Crown Castle Inc. (NYSE: CCI) ("Crown Castle") today reported
results for the fourth quarter and full year ended
December 31, 2022, and maintained its full year 2023 outlook,
as reflected in the table below.
|
Full Year 2023 |
|
Full Year 2022 |
|
(dollars in millions, except per share amounts) |
Current OutlookMidpoint(a) |
Midpoint GrowthRate Compared to Full Year 2022 Actual |
|
Actual |
Actual GrowthRate Comparedto Full Year 2021Actual |
|
|
|
Site rental revenues |
$6,511 |
4% |
|
$6,289 |
10% |
|
Income (loss) from continuing
operations |
$1,636 |
(2)% |
|
$1,675 |
45% |
(c) |
Income (loss) from continuing
operations per share—diluted |
$3.76 |
(3)% |
|
$3.86 |
45% |
(c) |
Adjusted EBITDA(b) |
$4,472 |
3% |
|
$4,340 |
14% |
|
AFFO(b) |
$3,319 |
4% |
|
$3,200 |
6% |
|
AFFO per share(b) |
$7.63 |
3% |
|
$7.38 |
6% |
|
(a) As issued on January 25, 2023 and unchanged
from the previous full year 2023 Outlook issued on October 19,
2022.(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) 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 as discussed in the April 2021 8-K.
“We generated significant growth in 2022,
highlighted by nearly 6.5% organic revenue growth in our Towers
segment and more than 9% dividend per share growth,” stated Jay
Brown, Crown Castle’s Chief Executive Officer. “Our ability to
deliver strong bottom-line growth in 2022 while navigating a
challenging environment with increasing interest rates reflects
solid operational performance by our team and the deliberate
actions we have taken over the years to reduce the risk profile of
our strategy. We have led the U.S. tower industry in growth during
the initial phase of 5G development over the last two years, and I
believe our comprehensive infrastructure offering of towers, small
cells and fiber positions us to continue to drive substantial
growth in the future. I am excited about the continued momentum we
see across our business, which is driving another year of expected
strong growth in 2023, including 5% organic revenue growth in our
Towers segment and a doubling of small cell deployments to 10,000
nodes with more than half of those nodes to be collocated on
existing fiber."
RESULTS FOR THE YEARThe table
below sets forth select financial results for the year ended
December 31, 2022 and December 31, 2021.
|
Actual |
Previous2022OutlookMidpoint(b) |
ActualComparedto PreviousOutlookMidpoint |
(dollars in millions, except per share amounts) |
2022 |
2021 |
|
Change |
Change % |
Site rental revenues |
$6,289 |
$5,719 |
|
$570 |
10% |
$6,265 |
$24 |
Income (loss) from continuing
operations |
$1,675 |
$1,158 |
(c) |
$517 |
45% |
$1,694 |
$(19) |
Income (loss) from continuing
operations per share—diluted |
$3.86 |
$2.67 |
(c) |
$1.19 |
45% |
$3.90 |
$(0.04) |
Adjusted EBITDA(a) |
$4,340 |
$3,816 |
|
$524 |
14% |
$4,352 |
$(12) |
AFFO(a) |
$3,200 |
$3,013 |
|
$187 |
6% |
$3,201 |
$(1) |
AFFO per share(a) |
$7.38 |
$6.95 |
|
$0.43 |
6% |
$7.36 |
$0.02 |
(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.(b) As
issued October 19, 2022. (c) 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.
HIGHLIGHTS FROM THE YEAR
- Site rental
revenues. Site rental revenues grew 10%, or $570 million,
from full year 2021 to full year 2022, inclusive of approximately
$258 million in Organic Contribution to Site Rental Billings and a
$299 million increase in straight-lined revenues. The $258 million
in Organic Contribution to Site Rental Billings represents 5.1%
growth, comprised of 8.4% growth from core leasing activity and
escalators, net of 3.3% from non-renewals.
- Income from continuing
operations. Income from continuing operations for full
year 2022 was $1.7 billion compared to $1.2 billion for full year
2021.
- Adjusted EBITDA.
Full year 2022 Adjusted EBITDA was $4.3 billion compared to $3.8
billion for full year 2021, representing 14% growth, primarily as a
result of the growth in site rental revenues and higher services
contribution.
- AFFO and AFFO per
share. Full year 2022 AFFO was $3.2 billion, or $7.38 per
share, representing growth from the full year 2021 of 6%.
- Capital
expenditures. Capital expenditures during the year were
$1.3 billion, comprised of $95 million of sustaining capital
expenditures and $1.2 billion of discretionary capital
expenditures. Discretionary capital expenditures during the year
primarily included approximately $1.0 billion attributable to Fiber
and approximately $174 million attributable to Towers.
- Common stock
dividend. During the year, Crown Castle paid common stock
dividends of approximately $2.6 billion in the aggregate, or $5.98
per common share, an increase of more than 9% on a per share basis
compared to full year 2021.
- Financing
activity. In January 2023, Crown Castle issued $1.0
billion in aggregate principal amount of senior unsecured notes
with a five-year maturity and a coupon of 5.000%. Net proceeds from
the senior notes offering were used to repay a portion of the
indebtedness under the existing revolving credit facility and pay
related fees and expenses.
“We believe the positive operating trends across
our business will continue as we navigate higher interest rates and
the previously disclosed rationalization of a portion of Sprint's
legacy network that will impact our growth in the near-term,"
stated Dan Schlanger, Crown Castle’s Chief Financial Officer.
"Looking beyond these near-term headwinds, we are excited to
leverage our comprehensive portfolio of infrastructure offerings to
generate long-term growth in line with our target of 7% to 8%
annual growth in dividends per share. We have continued to focus on
strengthening our balance sheet and liquidity position 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. Following our
successful bond offering earlier this month, we have an investment
grade balance sheet with more than 85% fixed rate debt, a weighted
average maturity across our debt of over eight years, limited debt
maturities through 2024 and approximately $5.5 billion in available
liquidity under our revolving credit facility. We believe the
combination of our balance sheet strength and attractive underlying
business characteristics provides a solid foundation to support
cash flow growth through various economic cycles."
OUTLOOKThis 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 full year 2023 Outlook, which remains unchanged from the
previous full year 2023 Outlook.
(in
millions, except per share amounts) |
Full Year 2023 |
Site rental billings(a) |
$5,631 |
to |
$5,671 |
Amortization of prepaid
rent |
$570 |
to |
$580 |
Straight-lined revenues |
$264 |
to |
$284 |
Site rental revenues |
$6,488 |
to |
$6,533 |
Site rental costs of
operations(b) |
$1,643 |
to |
$1,688 |
Services and other gross
margin |
$210 |
to |
$240 |
Income (loss) from continuing
operations |
$1,596 |
to |
$1,676 |
Income (loss) from continuing
operations per share—diluted(c) |
$3.67 |
to |
$3.85 |
Adjusted EBITDA(d) |
$4,449 |
to |
$4,494 |
Depreciation, amortization and
accretion |
$1,712 |
to |
$1,807 |
Interest expense and
amortization of deferred financing costs(e) |
$814 |
to |
$859 |
FFO(d) |
$3,350 |
to |
$3,395 |
AFFO(d) |
$3,296 |
to |
$3,341 |
AFFO per share(c)(d) |
$7.58 |
to |
$7.68 |
(a) See "Non-GAAP Financial Measures, Segment
Measures and Other Calculations" for our definition of site rental
billings.(b) Exclusive of depreciation, amortization and
accretion.(c) The assumption for diluted weighted-average common
shares outstanding for full year 2023 Outlook is based on the
diluted common shares outstanding as of December 31, 2022.(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.(e) See
reconciliation of "Outlook for Components of Interest Expense" for
a discussion of non-cash interest expense.
- The chart below
reconciles the expected growth in site rental revenues from 2022 to
2023 of $215 million to $260 million, inclusive of expected Organic
Contribution to Site Rental Billings during 2023 of $340 million to
$380 million, or approximately 7%. The expected consolidated growth
includes approximately 5% from towers, approximately 25% from small
cells, and approximately 5% from fiber solutions. Adjusted for the
expected impact from the previously reported small cell and fiber
solutions lease cancellations related to the consolidation of the
T-Mobile US, Inc. and Sprint network ("Sprint Cancellations"), our
projected consolidated growth of approximately 4% includes
approximately 5% from towers, approximately 8% from small cells and
flat fiber solutions revenue.
- The chart below reconciles the
components of expected growth in AFFO from 2022 to 2023 of $100
million to $145 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, January 26,
2023, at 10:30 a.m. Eastern time to discuss its full year 2022
results. A listen only live audio webcast of the conference call,
along with supplemental materials for the call, can be accessed on
the Crown Castle website at https://investor.crowncastle.com.
Participants may join the conference call by dialing 833-630-1956
(Toll Free) or 412-317-1837 (International) at least 30 minutes
prior to the start time. All dial-in participants should ask to
join the Crown Castle call.
A replay of the webcast will be available on the
Investor page of Crown Castle's website until end of day, Thursday,
January 25, 2024.
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 Inc. |
|
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, Organic Contribution to Site Rental Billings and Net
Debt, 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. Separately, we are also disclosing Organic Contribution to
Site Rental Billings as adjusted for impact of Sprint
Cancellations, which is outside of ordinary course, to provide
further insight into our results of operations and underlying
trends. Management believes that identifying the impact for Sprint
Cancellations provides increased transparency and comparability
across periods. Organic Contribution to Site Rental Billings
(including as adjusted for impact of Sprint Cancellations) 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.
- Net Debt is useful
to investors or other interested parties in evaluating our overall
debt position and future debt capacity. Management uses Net Debt in
assessing our leverage. Net Debt is not meant as an alternative
measure of debt and should be considered only as a supplement in
understanding and assessing our leverage.
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 site rental revenues related to core leasing
activity, escalators and payments for Sprint Cancellations (for
periods beginning in 2023), less non-renewals of tenant contracts
and non-renewals associated with Sprint Cancellations (for periods
beginning in 2023). Additionally, Organic Contribution to Site
Rental Billings adjusted for impact of Sprint Cancellations
reflects Organic Contribution to Site Rental Billings less payments
for Sprint Cancellations, plus non-renewals associated with Sprint
Cancellations.
Net Debt. We define Net Debt as (1) debt and
other long-term obligations and (2) current maturities of debt and
other obligations, excluding unamortized adjustments, net; less
cash, cash equivalents and restricted cash.
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, 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 (1) the impacts from both straight-lined
revenues and amortization of prepaid rent in accordance with GAAP
and (2) payments for Sprint Cancellations, where applicable.
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, exclusive of non-renewals
associated with Sprint Cancellations, where applicable.
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.
Reconciliations of Non-GAAP Financial Measures, Segment
Measures and Other Calculations to Comparable GAAP Financial
Measures:
Reconciliation of Historical Adjusted
EBITDA:
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
(in millions) |
|
December 31,2022 |
|
December 31,2021 |
|
December 31,2022 |
|
December 31,2021 |
|
Income (loss) from continuing operations |
|
$ |
413 |
|
|
$ |
353 |
|
$ |
1,675 |
|
|
$ |
1,158 |
|
(a) |
Adjustments to increase (decrease) income (loss) from continuing
operations: |
|
|
|
|
|
|
|
|
|
Asset write-down charges |
|
|
8 |
|
|
|
12 |
|
|
34 |
|
|
|
21 |
|
|
Acquisition and integration costs |
|
|
1 |
|
|
|
— |
|
|
2 |
|
|
|
1 |
|
|
Depreciation, amortization and accretion |
|
|
431 |
|
|
|
415 |
|
|
1,707 |
|
|
|
1,644 |
|
|
Amortization of prepaid lease purchase price adjustments |
|
|
4 |
|
|
|
4 |
|
|
16 |
|
|
|
18 |
|
|
Interest expense and amortization of deferred financing
costs(b) |
|
|
192 |
|
|
|
164 |
|
|
699 |
|
|
|
657 |
|
|
(Gains) losses on retirement of long-term obligations |
|
|
— |
|
|
|
— |
|
|
28 |
|
|
|
145 |
|
|
Interest income |
|
|
(2 |
) |
|
|
— |
|
|
(3 |
) |
|
|
(1 |
) |
|
Other (income) expense |
|
|
5 |
|
|
|
4 |
|
|
10 |
|
|
|
21 |
|
|
(Benefit) provision for income taxes |
|
|
2 |
|
|
|
1 |
|
|
16 |
|
|
|
21 |
|
|
Stock-based compensation expense |
|
|
36 |
|
|
|
31 |
|
|
156 |
|
|
|
131 |
|
|
Adjusted
EBITDA(c)(d) |
|
$ |
1,090 |
|
|
$ |
984 |
|
$ |
4,340 |
|
|
$ |
3,816 |
|
|
Reconciliation of Current Outlook for Adjusted
EBITDA:
|
|
Full Year 2023 |
(in millions) |
|
Outlook(f) |
Income (loss) from continuing operations |
|
$1,596 |
to |
$1,676 |
Adjustments to increase
(decrease) income (loss) from continuing operations: |
|
|
|
|
Asset write-down charges |
|
$26 |
to |
$36 |
Acquisition and integration costs |
|
$0 |
to |
$8 |
Depreciation, amortization and accretion |
|
$1,712 |
to |
$1,807 |
Amortization of prepaid lease purchase price adjustments |
|
$15 |
to |
$17 |
Interest expense and amortization of deferred financing
costs(e) |
|
$814 |
to |
$859 |
(Gains) losses on retirement of long-term obligations |
|
$0 |
to |
$0 |
Interest income |
|
$(4) |
to |
$(3) |
Other (income) expense |
|
$2 |
to |
$7 |
(Benefit) provision for income taxes |
|
$16 |
to |
$24 |
Stock-based compensation expense |
|
$165 |
to |
$169 |
Adjusted
EBITDA(c)(d) |
|
$4,449 |
to |
$4,494 |
(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 Interest Expense" 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 "Outlook for Components of
Interest Expense" for a discussion of non-cash interest expense.(f)
As issued on January 25, 2023 and unchanged from the previous full
year 2023 Outlook issued on October 19, 2022.
Reconciliation of Historical FFO and
AFFO:
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
(in millions, except per share
amounts) |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2022 |
|
December 31, 2021 |
|
Income (loss) from continuing operations |
|
$ |
413 |
|
|
$ |
353 |
|
|
$ |
1,675 |
|
|
$ |
1,158 |
|
(a) |
Real estate related depreciation, amortization and accretion |
|
|
417 |
|
|
|
402 |
|
|
|
1,653 |
|
|
|
1,593 |
|
|
Asset write-down charges |
|
|
8 |
|
|
|
12 |
|
|
|
34 |
|
|
|
21 |
|
|
FFO(b)(c) |
|
$ |
838 |
|
|
$ |
767 |
|
|
$ |
3,362 |
|
|
$ |
2,772 |
|
|
Weighted-average common shares
outstanding—diluted |
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
FFO per
share(b)(c) |
|
$ |
1.93 |
|
|
$ |
1.77 |
|
|
$ |
7.75 |
|
|
$ |
6.39 |
|
|
|
|
|
|
|
|
|
|
|
|
FFO (from above) |
|
$ |
838 |
|
|
$ |
767 |
|
|
$ |
3,362 |
|
|
$ |
2,772 |
|
|
Adjustments to increase
(decrease) FFO: |
|
|
|
|
|
|
|
|
|
Straight-lined revenues |
|
|
(85 |
) |
|
|
(38 |
) |
|
|
(410 |
) |
|
|
(111 |
) |
|
Straight-lined expenses |
|
|
18 |
|
|
|
18 |
|
|
|
73 |
|
|
|
76 |
|
|
Stock-based compensation expense |
|
|
36 |
|
|
|
31 |
|
|
|
156 |
|
|
|
131 |
|
|
Non-cash portion of tax provision |
|
|
2 |
|
|
|
(1 |
) |
|
|
6 |
|
|
|
1 |
|
|
Non-real estate related depreciation, amortization and
accretion |
|
|
14 |
|
|
|
13 |
|
|
|
54 |
|
|
|
51 |
|
|
Amortization of non-cash interest expense |
|
|
3 |
|
|
|
4 |
|
|
|
14 |
|
|
|
13 |
|
|
Other (income) expense |
|
|
5 |
|
|
|
4 |
|
|
|
10 |
|
|
|
21 |
|
|
(Gains) losses on retirement of long-term obligations |
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
|
145 |
|
|
Acquisition and integration costs |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
|
Sustaining capital expenditures |
|
|
(30 |
) |
|
|
(30 |
) |
|
|
(95 |
) |
|
|
(87 |
) |
|
AFFO(b)(c) |
|
$ |
802 |
|
|
$ |
768 |
|
|
$ |
3,200 |
|
|
$ |
3,013 |
|
|
Weighted-average common shares
outstanding—diluted |
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
|
AFFO per
share(b)(c) |
|
$ |
1.85 |
|
|
$ |
1.77 |
|
|
$ |
7.38 |
|
|
$ |
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 2023 |
(in millions, except per share
amounts) |
|
Outlook(a) |
Income (loss) from continuing operations |
|
$1,596 |
to |
$1,676 |
Real estate related depreciation, amortization and accretion |
|
$1,666 |
to |
$1,746 |
Asset write-down charges |
|
$26 |
to |
$36 |
FFO(b)(c) |
|
$3,350 |
to |
$3,395 |
Weighted-average common shares
outstanding—diluted(d) |
|
435 |
FFO per
share(b)(c)(d) |
|
$7.70 |
to |
$7.80 |
|
|
|
|
|
FFO (from above) |
|
$3,350 |
to |
$3,395 |
Adjustments to increase
(decrease) FFO: |
|
|
|
|
Straight-lined revenues |
|
$(284) |
to |
$(264) |
Straight-lined expenses |
|
$61 |
to |
$81 |
Stock-based compensation expense |
|
$165 |
to |
$169 |
Non-cash portion of tax provision |
|
$0 |
to |
$8 |
Non-real estate related depreciation, amortization and
accretion |
|
$47 |
to |
$62 |
Amortization of non-cash interest expense |
|
$7 |
to |
$17 |
Other (income) expense |
|
$2 |
to |
$7 |
(Gains) losses on retirement of long-term obligations |
|
$0 |
to |
$0 |
Acquisition and integration costs |
|
$0 |
to |
$8 |
Sustaining capital expenditures |
|
$(103) |
to |
$(83) |
AFFO(b)(c) |
|
$3,296 |
to |
$3,341 |
Weighted-average common shares
outstanding—diluted(d) |
|
435 |
AFFO per
share(b)(c)(d) |
|
$7.58 |
to |
$7.68 |
(a) As issued on January 25, 2023 and unchanged
from the previous full year 2023 Outlook issued on October 19,
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 2023
Outlook is based on the diluted common shares outstanding as of
December 31, 2022. Components of Changes in Site
Rental Revenues for the Quarters Ended December 31, 2022 and
2021:
|
|
Three Months Ended December 31, |
(dollars in millions) |
|
|
2022 |
|
|
|
2021 |
|
Components of changes in site
rental revenues: |
|
|
|
|
Prior year site rental billings(a) |
|
$ |
1,290 |
|
|
$ |
1,224 |
|
|
|
|
|
|
Core leasing activity(a) |
|
|
73 |
|
|
|
85 |
|
Escalators |
|
|
27 |
|
|
|
24 |
|
Non-renewals(a) |
|
|
(43 |
) |
|
|
(43 |
) |
Organic Contribution to Site Rental
Billings(a) |
|
|
57 |
|
|
|
66 |
|
Straight-lined revenues |
|
|
85 |
|
|
|
38 |
|
Amortization of prepaid rent |
|
|
145 |
|
|
|
146 |
|
Acquisitions(b) |
|
|
1 |
|
|
|
— |
|
Other |
|
|
— |
|
|
|
— |
|
Total site rental
revenues |
|
$ |
1,578 |
|
|
$ |
1,474 |
|
|
|
|
|
|
Year-over-year changes in
revenues: |
|
|
|
|
Site rental revenues |
|
|
7.1 |
% |
|
|
9.0 |
% |
Changes in revenues as a percentage of prior year site rental
billings: |
|
|
|
|
Organic Contribution to Site Rental
Billings(a) |
|
|
4.3 |
% |
|
|
5.4 |
% |
(a) 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.(b) 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.
Components of Changes in Site Rental
Revenues for Full Year 2022 Actual and Current Outlook for Full
Year 2023:
(dollars in millions) |
|
Full Year 2022 |
|
Current Full Year2023 Outlook(a) |
Components of changes in site
rental revenues: |
|
|
|
|
Prior year site rental billings(b) |
|
|
$5,048 |
|
|
$5,310 |
|
|
|
|
|
Core leasing activity(b) |
|
|
$321 |
|
|
$285 |
to |
$315 |
Escalators |
|
|
$103 |
|
|
$90 |
to |
$100 |
Non-renewals(b) |
|
|
$(166) |
|
|
$(180) |
to |
$(160) |
Organic Contribution to Site Rental Billings
adjusted for impact of Sprint Cancellations(b)(c) |
|
|
$258 |
|
|
$210 |
to |
$240 |
Payments for Sprint Cancellations(c) |
|
|
— |
|
|
$160 |
to |
$170 |
Non-renewals associated with Sprint Cancellations(c) |
|
|
— |
|
|
$(30) |
to |
$(30) |
Organic Contribution to Site Rental
Billings(b) |
|
|
$258 |
|
|
$340 |
to |
$380 |
Straight-lined revenues |
|
|
$410 |
|
|
$264 |
to |
$284 |
Amortization of prepaid rent |
|
|
$569 |
|
|
$570 |
to |
$580 |
Acquisitions(d) |
|
|
$4 |
|
|
— |
Other |
|
|
— |
|
|
— |
Total site rental
revenues |
|
|
$6,289 |
|
|
$6,488 |
to |
$6,533 |
|
|
|
|
|
Year-over-year changes in
revenues:(e) |
|
|
|
|
Site rental revenues |
|
|
10.0% |
|
|
3.5% |
Changes in revenues as a percentage of prior year site rental
billings: |
|
|
|
|
Organic Contribution to Site Rental Billings
adjusted for impact of Sprint Cancellations(b)(c) |
|
|
5.1% |
|
|
4.2% |
Organic Contribution to Site Rental
Billings(b) |
|
|
5.1% |
|
|
6.8% |
(a) As issued on January 25, 2023 and unchanged
from the previous full year 2023 Outlook issued on October 19,
2022.(b) See "Non-GAAP Financial Measures, Segment Measures and
Other Calculations" for our definitions of site rental billings,
core leasing activity, non-renewals, Organic Contribution to Site
Rental Billings adjusted for impact of Sprint Cancellations and
Organic Contribution to Site Rental Billings.(c) For payments for
Sprint Cancellations, the full year 2023 Outlook reflects $70
million and $95 million that relate to fiber solutions and small
cells, respectively. For non-renewals associated with Sprint
Cancellations, the full year 2023 Outlook reflects $10 million and
$20 million that relate to the fiber solutions and small cells,
respectively.(d) 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.(e) Calculated based
on midpoint of respective full year Outlook, where applicable.
Components of Capital
Expenditures:(a)
|
|
For the Three Months Ended |
(in millions) |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary capital
expenditures: |
|
|
|
|
|
|
|
|
|
|
Communications infrastructure improvements and other capital
projects |
|
$ |
29 |
$ |
307 |
$ |
7 |
$ |
343 |
|
$ |
34 |
$ |
239 |
$ |
13 |
$ |
286 |
Purchases of land interests |
|
|
16 |
|
— |
|
— |
|
16 |
|
|
19 |
|
2 |
|
— |
|
21 |
Sustaining capital
expenditures |
|
|
3 |
|
6 |
|
21 |
|
30 |
|
|
8 |
|
14 |
|
8 |
|
30 |
Total capital
expenditures |
|
$ |
48 |
$ |
313 |
$ |
28 |
$ |
389 |
|
$ |
61 |
$ |
255 |
$ |
21 |
$ |
337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
(in millions) |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
Towers |
Fiber |
Other |
Total |
|
Towers |
Fiber |
Other |
Total |
Discretionary capital
expenditures: |
|
|
|
|
|
|
|
|
|
|
Communications infrastructure improvements and other capital
projects |
|
$ |
121 |
$ |
1,017 |
$ |
24 |
$ |
1,162 |
|
$ |
138 |
$ |
905 |
$ |
33 |
$ |
1,076 |
Purchases of land interests |
|
|
53 |
|
— |
|
— |
|
53 |
|
|
64 |
|
2 |
|
— |
|
66 |
Sustaining capital
expenditures |
|
|
11 |
|
41 |
|
43 |
|
95 |
|
|
19 |
|
49 |
|
19 |
|
87 |
Total capital
expenditures |
|
$ |
185 |
$ |
1,058 |
$ |
67 |
$ |
1,310 |
|
$ |
221 |
$ |
956 |
$ |
52 |
$ |
1,229 |
Components of Interest
Expense:
|
|
For the Three Months Ended |
(in millions) |
|
December 31, 2022 |
|
December 31, 2021 |
Interest expense on debt obligations |
|
$ |
189 |
|
|
$ |
160 |
|
Amortization of deferred
financing costs and adjustments on long-term debt |
|
|
6 |
|
|
|
6 |
|
Capitalized interest |
|
|
(3 |
) |
|
|
(2 |
) |
Interest expense and
amortization of deferred financing costs |
|
$ |
192 |
|
|
$ |
164 |
|
Outlook for Components of Interest
Expense:
(in millions) |
|
Full Year 2023 Outlook(b) |
Interest expense on debt obligations |
|
$804 |
to |
$844 |
Amortization of deferred
financing costs and adjustments on long-term debt |
|
$20 |
to |
$30 |
Capitalized interest |
|
$(18) |
to |
$(8) |
Interest expense and
amortization of deferred financing costs |
|
$814 |
to |
$859 |
(a) See "Non-GAAP Financial Measures, Segment Measures and Other
Calculations" for our definitions of discretionary capital
expenditures and sustaining capital expenditures. (b) As issued on
January 25, 2023 and unchanged from the previous full year 2023
Outlook issued on October 19, 2022.
Debt Balances and Maturity Dates as of
December 31, 2022:
(in millions) |
|
Face Value |
|
Final Maturity |
Cash, cash equivalents and restricted cash |
|
$ |
327 |
|
|
|
|
|
|
|
Senior Secured Notes, Series
2009-1, Class A-2(a) |
|
|
47 |
|
Aug. 2029 |
Senior Secured Tower Revenue
Notes, Series 2015-2(b) |
|
|
700 |
|
May 2045 |
Senior Secured Tower Revenue
Notes, Series 2018-2(b) |
|
|
750 |
|
July 2048 |
Finance leases and other
obligations |
|
|
246 |
|
Various |
Total secured debt |
|
$ |
1,743 |
|
|
2016 Revolver(c) |
|
|
1,305 |
|
July 2027 |
2016 Term Loan A |
|
|
1,192 |
|
July 2027 |
Commercial Paper Notes(d) |
|
|
1,241 |
|
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 |
|
$ |
20,138 |
|
|
Net Debt(e) |
|
$ |
21,554 |
|
|
(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) As of
December 31, 2022, the undrawn availability under the $7.0
billion 2016 Revolver was $5.7 billion.(d) As of December 31,
2022, the Company had $0.8 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.(e) See
"Non-GAAP Financial Measures, Segment Measures and Other
Calculations" for further information on, and our definition and
calculation of, Net Debt.
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 2023 Outlook and plans,
projections, and estimates regarding (1) potential benefits,
growth, returns, capabilities, opportunities and shareholder value
which may be derived from our business (including our Fiber
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
the demand for our assets and solutions created by such deployment,
(4) our long- and near-term prospects and challenges, and the
trends, events and industry activities affecting our business,
including the impact on our business therefrom, (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 (including compound annual growth
rate), and its driving factors, (7) our debt and debt maturities,
(8) cash flows, including growth thereof, and its driving
factors (9) the leasing activity, including core leasing
activity, we see in our business, and the benefits and
opportunities created thereby and the impacts therefrom, (10)
tenant non-renewals and cancellations, 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 its
components (including 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
(including as adjusted for impact of Sprint Cancellations) 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
its components, including the growth thereof, (21) annual small
cell node deployment, including timing, driving factors and the
impacts therefrom, (22) prepaid rent, including the additions and
the amortization and growth thereof, (23) the growth in data demand
in the United States, (24) investment opportunities and the
benefits that may be derived therefrom, (25) interest rates,
including the increase thereof, and the impacts therefrom, (26)
services contribution, (27) the impact of Sprint Cancellations and
the rationalization of Sprint's legacy network, (28) site rental
costs of operations, (29) segment services and other gross margin,
including components thereof, (30) the strength of our balance
sheet, (31) our liquidity position and (32) the utility of certain
financial measures, including non-GAAP financial measures. 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
INC.CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)(Amounts in millions, except par values) |
|
|
December 31,2022 |
|
December 31,2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
156 |
|
|
$ |
292 |
|
Restricted cash |
|
|
166 |
|
|
|
169 |
|
Receivables, net |
|
|
593 |
|
|
|
543 |
|
Prepaid expenses |
|
|
102 |
|
|
|
105 |
|
Deferred site rental receivables |
|
|
127 |
|
|
|
92 |
|
Other current assets |
|
|
73 |
|
|
|
53 |
|
Total current assets |
|
|
1,217 |
|
|
|
1,254 |
|
Deferred site rental
receivables |
|
|
1,954 |
|
|
|
1,588 |
|
Property and equipment,
net |
|
|
15,407 |
|
|
|
15,269 |
|
Operating lease right-of-use
assets |
|
|
6,526 |
|
|
|
6,682 |
|
Goodwill |
|
|
10,085 |
|
|
|
10,078 |
|
Site rental contracts and
tenant relationships |
|
|
3,535 |
|
|
|
3,982 |
|
Other intangible assets,
net |
|
|
61 |
|
|
|
64 |
|
Other assets, net |
|
|
136 |
|
|
|
123 |
|
Total assets |
|
$ |
38,921 |
|
|
$ |
39,040 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
236 |
|
|
$ |
246 |
|
Accrued interest |
|
|
183 |
|
|
|
182 |
|
Deferred revenues |
|
|
736 |
|
|
|
776 |
|
Other accrued liabilities |
|
|
407 |
|
|
|
401 |
|
Current maturities of debt and other obligations |
|
|
819 |
|
|
|
72 |
|
Current portion of operating lease liabilities |
|
|
350 |
|
|
|
349 |
|
Total current liabilities |
|
|
2,731 |
|
|
|
2,026 |
|
Debt and other long-term
obligations |
|
|
20,910 |
|
|
|
20,557 |
|
Operating lease
liabilities |
|
|
5,881 |
|
|
|
6,031 |
|
Other long-term
liabilities |
|
|
1,950 |
|
|
|
2,168 |
|
Total liabilities |
|
|
31,472 |
|
|
|
30,782 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $0.01 par value; 1,200 shares authorized; shares
issued and outstanding: December 31, 2022—433 and December 31,
2021—432 |
|
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
|
18,116 |
|
|
|
18,011 |
|
Accumulated other comprehensive income (loss) |
|
|
(5 |
) |
|
|
(4 |
) |
Dividends/distributions in excess of earnings |
|
|
(10,666 |
) |
|
|
(9,753 |
) |
Total equity |
|
|
7,449 |
|
|
|
8,258 |
|
Total liabilities and equity |
|
$ |
38,921 |
|
|
$ |
39,040 |
|
|
|
CROWN CASTLE
INC.CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)(Amounts in millions, except per share
amounts) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net revenues: |
|
|
|
|
|
|
|
|
Site rental |
|
$ |
1,578 |
|
|
$ |
1,474 |
|
|
$ |
6,289 |
|
|
$ |
5,719 |
|
Services and other |
|
|
186 |
|
|
|
180 |
|
|
|
697 |
|
|
|
621 |
|
Net revenues |
|
|
1,764 |
|
|
|
1,654 |
|
|
|
6,986 |
|
|
|
6,340 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Costs of operations:(a) |
|
|
|
|
|
|
|
|
Site rental |
|
|
400 |
|
|
|
387 |
|
|
|
1,602 |
|
|
|
1,554 |
|
Services and other |
|
|
122 |
|
|
|
138 |
|
|
|
466 |
|
|
|
439 |
|
Selling, general and administrative |
|
|
192 |
|
|
|
180 |
|
|
|
750 |
|
|
|
680 |
|
Asset write-down charges |
|
|
8 |
|
|
|
12 |
|
|
|
34 |
|
|
|
21 |
|
Acquisition and integration costs |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
Depreciation, amortization and accretion |
|
|
431 |
|
|
|
415 |
|
|
|
1,707 |
|
|
|
1,644 |
|
Total operating expenses |
|
|
1,154 |
|
|
|
1,132 |
|
|
|
4,561 |
|
|
|
4,339 |
|
Operating income (loss) |
|
|
610 |
|
|
|
522 |
|
|
|
2,425 |
|
|
|
2,001 |
|
Interest expense and
amortization of deferred financing costs |
|
|
(192 |
) |
|
|
(164 |
) |
|
|
(699 |
) |
|
|
(657 |
) |
Gains (losses) on retirement
of long-term obligations |
|
|
— |
|
|
|
— |
|
|
|
(28 |
) |
|
|
(145 |
) |
Interest income |
|
|
2 |
|
|
|
— |
|
|
|
3 |
|
|
|
1 |
|
Other income (expense) |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
(10 |
) |
|
|
(21 |
) |
Income (loss) before income
taxes |
|
|
415 |
|
|
|
354 |
|
|
|
1,691 |
|
|
|
1,179 |
|
Benefit (provision) for income
taxes |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(16 |
) |
|
|
(21 |
) |
Income (loss) from continuing
operations |
|
|
413 |
|
|
|
353 |
|
|
|
1,675 |
|
|
|
1,158 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Net gain (loss) from disposal of discontinued operations, net of
tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(62 |
) |
Income (loss) from discontinued operations, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(62 |
) |
Net income (loss) |
|
$ |
413 |
|
|
$ |
353 |
|
|
$ |
1,675 |
|
|
$ |
1,096 |
|
|
|
|
|
|
|
|
|
|
Net income (loss), per common
share: |
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, basic |
|
$ |
0.95 |
|
|
$ |
0.82 |
|
|
$ |
3.87 |
|
|
$ |
2.68 |
|
Income (loss) from discontinued operations, basic |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.14 |
) |
Net income (loss), basic |
|
$ |
0.95 |
|
|
$ |
0.82 |
|
|
$ |
3.87 |
|
|
$ |
2.54 |
|
Income (loss) from continuing operations, diluted |
|
$ |
0.95 |
|
|
$ |
0.81 |
|
|
$ |
3.86 |
|
|
$ |
2.67 |
|
Income (loss) from discontinued operations, diluted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.14 |
) |
Net income (loss), diluted |
|
$ |
0.95 |
|
|
$ |
0.81 |
|
|
$ |
3.86 |
|
|
$ |
2.53 |
|
|
|
|
|
|
|
|
|
|
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
INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)(In millions of dollars) |
|
|
Twelve Months Ended December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operating activities: |
|
|
|
|
Income (loss) from continuing
operations |
|
$ |
1,675 |
|
|
$ |
1,158 |
|
Adjustments to reconcile
income (loss) from continuing operations to net cash provided by
(used for) operating activities: |
|
|
|
|
Depreciation, amortization and accretion |
|
|
1,707 |
|
|
|
1,644 |
|
(Gains) losses on retirement of long-term obligations |
|
|
28 |
|
|
|
145 |
|
Amortization of deferred financing costs and other non-cash
interest, net |
|
|
17 |
|
|
|
13 |
|
Stock-based compensation expense |
|
|
156 |
|
|
|
129 |
|
Asset write-down charges |
|
|
34 |
|
|
|
21 |
|
Deferred income tax (benefit) provision |
|
|
3 |
|
|
|
4 |
|
Other non-cash adjustments, net |
|
|
5 |
|
|
|
21 |
|
Changes in assets and liabilities, excluding the effects of
acquisitions: |
|
|
|
|
Increase (decrease) in liabilities |
|
|
(286 |
) |
|
|
(120 |
) |
Decrease (increase) in assets |
|
|
(461 |
) |
|
|
(226 |
) |
Net cash provided by (used for) operating
activities |
|
|
2,878 |
|
|
|
2,789 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital expenditures |
|
|
(1,310 |
) |
|
|
(1,229 |
) |
Payments for acquisitions, net of cash acquired |
|
|
(35 |
) |
|
|
(111 |
) |
Other investing activities, net |
|
|
(7 |
) |
|
|
8 |
|
Net cash provided by (used for) investing
activities |
|
|
(1,352 |
) |
|
|
(1,332 |
) |
Cash flows from
financing activities: |
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
748 |
|
|
|
3,985 |
|
Principal payments on debt and other long-term obligations |
|
|
(74 |
) |
|
|
(1,076 |
) |
Purchases and redemptions of long-term debt |
|
|
(1,274 |
) |
|
|
(2,089 |
) |
Borrowings under revolving credit facility |
|
|
3,495 |
|
|
|
1,245 |
|
Payments under revolving credit facility |
|
|
(2,855 |
) |
|
|
(870 |
) |
Net borrowings (repayments) under commercial paper program |
|
|
976 |
|
|
|
(20 |
) |
Payments for financing costs |
|
|
(14 |
) |
|
|
(42 |
) |
Purchases of common stock |
|
|
(65 |
) |
|
|
(70 |
) |
Dividends/distributions paid on common stock |
|
|
(2,602 |
) |
|
|
(2,373 |
) |
Net cash provided by (used for) financing
activities |
|
|
(1,665 |
) |
|
|
(1,310 |
) |
Net increase
(decrease) in cash, cash equivalents, and restricted cash -
continuing operations |
|
|
(139 |
) |
|
|
147 |
|
Discontinued
operations: |
|
|
|
|
Net cash provided by (used for)
operating activities |
|
|
— |
|
|
|
(62 |
) |
Net increase
(decrease) in cash, cash equivalents and restricted cash -
discontinued operations |
|
|
— |
|
|
|
(62 |
) |
Effect of exchange
rate changes on cash |
|
|
— |
|
|
|
— |
|
Cash, cash equivalents, and restricted cash at beginning of
period |
|
|
466 |
|
|
|
381 |
|
Cash, cash
equivalents, and restricted cash at end of period |
|
$ |
327 |
|
|
$ |
466 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
Interest paid |
|
|
684 |
|
|
|
661 |
|
Income taxes paid |
|
|
10 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CROWN CASTLE
INC.SEGMENT OPERATING RESULTS
(UNAUDITED)(In millions of dollars) |
SEGMENT OPERATING RESULTS |
|
|
Three Months
Ended December 31, 2022 |
|
Three Months
Ended December 31, 2021 |
|
|
Towers |
|
Fiber |
|
Other |
|
ConsolidatedTotal |
|
Towers |
|
Fiber |
|
Other |
|
ConsolidatedTotal |
Segment site rental revenues |
|
$ |
1,086 |
|
$ |
492 |
|
|
|
$ |
1,578 |
|
$ |
985 |
|
$ |
489 |
|
|
|
$ |
1,474 |
Segment services and other
revenues |
|
|
183 |
|
|
3 |
|
|
|
|
186 |
|
|
174 |
|
|
6 |
|
|
|
|
180 |
Segment revenues |
|
|
1,269 |
|
|
495 |
|
|
|
|
1,764 |
|
|
1,159 |
|
|
495 |
|
|
|
|
1,654 |
Segment site rental costs of
operations |
|
|
230 |
|
|
161 |
|
|
|
|
391 |
|
|
231 |
|
|
148 |
|
|
|
|
379 |
Segment services and other
costs of operations |
|
|
117 |
|
|
2 |
|
|
|
|
119 |
|
|
130 |
|
|
6 |
|
|
|
|
136 |
Segment costs of
operations(a)(b) |
|
|
347 |
|
|
163 |
|
|
|
|
510 |
|
|
361 |
|
|
154 |
|
|
|
|
515 |
Segment site rental gross
margin(c) |
|
|
856 |
|
|
331 |
|
|
|
|
1,187 |
|
|
754 |
|
|
341 |
|
|
|
|
1,095 |
Segment services and other
gross margin(c) |
|
|
66 |
|
|
1 |
|
|
|
|
67 |
|
|
44 |
|
|
— |
|
|
|
|
44 |
Segment selling, general and
administrative expenses(b) |
|
|
30 |
|
|
50 |
|
|
|
|
80 |
|
|
29 |
|
|
41 |
|
|
|
|
70 |
Segment operating
profit(c) |
|
|
892 |
|
|
282 |
|
|
|
|
1,174 |
|
|
769 |
|
|
300 |
|
|
|
|
1,069 |
Other selling, general and
administrative expenses(b) |
|
|
|
|
|
$ |
84 |
|
|
84 |
|
|
|
|
|
$ |
85 |
|
|
85 |
Stock-based compensation
expense |
|
|
|
|
|
|
36 |
|
|
36 |
|
|
|
|
|
|
31 |
|
|
31 |
Depreciation, amortization and
accretion |
|
|
|
|
|
|
431 |
|
|
431 |
|
|
|
|
|
|
415 |
|
|
415 |
Interest expense and
amortization of deferred financing costs |
|
|
|
|
|
|
192 |
|
|
192 |
|
|
|
|
|
|
164 |
|
|
164 |
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
|
|
16 |
|
|
16 |
|
|
|
|
|
|
20 |
|
|
20 |
Income (loss) before income
taxes |
|
|
|
|
|
|
|
$ |
415 |
|
|
|
|
|
|
|
$ |
354 |
(a) Exclusive of depreciation, amortization and
accretion shown separately.(b) Segment costs of operations exclude
(1) stock-based compensation expense of $8 million and
$6 million for the three months ended December 31, 2022
and 2021, respectively, and (2) prepaid lease purchase price
adjustments of $4 million for each of the three months ended
December 31, 2022 and 2021. Segment selling, general and
administrative expenses and other selling, general and
administrative expenses exclude stock-based compensation expense of
$28 million and $25 million for the three months ended
December 31, 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 |
|
|
Twelve Months
Ended December 31, 2022 |
|
Twelve Months
Ended December 31, 2021 |
|
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
|
Towers |
|
Fiber |
|
Other |
|
Consolidated Total |
Segment site rental revenues |
|
$ |
4,322 |
|
$ |
1,967 |
|
|
|
$ |
6,289 |
|
$ |
3,804 |
|
$ |
1,915 |
|
|
|
$ |
5,719 |
Segment services and other
revenues |
|
|
685 |
|
|
12 |
|
|
|
|
697 |
|
|
601 |
|
|
20 |
|
|
|
|
621 |
Segment revenues |
|
|
5,007 |
|
|
1,979 |
|
|
|
|
6,986 |
|
|
4,405 |
|
|
1,935 |
|
|
|
|
6,340 |
Segment site rental costs of
operations |
|
|
918 |
|
|
650 |
|
|
|
|
1,568 |
|
|
889 |
|
|
633 |
|
|
|
|
1,522 |
Segment services and other
costs of operations |
|
|
447 |
|
|
9 |
|
|
|
|
456 |
|
|
414 |
|
|
17 |
|
|
|
|
431 |
Segment costs of
operations(a)(b) |
|
|
1,365 |
|
|
659 |
|
|
|
|
2,024 |
|
|
1,303 |
|
|
650 |
|
|
|
|
1,953 |
Segment site rental gross
margin(c) |
|
|
3,404 |
|
|
1,317 |
|
|
|
|
4,721 |
|
|
2,915 |
|
|
1,282 |
|
|
|
|
4,197 |
Segment services and other
gross margin(c) |
|
|
238 |
|
|
3 |
|
|
|
|
241 |
|
|
187 |
|
|
3 |
|
|
|
|
190 |
Segment selling, general and
administrative expenses(b) |
|
|
115 |
|
|
190 |
|
|
|
|
305 |
|
|
107 |
|
|
174 |
|
|
|
|
281 |
Segment operating
profit(c) |
|
|
3,527 |
|
|
1,130 |
|
|
|
|
4,657 |
|
|
2,995 |
|
|
1,111 |
|
|
|
|
4,106 |
Other selling, general and
administrative expenses(b) |
|
|
|
|
|
$ |
317 |
|
|
317 |
|
|
|
|
|
$ |
290 |
|
|
290 |
Stock-based compensation
expense |
|
|
|
|
|
|
156 |
|
|
156 |
|
|
|
|
|
|
131 |
|
|
131 |
Depreciation, amortization and
accretion |
|
|
|
|
|
|
1,707 |
|
|
1,707 |
|
|
|
|
|
|
1,644 |
|
|
1,644 |
Interest expense and
amortization of deferred financing costs |
|
|
|
|
|
|
699 |
|
|
699 |
|
|
|
|
|
|
657 |
|
|
657 |
Other (income) expenses to
reconcile to income (loss) before income taxes(d) |
|
|
|
|
|
|
87 |
|
|
87 |
|
|
|
|
|
|
205 |
|
|
205 |
Income (loss) before income
taxes |
|
|
|
|
|
|
|
$ |
1,691 |
|
|
|
|
|
|
|
$ |
1,179 |
(a) Exclusive of depreciation, amortization and
accretion shown separately.(b) Segment costs of operations exclude
(1) stock-based compensation expense of $28 million and
$22 million for the twelve months ended December 31, 2022
and 2021, respectively, and (2) prepaid lease purchase price
adjustments of $16 million and $18 million for the twelve
months ended December 31, 2022 and 2021, respectively. Segment
selling, general and administrative expenses and other selling,
general and administrative expenses exclude stock-based
compensation expense of $128 million and $109 million for
the twelve months ended December 31, 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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