Crown Castle International Management Discusses Q1 2014 Results - Earnings Call Transcript

Apr.24.14 | About: Crown Castle (CCI)

Crown Castle International (NYSE:CCI)

Q1 2014 Earnings Call

April 24, 2014 10:30 am ET

Executives

Son Nguyen - Vice President of Corporate Finance

Jay A. Brown - Chief Financial Officer, Senior Vice President and Treasurer

W. Benjamin Moreland - Chief Executive Officer, President and Director

Analysts

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

David W. Barden - BofA Merrill Lynch, Research Division

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

Kevin R. Smithen - Macquarie Research

Amir Rozwadowski - Barclays Capital, Research Division

Philip Cusick - JP Morgan Chase & Co, Research Division

Simon Flannery - Morgan Stanley, Research Division

Colby Synesael - Cowen and Company, LLC, Research Division

Timothy K. Horan - Oppenheimer & Co. Inc., Research Division

Batya Levi - UBS Investment Bank, Research Division

Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Crown Castle International Q1 2014 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I will now turn the presentation over to Son Nguyen, Vice President of Corporate Finance. Please go ahead, Mr. Nguyen.

Son Nguyen

Thank you, John, and good morning, everyone. Thank you for joining us today as we review our first quarter 2014 results. With me on the call this morning are Ben Moreland, Crown Castle's Chief Executive Officer; and Jay Brown, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investors section of our website at crowncastle.com, which we will refer to throughout the call this morning.

The conference call will contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions, and actual results may vary materially from those expected.

Information about potential factors, which could affect our results, is available in the press release and Risk Factors sections of our company's SEC filings.

Our statements are made as of today, April 24, 2014, and we assume no obligation to update any forward-looking statements.

In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling such non-GAAP financial measures are available in the supplemental information package and slide presentation posted in the Investors section of the company's website at crowncastle.com.

With that, I'll turn the call over to Jay.

Jay A. Brown

Thanks, Son, and good morning, everyone. We executed another great quarter in Q1 2014, exceeding the high end of our previously issued outlook for site rental revenue, site rental gross margin, adjusted EBITDA and AFFO.

As you can see on Slide 3, the strong results from site rental and network services, coupled with our recent financing activities, allow us to increase our outlook for full year 2014. In addition to achieving great results in Q1, we had a very productive quarter on many other fronts. First, at the beginning of the year, we achieved a significant milestone as we began operating as a REIT, and subsequently paid our first common stock dividend in March. Further, since the beginning of the year, we have refinanced $2.6 billion of debt, extending our average debt maturity and lowering our overall cost of debt.

Also during the quarter, we made significant progress integrating the AT&T towers, the integration of which we expect to be substantially complete by the fall of this year.

Turning to Slide 4. During the first quarter, site rental revenue increased from $615 million to $747 million, representing a year-over-year growth of 21%. On an organic basis, before nonrenewals and adjusting for the impact of acquisitions, FX, material onetime items and straight-line accounting, site rental revenues increased by $47 million, an increase of approximately 8% compared to the same period a year ago. Excluded from the organic growth rate is the onetime benefit of $5 million from a customer contract termination payment from Revol Wireless during the quarter. The contract related to site leases for Revol, a regional carrier in Ohio that ceased operations earlier this year. Revol previously generated annual site rental revenue of approximately $4 million. Excluding the benefit of this onetime item, we were at the high end of our Q1 outlook for site rental revenues.

Of our approximately 8% organic growth, the cash escalations in our customer contracts contributed approximately 3%, and new leasing activity contributed approximately 5%. This new leasing activity was driven almost entirely by the Big 4 wireless carriers, with 85% of the growth coming from new tenant installations and the remaining portion from amendments to existing tenants.

As a part of the new leasing activity, we are continuing to see very strong demand for our small cell networks. At the end of the first quarter, we had nearly 12,000 small cell nodes and over 6,000 miles of fiber. The contribution to site rental revenue from our small cell networks is up approximately 20% year-over-year. For the quarter, nonrenewal of tenant leases reaching their contractual term end dates, inclusive of Sprint's iDEN decommissioning, was in line with our expectations.

Moving on to Slide 5. Site rental gross margin increased $81 million to $519 million, up 19% from the first quarter of 2013. Site rental gross margin percentage is lower by approximately 175 basis points year-over-year as we closed on the AT&T tower transaction, which had an average tenancy of 1.7 tenants and, therefore, lower margins when compared to our legacy assets with approximately 3 tenants.

However, the organic incremental margins were in excess of 90%, at the high end of our historical average and reflective of the high operating leverage of the tower business model. In the absence of additional acquisitions, we expect to see our site rental gross margins expand as carriers add equipment to our sites.

Adjusted EBITDA increased 20%, driven by the inclusion of the AT&T towers, an increase in site rental gross margin and strong performance of our network services business, and offset to a small degree by increased G&A, which was up about 8% year-over-year. This increase in G&A includes the effect of increased staffing to manage our T-Mobile and AT&T tower transactions, which increased our tower portfolio by nearly 75%, and the significant growth of our small cell networks.

AFFO was $349 million compared to $263 million from a year ago, an increase of 33%. On a per share basis, AFFO was up 17%, increasing from $0.90 per share to $1.05 per share.

As mentioned in our press release last night, we have updated our AFFO definition to reflect the benefit of prepaid rent from customers over the life of customer contracts rather than the period in which the prepaid rent was received. We believe the change will enhance comparability between us and our tower peers as we highlight the significant and growing cash flow of our -- our business produces. Obviously, the change to the AFFO definition does not change our cash flow profile or our investment capacity. Under the previous definition of AFFO, we would have exceeded the midpoint of our Q1 outlook by approximately $25 million.

With respect to how the change in the definition is likely to affect our AFFO results, our AFFO will be lower initially because the cash received from prepaid rent in the current period is significantly greater than the amortization of prepaid rent received in prior periods. This is primarily due to the fact that we have increased our portfolio of towers and small cell networks significantly over the last several years. Assuming no additional acquisitions and similar levels of leasing activity, we would expect the amount of prepaid rent and amortization of prepaid rent to converge over time.

Turning to investments and financing activities as shown on Slide 6. Since the beginning of the year, we refinanced or extended the maturities on $2.6 billion of our debt. In the first quarter of 2014, we extended the maturities on $1.8 billion of our Term Loan B by 2 years. Further, earlier this month, we closed on an 8-year $850 million senior notes offering with a coupon of 4.875%. Proceeds from the offering will be used to refinance $800 million of existing debt that has a weighted average coupon of approximately 6%. After giving effect to the aforementioned notes offering, our current weighted average cost of debt stands at 4.2%, with a weighted average maturity of 6 years. Our total net debt to last quarter annualized adjusted EBITDA is 5.4x, and adjusted EBITDA to cash interest expense is 4.2x. We expect to continue to de-lever through growth in adjusted EBITDA, trending towards approximately 5x debt to adjusted EBITDA.

During the first quarter, we invested $143 million in capital expenditures. These capital expenditures included $20 million in our land lease purchase program. During the quarter, we extended 340 land leases on our sites by an average of approximately 26 years. The extension activity impacted consolidated recurring cash ground lease expense by approximately 20 basis points.

Additionally, we purchased land beneath approximately 130 of our towers during the quarter. As of today, we own or control, for more than 20 years, land under towers representing 72% of our site rental gross margin. In fact, today, approximately 1/3 of our site rental gross margin is generated from towers on land that we own. Where we have ground leases, the average term remaining on our ground leases is approximately 30 years.

Our proactive approach to achieving long-term control of the ground beneath our sites is core to our business as we look to protect our assets and control our largest operating expense. We have provided more information regarding our ground interest activity in our supplemental information package that we referenced last night in our press release.

Of the remaining capital expenditures, we invested $11 million on sustaining capital expenditures and $111 million on revenue-generating capital expenditures, the latter consisting of $75 million on existing sites and $36 million on the construction of new sites, primarily small cell construction activity.

We had no meaningful acquisitions of towers in the first quarter. Further, during the quarter, we paid our first quarterly common stock dividend of $0.35 per share or $117 million in aggregate. Also during the quarter, we purchased $21 million of common shares at an average price of $74 per share.

Moving on to the 2014 outlook as shown on Slide 7. Based on our first quarter results, our expectations of continued strong activity from the carriers for the remainder of the year and our recent financing activities, we've increased our full year 2014 outlook for site rental revenues, site rental gross margin, adjusted EBITDA and AFFO by $11 million, $9 million, $26 million and $28 million, respectively, at the midpoint.

As shown on Slide 8, the midpoint of our 2014 outlook for site rental revenues implies growth of 19% or approximately $480 million compared to full year 2013. On an organic basis, before nonrenewals, our outlook implies revenue growth of approximately 9% year-over-year at the midpoint. The 9% is comprised of approximately 5% from new leasing activity and approximately 4% from escalations on existing customer lease contracts. Compared to the first quarter of 2014, our outlook assumes a 15% increase in quarterly new leasing activity for the remainder of 2014.

Our 2014 outlook for site rental revenues also includes the negative impact of nonrenewals of approximately 2% of site rental revenues. Approximately half of the nonrenewal impact is expected to come from Sprint's decommissioning of their legacy iDEN network and the remainder is expected to come from typical nonrenewal activity.

Based on Sprint's stated intention to decommission their iDEN network and our contractual terms at Sprint, we believe approximately 3% of our run rate site rental revenues will be impacted by the iDEN network decommissioning. This iDEN leases have effective term end dates spread evenly throughout 2014 and 2015.

With respect to 2014 adjusted EBITDA, our increased outlook implies 16% growth year-over-year and reflects the previously mentioned increase in site rental gross margin and higher expected services gross margin contribution. While the increases in staffing cost are a headwind to this growth in the short term, we believe the investment will allow us to maximize and execute on our leading portfolio of assets over the long run.

As presented on Slide 9, after adjusting our previously provided full year 2014 outlook for AFFO from January for the updated definition, on an apples-to-apples basis, our new outlook increases AFFO guidance by $28 million at the midpoint. Our increased AFFO reflects the increase in our outlook for adjusted EBITDA and from interest savings from our recent financing activities, offset by an increase in sustaining capital expenditures related to additional office facilities.

On a per share basis, our 2014 outlook implies AFFO growth of 11% before considering the benefit of the investment of our cash flows and after the 1% drag from additional office facility CapEx. For the full year 2014, we believe we will generate $425 million to $525 million in discretionary investment capacity.

I'd like to spend just a minute to describe the sequential impact to the second quarter of 2014 from certain onetime or seasonal items. Our second quarter growth is impacted by the previously mentioned onetime $5 million benefit from Revol's termination payment in Q1. Additionally, as is typical when going from the first quarter to the second quarter and warmer weather, repair and maintenance quarter-to-quarter is higher by $3 million.

Further, on an AFFO basis, sustaining capital expenditures for the second quarter is expected to be higher by $11 million, which includes the additional office facilities I spoke to a moment ago versus the first quarter of 2014.

Moving back to the high level, consistent with our full year outlook, the positive industry backdrop, which Ben will speak to, really supports our belief that there is a long runway of site rental revenue growth as the wireless operators continue to expand and improve their networks. Given the high operating leverage of the business, we believe our organic site rental revenue growth can translate into meaningful organic AFFO growth before considering the benefit of investments that we can make from the significant and growing cash flows generated by our business.

These investments include acquisitions; construction of new sites, including small cell networks; land purchases; and the purchases of our own security that we believe will further enhance long-term AFFO per share growth. Our longstanding approach to capital allocation, combined with strong execution, has driven significant growth in AFFO per share, which we believe is a good measure of our ability to pay and grow our dividends over a long -- over the long term. Importantly, we believe we will be able to produce this growth without increasing the risk profile of our business.

In summary, we are focused on total shareholder returns comprised of growth in dividends and AFFO per share. As we have said previously, we expect to grow our dividends to common shareholders by at least 15% per year over the next 5 years and continue to see significant growth in AFFO per share.

Lastly, before I turn the call over to Ben, I'd like to point out that we have posted to our website, along with our earnings release, a new supplemental information package. The supplemental information package is a part of our goal to continue to enhance our communication and disclosure practices. Many of the metrics I spoke to today are reconciled or presented in further detail on the supplemental package. We believe the supplemental information package will be a useful tool that will assist investors in understanding and evaluating our business model and overall performance.

And with that, I'm pleased to turn the call over to Ben.

W. Benjamin Moreland

Thanks, Jay, and thanks to all of you for joining us on this call on this busy reporting morning.

As Jay just walked you through, the first quarter was another great quarter, exceeding the high end of outlook for site rental revenue, site rental gross margin, adjusted EBITDA and AFFO. Given the level of activity that we are seeing, we are excited about the balance of the year.

Our current application pipeline leads us to expect new leasing activity per quarter for the remainder of the year to be approximately 15% higher compared to the level we experienced in the first quarter 2014. This level of activity, combined with our excellent first quarter results, allows us to raise our 2014 outlook for site rental revenue, site rental gross margin, adjusted EBITDA and AFFO.

As all 4 major wireless carriers continue to invest in their networks for LTE and capacity enhancement, I'm excited about the prospects of sustainable long-term growth over the next several years. This is particularly true given our position as the leading shared wireless infrastructure provider in the U.S., nearly 40,000 towers and 12,000 small cell nodes in operation.

As shown on Slide 10, we have a long track record of execution and growth through various cycles, whether it be macroeconomic or industry-specific cycles. Through this period of 14 years, we have delivered strong organic growth, as well as growth through disciplined capital allocation. As you can see from these results, we are committed to a long-term focus that delivers significant value over time.

With our industry-leading portfolio of assets and capabilities in the U.S., we expect to continue this track record in the most dynamic growth market for wireless. Over the last 2 years, we've invested approximately $9 billion in acquisitions, executing on our strategic objectives to expand our U.S. portfolio of towers and small cells.

Turning to Slide 11. We believe that these recent acquisitions provide us with opportunities to grow shareholder value through execution, similar to the acquisitions we have made in the past. Quite simply, our strategy is to replicate the performance of our legacy assets with our recent acquisitions. Tower assets that we have owned and operated for more than 10 years currently yield 15% on total invested capital, representing significant shareholder value creation when compared to the initial yields at the time of purchase of approximately 4% to 5%, similar to our recent acquisitions. I believe our strategy will continue to prove successful, given our investment in our people, processes and assets, which are focused on enabling carriers to meet the demand for wireless services.

We believe our recent acquisitions of small cell networks and towers were well-timed as network investments by carriers continue unabated. As carriers continue to invest in their networks, consumers and businesses have quickly absorbed the capacity added by the carriers.

Consumers and businesses continue to innovate and develop new applications and devices that will take advantage of the mobile Internet. This has led to a reinforcing cycle of investment by the carriers and increased usage by the end consumers.

During 2013, Cisco's annual report on mobile data traffic reported that U.S. mobile data consumption grew 75% over 2012. Cisco projects that between 2013 and 2018, mobile data traffic, even after accounting for Wi-Fi offloading, will grow at a compounded annual growth rate of 50% or an 8x increase in the next 5 years. This growth in usage can be seen in all of our everyday lives.

The convenience and accessibility of mobile devices made smartphones and tablets the dominant channel for Internet consumption and changing the way we live, work and play. For businesses, mobile Internet is changing the way companies operate, innovate and compete. There are mountains of positive statistics and trends about mobile Internet usage, and I'd like to highlight just a few.

From an entertainment perspective, a majority of consumers believe mobile devices will replace traditional televisions as the most common way to consume television shows and movies in the next 8 years. A separate survey confirms that this trend is well underway with smartphones' screen time already outpacing TV screen time today.

Further, Cisco reports that video already represents 50% of mobile Internet traffic and is projected to continue to grow at a 55% compound annual growth rate over the next 5 years.

As it relates to health, 95 million Americans are currently using mobile phones as health tools. The mobile health industry or mHealth is projected to grow 15x by 2018 to reach $20 billion of value as wireless technology has proven to increase efficiency and improve results. Remote patient monitoring is projected to save Americans $36 billion in health care cost by 2018.

And terms such as the Internet of Things or the Connected Life have been coined to describe the machine-to-machine connectivity that we're already seeing. Today, there are approximately 10 billion connected devices, ranging from GPS location devices to thermostats to smart meters. This number is projected to increase to 30 billion devices by 2020.

Cisco further projects that mobile data traffic created by these devices will increase 68-fold by 2018, driven by increased penetration of technologies such as connected cars and smart-wearable devices. To meet this growing demand, carriers are investing in their networks. And to effectively build out their networks, carriers need economic incentive, spectrum and infrastructure like we provide.

When it comes to economic incentive, we believe the U.S. market has the largest and the fastest-growing wireless market in the world, provides a landscape for the ability of the wireless carriers to make profitable investment its most apparent, and barriers to entry remain high.

As shown on Slide 12, the U.S. market is uniquely attractive due to its relative size and robustness compared to other markets. Strong unit economics with average ARPUs greater than $50 a month, combined with high correlation between network investment and low consumer churn, has led carriers to continue to upgrade their networks to improve network quality, increase capacity and add functionality in order to remain competitive and grow. As a result, we would expect current network upgrade and densification activity by the 4 major wireless carriers to continue for quite some time.

On the spectrum front, there's approximately 600 megahertz of spectrum in the hands of carriers and potential entrants, including LightSquared, DISH and FirstNet. Of this 600 megahertz, approximately 350 megahertz is actually deployed and is currently being used by consumers. That leaves another approximately 250 megahertz to be deployed depending upon the market.

Some of this spectrum, including Sprint's 2.5, T-Mobile's 700 megahertz and Verizon's AWS, represent near-term to intermediate-term opportunities for Crown Castle. Other spectrum, primarily held by LightSquared, DISH and FirstNet, represents longer-term opportunities.

Additionally, the FCC has proposed freeing up another approximately 150 megahertz over the next several years. It's possible that over the next decade, the total amount of spectrum deployed could double, a positive for Crown Castle as additional spectrum has historically led to additional equipment being deployed on our sites.

Before I turn the call over for questions, I think it's instructive to compare the current 4G deployment cycle with the 3G deployment cycle that we're familiar with. 3G was initially deployed in 2002 and continued through 2009 to 2010 time frame when 4G deployments began. Based on the 3G cycle, we believe that we are still in the early innings of the 4G investment cycle.

Verizon and AT&T initially led the way with 4G, and currently, they are focused on network densification, having addressed coverage in the early part of their rollouts. Sprint and T-Mobile are fast on their heels and soon will finish their initial coverage buildout. If history and Verizon and AT&T's experience holds, we expect that Sprint and T-Mobile will soon be focusing on network densification, and we are already seeing signs of those conversations happening -- that would be in the 2015 time frame.

Given the revolutionary nature of 4G, we have reasons to believe that the 4G LTE deployment cycle will be even longer than the 3G cycle. And in order to meet Cisco's projected 8x increase in mobile data demand, we believe carriers will continue to invest over a multiyear period. This multiyear deployment cycle gives us confidence in the long runway of sustained organic revenue growth.

Our team has a tremendous track record of execution, giving me a lot of confidence it will be able to leverage this unprecedented level of activity. With nearly 40,000 towers and 12,000 small cells in the U.S., as I previously mentioned, I believe we are well poised to continue to benefit greatly from these macro trends as we have in the past.

In the near term, our team is working diligently to integrate the AT&T towers into our portfolio so that we're able to deliver a Crown quality customer service experience across these assets as soon as possible. We have made significant strides to that end in the first several months since closing. And while it's early, our operating results are off to a good start across these new assets.

So in wrapping up and moving towards questions, our strategy remains unchanged. We are focused on adding site rental revenue across our portfolio of assets and investing our capital to maximize our long-term total shareholder return, which we measure as growth in AFFO per share, plus the increasing dividend we anticipate in the years to come.

With that, operator, can you please turn the call over for questions?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question today will come from Ric Prentiss with Raymond James.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

First, thanks for providing the supplemental information and making what was probably not an easy decision but going to a consistent comparable AFFO definition. We appreciate that. A couple of questions. First, on the organic growth side, can you -- obviously, services business had another good quarter. It was big in 4Q, continued to be big in 1Q. Help us understand what your thoughts are now as far as how much that's going to contribute in '14? And then also in the organic side, in the supplemental exhibits you gave, there's some nice color on 1Q, Page 13 talking about 8.5% growth and 1.4% churn for cash organic net growth. But then, for the year, that organic growth goes up to 8.8%, but churn jumps to 2.7%. Help us understand, is that the iDEN stuff? Or what's going on there? And what should we think as we look into '15, '16, what that looks like?

Jay A. Brown

Sure. I think the -- as you look at the growth of the full year, if you're looking at the outlook, there's a couple of things that are happening. Obviously, we've folded in the AT&T results; that is entirely in the first quarter, and that will continue for the balance of the year. On the cost side, we're staffing up in the first quarter, both in terms of direct expenses that would hit the gross margin, site rental gross margin line and also some of G&A and then the buildout of the facilities, which would impact AFFO. And that's -- most of that is starting to come in during Q2. There may be a little bit of it that doesn't get all the way in Q2 and would impact Q3, but I think most of that will be in the Q2. So I think that reconciles how to think about the addition of the AT&T asset. On the second part of the question, we're expecting organic growth to accelerate over the back half of the year. As I think Ben and I both mentioned in our comments, the leasing that we're assuming in Qs 2, 3 and 4 on average is about 15% higher than what we saw in Q1. And that's coming from all of the items that Ben mentioned around the big 4 operators. Most of that is new tenant installation on sites rather than amendments as we've seen over the last several years. So it's site densification and them adding additional sites.

W. Benjamin Moreland

And we see that in the pipeline today, given that we're sitting here in late April. We can see most of that already in the pipeline.

Jay A. Brown

And then on the churn side, most of that is iDEN. So that started to come into the revenue side in the first quarter, although most of it really we only saw 1 month worth of churn in the first quarter from iDEN, and then we'll see it for the balance of the year. As we go into the calendar year next year, I think we previously mentioned we thought during calendar year '14, we would see about 1% impact to revenues from churn from iDEN, a little over 1%. And then the balance of it we would expect to see in '15. And then any licenses that are canceled in the back half of '15 obviously will have a little bit of fall-over into '16. So probably 1/3 this year, 2/3 next year as you're trying to time out when we'll see the impact from iDEN.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Makes sense. And then on external growth, it looks like you had $62 million worth of acquisitions in the quarter. Was that for buying building towers? And then, Ben, you've hit pretty hard about how the U.S. is the best market you feel for wireless. What are your thoughts internationally? Is there anything that would be interesting to you in how you frame that?

W. Benjamin Moreland

Sure, you want to take the first part?

Jay A. Brown

Yes. On the CapEx side, those were all either CapEx we're adding on existing sites and then the construction of new sites, the vast majority of which would be in small cells. We didn't have any meaningful tower acquisitions in the first quarter.

W. Benjamin Moreland

Ric, we -- obviously, we're very proud of our track record and our business model around the economics of shareable infrastructure, and that clearly translates really to many markets around the world as wireless is a growing business worldwide today and we see that in our international business in Australia today. So we completely support the notion of shared infrastructure in other countries, and we continue to look. The challenge we've had thus far and the reason we haven't pulled the trigger on anything of any size has been the initial upfront price relative to the cost of capital in those other markets. We've just not been able to get to a sort of risk-adjusted total return expectation on lease-up, which you have to have when you impose the currency risk and inflation and other things that happen in some of those markets. It comes at a premium. And in our opinion, we haven't been able to meet the price or expectations of sellers and, therefore, haven't pulled the trigger. So it's merely a function of price. It has really not a lot to do with -- at a price, the shared model certainly works sense -- makes sense and works anywhere in the world. We are extremely bullish as we talked about on what we see happening in the U.S. market. We would note that we're in pretty good company with Verizon's decision to acquire their Vodafone interest. So we've got a lot on our plate here. The small cell business is going well, and as networks densify and add new cell sites to accommodate the capacity, we've got a lot to do here.

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

And what is small cell -- I think you said it's grown significantly. But what is it out of the total leasing revenue?

Jay A. Brown

It's a little over 5%, almost 6%. And as I mentioned in my comments, it's up about 20% year-over-year, Ric.

Operator

Your next question will come from David Barden with Bank of America.

David W. Barden - BofA Merrill Lynch, Research Division

So Jay, maybe I think at the last couple of weeks of last year's fourth quarter, we had about an $18 million contribution from the AT&T portfolio. And I think that you ended up guiding to about $400 million -- embedded in the guidance, $400 million contribution for 2014. Obviously, the annualized run rate of last year's AT&T portfolio growth would have been probably closer to $33 million higher than that. So can you talk a little bit about realized performance in the AT&T portfolio and how changes in expectations for the contribution of that portfolio to 2014 have influenced your guidance setting? And the last question is just on the 20% growth year-over-year in the small cell business, could give us an update on how big that business is now today as a percentage of the total?

Jay A. Brown

Sure. On the first question, I would say so far, the AT&T assets are performing very well in terms of the run rate of both revenues and gross margin that we acquired relative to what we expected in the acquisition. On a cash basis, it's slightly ahead of what we had underwritten and expected to have coming out of the gate. There's obviously whenever you -- if you're looking at the GAAP revenue numbers, there's the impacts of straight-line, both in terms of site rental revenues and site rental direct expenses related to ground leases. So there's some movement there, but on a cash basis, it's slightly ahead. And there is some benefit in our uplift of about $11 million in site rental revenue. A portion of that would be related to higher run rate -- initial run rates out of the AT&T portfolio, as well as the activity that I spoke about earlier of about 15% higher in the second half of the year and second quarter -- and second, third and fourth quarter of the year compared to the first quarter. So it's a combination of those 2 things that's driving the increase in revenue. On the 20% growth, again, it's about 6% of consolidated revenues today, and it's up about 20% year-over-year. Ben, I don't know if you want to speak to any details on what we're seeing.

W. Benjamin Moreland

Well, I would just say, yes, we're just -- we're seeing a very significant uptake in small cell architecture among -- amongst several of the carriers as they're using it as a way to add capacity in dense markets. When we talk about small cell, as you know, we're in the indoor business and the outdoor business. Certainly, we're doing a number of venues, and those are co-locatable networks and I'm very pleased with that. We're also having great success and a growing building of a pipeline in the outdoor small cell architecture. We're, again, serving higher density locations where macro sites are just unable to handle the traffic. And so this is an underlay type of architecture across where they would certainly already be coverage. And we're seeing a very significant uptake this year in that architecture and one that I think will ultimately be adopted in a robust way by all 4 of the major wireless carriers over time.

David W. Barden - BofA Merrill Lynch, Research Division

And Jay, if I can just a quick follow-up. The 20% growth in 6% of the business, so that's obviously giving you a percentage point of incremental revenue tailwind. Is that factored into the 8% organic same-store sales revenue growth before disconnects in the slide deck?

Jay A. Brown

It is, both on the historical data, as well as the look forward.

W. Benjamin Moreland

And the 9% forward.

Jay A. Brown

Yes.

Operator

Your next question will come from Jonathan Atkin with RBC.

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

Yes, I was interested in the nature of the staff increases that you've referenced, maybe a little bit more color on both direct expenses and the G&A-type staffing that you're doing. Secondly, on the DAS, I -- you gave the year-on-year growth rates and the scale of the business. Can you talk about whether your incremental investments in DAS, is that going towards more nodes or more fiber mileage, or can you give us a little bit of color about what's happening on the infrastructure side? And then my last question is on M2M Spectrum Networks in the press release that came out earlier in the month and kind of what your expectations are from that partnership and what they're doing.

Jay A. Brown

Okay. On the first question around the direct expenses in G&A, maybe the easiest way to do it, Jon, is to start from Q1 and then walk you to Q2. And then after Q2, as I mentioned, I think it will mostly be in the run rate. Moving from Q1 to Q2, there's the warmer weather impacts that we always see, as well as having more towers. That steps up direct site rental expenses by approximately $3 million from Q1 to Q2. The second item that's meaningful in site rental operating expenses would be around staffing, and that number moves up about $2 million roughly from Q1 to Q2. And that's a result -- as a result of us hiring folks throughout the first quarter to staff properly for the AT&T transaction. And then by the time we get to the second quarter, it's fully in the run rate. So I wouldn't expect meaningful steps in those expenses in Q3 and Q4. If you go to the cash G&A line, and this would exclude stock-based comp because as you look at our G&A line, the G&A line I think will look almost completely flat year-over-year. So the impact to EBITDA, and you can look at what is happening in -- around cash G&A. And there, there's probably another $2 million to $3 million step-up that we're seeing inside the quarter from Q1 to Q2 for a similar reason as to what I was speaking about in direct expenses where we staffed up during the first quarter and then we have the full run rate in the second quarter. And then from there, I would expect we'll see, both in terms of direct site rental expenses and G&A, those numbers to return to something in the neighborhood of about 3% growth on an annual basis from normal cost escalations.

W. Benjamin Moreland

Secondly, Jon, you asked about the incremental investment and activity we're seeing on the small cell side. Primarily, what we're doing is we're benefiting from the significant fiber plant that we acquired in the NextG acquisition back in 2012. From that, which we have significant fiber plant in many major cities, we're co-locating across that existing fiber plant, as well as adding additional laterals to that, extending the capacity of that plant into other locations. And so it gets sort of very blurry. It's not quite as clear-cut as the tower model where you're adding a tenant on an existing tower. Effectively, you're adding an additional tenant or node on existing fiber, and it may come with modifications or extensions to that fiber that we're doing on behalf of that tenant, with an expectation for further tenancy over time. So the term co-location is still alive and well in that business and working very well. It often comes with additional fiber that we're building, again, shareable among many. And then the last point.

Jay A. Brown

I think you were asking, Ric, about the mobile-to-mobile, M2M solutions press release that went out earlier in the month. That was a transaction or partnership that we've done with somebody to continue to build out small cells, and I think it's relatively small and won't be that impactful to site rental revenues or gross margins, adjusted EBITDA in the near term. I think there are, as Ben was speaking to in his commentary, there are a number of connected devices. And we're going to see the impact of those, or believe we'll see the impact of those, both on our traditional towers, as well as in the small cell space, for a long period of time. And so this was an early one that they wanted to put out, their desire to engage us in a meaningful way, from their perspective, to get their solution rolled out.

W. Benjamin Moreland

I think, Jay, you mentioned in your comments that our -- the vast majority, about 90%, of our activity right now is from the Big 4 carriers. And that's skewed a little high lately. For years, the -- what I would call the "other category" has been the equivalent of sort of one of the other Big 4. So there's sort of a Big 5 out there. And then of late, that has been light in that there's -- most of the activity has been around the Big 4 carriers. This M2M-type announcement highlights that there are always other people with access to spectrum, as I mentioned longer-term thoughts around DISH, LightSquared and FirstNet, that certainly stand to contribute to our growth over time, but not in the current outlook.

Jonathan Atkin - RBC Capital Markets, LLC, Research Division

So if I could follow up then, the nature of the AT&T integration CapEx, what does that consist of? And then on the fiber footprint that you mentioned, I did ask this several quarters ago, are there opportunities to monetize that for non-mobile carriers or even enterprises given the metro nature of the fiber assets that you have?

Jay A. Brown

Sure. I'll take the first one. You can do the second one, Ben. On the AT&T CapEx, we would have the normal repair and maintenance CapEx that we would expect to have. That will be on a recurring basis. And we'll start that during calendar year 2014 and we expect that to continue annually. Jon, if you're trying to pencil that out for the model, that generally works out to about $700 of CapEx per tower per annum. And so we've adjusted our outlook for sustaining capital expenditures to include that roughly $700 per asset. In addition to that, in the calendar year 2014, we're building out some additional office facilities to house the additional employees that I mentioned in the -- in my answer to your first question, and so there is some CapEx this year. It's going to be in the neighborhood in total of about $17 million. Obviously, I don't expect that to recur in future years. So that will be a cost we incur in calendar year 2014. And then beyond that, we would just have our normal repair and maintenance CapEx on a per asset basis.

W. Benjamin Moreland

It's a little spike this year. And then on the monetization of the existing fiber plant, obviously, we're working hard every day to add small cell nodes to that fiber. But to your point, we have a small level of fiber-to-the-cell business already monetizing some of that fiber. And we have some other opportunities that I wouldn't call material yet, but are interesting. And I think there's a number of ways over time we can monetize the fiber, those that we already own and what we may construct over time. But as yet, Jon, it's probably not material enough to really highlight.

Operator

Your next question will come from Kevin Smithen with Macquarie.

Kevin R. Smithen - Macquarie Research

Yes. How much capacity do T-Mo and AT&T have under their MLAs? And as these companies start to build out 700 megahertz Leap and then AWS3, could you see amendment revenue from these carriers later this year and especially 2015, or is this restricted by the MLAs?

W. Benjamin Moreland

Yes. Kevin, we -- as we've talked about, we're down to about 10% of our activity now as being covered by the so-called MLA contracts that were prepaid, if you will, presold. And we expect that to continue to fall. So really, any future activities, the most significant portion of that would be new revenue opportunities going forward. Without getting real specific by carrier, by market, we expect that 10% level to sort of hold and trail off over time.

Kevin R. Smithen - Macquarie Research

Is it fair to think of the 700 at T-Mo and the Leap spectrum and AWS at Verizon, is that more of a '15 event?

W. Benjamin Moreland

Yes, I would characterize it as more of a '15 event, exactly, given that we're already 1/3 of the way through the year.

Kevin R. Smithen - Macquarie Research

So there's not a -- the implied organic growth acceleration does not include a lot from these new spectrum bands?

W. Benjamin Moreland

That's right. Exactly.

Operator

Your next question on line will come from Amir Rozwadowski with Barclays.

Amir Rozwadowski - Barclays Capital, Research Division

I would love to touch on the overall spending environment debate here. You folks are once again raising your outlook for the year. Thus far, we've seen positive commentary from the carriers that have reported around their spending initiatives, particularly noting that densification is fairly important. I would welcome any additional color on how you think about the densification opportunity, particularly the size of the opportunity relative to the initial coverage upgrades to LTE. In other words, when we think about all the equipment needed at the site to optimize LTE traffic, be it fiber cabling, remote radio heads, multiband antennas or whatever the carriers are working with, is this densification opportunity for 4G as large an opportunity as sort of initial network deployments?

W. Benjamin Moreland

Yes. Thanks, Amir. This is Ben. I'll take a crack at that one. Densification and the anticipation of adding additional cell sites after the initial coverage build is our entire business thesis. We've spent $9 billion on buying 17,000 towers and 10,000 DAS nodes in the last few years just based on that exact view. And that is now happening and playing out in spades. As we talked about in our prepared remarks, where in the case of Verizon and AT&T, they're actively moving into that cell site densification activity, adding additional locations where they weren't previously present, going on new towers as their LTE networks load up and they need to add capacity. That's also what we're seeing on the small cell side. We fully expect, if history is any guide, that you'll see the same occur out of Sprint and T-Mobile over time as they complete their initial coverage build on LTE. And we're already having initial conversations with them around their build plans for 2015 in anticipation of that happening. So our thesis, which again played out quite well back from 1999 to today, is that you have initial coverage build, and then you have infill, and that's exactly what we're seeing happening in the market today and what we expect will happen for many years to come as we lease up these new sites we've acquired with roughly 1.7 tenants per tower. We have a lot of capacity and a lot of locations that can quickly and efficiently aid these carriers in adding capacity into their networks. So that's what we're all about.

Amir Rozwadowski - Barclays Capital, Research Division

And if I may, just a follow-up, you folks are fairly uniquely positioned in sort of your focus on the DAS and some of the small cell technologies. If I think about where we are today in transitioning towards more densification initiatives, have you seen any switch in priorities on -- in terms of spending? In other words, are carriers that you work with both on the DAS side and on the macro side reallocating capital? Or is it just more spend to everything?

W. Benjamin Moreland

Well, it really is carrier-specific, again depending upon where they are in their deployment cycle with 4G. But I would say that we have seen absolutely no evidence of switching as you used that term. What we've seen is sort of more of everything. And so of those that are now in the densification mode, there's a very heightened sense of urgency to add capacity to deal with all of the requirements and demands that we, as consumers, are putting on these networks, as we mentioned with mobile video, connected machine-to-machine, voice over LTE, which is still coming. So there is a lot of future demand that the carriers honestly are trying to build in anticipation of and keep up with our current needs. But I haven't seen any evidence of switching per se. It's just now we have an architecture that adds capacity very efficiently in high dense areas and reuses that frequency on a -- with very small cells and reuses that frequency frequently. That's something that we're continuing to benefit from and working very hard to optimize. We've got a lot of people working on building out the -- in the co-location on the fiber that we mentioned on the small cell side and a very robust pipeline there.

Operator

Your next question on the line will come from Phil Cusick with JPMorgan.

Philip Cusick - JP Morgan Chase & Co, Research Division

I guess first, if I look at the acceleration going forward of activity in the business, it seems like there could be upside to your services business, as well. Is that acceleration something that you can capitalize on in services?

W. Benjamin Moreland

Well, Phil, we've got a pretty good track record of growing the services business, as you all know. We're also kind of reticent to guide up on services. But I would say that with the addition of 10,000 towers this year, we would naturally expect with the activity that we ought to be able to replicate last year. As you sort of back into the guidance, you can sort of figure out that the service activity for this year now is roughly the same as last year, that's sort of what's implicit in the guidance. Can we do better than that? We'll see as we go through the year. We are extremely pleased with the take rates and the confidence that our carrier customers are placing in us in helping them meet these needs, both on augmenting and amending cell sites, as well as brand-new installations. So we'll see, but it's continuing to go in a very big way.

Philip Cusick - JP Morgan Chase & Co, Research Division

Great. And then second, I guess on the small cell side. Is it easier to build small cell infrastructure where Crown has towers, or carriers consider reuse backhaul and you have some zoning and staff? Or does something else sort of drive the ability to build? Do you need local teams, or do those teams move around?

W. Benjamin Moreland

So we have a lot of local presence. I mean, we operate a national business since we have people in local markets. And while I would say there has been some overlap and some benefit, and I would suggest to you in the future there will be more benefit and more overlap, where we have towers where you can even use some compounds at towers to build laterals off of tower sites into the small cell architecture, that has not been a real material part of the activity so far. I think it will over time. What the most, I guess, determining factor is for us and what's the most efficient, obviously, is where we already have fiber. Where we already have some of these 6,200 miles of fiber that we own in these major cities, that becomes a very compelling proposition for carriers looking to add an architecture in those markets. And then obviously, we have to build more as we're serving additional locations with laterals off of that spectrum -- I mean, off of that fiber. But obviously, the most important part of that is having that embedded fiber base already there, and that's yielding this pipeline we've spoken about.

Jay A. Brown

Probably the other synergy, Phil, I might just mention for you, is really on the sales side and sales cycle, this activity. We've talked about for years that when we do our customer surveys that we have the highest rate of customer service in the industry. And so as we broadened our service opportunity for small cells and demonstrated to the carriers in the early days that we're able to do these successfully to build them on time, to make them work, we've got a great track record of that. And that helps us as the carriers are looking to expand their portfolio. And I think our track record and our sales effort there has been really helpful, and that, obviously, has benefited greatly from the synergies of how well we've done over a long period of time on the tower side and on the services side. They trust us and they know we'll do what we say we're going to do. So I think that has benefited us greatly since we did the large acquisition 2 years ago.

Operator

The next question will come from Simon Flannery with Morgan Stanley.

Simon Flannery - Morgan Stanley, Research Division

So Ben, you talked about FirstNet a couple of times. It seems like the funding is coming into view here with the H Block and the AWS auctions. Have you been able to get more substantive conversations in terms of trying to feel like is that something that could start contributing in '15 or is it still sort of '16, '17? And then, again, thanks for the supplemental disclosure. If I'm reading it right, you're about 71% of the top 100 markets. How does the growth trajectory look in your top 100 markets versus the other markets? Are we still seeing a superior growth trajectory there, or is it more even now?

W. Benjamin Moreland

No, I would suggest the top 100 markets are probably even accelerating from what you see as the historical -- we provided in the supplement now the historical run rates of revenue, both top 100 and otherwise, on those towers. So you can see the spread there. I would suggest it's accelerating as the density of those markets is where all this capacity is required on top of the tower business, and I would overlay the small cell business and say, obviously, that's happening primarily in the top 100 markets, although not completely, primarily in the top 100 markets. So that's -- I think that's probably going to accelerate over time. The FirstNet activity, Simon, I hate to put a timeline on it. You can expect, given our position in the market, that we are very close to FirstNet and what's going on there. And they've got the keys to our system and are profiling our sites and portfolios in various markets and know how we could assist them, and we're in constant dialogue. But I would really not want to sort of put a timeline on exactly when we would think that would turn into revenue. As you know, there's a lot of moving pieces there, state by state, and so let's hold that one out for now. And obviously, it's a nice opportunity that we think will yield something in the future, but not in the current outlook.

Operator

Your next question will come from Colby Synesael with Cowen and Company.

Colby Synesael - Cowen and Company, LLC, Research Division

Great. I wanted to go back to the organic growth and I guess, more specifically, the churn. So you reported in the supplemental, it was 1.4% in the quarter, and the guide was 2.7% for the year. So obviously, an expectation for a meaningful increase as we go through the year. When we think about it collectively and we think of just total site rental revenue, do you expect the fourth quarter to be the low point for total site rental revenue based on that rising churn, or is it more going to happen in the second or third quarter and then we start to grow from there? I'm just trying to get a sense of what's the low point as it relates to site rental revenue as a result of the churn so we can get a better understanding what the jumpoff point might be as we go into 2015. And then just kind of going through your supplementals related to small cell, if I take the 6% of revenue that small cell represents as site rental revenue and just divide that by the node, I get to about $1,300, which you are generating per small cell -- or excuse me, per node right now. Is that -- could you give us an idea of how many customers are averaging on a per node so we can get a better sense of what you're generating on a per customer basis? And just curious, are you getting escalators for that, call it, $1,300 per month? And just getting a sense, is that a good number to look at, or does it vary widely so don't read too much into it? I'm just trying to get a bit of a sense of how we should start thinking about modeling out small cell.

Jay A. Brown

Sure, Colby. On your first question, the churn numbers looks -- I think it's important to draw a delineation between as you're thinking about the impact to site rental revenues in the full year 2014 versus full year 2015, as you asked that question. There is, as I mentioned in my comments, an acceleration by virtue of the fact that the iDEN churn didn't start occurring until March of this year. So as you go through the balance of the year, you, in essence, start to have full quarter impacts from the prior quarter nonrenewals. So really, in the second, third and fourth quarter, we're expecting a similar level of nonrenewals as we go through each of those quarters. The back half of the year, the cumulative impact of that is higher, and it will continue to grow all the way through calendar year 2015, which would have the highest cumulative amount of impact. But on a steady state, as you're thinking about sequential change quarter-to-quarter, the biggest news there is really Q1 to Q2 as we go from 1 month of impact to a full quarter impact. And then after that, you kind of have full quarter impacts. So the sequential change is most impacted then from Q1 to Q2. As we look at the revenue outlook for the balance of the year, given that we're expecting an increase in leasing of 10% at the organic growth line, that number would accelerate over the course of the year. So your sequential steps in net revenue quarter-to-quarter are going to be degraded by the time you get to the fourth quarter. So hopefully that sort of helps you think through your model. On the second question, I think as you get into the pricing on a tenant basis with small cells, it's a little different than traditional towers because the systems are priced based on what needs to occur at the local level in order to accomplish that buildout. So these are priced much more on a return basis. I would say, generally speaking, you kind of laid out the numbers, you're in the general ballpark of what small cells revenue impact is on a per site basis. Maybe a little high, but there are certain systems that are going to be even higher than the number that you mentioned and other systems that are lower. So we're pricing these on a return basis. And as we've said historically, we think the returns on small cells are similar to that of towers, if you price them on a ticket system that has 3 tenants on them or 4 tenants on them. And the returns on those would look very similar to a tower that would have 3 to 4 tenants. The business is performing very well, and the lease-up that we're seeing on the small cells that we've built thus far, they're actually leasing faster than what we've historically seen from towers. So the returns or the margins or how we want to think about yields on those assets, they're achieving yields higher than -- over a shorter period of time from what we've traditionally seen in towers, which is probably a better way to think about it rather than trying to price that out on a per node basis, because we're pricing these based on the invested capital required in order to accomplish them.

Operator

Your next question will come from Tim Horan with Oppenheimer.

Timothy K. Horan - Oppenheimer & Co. Inc., Research Division

Just 2 clarifications. Last year, I think you talked about 8% of organic growth. Was that net of churn? And then just on Colby's question, did the small cells have escalators embedded in them? And then, Ben, I get asked the question a lot so I figured I'd ask you. Any kind of current thoughts on potential technological cannibalization? I know the cable companies sound like they're going to be deploying Wi-Fi hotspots fairly aggressively. I believe there was an article yesterday that -- of a pCell technology that DISH might be trialing. I guess is that kind of maybe a risk or benefit to you guys?

Jay A. Brown

On the first question, the 8% number we were talking about last year, that was on a gross basis before nonrenewals. So we're now -- we've moved that number from 8% to 9%. That 1% move is all related to the new leasing activity. Escalators are remaining the same as we've previously expected. We do have escalators on the DAS. Thank you for reasking the question. I'm sorry I missed that in Colby's question. There are embedded escalators in the DAS contracts. The terms of those leases are very similar to towers as we noted in the supplement. There's about 8 years remaining on the average term on those leases, and so they look very similar to tower leases, both in terms of term and escalation provisions.

W. Benjamin Moreland

Tim, on the technology question, as I think about technology, what we've seen that's been most impactful so far, aside from just spectral efficiencies we've gained in the equipment by putting our RUs [ph] up the tower and things like that, it has been the emergence of Wi-Fi hotspots. And I don't want to speak for my carrier customer friends, but I suspect in certain places, they're somewhat relieved that you're getting wireless -- somewhat a relief there through Wi-Fi hotspots. And I believe by some estimates, it's already offloading as much as 50% of the traffic when we're all using Wi-Fi when we can. It's our expectation that, as I've said in my prepared remarks, net of that kind of offloading node, in the mobile environment, there's licensed spectrum, and handoff from one cell to the other is sort of the dominant architecture. We're going to continue to see very significant growth on the licensed spectrum side, if for no other reason just because of the capacity requirements that's needed with, as we mentioned, with 350 megahertz out there and more to come. That's a whole lot more than you could traditionally do a Wi-Fi node. And then with respect to the pCell Artemis article the other day, from time to time, there are valuable new technologies that come up. They don't -- they change the laws of physics and they do require light installations and some level of backhaul connectivity into whether it's a vertical height or it's an installation that looks a lot like a small cell. And over time, to the extent that's viable, and I think it's very early days, but to the extent that's viable, I would think that would certainly be something we could benefit from over time.

Operator

Your last question will come from Batya Levi with UBS.

Batya Levi - UBS Investment Bank, Research Division

Just a couple of quick follow-ups. Last quarter, you had mentioned that you expected to be at the high end of 25% to 30% revenue increase for new leases. Now you're looking for a 15% sequential increase off of 1Q. So given the prior comments, how should we think about the overall annual growth? And the new installment and amendment mix that you gave, 85%, 15%, how does that compare to last year? And can you also provide some color on average rental revenue for amendments?

Jay A. Brown

Yes. On the first question, if you were to take the 25% to 30% that we said before and then factor in the 15% from Q2 to Q3, Q4, probably closer to about 35%, maybe a little bit more than that, year-over-year growth in terms of new activity and amendment activity. Combine that and think about that in terms of organic revenue growth on the sites. On the amendment activity, 85% of the total revenue activity, leasing activity that we're seeing is new licenses is 15%. That probably compares last year to somewhere in the neighborhood of about 60% new and 40% amendments. In the year prior to that, it was almost a complete inverse of '14 where we were seeing between 10% and 20% new licenses and about 80% almost of the activity was coming from amendments. Most of that speaks to the commentary that Ben gave around the carriers' move from the coverage buildout for 4G to looking at site densification. In terms of what we're seeing from both amendments and new leasing pricing, it's up from past years and, on a like-for-like basis if you look at the equipment being added, it's -- the pricing has gone up probably 3% to 4% on an annual basis. When you start to try to compare what's the average amendment or the average lease, you really have to do that analysis on a carrier by carrier basis and look at what equipment are they actually putting up. Otherwise, the numbers are not necessarily comparable, and we're not prepared to share pricing by carrier. So I think I'll stop there on the explanation.

W. Benjamin Moreland

I was about to stop you. I -- Listen, I appreciate everybody by going along with us this morning. I know it was a very busy morning for reporting. I want to commend the team for putting out the supplemental package. You can appreciate this was a lot of work to determine what we thought was most relevant to you, the investor. There's a lot of good information in here that I would encourage you to spend a little time with. I think most importantly, that I think is relevant, is it will help all of us more easily toggle between the GAAP reported revenue numbers and the adjusted numbers adjusted for straight-line and acquisitions. That's a challenging concept. It sounds easy. It's not. I appreciate that, and we -- it's challenging for us and we do it every day. So hopefully, some of this disclosure, for example, on Page 8 for one and others, that really kind of gets this into very granular terms is helpful for your own modeling and to really understand what's going on in the business. Again, thanks to the team for doing that, and thank you, again, for listening and staying along with us this morning. We look forward to reporting to you on another very successful quarter next quarter. Thank you.

Operator

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation. You may now disconnect your lines.

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