Crown Castle Q3 2020 Earnings Report
Key Takeaways
Crown Castle International Corp. reported solid results for the third quarter ended September 30, 2020. Site rental revenues grew by 4.0%, driven by organic contribution. The company updated its full year 2020 outlook and issued its full year 2021 outlook. The Board of Directors announced an 11% increase to the common stock dividend.
Site rental revenues grew 4.0%, or $52 million, from third quarter 2019 to third quarter 2020, inclusive of approximately $70 million in Organic Contribution to Site Rental Revenues and a $18 million decrease in straight-lined revenues.
Net income for the third quarter 2020 was $163 million compared to $242 million during the third quarter of 2019 and was impacted by the retirement of $2.4 billion of senior unsecured notes during July 2020, which resulted in a $95 million loss on the retirement of long-term obligations.
Capital expenditures during the quarter were $377 million, comprised of $20 million of sustaining capital expenditures and $357 million of discretionary capital expenditures.
During the quarter, Crown Castle paid common stock dividends of approximately $518 million in the aggregate, or $1.20 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago.
Crown Castle
Crown Castle
Crown Castle Revenue by Segment
Forward Guidance
Crown Castle provided its outlook for full year 2020 and full year 2021, expecting growth in site rental revenues and adjusted EBITDA.
Positive Outlook
- Expect approximately 6% growth in Organic Contribution to Site Rental Revenue across both Towers and Fiber segments in 2021.
- Expect acceleration in AFFO per share growth to approximately 10% in 2021.
- Unique portfolio of assets positions Crown Castle to benefit from what they expect will be a decade-long investment cycle as customers deploy 5G, which they believe will start in earnest in 2021.
- Expect discretionary capital expenditures to be approximately $400 million lower in 2021 when compared to 2019 while delivering AFFO per share growth above long-term target.
- Anticipate the combination of lower capital expenditures and higher cash flow growth will allow funding of discretionary capital budget next year with free cash flow and incremental debt capacity.
Challenges Ahead
- Reduction to the 2020 Outlook primarily reflects an expected shift in the timing of Towers activity from the second half of 2020 to the first half of 2021.
- Change in the timing of Towers activity negatively impacts the expected Organic Contribution to Site Rental Revenues by approximately $20 million.
- Services contribution from towers negatively impacted by approximately $50 million due to timing changes.
- Straight-lined revenues from Towers for full year 2020 are expected to be approximately $20 million lower than previously expected.
- Lower straight-lined revenues are due to a combination of the timing of Towers activity as well as fewer lease extensions than previously forecasted.
Revenue & Expenses
Visualization of income flow from segment revenue to net income