Crown Castle International Corp. (CCI) yesterday reported results for the second quarter ended June 30, 2021 and increased its full year 2021 Outlook.
“Capitalizing on the momentum created by a robust 5G leasing environment, we were able to deliver another solid quarter in the second quarter and increase our full year 2021 Outlook for AFFO per share growth to 12 percent,” Jay Brown, Crown Castle’s Chief Executive Officer said. “We are seeing the highest level of tower activity in our history as our customers are focusing on utilizing towers in the first phase of deploying their 5G networks nationwide. This initial focus on towers has led to delays in some of our small cell deployments that impact the timing of when we expect to complete the nearly 30,000 small cells currently in our backlog. We continue to believe the deployment of 5G in the U.S. will extend our opportunity to create value for our shareholders as our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks, will be critical as our customers densify their networks to deliver 5G,” Brown said.
Highlights from the quarter include:
- Site rental revenues grew 8 percent, or $106 million, from second quarter 2020 to second quarter 2021, inclusive of approximately $70 million in Organic Contribution to Site Rental Revenues and a $35 million increase in straight-lined revenues. The $70 million in Organic Contribution to Site Rental Revenues represents approximately 5.3 percent growth, comprising approximately 8.6 percent growth from new leasing activity and contracted tenant escalations, net of approximately 3.3 percent from tenant non-renewals.
- Income from continuing operations for the second quarter 2021 was $333 million compared to $200 million for the second quarter 2020 and was predominantly impacted by the increase in site rental revenues and services contribution.
- AFFO per share for the second quarter 2021 was $1.71, representing 18 percent growth when compared to $1.45 for the second quarter 2020.
- Capital expenditures during the quarter were $308 million, consisting of $19 million of sustaining capital expenditures and $289 million of discretionary capital expenditures. Discretionary capital expenditures during the quarter primarily included approximately $223 million attributable to Fiber and approximately $60 million attributable to Towers.
- During the quarter, Crown Castle paid common stock dividends of approximately $575 million in the aggregate, or $1.33 per common share, an increase of approximately 11 percent on a per share basis compared to the same period a year ago.
- In June, Crown Castle issued $750 million in aggregate principal amount of senior unsecured notes with a 10-year maturity and a coupon of 2.500 percent and extended the maturity date on its Senior Unsecured Credit Facility to June 2026. Net proceeds from the senior notes offering were used to repay all of the outstanding Senior Secured Tower Revenue Notes, Series 2015-1, Class C-2022 in July, to repay outstanding commercial paper notes at their maturity date, and for general corporate purposes.
“Our diverse portfolio of assets and customer solutions has enabled us to outperform our long-term target growth rate of 7 percent to 8 percent since we established the target in 2017,” Brown said, “demonstrating how well positioned Crown Castle is to capitalize on the robust demand for connectivity. During that period, we have grown dividends per share at a compounded annual growth rate of 9 percent, and, going forward, we believe our strategy will allow us to deliver on our long-term target dividend per share growth of 7 percent to 8 percent per year.”
Dan Schlanger, Crown Castle’s Chief Financial Officer said they are seeing customers who are deploying 5G at scale and believes Crown is well positioned to support them by providing a set of solutions across towers, small cells and fiber solutions. Schlanger said all are necessary to build out 5G wireless networks.
“The elevated level of Towers activity this year is contributing to an expected 12 percent growth in AFFO per share,” Schlanger said, “meaningfully exceeding our long-term target of 7 percent to 8 percent per year. Looking forward, we believe we are in a great position to deliver on our growth target while at the same time making investments in our business that we believe will generate attractive long-term returns and support future growth.”
Schlanger said they will continue to take steps to complement their compelling total return opportunity with a lower risk profile, which includes allocating capital to opportunities in the U.S., which they believe is the best market for communications infrastructure ownership.
“To that point,” he said, “we were able to opportunistically access the bond market and extend the maturity on our credit facility during the second quarter, extending our debt maturity profile and reducing our overall cost of capital.”
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