Crown Castle International Inc.
(
CCI
) declared solid second quarter of 2012 financial results, beating
the Zacks Consensus Estimates. The company also raised its fiscal
2012 financial guidance mainly based on the acquisition of Wireless
Capital Partners and NextG Networks.
Net profit
Quarterly GAAP net income was approximately $116 million or 40
cents per share compared with a net income of $25.7 million or 9
cents per share in the year-ago quarter. Second-quarter 2012
earnings per share of 40 cents surpassed the Zacks Consensus
Estimate by a penny.
Revenue
Net revenue in the second quarter was $585.5 million, up 17%
year over year, easily beating the Zacks Consensus Estimate of $561
million. This was mainly due to improved performance by the Site
Rental segment.
Margins
Gross margin in the second quarter was 70.7% compared with 70.6%
in the year-ago quarter. Operating income was $203 million compared
with $167.1 million in the prior-year quarter. Quarterly adjusted
EBITDA was approximately $378.5 million, up 18% year over year.
Cash Flow
During the second quarter of fiscal 2012, funds flow from
operation (FFO) was $195.3 million compared with $168.8 million in
the prior-year quarter. FFO per share in the reported quarter was
67 cents compared with 59 cents in the year-ago quarter. Quarterly
adjusted funds flow from operation (AFFO) was $214.8 million
compared with $179.8 million in the previous quarter. AFFO per
share in the reported quarter was 74 cents compared with 63 cents
in the year-ago quarter.
Balance Sheet
At the end of second quarter of fiscal 2012, Crown Castle had
cash & marketable securities of approximately $96.2 million on
its balance sheet compared with $80.1 million at the end of fiscal
2011. Total debt was approximately $8,434.1 million at the end of
the reported quarter versus $6,853.2 million at the end of fiscal
2011. At the end of the reported quarter, debt-to-capitalization
ratio was 0.74 versus 0.74 at the end of fiscal 2011.
Site Rental Segment
Quarterly revenue was $517.6 million, up 13.2% year over year.
Gross margin for the segment was 74.6% compared with 73.5% in the
prior-year quarter.
Network Services Segment
Quarterly revenue was $67.9 million, up 57.1% year over year.
Gross margin for the segment was 40.7% compared with 40.1% in the
prior-year quarter.
Management Outlook for the Third Quarter of Fiscal
2012
CrownCastleexpects site rental revenue in the range of $530
million to $535 million. Site rental cost of operation is projected
in the $130 million to $135 million range. Adjusted EBITDA is
anticipated between $387 million and $392 million. Site rental
gross margin is anticipated to be between $397 to $402. Interest
expense (inclusive of amortization) is estimated in the $143
million to $147 million range. FFO is estimated in the range of
$191 million to $231 million. AFFO is estimated in the $211 million
to $216 million range. Net income is expected in the range of $17
million to $51 million or 6 cents to 18 cents per share.
Management Outlook for Fiscal 2012
CrownCastleexpects site rental revenue to be in the range of
$2,083 million to $2,093 million. Site rental cost of operation is
projected in the $514 million to $524 million range. Site rental
gross margin is expected between $1,561 to 1,571 million.
Adjusted EBITDA is anticipated between $1,518 million and
$1,528 million. Interest expense (inclusive of amortization) is
estimated in the $568 million to $578 million range. FFO is
estimated in the range of $772 million to $862 million. AFFO is
estimated in the $847 million to $857 million range. Net income is
expected to be between $206 million and $281 million or 71 cents to
96 cents per share.
Recommendation
We believe that strong financial outlook, continuous acquisition
and huge demand for network due to increased usage of smartphones
will act as tailwinds for the company going forward despite
competition from
American Tower Corp.
(
AMT
) and
SBA Communications Corp.
(
SBAC
).We, thus, maintain our long-term Outperform recommendation
onCrown Castle. Currently, CrownCastlecarries a Zacks#1 Rank,
implying a short-term Strong Buy rating.
AMER TOWER CORP (AMT): Free Stock Analysis
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CROWN CASTLE (CCI): Free Stock Analysis Report
SBA COMM CORP (SBAC): Free Stock Analysis
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