10-QPeriod: Q3 FY2009

CROWN CASTLE INC. Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:CCI

Summary

Crown Castle Inc. (CCI) reported its third quarter and nine-month results for the period ending September 30, 2009. The company experienced a significant increase in net revenues, driven primarily by its site rental business, which accounts for 92% of total revenues. While the company incurred a net loss attributable to CCIC stockholders for both periods, this was largely influenced by substantial non-cash charges and debt-related expenses, including losses on interest rate swaps and losses from debt repurchases. Operationally, the company demonstrated resilience amidst a challenging economic environment, with growth in its core U.S. tower operations (CCUSA) showing strong Adjusted EBITDA performance. The company has actively managed its debt during the period, issuing new debt and using proceeds to retire existing obligations, thereby extending its debt maturity profile. Despite a challenging credit market, Crown Castle maintained a positive outlook for future growth, anticipating continued demand for its towers due to the expansion of wireless networks and increasing consumer usage of data services. Management is focused on translating this growth into per-share value by co-locating additional tenants on existing towers and capital allocation strategies.

Financial Highlights

47 data points
Beta

Revenue

$429.08M

Net Income

-$31.64M

-7.4% Net Margin

EPS (Diluted)

$-0.13

Total Assets

$10.48B

Cash & Equivalents

$268.83M

Free Cash Flow

$124.22M

Financial Statements
Beta
Revenue$429.08M
SG&A Expenses$39.23M
Operating Expenses$310.28M
Operating Income$118.80M
Interest Expense$94.22M
Net Income-$31.64M
EPS (Basic)$-0.13
EPS (Diluted)$-0.13
Shares Outstanding (Basic)286.71M
Shares Outstanding (Diluted)286.71M

Key Highlights

  • 1Net revenues increased by 12% year-over-year for the third quarter, reaching $429.1 million, driven by a 12% rise in site rental revenues.
  • 2Adjusted EBITDA for the third quarter increased by 21% year-over-year to $260.5 million, indicating operational efficiency and growth in core business.
  • 3The company actively managed its debt, issuing $2.9 billion in new debt and retiring $2.4 billion in existing debt during the first nine months of 2009, extending debt maturities.
  • 4Crown Castle incurred a net loss attributable to CCIC stockholders of $31.6 million for the third quarter and $132.5 million for the first nine months, significantly impacted by non-cash charges like losses on interest rate swaps ($58.3 million in Q3) and debt extinguishment losses ($90.2 million in nine months).
  • 5Despite net losses, the company's operational outlook remains positive, with projected site rental revenue growth of 7-8% for 2010.
  • 6Major customers like Sprint Nextel, AT&T, Verizon Wireless, and T-Mobile accounted for 72% of third-quarter revenues, highlighting significant customer concentration.
  • 7The company's Australian operations (CCAL) faced challenges from foreign currency fluctuations, with net revenues decreasing by 9% in the third quarter due to the weakening Australian dollar.

Frequently Asked Questions

In the third quarter of 2009, Crown Castle's net revenues increased by 12% year-over-year to $429.1 million, primarily driven by a 12% rise in site rental revenues. However, the company reported a net loss attributable to CCIC stockholders of $31.6 million. This loss was significantly influenced by a $58.3 million loss on interest rate swaps and other debt-related expenses, despite strong operational performance reflected in a 21% increase in Adjusted EBITDA to $260.5 million.

Crown Castle was very active in managing its debt. During the first nine months of 2009, it issued $2.9 billion in new debt and retired $2.4 billion of existing debt, significantly extending its debt maturity profile. The company anticipates refinancing its tower revenue notes in 2010 and 2011. Despite challenging credit markets, Crown Castle expects to have sufficient liquidity to meet its obligations and operate its business, with no debt maturities in the next twelve months beyond principal payments on amortizing debt and the expiration of its revolving credit agreement.

Crown Castle's growth is primarily driven by the anticipated expansion of wireless networks and increasing consumer demand for wireless data services. The company expects to grow revenues by co-locating additional tenants on its existing towers, benefiting from high incremental margins due to relatively fixed operating costs. Key risks include the concentration of revenue from a few major wireless carriers, potential impacts from economic recession on carrier capital spending, and foreign currency fluctuations affecting its Australian operations (CCAL).