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Crown Castle International Reports Q3-18

|About: Crown Castle International Corp. (CCI)

There is a really old saying 'round where I live - "Never ask a man where he's from. If he is from Texas, he'll tell you. If he ain't - you will just embarrass him". . . . and I'm getting the same impression about asking a fellow investor about earnings releases in some sectors.

REITs in general are simple enough. But cell tower and data center earnings releases are a horse of a different color. It was bad enough when Yahoo Finance produced an earnings number based on FFO. Now, Yahoo provides EPS numbers. Nasdaq provides for CCI an earning number that is right in the middle of the CCI guidance for AFFO and FFO.

The dividend was increased 7% year over year. That is well beneath the pace of growth for FFO, AFFO and revenue per share. "Revenue per share" is not one of the metrics that the brokerage analysts write about. But in doing my own private pondering on growth - specifically for the higher growth companies with increases in share counts - it is a metric I like to use in generating my assessments.

7% dividend growth is well below the three year trend of 9.35%. I would have an expectation that 7% would disappoint 'the street'.

Here is the earning summary from AP:

Crown Castle International Corp. (CCI) on Wednesday reported a key measure of profitability in its third quarter. The results topped Wall Street expectations.

The real estate investment trust, based in Houston, said it had funds from operations of $579 million, or $1.39 per share, in the period.

The average estimate of seven analysts surveyed by Zacks Investment Research was for funds from operations of $1.38 per share.

Funds from operations is a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization.

The company said it had net income of $136 million, or 33 cents per share.

The operator of wireless communications towers, based in Houston, posted revenue of $1.38 billion in the period, also beating Street forecasts. Eight analysts surveyed by Zacks expected $1.35 billion.

For the current quarter ending in December, Crown Castle expects its per-share funds from operations to range from $1.42 to $1.44.

The company expects full-year funds from operations in the range of $5.48 to $5.50 per share.

The company's shares have dropped almost 4 percent since the beginning of the year, while the Standard & Poor's 500 index has risen 5 percent. In the final minutes of trading on Wednesday, shares hit $106.79, a rise of slightly more than 5 percent in the last 12 months.

Here are the projections from Nasdaq:

Yearly Earnings Forecasts

Fiscal
Year End
Consensus
EPS* Forecast
High EPS*
Forecast
Low EPS*
Forecast
Number of
Estimates
Over the Last 4 Weeks
Number of Revisions
Up ----- Down
Dec 2018 5.24 5.26 5.22 6 1 0
Dec 2019 5.74 5.85 5.67 6 0 1
Dec 2020 6.26 6.41 6.11 2 0 0

Quarterly Earnings Forecasts

Fiscal
Quarter End
Consensus
EPS* Forecast
High EPS*
Forecast
Low EPS*
Forecast
Number of
Estimates
Over the Last 4 Weeks
Number of Revisions
Up ----- Down
Sep 2018 1.32 1.32 1.31 6 1 0
Dec 2018 1.37 1.39 1.35 6 1 0
Mar 2019 1.40 1.42 1.38 3 0 0
Jun 2019 1.41 1.43 1.39 3 0 0
Sep 2019 1.45 1.46 1.44 3 0 0

So there is 11% 'earnings' growth projected for 2019 and 9% growth projected for 2020.

Here is my spreadsheet for CCI's Q3-18:

CCI Crown_Castle--------------- Q3-2018 Q2-2018 Q1-2018 Q4-2017 Q3-2017 Q2-2017 Q1-17 Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015
FFO 515 525 447 429,302 408,422 404,626 400,945 386,875 369,922 356,429 316,295 410,271 357,828
FFO/share 1.24 1.26 1.09 1.05 1.03 1.11 1.11 1.10 1.09 1.05 0.94 1.23 1.07
AFFO 579 546 558 551,797 458,537 439,907 450,162 406,402 415,832 392,478 395,152 372,223 356,350
AFFO/share 1.39 1.31 1.36 1.25 1.15 1.20 1.24 1.15 1.23 1.16 1.18 1.11 1.07
Share Count 416 416 410 408,130 397,035 365,832 361,727 352.878 338,409 338,609 334,929 334,320 333,711
The Q3-17 Lightower Finance acquisition, due to an increasing share count, lowered 2017 projected AFFO from $4.99 (in Q2-17) to $4.645 - with a 2018 projection of $5.50
Midpoint FFO Outlook 4.964 4.889 4.938 4.865 4.415 4.485 4.525 4.515 4.515 4.200 4.30 4.24 4.47
Midpoint AFFO Outlook 5.489 5.50 5.495 5.495 4.645 4.995 5.025 5.025 5.010 4.710 4.695 4.680 4.300
Revenue 1,375 1,330 1,153 1,238,090 1,063,238 1,038,335 1,015,942 1,032,416 992,016 962,409 934,384 945,836 918,107
Revenue/share 3.31 3.20 2.81 3.03 2.68 2.84 2.81 2.93 2.93 2.84 2.79 2.83 2.75
FFO/share to Rev/share 37.5% 39.5% 38.8% 34.6% 38.4% 39.1% 39.5% 37.5% 37.2% 37.0% 33.7% 43.5% 38.9%
AFFO/share to Rev/share 42.0% 40.9% 48.4% 41.3% 42.9% 42.3% 44.1% 39.2% 42.0% 40.8% 42.3% 39.2% 38.9%
Property + Equipment 13,433 13,218 13,051 12,923,885 10,599,604 10,507,736 10,293,693 9,805,315 9,714,149 9,670,358 9,559,397 9,580,057 9,498,568
Goodwill 10,074 10,075 10,075 10,021,468 6,905,922 6,919,358 6,530,001 5,757,676 5,750,033 5,744,681 5,531,064 5,513,551 5,527,134
Intangible assets 5,620 5,729 5,854 5,961,759 3,885,311 3,953,812 3,894,362 3,650,072 3,737,448 3,779,957 3,707,129 3,779,915 3,837,360
Total Investments 29,127 29,022 28,980 28,907,112 21,390,857 21,380,906 20,748,056 19,213,063 19,201,670 19,194,996 18,797,590 18,873,523 18,863,062
Debt 16,313 15,844 15,616 16,044,369 15,090,217 13,726,333 13,380,091 12,069,393 12,491,596 12,325,859 11,778,176 12,043,740 12,039,178
Other LT Liabilities 2,732 2,678 2,615 2,554,037 2,200,336 2,169,070 2,131,076 2,087,299 2,028,672 2,002,944 1,975,135 1,948,636 1,859,304
Debt + LT Liabilities 19,045 18,522 18,231 18,598,406 17,290,553 15,895,403 15,511,167 14,156,692 14,520,268 14,328,803 13,753,311 13,992,376 13,898,482
Interest Expense 160 157 160 160,280 154,146 141,769 134,487 129,362 129,916 129,362 126,378 128,346 129,887
Adjusted EBITDA 793 769 763 707,012 604,802 588,543 581,412 574,617 564,120 549,669 539,120 539,797 529,158
LTM EBITDA 3,032 2,844 2,663 2,481,769 2,349,377 2,308,695 2,269,818 2,225,526 2,192,706 2,157,744
Debt/LTM EBITDA calc 6.28x 6.51x 6.85x 7.49x 7.36x 6.88x 6.83x 5.42x 6.62x 6.64x
4x EBITDA 3,172 3,076 3,052 2,828,048 2,419,208 2,354,172 2,325,648 2,298,468 2,256,480 2,198,676 2,156,480 2,159,188 2,116,632
Debt/4x EBITDA calc 6.00x 6.02x 5.97x 6.58x 6.24x 5.83x 5.75x 5.25x 6.43x 6.52x 6.38x 6.48x 6.57x
Reported Debt/EBITDA 5.1x 5.2x 5.1x 5.6x 3.6x 5.8x 5.8x 5.6x 5.6x 5.6x 5.5x 5.1x 5.7x
Rpt interest coverage 5.0x 4.9x 4.8x 4.4x 4.0x 4.2x 4.4x 4.5x 4.5x 4.4x 4.4x 4.4x 4.4x
Interest Coverage calc 4.96x 4.90x 4.77x 4.41x 3.92x 4.15x 4.32x 4.44x 4.34x 4.25x 4.27x 4.21x 4.07x
FFO/Investments Ratio 7.07% 7.24% 6.17% 5.94% 7.63% 7.56% 7.73% 8.05% 7.71% 7.43% 6.73% 8.70% 7.59%
Reported Wt Av Interest 3.9% 3.9% 3.9% 4.0% 4.0% 4.1% 4.0% 4.1% 4.0% 4.1% 4.1% 3.8% 4.0%
S&P Credit Rating BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BBB- BB+

Disclosure: I am/we are long CCI.