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Crown Castle (CCI) Surpasses Q3 FFO Estimates, Issues '20 View

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Crown Castle International Corp. (CCI - Free Report) reported third-quarter 2019 adjusted funds from operations (AFFO) per share of $1.55, up 12% year over year. Further, the reported figure surpassed the Zacks Consensus Estimate of $1.48.

Results reflect benefits from the company’s extensive tower portfolio, high demand for infrastructure and healthy leasing activity. The year-over-year increase in the bottom line reflects growth in site-rental revenues.

Net revenues for the reported quarter amounted to $1.51 billion, suggesting 10.1% year-over-year growth. Moreover, the reported figure outpaced the Zacks Consensus Estimate of $1.47 billion.

Site-rental revenues came in at around $1.3 billion, up 6.4% year over year, which included organic growth, as well as contributions from straight-lined revenues. Particularly, site-rental revenues during the September-end quarter recorded 6% organic growth, driven by new leasing activity, as well as contracted tenant escalations.

Operating Metrics

Quarterly operating income increased 26.2% from the prior-year quarter to $453 million. However, operating expenses flared up 4.4% year over year to nearly $1.1 billion. Quarterly adjusted EBITDA was approximately $882 million, representing year-over-year jump of 11%.

Cash Flow and Liquidity

Crown Castle exited third-quarter 2019 with cash and cash equivalents of $182 million, down from the $277 million reported at the end of 2018.

Furthermore, as of Sep 30, 2019, the company generated around $1.9 billion of net cash from operating activities compared with the roughly $1.8 billion reported in the year-ago period.

Also, debt and other long-term obligations aggregated approximately $17.7 billion, up from the $16.6 billion witnessed at the end of 2018.

Dividend Payout

During the September-end quarter, Crown Castle paid common stock dividend of $1.125 per common share, up approximately 7% from the year-earlier quarter.

2019 Outlook

Crown Castle has reiterated its outlook for full-year 2019. The company expects site-rental revenues of $4,950 million to $4,980 million. Adjusted EBITDA is projected at $3,393-$3,423 million.

The company’s FFO is anticipated in the $2,363-$2,393 million range. Also, AFFO is projected at $2,464-$2,494 million.

2020 Outlook

The company has also provided its outlook for full-year 2020. It expects site-rental revenues of $5,196 million to $5,241 million. Adjusted EBITDA is projected at $3,569 million-$3,614 million.

Additionally, FFO is anticipated in the $2,539-$2,584 million range. Also, AFFO is projected at $2,662-$2,707 million.

Our Take

Notably, Crown Castle’s strong portfolio of tower, fiber and small-cells assets have enabled it to benefit from network-densification efforts of mobile carriers. In fact, the company is witnessing high levels of tower leasing activity. Given the ongoing macro tailwinds, this is likely to continue in the upcoming period as well.

Crown Castle International Corporation Price, Consensus and EPS Surprise

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.

We now look forward to the earnings releases of other REITs like Equity Residential (EQR - Free Report) , Highwoods Properties, Inc. (HIW - Free Report) and PS Business Parks (PSB - Free Report) that are slated to report their quarterly numbers on Oct 22.

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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