10-QPeriod: Q2 FY2013

CROWN CASTLE INC. Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 6, 2013For Securities:CCI

Summary

Crown Castle Inc. (CCI) reported its second quarter and first half 2013 financial results, demonstrating significant growth driven by its core site rental business and strategic acquisitions. Net revenues for the six months ended June 30, 2013, increased by 30% year-over-year to $1.47 billion, with site rental revenues up 21% to $1.23 billion. The company's operating income grew 15% to $465 million for the same period, reflecting strong operational performance and management's focus on expanding its tower portfolio. Financially, CCI has managed its debt effectively, with a significant portion at fixed rates and long-dated maturities. The company repurchased debt and shares during the period, indicating a commitment to enhancing shareholder value. Despite ongoing integration of recent acquisitions, such as the T-Mobile tower portfolio, the company maintains a stable cash flow from operations, which is expected to fund future capital expenditures and discretionary investments. Key customers like Sprint, T-Mobile, AT&T, and Verizon Wireless continue to drive a substantial portion of revenue.

Financial Highlights

49 data points
Beta

Revenue

$734.93M

Net Income

$52.36M

7.1% Net Margin

EPS (Diluted)

$0.18

Total Assets

$15.39B

Cash & Equivalents

$126.89M

Free Cash Flow

$273.40M

Financial Statements
Beta
Revenue$734.93M
SG&A Expenses$54.79M
Operating Expenses$504.97M
Operating Income$229.96M
Interest Expense$119.70M
Net Income$52.36M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)291.23M
Shares Outstanding (Diluted)292.71M

Key Highlights

  • 1Net revenues increased 30% to $1.47 billion for the first six months of 2013 compared to the same period in 2012.
  • 2Site rental revenues, the core business, grew 21% to $1.23 billion for the first six months of 2013.
  • 3Operating income rose 15% to $465 million for the first six months of 2013, showcasing operational efficiency.
  • 4The company's debt portfolio remains manageable, with 71% of debt at fixed rates and long-dated maturities.
  • 5Significant debt repurchases and common stock purchases were executed, demonstrating a focus on capital allocation for shareholder value.
  • 6Net cash from operating activities increased significantly by 73% to $560 million for the first six months of 2013.
  • 7Key customers (Sprint, T-Mobile, AT&T, Verizon Wireless) accounted for 84% of consolidated revenues in the first half of 2013.

Frequently Asked Questions

The primary driver of revenue growth was the core site rental business, which increased by 21% to $1.23 billion for the first six months of 2013. This growth was supplemented by a substantial increase in network services and other revenues, which nearly doubled year-over-year, and the impact of strategic acquisitions completed in the prior year.

Crown Castle has actively managed its debt by refinancing existing debt and focusing on a mix of fixed and variable rates. As of June 30, 2013, the company had approximately $10.8 billion in debt and other long-term obligations. Notably, 71% of this debt carries fixed interest rates, and the company has long-dated maturities, with no significant debt maturities expected until 2015. The company also repurchased debt during the period.

The company generated strong cash flow from operations, with net cash provided by operating activities increasing by 73% to $560 million for the first six months of 2013. This robust operating cash flow, combined with available credit facilities, is expected to fund capital expenditures (sustaining and discretionary), debt service obligations, and other discretionary investments such as share repurchases.

The T-Mobile acquisition, closed in November 2012, is a significant contributor to Crown Castle's growth. While the purchase price allocation was still being finalized as of June 30, 2013, the acquisition has increased consolidated net revenues and is a key factor in the company's expanded tower portfolio. The integration of these towers is expected to drive future site rental revenue growth and capitalize on anticipated carrier network expansion.