Crown Castle Reports First Quarter 2016 Results and Raises Outlook for Full Year 2016

 HIGHLIGHTS

• Exceeded the midpoint of previously provided first quarter 2016 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA, AFFO and AFFO per share
• Increased midpoint of full year 2016 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA and AFFO
• Increased midpoint of full year 2016 Outlook for AFFO per share to $4.70, representing over 9% year-over-year growth

HOUSTON, April 21, 2016 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) ("Crown Castle") today reported results for the quarter ended March 31, 2016.

"As a shared wireless infrastructure provider, Crown Castle is uniquely positioned with our portfolio of towers and small cells to help our customers deploy their wireless networks efficiently and cost-effectively as they seek to meet the increasing demand for wireless connectivity," stated Ben Moreland, Crown Castle's President and Chief Executive Officer.  "Our track record of consistently delivering results that meet or exceed our guidance, including the strong results we generated in the first quarter, further demonstrates the long-term demand for our wireless infrastructure.  The innovation and adoption of wireless connectivity is expected to drive new applications, such as machine-to-machine connections, mobile video and fixed wireless broadband, all of which give us confidence in our ability to deliver on our stated goal of generating compound annual growth in AFFO and dividends per share of 6% to 7% organically over the next several years.  We believe this growth, combined with our current dividend yield of approximately 4%, represents an attractive long-term total return profile for shareholders."

RESULTS FOR THE QUARTER

The table below sets forth select financial results for the three month period ended March 31, 2016.  For further information, refer to the financial statements and non-GAAP and other calculation reconciliations included in this press release.

• Site rental revenues.  Organic Site Rental Revenue growth was approximately 8% year-over-year, comprised of approximately 7% growth from new leasing activity and 3% from contracted tenant escalations, net of approximately 2% from tenant non-renewals.  Site rental revenues growth of $68 million from first quarter 2015 to first quarter 2016 is comprised of $55 million in Organic Site Rental Revenue growth, less $14 million in adjustments for straight-line accounting, plus $27 million in contributions from acquisitions and other items.
• Non-recurring and timing items.  Results included one-time items not expected in the previously provided Outlook which benefited site rental revenues by approximately $4 million and increased site rental cost of operations by $3 million during first quarter 2016.  Further, AFFO for first quarter 2016 benefited from $10 million in lower than expected sustaining capital expenditures, which is primarily due to timing as full year 2016 Outlook for sustaining capital expenditures remains unchanged.  Excluding the benefit of these items, Crown Castle still exceeded the midpoint of its previously provided first quarter 2016 Outlook for site rental revenues, site rental gross margin, Adjusted EBITDA, AFFO and AFFO per share.
• Segment reporting.  During first quarter 2016, Crown Castle changed its reportable operating segments to be comprised of a Towers operating segment ("Towers") and a Small Cells operating segment ("Small Cells").  Further information regarding the Towers and Small Cells segments are available in this press release and in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.

INVESTING AND FINANCING ACTIVITIES DURING THE QUARTER

During first quarter 2016, Crown Castle invested approximately $193 million in capital expenditures, comprised of $21 million of land purchases, $10 million of sustaining capital expenditures and $162 million of revenue generating capital expenditures.  Revenue generating capital expenditures consisted of $83 million invested in Towers and $79 million invested in Small Cells.

On March 31, 2016, Crown Castle paid a quarterly common stock dividend of $0.885 per common share, or approximately $298 million in the aggregate, consistent with the dividend paid in fourth quarter 2015.

During the quarter, Crown Castle issued $1.5 billion in aggregate principal amount of senior unsecured notes, the proceeds of which were used to repay borrowings under Crown Castle’s credit facilities.  The notes are due 2021 and 2026 and have an interest rate of 3.4% per annum and 4.45% per annum, respectively.  As of March 31, 2016, Crown Castle had approximately $176 million in cash and cash equivalents (excluding restricted cash) and approximately $2.3 billion of availability under its revolving credit facility.

Subsequent to first quarter 2016,  on April 8, 2016, Crown Castle acquired Tower Development Corporation ("TDC") for approximately $461 million in cash. TDC owns and operates 336 towers in the U.S. and Puerto Rico.  Based on TDC's run-rate contribution, the transaction is immediately accretive to AFFO per share.  Crown Castle funded the acquisition with available cash, including cash on hand, cash from borrowings under its revolving credit facility and cash from the sale of approximately 3.5 million net shares of common stock during first quarter 2016.

"The first quarter continues our track record of execution, as demonstrated by our results during the quarter and increased Outlook for the full year," stated Jay Brown, Crown Castle’s Chief Financial Officer.  "At the same time, we also continued our strategy of deploying capital in a manner that we believe will enhance long-term growth in dividends per share by investing in small cells and acquiring TDC, which further reinforce our leadership position in U.S.  wireless infrastructure.  Our approach to creating long-term shareholder value through delivering a high-quality, growing dividend stream ultimately drives our decision to invest in the U.S., which we believe is the most attractive market for wireless investment.  Finally, we were able to generate these results while continuing to invest in the future of our business and maintaining a strong balance sheet."

OUTLOOK

This Outlook section contains forward-looking statements, and actual results may differ materially.  Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC").

The following table sets forth Crown Castle's current Outlook for second quarter 2016 and full year 2016:           

Full Year 2016 Outlook

The table below compares the results for full year 2015, the midpoint of the current full year 2016 Outlook and the midpoint of the previously provided full year 2016 Outlook for select metrics:

• The increase in full year 2016 Outlook reflects the contribution from the TDC acquisition, the results from the first quarter and the expected timing benefit from tenant non-renewals occurring later than previously expected.
• The chart below reconciles the components of expected growth, at the midpoint, in Organic Site Rental Revenues and site rental revenues from 2015 to 2016 of approximately $180 million and $202 million, respectively.  The TDC acquisition, which closed on April 8, 2016, is expected to generate approximately $24 million in site rental revenues and $20 million in site rental gross margin during full year 2016.  For second quarter 2016, the TDC acquisition is expected to generate approximately $8 million in site rental revenues and $6 million in site rental gross margin.
  An infographic accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/8e49309d-8ef9-49e6-bbcb-cc1c38e7857e
• The chart below reconciles the components of expected growth in AFFO from 2015 to 2016 of approximately $161 million at the midpoint.
  An infographic accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/5abd7609-8ca6-4568-9aa4-0b65092589c5
• Additional information regarding Crown Castle's expectations for site rental revenue growth, including tenant non-renewals, is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
  

CONFERENCE CALL DETAILS

Crown Castle has scheduled a conference call for Friday, April 22, 2016, at 10:30 a.m. Eastern Time.  The conference call may be accessed by dialing 800-262-8795 and asking for the Crown Castle call (access code 463030) at least 30 minutes prior to the start time.  The conference call may also be accessed live over the Internet at http://investor.crowncastle.com.  Supplemental materials for the call have been posted on the Crown Castle website at http://investor.crowncastle.com.

A telephonic replay of the conference call will be available from 1:30 p.m. Eastern Time on Friday, April 22, 2016, through 1:30 p.m. Eastern Time on Thursday, July 21, 2016 and may be accessed at https://jsp.premiereglobal.com/webrsvp and using access code 463030.  An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

ABOUT CROWN CASTLE

Crown Castle provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 16,500 miles of fiber supporting small cells, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets.  For more information on Crown Castle, please visit www.crowncastle.com.

Non-GAAP Financial Measures and Other Calculations

This press release includes presentations of Adjusted EBITDA, Segment Gross Margin, Segment Operating Profit, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, 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")).  Each of the amounts included in the calculation of Adjusted EBITDA, Segment Gross Margin, Segment Operating Profit, FFO, AFFO, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion. 

Our measures of Adjusted EBITDA, Segment Gross Margin, Segment Operating Profit, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs.  Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.

Adjusted EBITDA, Segment Gross Margin, Segment Operating Profit, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses.  In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations. 

Adjusted EBITDA. Crown Castle defines 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.

Segment Gross Margin.  Crown Castle defines segment gross margin as segment revenue less segment operating expenses, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in cost of operations.

Segment Operating Profit.  Crown Castle defines segment operating profit as Segment Gross Margin less general and administrative expenses attributable to the respective segment.

Funds from Operations ("FFO"). Crown Castle defines 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.

FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.

Adjusted Funds from Operations ("AFFO").  Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line 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, gain (loss) 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 capital improvement capital expenditures and corporate capital expenditures.

AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.

Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.

Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.

Sustaining capital expenditures.  Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.

The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures.  The components in these tables may not sum to the total due to rounding.

Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures and Other Calculations:

Adjusted EBITDA for the three months ended March 31, 2016 and 2015 is computed as follows:

Adjusted EBITDA for the quarter ending June 30, 2016 and the year ending December 31, 2016 are forecasted as follows:

FFO and AFFO for the quarter ending June 30, 2016 and the year ending December 31, 2016 are forecasted as follows:

Organic Site Rental Revenue growth for the year ending December 31, 2016 is forecasted as follows:

Organic Site Rental Revenue growth for the quarter ended March 31, 2016 is as follows:

FFO and AFFO for the three ended March 31, 2016 and 2015 are computed as follows:

The components of interest expense and amortization of deferred financing costs for the three months ended March 31, 2016 and 2015 are as follows:

The components of interest expense and amortization of deferred financing costs for the quarter ending June 30, 2016 and the year ending December 31, 2016 are forecasted as follows:

Debt balances and maturity dates as of March 31, 2016 are as follows:

Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:

Sustaining capital expenditures for the three months ended March 31, 2016 and 2015 is computed as follows:

Cautionary Language Regarding Forward-Looking Statements

This press release contains forward-looking statements and information that are based on our management's current expectations.  Such statements include our Outlook and plans, projections, and estimates regarding (1) potential benefits, returns and shareholder value which may be derived from our business, assets, investments, dividends and acquisitions, including on a long-term basis, (2) our strategy and strategic position and strength of our business, (3) demand for wireless connectivity, (4) demand for our wireless infrastructure and services, (5) carrier network investments and upgrades, and the benefits which may be derived therefrom, (6) innovation and adoption of new technologies and applications for wireless connectivity, (7) our growth and long-term prospects, (8) our dividends, including our dividend plans, the amount and growth of our dividends, the potential benefits therefrom and the tax characterization thereof, (9) the U.S. wireless market, (10) leasing activity, including the impact of such leasing activity on our results and Outlook, (11) the TDC acquisition, including potential benefits and impact therefrom and growth related thereto, (12) our investments, including in small cells, and the potential growth and benefits therefrom, (13) tenant non-renewal, including timing and the impact thereof, (14) capital expenditures, including sustaining capital expenditures, (15) timing items, (16) straight-line adjustments, (17) tower acquisitions and builds, (18) expenses, (19) site rental revenues and Site Rental Revenues, as Adjusted, (20) site rental cost of operations, (21) site rental gross margin and network services gross margin, (22) Adjusted EBITDA, (23) interest expense and amortization of deferred financing costs, (24) FFO, including on a per share basis, (25) AFFO, including on a per share basis, (26) Organic Site Rental Revenues and Organic Site Rental Revenue growth, (27) net income (loss), including on a per share basis, (28) our common shares outstanding, including on a diluted basis, and (29) the utility of certain financial measures, including non-GAAP financial measures.  Such forward-looking statements are subject to certain risks, uncertainties and assumptions prevailing market conditions and the following:

• Our business depends on the demand for our wireless infrastructure, driven primarily by demand for wireless connectivity, and we may be adversely affected by any slowdown in such demand.  Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services).
• A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues or reduce demand for our wireless infrastructure and network services.
• The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks.  If we do not successfully operate that business model or identify or manage those operational risks, such operations may produce results that are less than anticipated.
• Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments and 4.50% Mandatory Convertible Preferred Stock limit our ability to take a number of actions that our management might otherwise believe to be in our best interests.  In addition, if we fail to comply with our covenants, our debt could be accelerated. 
• We have a substantial amount of indebtedness.  In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
• Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock.
• As a result of competition in our industry, we may find it more difficult to achieve favorable rental rates on our new or renewing tenant leases.
• New technologies may reduce demand for our wireless infrastructure or negatively impact our revenues.
• The expansion and development of our business, including through acquisitions, increased product offerings or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results.
  
• If we fail to retain rights to our wireless infrastructure, including the land interests under our towers, our business may be adversely affected.
• Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
• New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
  
  
• If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.
• If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
• Certain provisions of our certificate of incorporation, bylaws and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
• We may be vulnerable to security breaches that could adversely affect our business, operations, and reputation.
• Future dividend payments to our stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities.  In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.
• Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the US Internal Revenue Code.  Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash.
• Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives.
• If we fail to pay scheduled dividends on the 4.50% Mandatory Convertible Preferred Stock, in cash, common stock or any combination of cash and common stock, we will be prohibited from paying dividends on our common stock, which may jeopardize our status as a REIT.
• We have limited experience operating as a REIT. Our failure to successfully operate as a REIT may adversely affect our financial condition, cash flow, the per share trading price of our common stock, or our ability to satisfy debt service obligations.
• REIT related ownership limitations and transfer restrictions may prevent or restrict certain transfers of our capital stock.

Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the SEC.  As used in this release, the term "including," and any variation thereof, means "including without limitation."