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Crown Castle (CCI) Q4 Earnings Lag Estimates, Revenues Beat

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Crown Castle International Corp. (CCI - Free Report) reported mixed fourth-quarter 2017 results. The top line beat the Zacks Consensus Estimate, while the bottom line missed the same.

Net Income

Crown Castle reported quarterly earnings per share of 17 cents, which lagged the Zacks Consensus Estimate of $1.06. GAAP net loss came in at $98 million, 22% narrower than the year-ago figure.

 

Revenues

Total revenues in fourth-quarter 2017 increased 19.9% year over year to $1,238.09 million, which surpassed the Zacks Consensus Estimate of $1,147.3 million. Site Rental Segment revenues were $1,050.68 million, up 28.5% year over year. Network Services Segment revenues were $187.40 million, down 12.8% year over year.

Operating Metrics

Quarterly operating income increased to $268.43 million from $262.04 in the year-ago quarter. Total operating expenses amounted to $969.66 million, up from $770.38 million in the prior-year quarter. Quarterly adjusted EBITDA was approximately $707 million, representing year-over-year increase of 23%.

Cash Flow and Liquidity

As of Dec 31, 2017, Crown Castle generated $2044.18 million of cash from operating activities compared with $1,782.26 million in the year-ago period.

In the quarter under review, cash and cash equivalents were $314.09 million, down from $567.59 million at the end of 2016. Total debt and other long-term obligations totaled approximately $16,044.36 million, up from $12,069.39 million at the end of 2016. 

Dividend Payout

During the quarter, Crown Castle paid common stock dividends of approximately $427 million in aggregate or $1.05 per common share, up approximately 11% on a per share basis from the year-ago quarter.

Q1 Outlook

For the first quarter of 2018, Crown Castle expects Site Rental revenues in the range of $1,132-$1,142 million. Site Rental cost of operation is projected in the band of $341-$351 million. Adjusted EBITDA is estimated in the range of $745-$755 million. Interest expense (inclusive of amortization) is estimated in the band of $157-$167 million. Meanwhile, FFO (funds flow from operation) is anticipated in the $477-$487 million band. Adjusted FFO (AFFO) is projected in the $538-$548 million range, while net income is projected in the band of $116-$141 million.

2018 Outlook

Crown Castle raised its 2018 outlook. The company expects Site Rental revenues in the range of $4,582-$4,627 million. Site Rental cost of operation is projected in the $1,360-$1,405 million band. Adjusted EBITDA is anticipated between $3,049 million and $3,094 million. Interest expense (inclusive of amortization) is estimated in the $642-$687 million range. FFO is expected in the range of $1,965-$2,010 million. AFFO is expected between $2,219 million and $2,264 million. Net income is anticipated between $511 million and $591 million.

Deterrents

Crown Castle operates in a consolidated wireless industry which is a major concern. Further, new technologies are replacing the demand for site leases. Also, the top four industry players — Verizon Wireless, AT&T Inc. (T - Free Report) , Sprint Corp. (S - Free Report) , and T-Mobile US Inc. (TMUS - Free Report) — account for majority of the company’s total revenues. Loss of customers or consolidation among them will significantly affect Crown Castle’s top line.

Plagued by such headwinds, the company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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