,138
$
1,151
to
$
1,177
Amortization of prepaid lease purchase price adjustments
$
4
to
$
6
$
20
to
$
22
$
20
to
$
22
Interest expense and amortization of deferred financing costs(a)
$
128
to
$
133
$
514
to
$
519
$
515
to
$
545
Gains (losses) on retirement of long-term obligations
$
0
to
$
0
$
52
to
$
52
$
0
to
$
0
Interest income
$
(1
)
to
$
0
$
(2
)
to
$
(1
)
$
(1
)
to
$
1
Other income (expense)
$
(1
)
to
$
2
$
3
to
$
6
$
2
to
$
4
Benefit (provision) for income taxes
$
4
to
$
8
$
18
to
$
22
$
14
to
$
22
Stock-based compensation expense
$
21
to
$
23
$
97
to
$
99
$
94
to
$
99
Adjusted EBITDA(b)
$
566
to
$
571
$
2,219
to
$
2,224
$
2,263
to
$
2,293
(a) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
Reconciliation of Historical FFO and AFFO:
For the Three Months Ended
For the Nine Months Ended
For the Twelve Months Ended
(in millions)
September 30, 2016
September 30, 2015
September 30, 2016
September 30, 2015
December 31, 2015
Net income (loss)(a)
$
98.4
$
104.3
$
232.3
$
382.6
$
525.3
Real estate related depreciation, amortization and accretion
274.2
257.0
815.1
753.6
1,018.3
Asset write-down charges
8.3
7.5
28.3
19.7
33.5
Dividends on preferred stock
(11.0
)
(11.0
)
(33.0
)
(33.0
)
(44.0
)
FFO(b)(c)(d)(e)(f)
$
369.9
$
357.8
$
1,042.6
$
1,122.8
$
1,533.1
FFO (from above)
$
369.9
$
357.8
$
1,042.6
$
1,122.8
$
1,533.1
Adjustments to increase (decrease) FFO:
Straight-lined revenue
(8.8
)
(27.1
)
(42.4
)
(89.0
)
(111.3
)
Straight-lined expense
23.5
24.4
71.1
74.0
98.7
Stock-based compensation expense
22.6
16.5
75.3
49.3
67.1
Non-cash portion of tax provision
3.5
(5.9
)
5.2
(20.3
)
(63.9
)
Non-real estate related depreciation, amortization and accretion
6.6
4.6
19.6
13.0
17.9
Amortization of non-cash interest expense
3.3
8.6
11.3
32.4
37.1
Other (income) expense
0.8
1.2
4.6
(58.5
)
(57.0
)
Gains (losses) on retirement of long-term obligations
10.3
—
52.3
4.2
4.2
Acquisition and integration costs
2.7
7.6
11.5
12.0
15.7
Capital improvement capital expenditures
(10.0
)
(14.4
)
(25.4
)
(32.5
)
(46.8
)
Corporate capital expenditures
(8.5
)
(17.0
)
(22.4
)
(42.9
)
(58.1
)
AFFO(b)(c)(d)(e)(f)
$
415.8
$
356.4
$
1,203.5
$
1,064.4
$
1,436.6
(a) Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $(0.5 million), $1.0 billion and $1.0 billion for the three months ended September 30, 2015, nine months ended September 30, 2015 and twelve months ended December 31, 2015, respectively.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) Diluted weighted-average common shares outstanding were 338.4 million, 333.7 million, 337.1 million, 333.7 million and 334.1 million for the three months ended September 30, 2016 and 2015, the nine months ended September 30, 2016 and 2015 and the twelve months ended December 31, 2015. The diluted weighted-average common shares outstanding assumes no conversion of preferred stock in the share count.
(e) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(f) Attributable to CCIC common stockholders.
Reconciliation of Current Outlook for FFO and AFFO:
Q4 2016
Full Year 2016
Full Year 2017
(in millions)
Outlook
Outlook
Outlook
Net income (loss)
$
90
to
$
110
$
318
to
$
338
$
375
to
$
425
Real estate related depreciation, amortization and accretion
$
277
to
$
290
$
1,097
to
$
1,110
$
1,127
to
$
1,148
Asset write-down charges
$
9
to
$
11
$
37
to
$
39
$
35
to
$
45
Dividends on preferred stock
$
(11
)
to
$
(11
)
$
(44
)
to
$
(44
)
$
0
to
$
0
FFO(a)(b)(c)(d)(e)
$
383
to
$
388
$
1,426
to
$
1,431
$
1,566
to
$
1,596
FFO (from above)
$
383
to
$
388
$
1,426
to
$
1,431
$
1,566
to
$
1,596
Adjustments to increase (decrease) FFO:
Straight-lined revenue
$
(8
)
to
$
(3
)
$
(50
)
to
$
(45
)
$
13
to
$
28
Straight-lined expense
$
20
to
$
25
$
90
to
$
95
$
78
to
$
93
Stock-based compensation expense
$
21
to
$
23
$
97
to
$
99
$
94
to
$
99
Non-cash portion of tax provision
$
2
to
$
7
$
9
to
$
14
$
(3
)
to
$
12
Non-real estate related depreciation, amortization and accretion
$
6
to
$
8
$
26
to
$
28
$
24
to
$
29
Amortization of non-cash interest expense
$
3
to
$
6
$
12
to
$
15
$
11
to
$
17
Other (income) expense
$
(1
)
to
$
2
$
3
to
$
6
$
2
to
$
4
Gains (losses) on retirement of long-term obligations
$
0
to
$
0
$
52
to
$
52
$
0
to
$
0
Acquisition and integration costs
$
3
to
$
6
$
14
to
$
17
$
3
to
$
8
Capital improvement capital expenditures
$
(20
)
to
$
(15
)
$
(46
)
to
$
(41
)
$
(45
)
to
$
(40
)
Corporate capital expenditures
$
(20
)
to
$
(15
)
$
(43
)
to
$
(38
)
$
(37
)
to
$
(32
)
AFFO(a)(b)(c)(d)(e)
$
403
to
$
408
$
1,606
to
$
1,611
$
1,739
to
$
1,769
(a) The assumption for fourth quarter 2016, full year 2016 and full year 2017 diluted weighted-average common shares outstanding is 346 million, 340 million and 350 million, respectively, based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e) Attributable to CCIC common stockholders.
For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
Previously Issued
Previously Issued
Q3 2016
Full Year 2016
(in millions)
Outlook
Outlook
Net income (loss)
$
91
to
$
111
$
318
to
$
358
Adjustments to increase (decrease) net income (loss):
Asset write-down charges
$
9
to
$
11
$
35
to
$
45
Acquisition and integration costs
$
3
to
$
6
$
14
to
$
19
Depreciation, amortization and accretion
$
275
to
$
290
$
1,107
to
$
1,133
Amortization of prepaid lease purchase price adjustments
$
4
to
$
6
$
20
to
$
22
Interest expense and amortization of deferred financing costs
$
127
to
$
132
$
508
to
$
528
Gains (losses) on retirement of long-term obligations
$
0
to
$
0
$
42
to
$
42
Interest income
$
(1
)
to
$
0
$
(1
)
to
$
0
Other income (expense)
$
(1
)
to
$
2
$
4
to
$
6
Benefit (provision) for income taxes
$
3
to
$
7
$
15
to
$
23
Stock-based compensation expense
$
21
to
$
23
$
93
to
$
98
Adjusted EBITDA(a)
$
557
to
$
562
$
2,205
to
$
2,225
(a) 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
Previously Issued
Q3 2016
Full Year 2016
(in millions)
Outlook
Outlook
Net income (loss)
$
91
to
$
111
$
318
to
$
358
Real estate related depreciation, amortization and accretion
$
269
to
$
282
$
1,083
to
$
1,104
Asset write-down charges
$
9
to
$
11
$
35
to
$
45
Dividends on preferred stock
$
(11
)
to
$
(11
)
$
(44
)
to
$
(44
)
FFO(a)(b)(c)(e)
$
375
to
$
380
$
1,421
to
$
1,441
FFO (from above)
$
375
to
$
380
$
1,421
to
$
1,441
Adjustments to increase (decrease) FFO:
Straight-line revenue
$
(13
)
to
$
(8
)
$
(56
)
to
$
(41
)
Straight-line expense
$
21
to
$
26
$
85
to
$
100
Stock-based compensation expense
$
21
to
$
23
$
93
to
$
98
Non-cash portion of tax provision
$
1
to
$
6
$
3
to
$
18
Non-real estate related depreciation, amortization and accretion
$
6
to
$
8
$
24
to
$
29
Amortization of non-cash interest expense
$
3
to
$
6
$
12
to
$
18
Other (income) expense
$
(1
)
to
$
2
$
4
to
$
6
Gains (losses) on retirement of long-term obligations
$
0
to
$
0
$
42
to
$
42
Acquisition and integration costs
$
3
to
$
6
$
14
to
$
19
Capital improvement capital expenditures
$
(13
)
to
$
(11
)
$
(41
)
to
$
(36
)
Corporate capital expenditures
$
(14
)
to
$
(12
)
$
(43
)
to
$
(38
)
AFFO(a)(b)(c)(e)
$
400
to
$
405
$
1,595
to
$
1,615
(a) Previously issued third quarter 2016 outlook assumes diluted common shares outstanding as of June 30, 2016 of approximately 339 million shares. Previously issued full year 2016 outlook assumes diluted common shares outstanding of approximately 341 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in November 2016.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e) Attributable to CCIC common stockholders.
The components of changes in site rental revenues for the quarters ended September 30, 2016 and 2015 are as follows:
Three Months Ended September 30,
(in millions)
2016
2015
Components of changes in site rental revenues(f):
Prior year site rental revenues exclusive of straight-line associated with fixed escalators(a)(c)
$
737
$
672
New leasing activity(a)(c)
45
44
Escalators
22
23
Non-renewals
(20
)
(24
)
Organic Contribution to Site Rental Revenues(d)
47
43
Straight-lined revenues associated with fixed escalators
9
27
Acquisitions and builds(b)
19
23
Other
—
—
Total GAAP site rental revenues
$
812
$
765
Year-over-year changes in revenue:
Reported GAAP site rental revenues
6.1
%
Organic Contribution to Site Rental Revenues(d)(e)
6.4
%
(a) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(b) The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(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 and Other Calculations" herein.
(e) Calculated as the percentage change from prior year site rental revenues exclusive of straight-line associated with fixed escalations compared to Organic Contribution to Site Rental Revenues for the current period.
(f) Additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
The components of the changes in site rental revenues for the years ending December 31, 2016 and 2017 are forecasted as follows:
(in millions)
Midpoint of Full Year 2016 Outlook
Full Year 2017 Outlook
Components of changes in site rental revenues(g):
Prior year site rental revenues exclusive of straight-line associated with fixed escalators(a)(c)
$
2,907
$
3,184
New leasing activity(a)(c)
171
150 to 170
Escalators
89
80 to 85
Non-renewals
(74
)
(95) to (75)
Organic Contribution to Site Rental Revenues(d)
186
140 to 170
Straight-lined revenues associated with fixed escalators
48
(28) to (13)
Acquisitions and builds(b)
89
11
Other
—
—
Total GAAP site rental revenues
$
3,230
$3,314 to $3,344
Year-over-year changes in revenue:
Reported GAAP site rental revenues
7.0
%
3.1
%
Organic Contribution to Site Rental Revenues(d)(e)
6.4
%
4.9
%
(f)
(a) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(b) The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(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 and Other Calculations" herein.
(e) Calculated as the percentage change from prior year site rental revenues exclusive of straight-lined associated with fixed escalations compared to Organic Contribution to Site Rental Revenues for the current period.
(f) Calculated based on midpoint of Full Year 2017 Outlook.
(g) Additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
For the Three Months Ended
(in millions)
September 30, 2016
September 30, 2015
Interest expense on debt obligations
$
126.6
$
121.3
Amortization of deferred financing costs and adjustments on long-term debt, net
4.6
5.6
Amortization of interest rate swaps(a)
—
3.7
Other, net
(1.3
)
(0.7
)
Interest expense and amortization of deferred financing costs
$
129.9
$
129.9
(a) Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.
Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
Q4 2016
Full Year 2016
Full Year 2017
(in millions)
Outlook
Outlook
Outlook
Interest expense on debt obligations
$
126
to
$
128
$
501
to
$
503
$
509
to
$
524
Amortization of deferred financing costs and adjustments on long-term debt, net
$
4
to
$
7
$
17
to
$
21
$
17
to
$
21
Other, net
$
(1
)
to
$
(1
)
$
(5
)
to
$
(5
)
$
(6
)
to
$
(4
)
Interest expense and amortization of deferred financing costs
$
128
to
$
133
$
514
to
$
519
$
515
to
$
545
Debt balances and maturity dates as of September 30, 2016 are as follows:
(in millions)
Face Value
Final Maturity
Bank debt - variable rate:
2016 Revolver
$
410.0
Jan. 2021
2016 Term Loan A
1,975.0
Jan. 2021
Total bank debt
2,385.0
Securitized debt - fixed rate:
Secured Notes, Series 2009-1, Class A-1(a)
57.2
Aug. 2019
Secured Notes, Series 2009-1, Class A-2(a)
70.0
Aug. 2029
Tower Revenue Notes, Series 2010-3(b)
1,250.0
Jan. 2040
Tower Revenue Notes, Series 2010-6(b)
1,000.0
Aug. 2040
Tower Revenue Notes, Series 2015-1(b)
300.0
May 2042
Tower Revenue Notes, Series 2015-2(b)
700.0
May 2045
Total securitized debt
3,377.2
Bonds - fixed rate:
5.250% Senior Notes
1,650.0
Jan. 2023
3.849% Secured Notes
1,000.0
Apr. 2023
4.875% Senior Notes
850.0
Apr. 2022
3.400% Senior Notes
850.0
Feb. 2021
4.450% Senior Notes
900.0
Feb. 2026
3.700% Senior Notes
750.0
June 2026
2.250% Senior Notes
700.0
Sept. 2021
Total bonds
6,700.0
Capital leases and other obligations
225.5
Various
Total Debt
$
12,687.7
Less: Cash and Cash Equivalents(c)
$
156.2
Net Debt
$
12,531.5
(a) The Senior Secured Notes, Series 2009-1, Class A-1 principal amortizes during the period beginning January 2010 and ending in 2019 and the Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in 2019 and ending in 2029.
(b) The Senior Secured Tower Revenue Notes, Series 2010-3 and 2010-6 have anticipated repayment dates in 2020. The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively.
(c) Excludes restricted cash.
Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(in millions)
For the Three Months Ended September 30, 2016
Total face value of debt
$
12,687.7
Ending cash and cash equivalents(a)
156.2
Total Net Debt
$
12,531.5
Adjusted EBITDA for the three months ended September 30, 2016
$
564.1
Last quarter annualized adjusted EBITDA
2,256.5
Net Debt to Last Quarter Annualized Adjusted EBITDA
5.6
x
(a) Excludes restricted cash.
Components of Capital Expenditures:
For the Three Months Ended
(in millions)
September 30, 2016
September 30, 2015
Towers
Small Cells
Other
Total
Towers
Small Cells
Other
Total
Discretionary:
Purchases of land interests
$
17.4
$
—
$
—
$
17.4
$
16.0
$
—
$
—
$
16.0
Wireless infrastructure construction and improvements
76.6
108.6
—
185.2
98.0
92.1
—
190.1
Sustaining:
Capital improvement and corporate
9.7
3.2
5.6
18.5
22.4
3.0
5.9
31.3
Total
$
103.7
$
111.8
$
5.6
$
221.1
$
136.4
$
95.1
$
5.9
$
237.4
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements and information that are based on our management's current expectations. Such statements include our Outlook and plans, projections, and estimates regarding (1) potential benefits, returns and shareholder value which may be derived from our business, assets, investments, dividends and acquisitions, including on a long-term basis, (2) our strategy, strategic position and strength of our business, (3) carrier network investments and upgrades, and the benefits which may be derived therefrom, (4) demand for wireless connectivity and the benefits which may be derived therefrom, (5) our dividends, including our dividend plans and the amount and growth of our dividends, (6) leasing activity, (7) our investments, including in towers and small cells, and the potential growth, returns and benefits therefrom, (8) demand for our wireless infrastructure and services, (9) our growth and long-term prospects, (10) tenant non-renewals, including the impact and timing thereof, (11) capital expenditures, including sustaining capital expenditures, (12) straight-line adjustments, (13) expenses, (14) site rental revenues, (15) site rental cost of operations, (16) site rental gross margin and network services gross margin, (17) net income (loss), (18) Adjusted EBITDA, (19) interest expense and amortization of deferred financing costs, (20) FFO, (21) AFFO, (22) Organic Contribution to Site Rental Revenues and Organic Contribution to Site Rental Revenue growth, (23) our common shares outstanding, including on a diluted basis, and the conversion of our Preferred Stock, and (24) 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 wireless infrastructure, driven primarily by demand for wireless connectivity, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services). • A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues or reduce demand for our wireless infrastructure and network services. • The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks. If we do not successfully operate that business model or identify or manage those operational risks, such operations may produce results that are less than anticipated. • 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 Preferred Stock limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated. • We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations. • Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock. • As a result of competition in our industry, we may find it more difficult to achieve favorable rental rates on our new or renewing tenant leases. • New technologies may reduce demand for our wireless infrastructure or negatively impact our revenues. • The expansion and development of our business, including through acquisitions, increased product offerings or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results. • If we fail to retain rights to our wireless infrastructure, including the land interests under our towers, our business may be adversely affected. • Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results. • New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected. • If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business. • If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues. • Certain provisions of our 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 that could adversely affect our business, operations, 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 US Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash. • Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives. • If we fail to pay scheduled dividends on the Preferred Stock, in cash, common stock or any combination of cash and common stock, we will be prohibited from paying dividends on our common stock, which may jeopardize our status as a REIT. • We have limited experience operating as a REIT. Our failure to successfully operate as a REIT may adversely affect our financial condition, cash flow, the per share trading price of our common stock, or our ability to satisfy debt service obligations. • REIT 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. As used in this release, the term "including," and any variation thereof, means "including without limitation."
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands, except share amounts)
September 30, 2016
December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents
$
156,219
$
178,810
Restricted cash
116,932
130,731
Receivables, net
276,259
313,296
Prepaid expenses
157,102
133,194
Other current assets
133,163
225,214
Total current assets
839,675
981,245
Deferred site rental receivables
1,321,777
1,306,408
Property and equipment, net
9,714,149
9,580,057
Goodwill
5,750,033
5,513,551
Other intangible assets, net
3,737,448
3,779,915
Long-term prepaid rent and other assets, net
808,641
775,790
Total assets
$
22,171,723
$
21,936,966
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
148,916
$
159,629
Accrued interest
84,244
66,975
Deferred revenues
358,683
322,623
Other accrued liabilities
204,533
199,923
Current maturities of debt and other obligations
101,362
106,219
Total current liabilities
897,738
855,369
Debt and other long-term obligations
12,491,596
12,043,740
Other long-term liabilities
2,028,672
1,948,636
Total liabilities
15,418,006
14,847,745
Commitments and contingencies
CCIC stockholders' equity:
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2016—337,569,931 and December 31, 2015—333,771,660
3,375
3,338
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2016 and December 31, 2015—9,775,000; aggregate liquidation value: September 30, 2016 and December 31, 2015—$977,500
98
98
Additional paid-in capital
9,914,844
9,548,580
Accumulated other comprehensive income (loss)
(5,541
)
(4,398
)
Dividends/distributions in excess of earnings
(3,159,059
)
(2,458,397
)
Total equity
6,753,717
7,089,221
Total liabilities and equity
$
22,171,723
$
21,936,966
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2016
2015
2016
2015
Net revenues:
Site rental
$
812,032
$
764,606
$
2,415,926
$
2,233,077
Network services and other
179,984
153,501
472,883
484,938
Net revenues
992,016
918,107
2,888,809
2,718,015
Operating expenses:
Costs of operations (exclusive of depreciation, amortization and accretion):
Site rental
256,750
247,000
762,223
716,244
Network services and other
109,228
86,859
286,066
263,177
General and administrative
89,941
76,699
278,909
223,880
Asset write-down charges
8,339
7,477
28,251
19,652
Acquisition and integration costs
2,680
7,608
11,459
12,001
Depreciation, amortization and accretion
280,824
261,662
834,725
766,621
Total operating expenses
747,762
687,305
2,201,633
2,001,575
Operating income (loss)
244,254
230,802
687,176
716,440
Interest expense and amortization of deferred financing costs
(129,916
)
(129,877
)
(385,656
)
(398,782
)
Gains (losses) on retirement of long-term obligations
(10,274
)
—
(52,291
)
(4,157
)
Interest income
175
789
454
1,170
Other income (expense)
(832
)
(1,214
)
(4,623
)
58,510
Income (loss) from continuing operations before income taxes
103,407
100,500
245,060
373,181
Benefit (provision) for income taxes
(5,041
)
3,801
(12,797
)
9,380
Income (loss) from continuing operations
98,366
104,301
232,263
382,561
Discontinued operations:
Income (loss) from discontinued operations, net of tax
—
(522
)
—
1,000,708
Net income (loss)
98,366
103,779
232,263
1,383,269
Less: Net income (loss) attributable to the noncontrolling interest
—
—
—
3,343
Net income (loss) attributable to CCIC stockholders
98,366
103,779
232,263
1,379,926
Dividends on preferred stock
(10,997
)
(10,997
)
(32,991
)
(32,991
)
Net income (loss) attributable to CCIC common stockholders
$
87,369
$
92,782
$
199,272
$
1,346,935
Net income (loss) attributable to CCIC common stockholders, per common share:
Income (loss) from continuing operations, basic
$
0.26
$
0.28
$
0.59
$
1.05
Income (loss) from discontinued operations, basic
$
—
$
—
$
—
$
3.00
Net income (loss) attributable to CCIC common stockholders, basic
$
0.26
$
0.28
$
0.59
$
4.05
Income (loss) from continuing operations, diluted
$
0.26
$
0.28
$
0.59
$
1.05
Income (loss) from discontinued operations, diluted
$
—
$
—
$
—
$
2.99
Net income (loss) attributable to CCIC common stockholders, diluted
$
0.26
$
0.28
$
0.59
$
4.04
Weighted-average common shares outstanding (in thousands):
Basic
337,564
333,049
336,426
332,951
Diluted
338,409
333,711
337,076
333,735
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Nine Months Ended September 30,
2016
2015
Cash flows from operating activities:
Net income (loss) from continuing operations
$
232,263
$
382,561
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities:
Depreciation, amortization and accretion
834,725
766,621
Gains (losses) on retirement of long-term obligations
52,291
4,157
Gains (losses) on settled swaps
2,608
(54,475
)
Amortization of deferred financing costs and other non-cash interest
11,293
32,394
Stock-based compensation expense
60,402
44,711
Asset write-down charges
28,251
19,652
Deferred income tax benefit (provision)
6,626
(16,199
)
Other adjustments, net
(1,060
)
(7,240
)
Changes in assets and liabilities, excluding the effects of acquisitions:
Increase (decrease) in liabilities
122,944
208,538
Decrease (increase) in assets
(45,628
)
(89,844
)
Net cash provided by (used for) operating activities
1,304,715
1,290,876
Cash flows from investing activities:
Payments for acquisition of businesses, net of cash acquired
(545,162
)
(1,083,319
)
Capital expenditures
(614,178
)
(658,240
)
Net receipts from settled swaps
8,141
54,475
Other investing activities, net
11,616
(1,561
)
Net cash provided by (used for) investing activities
(1,139,583
)
(1,688,645
)
Cash flows from financing activities:
Proceeds from issuance of long-term debt
5,201,010
1,000,000
Principal payments on debt and other long-term obligations
(69,717
)
(78,049
)
Purchases and redemptions of long-term debt
(4,044,834
)
(1,069,337
)
Borrowings under revolving credit facility
3,440,000
1,560,000
Payments under revolving credit facility
(4,155,000
)
(1,240,000
)
Payments for financing costs
(41,471
)
(17,415
)
Net proceeds from issuance of capital stock
323,798
—
Purchases of capital stock
(24,759
)
(29,576
)
Dividends/distributions paid on common stock
(896,628
)
(821,056
)
Dividends paid on preferred stock
(32,991
)
(32,991
)
Net (increase) decrease in restricted cash
40
28,435
Net cash provided by (used for) financing activities
(300,552
)
(699,989
)
Net increase (decrease) in cash and cash equivalents - continuing operations
(135,420
)
(1,097,758
)
Discontinued operations:
Net cash provided by (used for) operating activities
—
4,359
Net cash provided by (used for) investing activities
113,150
1,103,577
Net increase (decrease) in cash and cash equivalents - discontinued operations
113,150
1,107,936
Effect of exchange rate changes
(321
)
(1,682
)
Cash and cash equivalents at beginning of period
178,810
175,620
(a)
Cash and cash equivalents at end of period
$
156,219
$
184,116
Supplemental disclosure of cash flow information:
Interest paid
357,094
364,147
Income taxes paid
11,740
23,865
(a) Inclusive of cash and cash equivalents included in discontinued operations.
CROWN CASTLE INTERNATIONAL CORP. SEGMENT OPERATING RESULTS (UNAUDITED) (in thousands)
SEGMENT OPERATING RESULTS
Three Months Ended September 30, 2016
Three Months Ended September 30, 2015
Towers
Small Cells
Other
Consolidated Total
Towers
Small Cells
Other
Consolidated Total
Segment site rental revenues
$
709,603
$
102,429
$
812,032
$
686,934
$
77,672
$
764,606
Segment network services and other revenue
166,979
13,005
179,984
138,566
14,935
153,501
Segment revenues
876,582
115,434
992,016
825,500
92,607
918,107
Segment site rental cost of operations
210,322
37,754
248,076
209,056
30,449
239,505
Segment network services and other cost of operations
97,395
10,194
107,589
75,302
10,213
85,515
Segment cost of operations(a)
307,717
47,948
355,665
284,358
40,662
325,020
Segment site rental gross margin(b)
499,281
64,675
563,956
477,878
47,223
525,101
Segment network services and other gross margin(b)
69,584
2,811
72,395
63,264
4,722
67,986
Segment general and administrative expenses(a)
22,225
14,480
35,526
72,231
22,994
10,194
30,741
63,929
Segment operating profit(b)
546,640
53,006
(35,526
)
564,120
518,148
41,751
(30,741
)
529,158
Stock-based compensation expense
22,594
22,594
16,466
16,466
Depreciation, amortization and accretion
280,824
280,824
261,662
261,662
Interest expense and amortization of deferred financing costs
129,916
129,916
129,877
129,877
Other (income) expenses to reconcile to income (loss) from continuing operations before income taxes(c)
27,379
27,379
20,653
20,653
Income (loss) from continuing operations before income taxes
$
103,407
$
100,500
(a) Segment cost of operations exclude (1) stock-based compensation expense of $4.9 million and $3.7 million for the three months ended September 30, 2016 and 2015, respectively and (2) prepaid lease purchase price adjustments of $5.4 million and $5.1 million for the three months ended September 30, 2016 and 2015, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $17.7 million and $12.8 million for the three months ended September 30, 2016 and 2015, respectively.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network service and other gross margin and segment operating profit.
(c) Other (income) expenses to reconcile to income (loss) from continuing operations before income taxes includes (1) losses on retirement of long-term obligations of approximately $10.3 million and $0 for the three months ended September 30, 2016 and 2015, respectively and (2) gains (losses) on swaps of approximately $0 and $10.2 million for the three months ended September 30, 2016 and 2015, respectively.
SEGMENT OPERATING RESULTS
Nine Months Ended September 30, 2016
Nine Months Ended September 30, 2015
Towers
Small Cells
Other
Consolidated Total
Towers
Small Cells
Other
Consolidated Total
Segment site rental revenues
$
2,118,159
$
297,767
$
2,415,926
$
2,040,147
$
192,930
$
2,233,077
Segment network services and other revenue
434,042
38,841
472,883
445,683
39,255
484,938
Segment revenues
2,552,201
336,608
2,888,809
2,485,830
232,185
2,718,015
Segment site rental cost of operations
625,331
109,402
734,733
620,726
73,818
694,544
Segment network services and other cost of operations
249,306
30,652
279,958
229,164
30,034
259,198
Segment cost of operations(a)
874,637
140,054
1,014,691
849,890
103,852
953,742
Segment site rental gross margin(b)
1,492,828
188,365
1,681,193
1,419,421
119,112
1,538,533
Segment network services and other gross margin(b)
184,736
8,189
192,925
216,519
9,221
225,740
Segment general and administrative expenses(a)
68,329
45,720
107,161
221,210
68,245
25,664
90,981
184,890
Segment operating profit(b)
1,609,235
150,834
(107,161
)
1,652,908
1,567,695
102,669
(90,981
)
1,579,383
Stock-based compensation expense
75,297
75,297
49,282
49,282
Depreciation, amortization and accretion
834,725
834,725
766,621
766,621
Interest expense and amortization of deferred financing costs
385,656
385,656
398,782
398,782
Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(c)
112,170
112,170
(8,483
)
(8,483
)
Income (loss) from continuing operations before income taxes
$
245,060
$
373,181
(a) Segment cost of operations exclude (1) stock-based compensation expense of $17.6 million and $10.3 million for the nine months ended September 30, 2016 and 2015, respectively and (2) prepaid lease purchase price adjustments of $16.0 million and $15.4 million for the nine months ended September 30, 2016 and 2015, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $57.7 million and $39.0 million for the nine months ended September 30, 2016 and 2015, respectively.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network service and other gross margin and segment operating profit.
(c) Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes includes (1) losses on retirement of long-term obligations of approximately $52.3 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively and (2) gains (losses) on swaps of approximately $(2.6 million) and $70.0 million for the nine months ended September 30, 2016 and 2015, respectively.
Contacts: Dan Schlanger, CFO Son Nguyen, VP & Treasurer Crown Castle International Corp. 713-570-3050