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Crown Castle's (CCI) Q3 AFFO and Revenues Lag Estimates
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Shares of Crown Castle Inc. (CCI - Free Report) lost 3.22% in the after-hours trading in response to dismal third-quarter 2023 results.
Adjusted funds from operations (AFFO) per share of $1.77 lagged the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflect lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
Net revenues of $1.67 billion, too, missed the Zacks Consensus Estimate of $1.71 billion. Moreover, the figure fell 4.5% year over year.
Per Jay Brown, chief executive officer of the company, “Our third quarter results continue to demonstrate the resiliency of our business, allowing us to keep our full year 2023 outlook consistent with expectations of 5% tower organic revenue growth and delivering on 10,000 small cell nodes. Based on our customers' continued investments to meet increasing data demand, we expect full year 2024 organic growth excluding the impact of Sprint Cancellations of 4.5% from towers, 13% from small cells, based on plans to deliver approximately 14,000 small cell nodes, and 3% from fiber solutions to generate consolidated organic revenue growth of 5%.”
Quarter in Detail
During the third quarter, CCI’s site-rental revenues came in at $1.58 billion, marginally up from the prior-year quarter. The organic contribution of $53 million to the site rental billings reflected 3.9% growth and was not materially impacted by the Sprint Cancellations. Our estimate for site-rental revenues was pegged at $1.57 billion.
On the other hand, services and other revenues plunged 49.4% year over year to $90 million. We estimated the metric at $158.6 million.
CCI’s quarterly operating expenses increased 3.2% year over year to $1.18 billion. The operating income fell to $486 million from $602 million recorded a year ago. The quarterly adjusted EBITDA of $1.05 billion slipped 2.8%.
Interest expenses on debt obligations rose 22.4% year over year to $213 million.
The company reported capital expenditures of $347 million in the quarter. This comprised discretionary capital expenditures of $325 million and sustaining capital expenditures of $22 million. Discretionary capital expenditures primarily attributable to Fiber were around $273 million, and that to Towers was roughly $47 million.
Balance Sheet
Crown Castle exited the third quarter of 2023 with cash and cash equivalents of $117 million, down from $276 million reported as of Jun 30, 2023.
Moreover, debt and other long-term obligations aggregated $21.9 billion as of Sep 30, 2023, increasing 1.4% sequentially.
Guidance
Crown Castle maintained its guidance for 2023 AFFO per share in the range of $7.50-$7.58. The Zacks Consensus Estimate is pegged at $7.53, which is within the guided range.
The company reiterated its expectations for site rental revenues between $6.488 billion and $6.533 billion, and adjusted EBITDA in the band of $4.399-$4.444 billion.
CCI also issued its guidance for 2024.
It expects AFFO per share in the range of $6.85 to $6.97. The Zacks Consensus Estimate stands at $7.21.
Site rental revenues are projected between $6.347 billion and $6.392 billion, while adjusted EBITDA is estimated to be in the band of $4.138-$4.188 billion.
We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and American Tower (AMT - Free Report) , slated to report on Oct 25 and Oct 26, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Equinix’s third-quarter 2023 FFO per share is pegged at $7.79, implying a marginal year-over-year increase. EQIX currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for American Tower’s third-quarter 2023 FFO per share stands at $2.35, indicating a marginal fall year over year. AMT currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2023 FFO per share is pegged at $1.85, suggesting a year-over-year fall of 3.14%. BXP currently carries a Zacks Rank #2.
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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Crown Castle's (CCI) Q3 AFFO and Revenues Lag Estimates
Shares of Crown Castle Inc. (CCI - Free Report) lost 3.22% in the after-hours trading in response to dismal third-quarter 2023 results.
Adjusted funds from operations (AFFO) per share of $1.77 lagged the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflect lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
Net revenues of $1.67 billion, too, missed the Zacks Consensus Estimate of $1.71 billion. Moreover, the figure fell 4.5% year over year.
Per Jay Brown, chief executive officer of the company, “Our third quarter results continue to demonstrate the resiliency of our business, allowing us to keep our full year 2023 outlook consistent with expectations of 5% tower organic revenue growth and delivering on 10,000 small cell nodes. Based on our customers' continued investments to meet increasing data demand, we expect full year 2024 organic growth excluding the impact of Sprint Cancellations of 4.5% from towers, 13% from small cells, based on plans to deliver approximately 14,000 small cell nodes, and 3% from fiber solutions to generate consolidated organic revenue growth of 5%.”
Quarter in Detail
During the third quarter, CCI’s site-rental revenues came in at $1.58 billion, marginally up from the prior-year quarter. The organic contribution of $53 million to the site rental billings reflected 3.9% growth and was not materially impacted by the Sprint Cancellations. Our estimate for site-rental revenues was pegged at $1.57 billion.
On the other hand, services and other revenues plunged 49.4% year over year to $90 million. We estimated the metric at $158.6 million.
CCI’s quarterly operating expenses increased 3.2% year over year to $1.18 billion. The operating income fell to $486 million from $602 million recorded a year ago. The quarterly adjusted EBITDA of $1.05 billion slipped 2.8%.
Interest expenses on debt obligations rose 22.4% year over year to $213 million.
The company reported capital expenditures of $347 million in the quarter. This comprised discretionary capital expenditures of $325 million and sustaining capital expenditures of $22 million. Discretionary capital expenditures primarily attributable to Fiber were around $273 million, and that to Towers was roughly $47 million.
Balance Sheet
Crown Castle exited the third quarter of 2023 with cash and cash equivalents of $117 million, down from $276 million reported as of Jun 30, 2023.
Moreover, debt and other long-term obligations aggregated $21.9 billion as of Sep 30, 2023, increasing 1.4% sequentially.
Guidance
Crown Castle maintained its guidance for 2023 AFFO per share in the range of $7.50-$7.58. The Zacks Consensus Estimate is pegged at $7.53, which is within the guided range.
The company reiterated its expectations for site rental revenues between $6.488 billion and $6.533 billion, and adjusted EBITDA in the band of $4.399-$4.444 billion.
CCI also issued its guidance for 2024.
It expects AFFO per share in the range of $6.85 to $6.97. The Zacks Consensus Estimate stands at $7.21.
Site rental revenues are projected between $6.347 billion and $6.392 billion, while adjusted EBITDA is estimated to be in the band of $4.138-$4.188 billion.
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 Equinix (EQIX - Free Report) and American Tower (AMT - Free Report) , slated to report on Oct 25 and Oct 26, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Equinix’s third-quarter 2023 FFO per share is pegged at $7.79, implying a marginal year-over-year increase. EQIX currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for American Tower’s third-quarter 2023 FFO per share stands at $2.35, indicating a marginal fall year over year. AMT currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2023 FFO per share is pegged at $1.85, suggesting a year-over-year fall of 3.14%. BXP currently carries a Zacks Rank #2.
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.