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Crown Castle Inc. (CCI - Free Report) reported second-quarter 2023 adjusted funds from operations (AFFO) per share of $2.05, outpacing the Zacks Consensus Estimate of $1.99. The reported figure climbed 13.9% from the year-ago quarter’s tally of $1.80.
Net revenues of $1.87 billion, too, surpassed the Zacks Consensus Estimate of $1.86 billion and increased 7.6% year over year.
Results reflect better-than-anticipated revenues aided by robust site-rental revenue growth. However, the company lowered its outlook for 2023, citing that it expects a decline in tower activity for the remainder of the year due to reduced network spending by wireless carriers.
Per Jay Brown, chief executive officer of the company, “Expected growth in our core business in 2023 remains robust, including 5% tower organic growth, 10,000 small cell node deployments and returning to 3% fiber solutions growth by the end of the year. Longer term, as our customers spend to meet the significant increase in mobile data demand in the U.S, we have visibility to continued growth in our core business.”
Quarter in Detail
During the second quarter, CCI’s site-rental revenues came in at $1.73 billion, up 10.3% year over year. The organic contribution of $155 million to the site rental revenues reflected 11.9% growth. When adjusted for the impact of Sprint cancellations, organic contribution to site rental revenues represented 4.2% growth. Our estimate for site-rental revenues was pegged at $1.68 billion.
On the other hand, services and other revenues fell 16.8% year over year to $139 million. We estimated the same to be $180.5 million.
CCI’s quarterly operating expenses increased 5.2% year over year to $1.20 billion. The operating income climbed 12.5% to $667 million. The quarterly adjusted EBITDA of $1.19 billion rose 10.2% year over year.
Crown Castle reported capital expenditures of $379 million in the quarter. This comprised discretionary capital expenditures of $361 million and sustaining capital expenditures of $18 million. Discretionary capital expenditures primarily attributable to Fiber were around $298 million, and that to Towers was roughly $57 million.
Balance Sheet
Crown Castle exited second-quarter 2023 with cash and cash equivalents of $276 million, up from $187 million reported as of Mar 31, 2023.
Moreover, debt and other long-term obligations aggregated $21.6 billion as of Jun 30, 2023, increasing marginally sequentially.
2023 Guidance Revised
Crown Castle, anticipating lower tower activity for the remainder of 2023 due to a reduction in network spending by wireless carriers, decreased its AFFO per share guidance in the range of $7.50-$7.58 from its prior estimation of $7.58-$7.68. The Zacks Consensus Estimate for the same is pegged at $7.64.
The company maintained its expectations for site rental revenues between $6.488 billion and $6.533 billion. It stated that the long-term leasing agreements with its customers are likely to have little impact on its site rental revenues.
Adjusted EBITDA is now projected in the band of $4.399-$4.444 billion, revised from $4.449-$4.494 billion estimated earlier.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) and American Tower (AMT - Free Report) , slated to report on Jul 24 and Jul 27, respectively. Boston Properties’ (BXP - Free Report) earnings are scheduled for Aug 1.
The Zacks Consensus Estimate for Alexandria’s second-quarter 2023 FFO per share is pegged at $2.20, implying a year-over-year increase of 4.8%. ARE currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for American Tower’s second-quarter 2023 FFO per share is pegged at $2.34, suggesting a year-over-year fall of 9.7%. AMT currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ quarterly FFO per share stands at $1.80, indicating a year-over-year fall of 7.2%. BXP currently has a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Crown Castle (CCI) Q2 AFFO & Revenues Beat, '23 View Revised
Crown Castle Inc. (CCI - Free Report) reported second-quarter 2023 adjusted funds from operations (AFFO) per share of $2.05, outpacing the Zacks Consensus Estimate of $1.99. The reported figure climbed 13.9% from the year-ago quarter’s tally of $1.80.
Net revenues of $1.87 billion, too, surpassed the Zacks Consensus Estimate of $1.86 billion and increased 7.6% year over year.
Results reflect better-than-anticipated revenues aided by robust site-rental revenue growth. However, the company lowered its outlook for 2023, citing that it expects a decline in tower activity for the remainder of the year due to reduced network spending by wireless carriers.
Per Jay Brown, chief executive officer of the company, “Expected growth in our core business in 2023 remains robust, including 5% tower organic growth, 10,000 small cell node deployments and returning to 3% fiber solutions growth by the end of the year. Longer term, as our customers spend to meet the significant increase in mobile data demand in the U.S, we have visibility to continued growth in our core business.”
Quarter in Detail
During the second quarter, CCI’s site-rental revenues came in at $1.73 billion, up 10.3% year over year. The organic contribution of $155 million to the site rental revenues reflected 11.9% growth. When adjusted for the impact of Sprint cancellations, organic contribution to site rental revenues represented 4.2% growth. Our estimate for site-rental revenues was pegged at $1.68 billion.
On the other hand, services and other revenues fell 16.8% year over year to $139 million. We estimated the same to be $180.5 million.
CCI’s quarterly operating expenses increased 5.2% year over year to $1.20 billion. The operating income climbed 12.5% to $667 million. The quarterly adjusted EBITDA of $1.19 billion rose 10.2% year over year.
Crown Castle reported capital expenditures of $379 million in the quarter. This comprised discretionary capital expenditures of $361 million and sustaining capital expenditures of $18 million. Discretionary capital expenditures primarily attributable to Fiber were around $298 million, and that to Towers was roughly $57 million.
Balance Sheet
Crown Castle exited second-quarter 2023 with cash and cash equivalents of $276 million, up from $187 million reported as of Mar 31, 2023.
Moreover, debt and other long-term obligations aggregated $21.6 billion as of Jun 30, 2023, increasing marginally sequentially.
2023 Guidance Revised
Crown Castle, anticipating lower tower activity for the remainder of 2023 due to a reduction in network spending by wireless carriers, decreased its AFFO per share guidance in the range of $7.50-$7.58 from its prior estimation of $7.58-$7.68. The Zacks Consensus Estimate for the same is pegged at $7.64.
The company maintained its expectations for site rental revenues between $6.488 billion and $6.533 billion. It stated that the long-term leasing agreements with its customers are likely to have little impact on its site rental revenues.
Adjusted EBITDA is now projected in the band of $4.399-$4.444 billion, revised from $4.449-$4.494 billion estimated earlier.
Crown Castle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Crown Castle Inc. Price, Consensus and EPS Surprise
Crown Castle Inc. price-consensus-eps-surprise-chart | Crown Castle Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) and American Tower (AMT - Free Report) , slated to report on Jul 24 and Jul 27, respectively. Boston Properties’ (BXP - Free Report) earnings are scheduled for Aug 1.
The Zacks Consensus Estimate for Alexandria’s second-quarter 2023 FFO per share is pegged at $2.20, implying a year-over-year increase of 4.8%. ARE currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for American Tower’s second-quarter 2023 FFO per share is pegged at $2.34, suggesting a year-over-year fall of 9.7%. AMT currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ quarterly FFO per share stands at $1.80, indicating a year-over-year fall of 7.2%. BXP currently has a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.