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Crown Castle (CCI) Q1 FFO Beats, View Up on Leasing Activity

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Crown Castle International Corp.’s (CCI - Free Report) first-quarter 2021 adjusted funds from operations (AFFO) per share of $1.71 surpassed the Zacks Consensus Estimate of $1.61. Moreover, the figure was 20% higher than the prior-year quarter’s $1.42.

Net revenues of $1.49 billion improved 4.5% year over year in the reported quarter. However, the figure missed the Zacks Consensus Estimate of 1.50 billion.

Growth in site-rental revenues aided the top-line performance. The company also enhanced its outlook for 2021, backed by additional straight-lined revenues to be generated from the long-term tower leasing agreement with wireless carrier Verizon. The lease became effective on Apr 1 and resulted in an increase in the average contracted lease term for Verizon’s existing tower site leases to nearly 10 years.

Per management, “In the first quarter, we delivered solid results that exceeded our expectations and reflect a robust 5G leasing environment, positioning us to generate an expected double-digit growth in both AFFO per share and dividends per share for full year 2021."

Quarter in Detail

Site-rental revenues were $1.4 billion, up 5% year over year. The organic contribution of $82 million to site rental revenues reflects 6.3% year-over-year growth. Further, services and other revenues rose 4.5% year over year to $116 million.

Quarterly operating expenses decreased 1.9% year over year to $1.03 billion. Nonetheless, operating income rose 23.1% year over year to $448 million. Quarterly adjusted EBITDA of $897 million marked a 10% year-over-year rise.

The company reported a capital expenditure of $302 million for the first quarter. This included $285 million of discretionary capital expenditure and $17 million of sustaining capital expenditure.

Balance Sheet

Crown Castle exited first-quarter 2021 with cash and cash equivalents of $254 million, up from $232 million reported at the end of 2020.

Furthermore, for the three months ended Dec 31, 2021, the company generated $584 million of net cash from operating activities compared with $653 million reported in the year-ago period.

Also, debt and other long-term obligations aggregated $19.7 billion, up from $19.1 billion witnessed at the end of 2020.

Guidance

The company has increased its outlook for 2021. It expects site-rental revenues of 5,672-$5,717 million. Adjusted EBITDA is projected to be $3,734-$3,779 million. AFFO per share is anticipated to be $6.74-$6.85. The Zacks Consensus Estimate for the same is pegged at $6.72.

Crown Castle currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Digital Realty Trust, Inc. (DLR - Free Report) ,Cousins Properties (CUZ - Free Report) , and CubeSmart (CUBE - Free Report) . All three companies are slated to report first-quarter earnings on Apr 29.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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