Crown Castle Inc. (NYSE: CCI) yesterday reported results for the second quarter ended June 30, 2023 and updated its full year 2023 outlook. The company said despite anticipated slow down activity, its 2023 outlook for site rental revenues is unchanged.
“The resiliency in organic growth is the result of our past decisions to reduce the risk in our business by entering into attractive long-term customer agreements with contracted increases,” Dan Schlanger, Crown Castle’s Chief Financial Officer said. “Due to the change in tower activity, we have lowered our expected contribution from tower services margin by $90 million which reflects lower expected services revenues, partially offset by expected reductions in expenses.”
Schlanger said he believes the combination of the stability of CCI’s contracted rental revenues, efficient operations, and strong balance sheet provides a resilient cash flow stream. In an effort to improve the strength of its balance sheet, the company issued $1.35 billion of long-term fixed rate debt in the second quarter at a weighted average interest rate of approximately five percent. Schlanger said it allowed them to end the second quarter with more than 90 percent fixed rate debt, a weighted average maturity of eight years with only seven percent of its debt maturing through 2024, and more than $6 billion of available liquidity under their revolving credit facility.
Highlights included:
- Site rental revenues grew 10 percent, or $161 million, from second quarter 2022 to second quarter 2023, inclusive of approximately $155 million in Organic Contribution to Site Rental Billings, a $30 million decrease in straight-lined revenues, and a $36 million increase in amortization of prepaid rent. The $155 million in Organic Contribution to Site Rental Billings represents 11.9 percent growth, or 4.2 percent when adjusted for the impact of Sprint Cancellations.
- Included in site rental revenues is a $100 million net contribution to Site Rental Billings from lease cancellations related to the previously disclosed T-Mobile and Sprint network consolidation, consisting of $97 million to small cells and $3 million to fiber solutions. Also included in site rental revenues is $57 million in accelerated prepaid rent amortization associated with Sprint Cancellations related to small cells.
- Net income for the second quarter 2023 was $455 million compared to $421 million for the second quarter 2022.
- Second quarter 2023 Adjusted EBITDA was $1.2 billion compared to $1.1 billion for the second quarter 2022, representing 10 percent growth. The growth in the quarter was primarily as a result of $155 million of organic growth, inclusive of $100 million net contribution from Sprint Cancellations, partially offset by lower services contribution.
- Second quarter 2023 AFFO was $891 million, or $2.05 per share, representing growth from the second quarter 2022 of 14 percent for each.
- Capital expenditures during the quarter were $379 million, comprised of $18 million of sustaining capital expenditures and $361 million of discretionary capital expenditures. Discretionary capital expenditures during the quarter primarily included approximately $298 million attributable to Fiber and approximately $57 million attributable to Towers.
- During the quarter, Crown Castle paid common stock dividends of approximately $678 million in the aggregate, or $1.565 per common share, an increase of 6.5 percent on a per share basis compared to the same period a year ago.
- In April 2023, Crown Castle issued $1.35 billion in aggregate principal of senior unsecured notes in a combination of 5-year and 10-year maturities with a weighted average maturity and coupon of 8 years and approximately 5.0 percent, respectively. Net proceeds from the offering were used to repay a portion of the indebtedness under the existing revolving credit facility and pay related fees and expenses.
