Crown Castle Highlights Compelling Opportunity for Value Creation and Growth

Rhea-AI Summary

Crown Castle International Corp. (NYSE: CCI) issued a statement addressing Elliott Associates regarding its strategic direction. With over 25 years of experience, Crown Castle boasts a robust portfolio of towers and fiber networks essential for communications, aiming for significant growth in the U.S. market. The company has invested approximately $30 billion over the last decade to enhance its assets, expecting a long-term investment cycle driven by mobile data and 5G demand. Crown Castle aims to grow its dividend by 7% to 8% annually and has delivered impressive shareholder returns, including over $9 billion in dividends since 2014.

Positive

• Generated 32%, 90%, and 154% total returns over the last 1-, 3-, and 5-year periods, outperforming the S&P 500 and RMZ index.
• Achieved 67% site rental revenue growth and 73% AFFO growth over four years ending December 31, 2019.
• Plans to increase dividend per share by 7% to 8% annually.

Negative

• None.

HOUSTON, July 06, 2020 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE: CCI) (“Crown Castle”) today issued the following statement in response to the letter from Elliott Associates, L.P. and Elliott International, L.P. (“Elliott”): 

Since its inception over 25 years ago, Crown Castle has established an unmatched portfolio of towers, small cell networks and fiber, which are all integral components of communications networks and are shared among multiple tenants. By continuing to execute on our strategy to own and operate this critical infrastructure within the communications ecosystem in the United States, we believe we are providing the best opportunity for Crown Castle to generate significant growth while delivering compelling returns for shareholders.

We believe the U.S. is the best market in the world for shared communications infrastructure ownership. Through our investment of approximately $30 billion over the last ten years¹, we have built a unique portfolio of assets, unparalleled capabilities and strong customer relationships that position us well to capture the upside of the anticipated decade-long investment cycle required to meet the increasing demand for mobile data and deploy 5G in the U.S. While continuing to make the investments necessary to access this potential, we remain confident in our ability to generate compelling value for our shareholders, including through our goal of growing our dividend per share 7% to 8% per year.

¹Includes capital expenditures and acquisitions for the 10-year period ending December 31, 2019.

Crown Castle, under the leadership of its Board of Directors and management team, has a proven record of creating significant shareholder value and has:

• generated 32%, 90% and 154% total returns over the last 1-, 3-, and 5-year periods, compared to 7%, 37% and 67% total returns generated by the S&P 500 and -12%, 2% and 22% generated by the RMZ index over the same periods², respectively;
• exceeded total returns generated by 89%, 86% and 84% of the S&P 500 constituents and 97%, 96% and 88% of the RMZ index over the last 1-, 3- and 5-year periods², respectively;
• distributed $1.9 billion of cash to common shareholders through dividends in 2019 and more than $9 billion since initiating a common stock dividend in 2014.

²As of close of trading July 2, 2020.

Crown Castle’s performance and strong investment grade balance sheet reflect the strength of our assets. For the four-year period ending December 31, 2019, we have delivered:

• site rental revenue growth of 67%;
• 61% growth in Adjusted EBITDA³;
• and 73% AFFO growth³, resulting in 39% growth in AFFO per share³ and a corresponding increase in dividends per share of 37%.

³See “Non-GAAP Financial Measures and Reconciliations” included herein for further information and reconciliation of this non-GAAP financial measure to net income.

As is always the case, the Crown Castle Board of Directors and management team are open to all ideas to enhance shareholder value. In this regard, members of our Board and management team have met with Elliott multiple times to fully understand and extensively evaluate their assumptions and proposed changes to our strategic plan. While we firmly believe our strategy best positions Crown Castle to deliver near- and long-term value creation, we remain open to having continuing dialogue with Elliott, as we do with all shareholders.

Morgan Stanley & Co. LLC is acting as financial advisor and Cravath, Swaine & Moore LLP is acting as legal advisor to Crown Castle.

ABOUT CROWN CASTLE

Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology and wireless service - bringing information, ideas and innovations to the people and businesses that need them.

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that are based on Crown Castle management's current expectations. Such statements include plans, projections and estimates regarding (1) our strategy, including the benefits which may be derived therefrom, (2) our growth, (3) shareholder value and returns, (4) the U.S. market for shared communications infrastructure ownership, (5) our capabilities, (6) our strategic position, (7) investment cycles, demand for mobile data, and 5G deployment, (8) our investments, and (9) dividends, including growth thereof. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.  More information about potential risk factors that could affect Crown Castle and its results is included in Crown Castle's filings with the SEC. The term "including," and any variation thereof, means "including, without limitation.”

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including per share amounts, 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").

We define our non-GAAP financial measures, segment measures and other calculations as follows:

Non-GAAP Financial Measures

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, (income) loss from discontinued operations and stock-based compensation expense.

Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less sustaining capital expenditures.

AFFO per share. We define AFFO per share as AFFO divided by diluted weighted-average common shares outstanding.

Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders. Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion in 2014.

FFO per share. We define FFO per share as FFO divided by diluted weighted-average common shares outstanding.

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.

Reconciliation of Historical FFO and AFFO:

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(in millions, except per share amounts)	FY 2015 (As Restated)(a)	FY 2019
Net income (loss)(b)	$456	$860
Real estate related depreciation, amortization and accretion	$1,018	$1,517
Asset write-down charges	$33	$19
Dividends on preferred stock	($44)	($113)
FFO(c)(d)(e)(f)	$1,464	$2,284
Weighted-average common shares outstanding- diluted(g)	334	418
FFO per share(c)(d)(e)(f)(g)	$4.38	$5.47
FFO (from above)	$1,464	$2,283
Adjustments to increase (decrease) FFO:
Straight-lined revenue	($111)	($80)
Straight-lined expense	$99	$93
Stock-based compensation expense	$67	$116
Non-cash portion of tax provision	($64)	$5
Non-real estate related depreciation, amortization and accretion	$18	$55
Amortization of non-cash interest expense	$37	$1
Other (income) expense	($57)	($1)
(Gains) losses on retirement of long-term obligations	$4	$2
Acquisition and integration costs	$16	$13
Sustaining capital expenditures	($105)	($117)
AFFO(c)(d)(e)(f)	$1,368	$2,371
Weighted-average common shares outstanding- diluted(g)	334	418
AFFO per share(c)(d)(e)(f)(g)	$4.09	$5.68

1. See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information.
2. Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $1.0 billion for the twelve months ended December 31, 2015.
3. See definitions of FFO, including per share amounts, and AFFO, including per share amounts herein.
4. FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
5. Attributable to CCIC common stockholders.
6. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
7. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

Reconciliation of Adjusted EBITDA:

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(in millions, except per share amounts)	FY 2015 (As Restated)(a)	FY 2019
Net Income (loss)	$1,455	$860
Adjustments to increase (decrease) net income (loss):
Income (loss) from discontinued operations	($999)	-
Asset write-down charges	$33	$19
Acquisition and integration costs	$16	$13
Depreciation, amortization and accretion	$1,036	$1,572
Amortization of prepaid lease purchase price adjustments	$21	$20
Interest expense and amortization of deferred financing costs	$527	$683
(Gains) losses on retirement of long-term obligations	$4	$2
Interest income	($2)	($6)
Other (income) expense	($57)	($1)
(Benefit) provision for income taxes	($51)	$21
Stock-based compensation expense	$67	$116
Adjusted EBITDA(b)(c)	$2,050	$3,299

1. See our Annual Report on Form 10-K for the year ended December 31, 2019 for further information.
2. See definition of Adjusted EBITDA herein.
3. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

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CONTACTS

Investors Dan Schlanger, CFO Ben Lowe, VP & Treasurer Crown Castle International Corp. 713-570-3050  Media Andy Brimmer / Nick Lamplough / Adam Pollack Joele Frank, Wilkinson Brimmer Katcher 212-355-4449

FAQ

What is Crown Castle's investment in communications infrastructure?

Crown Castle has invested approximately $30 billion over the last ten years to establish a strong portfolio of towers, small cell networks, and fiber.

How have Crown Castle's total returns compared to the S&P 500?

Crown Castle generated total returns of 32%, 90%, and 154% over the last 1-, 3-, and 5-year periods, significantly outperforming the S&P 500.

What is Crown Castle's dividend growth target?

Crown Castle aims to grow its dividend per share by 7% to 8% annually.

How much cash has Crown Castle distributed to shareholders through dividends?

Crown Castle distributed $1.9 billion in cash dividends in 2019 and over $9 billion since initiating a common stock dividend in 2014.

What is the significance of Crown Castle's portfolio in the 5G rollout?

Crown Castle's unique portfolio of assets positions it well to benefit from the anticipated investment cycle for 5G deployment in the U.S.