CCI - Earnings call 3 2023 | Crown Castle Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Crown Castle Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kris Hinson, VP of Corporate Finance and Treasurer. Please go ahead.

Kris Hinson

Thank you, Kate, and good morning, everyone. us we joining quarter our for results. XXXX you today discuss as third Thank the morning Crown call Crown on me With this Executive Officer. and Financial Castle's are Officer; Dan Chief Schlanger, Castle's Chief Brown, Jay and To uncertainties aid supplemental the throughout results that expected. section which actual Investors contain the crowncastle.com subject have and call our certain at conference be are materials forward-looking materially call website will in vary of will from discussion, the we assumptions, posted referenced risks, this to may morning. This statements, those is factors, in Risk Information could company's about potential which of sections press affect SEC the our and results available release filings. the the Factors

today, Our statements. and XX, XXXX, no any statements as we forward-looking are of October obligation made assume to update

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

to let me that, With turn call over Jay. the

Jay A. Brown

good morning, joining Kris, us. Thanks, everyone. and for Thanks

Our industry and third the in revenue, XXXX EBITDA our for changes ability face to of results growth the demonstrate generate outlook consistent to allowing our full in us adjusted maintain year continue AFFO. environment, quarter to

midst in to to maintaining our our of model, on multiyear the Therefore, committed from and services. are get churn. from of the the lower we impacts Sprint once Based cancellations strength past dividend grow beyond we XXXX we our are XXXX business the dividend confident contributions ability our the in nonrecurring Sprint-related in

the AFFO the half has driven Demand to to growth headwinds, investing year rapid for our of of with in networks to our second of occur first half customers we beyond. keep the data the expect in on in the and mobile AFFO consistently pace been these demand. returning assets in Based their XXXX by growth next before point of during timing low

benefits consumers ability world growth we of data lowering our us. have deploying the maximize that and macroeconomic our helped the with throughout underlying cost their connect low-cost of ability networks shared our the networks, as has resilient by the to for around and customers improved infrastructure Through cycles. model, combination our people investments significantly growth of upgrades shared us demand infrastructure to enabled across generational and The solutions provide persistent have

full year with tower complementing a of cells demonstrates portfolio small outlook benefits of the business Our XXXX leading and fiber. our

network portfolio demand As users, of our the densification of XG diverse needs customers end increasingly can to for focus their our increase. assets total they the expect on meet that so we

expect we towers, For to growth generate of X.X% XXXX. revenue organic in

fiber cells, continued $XX for churn For million to XX% generate generate we X%. new And to leasing to nodes activity from XX,XXX of activity we growth with XXXX acceleration in around organic organic by XXXX. small driven of leasing as growth increase in core of of we XX,XXX expect combined expect solutions, lower

revenue generate XXXX. Excluding impact business X% up of of combination to our the growth is expected in Sprint from X% XXXX, of growth organic consolidated the across organic cancellations, in

continue to long-term need get our improve and centralize continue processes costs simplify, which and we to to experience. streamline operations, know we our business reduce robust, Therefore, remains and growth will customer better. our While we our

a drive we X,XXX centralized rate XXXX. plan approximately move a opportunities by have Since in restructuring $XXX nationwide savings. have to to reduced of run third end of announcing million additional we positions further from plan annual completed the several identified including Having quarter location the efficiencies, workforce achieved July, the our plan, locations and of employee that to

reduce continue of costs annualized take maintaining $X.XX share. leverage to operating the we to organic from dividend per our strong The improved our growth supports and actions current

portfolio strategy our of to our As and sources in growth. an of our differentiated unmatched assets results in diversifies build outlook, reflected invest and

Our markets of miles U.S. demand positioned route the us of XX,XXX cells deploy their spectrum concentrated to top well fiber towers, how and small carriers densify in XX,XXX data growth air make regardless and and networks. and on contract capitalize under XXX,XXX on long-term

record our At drove XG, levels. the spectrum. customers activity moved beginning quickly of to newly of amounts deploy tower record acquired This

portions in have to as networks ended, As traffic. shift the this growth surge customers initial that our tower small focus experienced cell activity is most accelerating their densifying of

expect deploy we a nodes. cell to XX,XXX XXXX, record In small

States. is United growth infrastructure by we shared accelerating the that assets demand the in Our core built operator in small ability have as to capabilities of and driven capture largest the cell the

include miles locations XX,XXX density desirable for them of the deployments. heavily the highest, demand cell is data counts high populated makes in strand most small the Our of fiber route areas where which

a that fiber operator highly customers, If reliability off-line, cells goes our go of are small And are fiber We off-line. network and paramount. reliable network. wireless quality for

mitigate We have capable and is network these outages engineers of and a any world-class efficiently. of designed operators is to the our impact of quickly team network that and outage fixing ensures

small navigating with have hundreds navigate set the also utility organizations, United difficult in regulations stakeholders. and us of of a in agencies across expertise across expertise We unique markets developed and the local regulatory allows permitting States. disparate This municipal multiple of processes with cells to companies process the markets, the building each

These efficiently. the for solutions networks, our the for communications finding to core continuously provide mentioned risk-adjusted the consistently building to generate of returns operating our even and fiber costs. capital cost reduce and build businesses through We and on the allow highest cost-effective customers. capabilities and the deploying of becomes cells deliver for to more more increasing just most in times efficiencies in compelling which I look that unique us customers that overall operate. reliable ways are value shareholders own These we small Finally, network we capabilities

impact Of course, well. us costs as higher capital

capital so as investments. cost must our that Our the capital from approach to require disciplined we allocation our of returns means increases,

returns. potential repurchasing our returns investments highest expected Consequently, cost capital shares. whatever will the long-term of allocate we evaluating believe we investment of all and including rising the continuously against are capital to generate opportunities, We own our other the of

adjust of in that allocators mean We rigorous the and customers we investments stop pursue given consistent, appropriately of our means for disciplined returns on level superior that apply economics doesn't a technology, It capital to we approach risk. Being conditions. opportunities their of and investing. changes expected macroeconomic based generate scale that

created is opportunities. value Long-term those when invest we in

And significant can value. We long-term of our sustainable drive cell business towers of unique the great long have through where how on build built small in history cycles. a business a believe is macroeconomic various capabilities example another investing can we we grow advantages that success

XX,XXX segment. we with resulting expenditures new of XXXX capital in the XX,XXX approximately than only contributions capitalize we net opportunities, as in reflecting colocation these nodes In in in the XX% to to expected XX% $X.X plan and on billion nodes customer increase of capital XXXX, acceleration in expect billion XX% increase supporting our fiber of nodes nodes in $X.X is discretionary This with XXXX, a in a more nodes. be capital

tower in multi-tenant and XX%, only increasing fund up on means XXXX, Importantly, years. to this reflecting colocation business we to Xx our the up similar again in expect be assets. colocation increasing CapEx will expect XX to continue over deployed we with CapEx The while to systems Compared be of yields without issuing equity. is that fiber on the last XXXX existing XXXX nodes the this development discretionary

one is I There to discuss. item more wanted

As be you will the in March. saw Dan Castle next release, Crown departing

years. the take for opportunity contributions that of business While wanted made I to has thank He has to leaving for our him last company integral to not X he's the the and another strategy. to been the X-plus the months, he growth over

of sheet, finance and he developed and from We the work balance a team. benefiting to the increase our has are led strong he has duration predictability

wish endeavors. in him will all We his best the next

and We considering have and to candidates. search be a internal replacement, his external we'll find begun both

we demand I and point of mentioned work for AFFO consistent low dividend us services beyond equity Sprint XXXX to in by pursue growth fund confidence that driven XXXX. growth without first our half headwinds dividend each current the sustainable cancellations The persistent XXXX believe wrap of will maintain up, in in budget in the in as lines we issuing of growth of and be earlier. CapEx our the to nonrecurring As ability XXXX I through data the business to our our gives

call Dan. And to with the turn over me let that,

Daniel Schlanger

X and morning, I kind is generate grateful value Good thanks everyone, to words, just for am a to I for last continue strongly It's company, wanted work for it great Jay. opportunity strategy years. saying significant by Castle will that I shareholders. a the believe pursuing the to over the how at Crown and having start

years several excited I'm strategy continued ] the the success. me that a As and to next over shareholder, [ release play for look large to company's out see forward as

results. Turning to the

expectations fiber business. beyond with of quarter were in consolidated towers demonstrated growth line With and third Our cells surge able the deployments, XG the organic initial and quarter, solutions. accelerating in we in organic the was including X% resiliency to our deliver X.X% nearly growth growth transitioning in in customers our small and

our remain Page XXXX of income our $XXX of expected our $XXX on quarter shown of in in third items Following reflect net July approximately X. plans well All -- reduction announced tower outlook results, as on as charges we a restructuring to million other for our CapEx. million related updated as to impact the unchanged,

issues significant are our negatively to that Moving X impacting are our outlook. XXXX results. There

cancellation First, recur the XXXX Sprint XXXX. of million payments will we $XXX received in not in have

are million of a gross and of reduction combination $XX see of activity which levels prepaid approximately a reduction causes lastly, to tower and of noncash rent, in the construction will services adjustment straight-line our million $XXX items. And services both we business amortization a margin. combined lower exiting Second, our

year-over-year AFFO shows site EBITDA million, these $XXX impacts, XXXX million of to of rental our $XXX Due $XXX adjusted and in of outlook million. declines revenues

businesses Excluding growth. organic resulting $XX to adjusted our million these million AFFO contributes of EBITDA, each of in headwinds, $XXX growth the strong XXXX across

Turning to X. Page

to assets. full compared organic an cell continue an $XXX Looking as attractive small increase in fiber trends expect consolidated core of growth to we increase XXXX our is we million organic million seeing demand in are X% the X% Contributing of growth and in for to ahead, from with $XX midpoint million leasing, to accelerating to XXXX. $XXX XXXX at growth year revenue our

XXXX, compared from XXXX. $XXX and XXXX XXXX $XXX $XXX $XX in Our at core in to the compared midpoint $XX million towers million million solutions small of in to million in in to fiber million leasing includes million cells compared consolidated million $XXX $XXX

of from in to towers, small X% site This includes million cells an growth from results X.X% cancellations in or organic leasing year-over-year to contribution increase excluding Sprint the which $XXX in at increase return XX% fiber X%, a billings core of impact in midpoint and the rental solutions.

cancellations a Sprint midway with The organic at of XXXX, referenced revenues by $XX offset rental earlier small related were to additional site This noncash the along decreases is cancellation-related nodes rollover through million that which approximately primarily and creates Sprint XXXX. cell of I in the terminated effect churn. growth is impact X,XXX an

X. Turning to Page

in contributions or $XX be total this $XX to XXXX. costs rate in $XX our a X% We in expected expect restructuring $XX margin organic million of installation million are impact Inclusive cost the we from of announced expense increase embedded service $XX million business, reduction and rental million of million million exiting delivering in XXXX XXXX from the the margin, the be in which the $XX related at to billings services we this with is XXXX in $XXX of to expenses benefits in of expected to we to July. limited $XX increase and in only savings in to savings services million. the change midpoint, program savings the decrease restructuring achieve combining with run annual of million $XX site the When million

approximately a cost-reduction services as phase third XXXX benefit installation in initiatives. by business the nearly to we from expected from XX% of are as to the percentage end quarter services revenue our of out Margins in improve XXXX our of and XX% activity

Moving to expense. interest

a forecasting the interest environment $XXX fund our by XXXX approximately current with midpoint the we capital incremental as assume of debt. expect rate of above borrowing implied requirements. XXXX cost expense, X% million increase When investments we We slightly an to at fund our

and $XX to is cancellations to the XXXX which Our Sprint closely more the be growth noncash of reflects excluding AFFO the business movements, growth the of $XX million expected impact million. underlying outsized

dividend into period, our backlog agreements, multiyear structure, nodes cell over for contracted leasing largely have providing XX,XXX solid tower visibility for and and fixed our a With sustainable growth a a small XXXX. continuing current cost of long-term to dividend growth after underlying of expectation foundation we this returning both a

their expand value-creating is as billion network number discretionary of XXXX increasingly of opportunities. $X.X to investment prepaid million a our investment coverage $X.X already received. Jay capital billion XG As rent seeing $X.X wireless densification, we both focus of to and mentioned, And our customers billion $X.X to growing include billion are $XXX net or program

Importantly, the noncash to in collective investments We our can of Xx recurring in fund impact without exceeding items and these we the issuing results believe target recognize net our the payments XXXX. we Sprint cancellation in reduction XXXX ratio debt equity in leverage of EBITDA. not

However, multiple we over do line expect time flow through our credit we our adjusted profile to investment-grade EBITDA on net reduce cash with our investment-grade business to organically our have growth ratio history. in as to our seen durable levels occasions debt

years by X we extending to secured the fixed debt X% rate in years, investment from of weighted XX% debt to grade our from decreasing percentage of mitigate maturity percentage and XX% increasing transitioning the XXXX, X average sheet have balance XX%. from strengthened our to risk intentionally Since to to

we quarter occurring revolving Further, fund for providing with future. under our through foreseeable billion credit XXXX, $X the us of approximately ended availability and with business liquidity debt of to maturities $XXX our million ample the only facility

value-creating underlying pursue period. foundation and solid the a ability issuing and without the We for line contracted growth and underlying agreements the multiyear over remains this the growth to provide equity. our business -- up, believe place continue we XXXX continued have wrap in dividend stable growth To provides continued of of current a to our into investments in sight

unparalleled of long-term shareholder tower, small our number increase our will and which of returns, create domestic for cell return. to our we with provides access superior portfolio a opportunities unique assets term, growing risk-adjusted total shareholders value fiber and Longer believe

Kate, the that, I'd open With like call to to questions.

Operator

first from The Flannery Instructions] Simon Morgan is Stanley. of [Operator question

Simon Flannery

future. a call could I Great And the more and you've it's with got the of guidance peers. expectations. XG just with with like you. guess activity Perhaps your I seems cycle the best know lot us. of for Dan, talking down a leasing But before all the one It pretty we start working winding about here. always parts guide year. we've got you CapEx tricky moving kind

set how expect guidance what year for the you towers, when to year, could just activity your characterize the in there So for characterize you in next expectations and we next you particularly current on of terms And that to from of years? you visibility, the has conservative? be less DISH? that from major the and see carriers perhaps likes just caused Does -- somewhat is than say, prior

of talked some of that you kind being Are to wireless there. leverage the the anything any And the then be about moves above also M&A trend. by given side? the on And might opportunities assets, any on side, some carriers strategic you sell ability out looking strategic

Jay A. Brown

Simon. Sure,

of what leasing XXXX activity, level guide for second On the the first around in similar the question half activity assumes of to tower a XXXX. seen we've

XG during came the first So activity from of surge, a year. the initial underlying an of our to the as view half is activity consistent basically the level end

of we stabilize, that think year and level calendar 'XX. carries the activity into saw We

around the year we work online. I think we have of go contracted, we with revenue come when of good good that significant actually that. nature into will as given portion visibility of the the we already a Much and it think the have visibility to business,

we've is as using and they're long what to a feel sites on. XG I the to sustainable with currently seen towers from that of already similar carriers pretty they're term not the reported characterize as standpoint visibility upgrade So as would densify like result our that on network well the level activity the equipment that and historically, continue over

and to a think they a densify have to and noted seen we in I as cells that to the carriers my greater small their we network. from start shift use focus will see As comments, a degree

feel the wireless holistic both So showing the view a wrap as our the XXXX segments related thinking -- carriers their the into and pretty to we're good is in that based both XXXX and networks on about way about get of there growth on we up organic view are carriers.

happened back that good we'll in where business his we that levels delever with the cause question up of leverage time past, going that bit. would Dan in obviously, second we as us tick it's in back the down over see and growth the our the the in to some On a about expect -- trend, at will talked mentioned and the That's comments, to are comments, would allow leverage our target get that around headwinds to be.

will line. bring around down to we'll headwinds some think the So create back that we And time, able in ratio. it uplift leverage be over then

around part there's shareholder think we ways are I -- view on. other value. comment last business ways your the I way manage is the we M&A would can and long-term about of business would -- I to anything and there think question our that that things, your running don't But generally, On the create just specific X we

The extend is all we add capital. first we the more we the lower future. organic -- growth X are third the cost that that value, in long-term that of then is X incremental extend returns. and way we at own. shareholder into great growth is are And to revenue believe assets That driving would ways We of to those to will think invest constantly additional And would runway second way comes assets of the of the those. working can -- all on way the we of

us the sometimes the And reference assets that over That returns disruption, costs that that invest to that priced. unique to oftentimes our happens the terms in of in long arise. made can environment for also more can current term. are in capital of -- is periods the way create What's we're I of around drive about that opportunities customers capital opportunities

how I X of can value being about in that experience we we always periods that are there our unique those not say are some at And really oftentimes arise. disruption, thoughtful pretty on create fronts so And are us looking -- and always opportunities would those opportunities. been has we

existing on continue lower to ways capital. all work we'll trying growing revenues to opportunities new the assets, cost on of our for find so the to then And and for X, assets looking

Operator

from is next The of Citi. question Michael Rollins

Michael Rollins

Two I to could, as to today. well. my I if Dan wishes want give also best questions,

cells you're returns the small a one just is give And any now us first if expectation? on accelerating, the current you those how is update returns. to how you're The in if your relative on for basis the are pacing versus Curious pricing can difference returns growth describing an seeing per node portfolio? as

And then amount significant if just ground can the recent reports? on given press possibly question drilling noncore size you or into down unpack of have Do a of assets. the any noncore earlier have And leases? that assets the you you

Jay A. Brown

Sure.

first cell of the really encouraging. cells, returns we question seeing attractive And On of returns excess well that small both XXXX in the in business. around to for in economics adds XX% we're incremental continue the those XXXX and of our see small is amount colocation and

have initial be XX% returns. a as continue the to standpoint. high system returns second -- we third And teens, to that we're going we to tenant, those the As seen get into we double-digit develop, we systems tenant, low low second get from

track of I in as my being 'XX, colocation, half -- those returns. the talked and Given when 'XX go we systems seeing nodes the of the those into nodes well multi-tenant that comments, expected both quantity we're seeing we're in about as that

so feel where about good really those are And going.

always business about As the think pricing, we on on returns. -- focused priced we based have

a Small is cost a assets, there's required the systems. the not returns on is where cells So on different. pricing based across unlike of based there's more small to national build cells -- priced towers

costs are the And higher, follows. the so where in pricing areas

of in had some have it as some in of the been result that the And that has a inflationary pressures uplift environment.

system. affect order grow does the and associated we're pricing, that pricing so able lift with to maintain with that in the and And the returns associated to

we expected. seen have so develop business the we've would as And

think is of specifically question over assets. portfolio ground second I the I of ground noncore don't a inside the have that size leases, we balance one have, the On on sheet you acquiring noncore we assets and a brought things of ground leases by But potential around referenced of there, lot time, leases say would leases. significant assets ground the portion the

lease of also time. years of our portfolio. ground very We XX periods We're leases duration extend now of for long north in ground

of have sheet. we we We or And time. leases opportunity. do -- opportunity, may of we sheet balance out to that to on off-balance for push have obviously, so and ground in duration very over the see go the periods terms choose And the long

an we So the revenue. certainty activity, put asset do efficiently, of of then order the for think In on run in about business and us we is terms to maintain able it. of have being be lower would and opportunity the cost in have to we could category that control capital that do cost that of depending key to I add how terms control in of both the additional the of the

for really And way financing achieve lowest what's always just the of to across to we're assets. opportunities down the So lowest the of cost that cost looking to out decision capital comes figure to the try capital.

Operator

next The MoffettNathanson. Del Nick is Deo question of from

Nicholas Del Deo

to get of set. were capital? from so relationship what guess, versus describe you or today? Are more would from guess First, fiber repurchases in consideration look your the I interesting in fiber generally, I more really repurchases. The the far returns to the you you you generally how argued uses repurchases past, that ahead small can see on starting of theme, weren't cells, other allocation capital that continue

Jay A. Brown

growth we yield stock it, Obviously, at the line after to in view targets. prices. the return more our that we'll in with able XXXX through a the becomes a Obviously, that investment we'll that attractive growing while move long-term maintained to organic with be we've associated get downward return lower price and

small comments, cells. what's our growing true and we by focus a also assets around is growing believe, mentioned demand As I -- there's my carrier the customers in for

cost we're the projects pursue what the we things And could we as potential on affects because thinking so absolutely it incremental take path or always returns about opportunity by that one think another is the we over choosing way opportunity about path. that the

consistent -- a over And or been compare like assets. in has to shares of approach to do investing time our that long repurchasing things period

as think and continue we So it moved, to has so. it about the price how does will stock opportunities, do adjust

Nicholas Del Deo

Maybe to it turning pretty disclosed think night, is in reflect from now? a Or meaningful company, seems last you manage approach that you Okay. am I a philosophical to overthinking more why in plan relocation guess your least employee more Has how something change outsider's you at of I an a changed perspective. of do in it? the to ability better were? terms centralized centralized you better manage once business the than kind way the

Jay A. Brown

you're I it. overthinking don't think

our We efficiently. run are business at to looking constantly more ways

several And the so we off come right were looked of we sizing one did things we the have the that the we completed as that one and of the of of the XG July in the the months. at activity, business, in peak to employees the was that which things that work number organization, last of thought what's reduce evaluating as necessary was over we of

can run our business in operations. The and efficiently of is, more second how the it terms part processes business of we

we centralizing our to can where quickly give place we potentially more the so customers more that an the business. cost we and revenue we operating our for get things, is front them more to that that the on that costs customers long-term operating deliver for reduce can both And reducing the long-term experience, our the quickly. delivering by took view also the of increase believe by opportunity can will of And can but we improving so deliver customer us we for do assets, which efficiently,

the term, the then time. over business us a for from be the revenues way cost it over best we to opportunity the looked ways additional run occur standpoint and at the the reformatted should we've will this just I business running as believe efficiently. give cost, run think you more reduce way business, And both business for that's will we is believe always long that to activity for looking be the the

Nicholas Del Deo

you hiccup, down? of And Okay. just buttoned And Or -- quick feel an changes well risk follow-up given on the like any one operational that. you place? taking pretty that all do any have

Jay A. Brown

never wouldn't a place for the there's I say ever there hiccup. where -- opportunity there's isn't a

disciplined we've intend run operators and to do that. So the assets to business the got be and of thoughtfully, we

restructuring press our have I team deal the great ability that release our we The do and about in plan employees. our yesterday of affects in a that. announced to XX% of confidence

And so place that through confident do they'll that I'm the to plans in we well. that, have work

are the business. work you The on are XX% in would today of expect that what terms unaffected, hard delivering I doing at and believe,

and and So a that. it's something certainly we've got to manage, watch internally have we plan to do

Operator

next is Markets. question RBC Capital from Atkin of The Jonathan

Jonathan Atkin

equity growth would about XXXX the your of ATM? from side, point on that on not pace vantage thinking beyond questions. now? couple of include no the right A be When you drawing more And say updated does dividend then broadly issuance, your the financial wondered what

Daniel Schlanger

take I'll be under it the on one ATM. the not means Jon, going the Yes, ATM. issuing equity to Yes, first even we're that

Jay A. Brown

on XG, the at out of where decade growth we to would forecast the going level targeted I look build expect, to going we the which XXXX, are organic continue the better is to for X% part returning take growth revenue organic X%. that we for to our carriers to in see to of invest we based Beyond see the AFFO that say business long-term and and think characteristics

look that we as But can underlying so talk going then to And think drivers closer in demand get what be feel -- And AFFO. get in think date, our more get good and these to we about intact, about be how and and we're a drivers XXXX of as look the to we growth there. will over XXXX. where And specifically underlying going we we we're the healthy as rate growth headwinds the it to back XXXX of through are we we'll level at today, demand that get targeted and to sustainable. those

Jonathan Atkin

forth? And renewals, demand, my seeing you're business terms are trends from the small then fiber the lastly core of cells, side, customer so pricing in types just of ex and what on

Jay A. Brown

that affecting trends that. are big Two Sure.

As we've and get where about, in moved we the exit been seen gone about we've events to we churn growth the the both with calendar that talking expected this the line year the we've seen -- through back come we're at we've year X%. think to going -- -- past net still

next pace we're see could be pace -- an year. guide X that leasing time we're on to by side. get of seeing year's on get both year that we core we exit next we'll growth is The to to this trends level in our the believe the You uplift for on

activity to new more selling to. logos already sell logos from to to continue seeing both we're the we're and opportunity So that an

a We in see also reduction churn.

undertaken a and a years in to that couple are churn. number last starting thoughtful really of reduction has team in activities results that fruit of over Our the bear

And see on reduction top growth leading as so that that is as both we churn to X% next in the well the year.

The customer as healthy are are on serve. The create moving enterprises and the wireline business also off-premises not for this wireless, those that for which opportunities base business. about of think to data cloud those especially for only a to more lot to intact, growth towards data we we've connectivity basis, the movement macro be drivers that on of trends healthy. continue demand, continues but a We talked drivers that call, for

enterprises. large primarily Our fiber serves business

We have and we very consumer. little direct do exposure don't small medium and to to businesses, anything

to to make drive period off-premises continuing large we're and are the be And how to see the that sustainable going sticky. be drivers about movement of for side, growth those enterprise long time. to more a thoughtful revenue streams those trends we we cloud On can towards

Operator

question is Ric James. next from of Prentiss The Raymond

Ric Prentiss

you years. know to last over X getting enjoyed Dan, these

Daniel Schlanger

Me, Yes. Thanks, Ric. too.

Ric Prentiss

dividend Want to side. on start the

and reported billion than was $XXX metric. amortization about, the I the billion $X.XXX more items $X.X But You of that like you million. more noncash of billion. be talked at it looking of dividends about rent like all AFFO like midpoint cash it ] number would a That be like 'XX [ prepaid ballpark $X.X AFFO AFFO and kind might implies really the cash looks versus know

of kind to ways cash how of I there the to to bridge you get dividend? that are correctly? of kind or other what ways And working then that to pay other Am that capital get thinking

Daniel Schlanger

thinking So Ric, correctly. I would say about yes, that you're

get we look taking to at so. the XXXX. that our makes when number to going out midpoint rent a be the as is to cash level below And AFFO, way prepaid dividend shorthand a sense at at amortization Looking to our do

the Jay pointed made that his returning lot we think out cash to we a that don't from. out the And XXXX different as throughout in growth going of we all dividend dividend is. it can that of sense figure where is issue given that that out comments, ways. past keep liquidity comes we're And in believe, have to to trying fund where of be to sorts it We

growth next What course we'll we the of dividend the the time. as out organic then over And have is dividend. feel with over trajectory business we the pay comfortable several the -- is years, of in do to to the continue what we'll continues that really increase

Ric Prentiss

we a maintain is decision, assume a as Board short? couple 'XX think, 'XX. pay cash I but it And in to other if point, And the intent the to Obviously, there's dividend should it's of to times, Okay. mentioned the ways well? dividend Dan's you in is Jay, maintain

Jay A. Brown

Yes, Ric, policy setting obviously, we're XXXX. the for dividend

to But some So of reason we've want referencing and start this low and multiyear you consolidation philosophically, I we're don't why headwinds work of Sprint facing. help we've the view with the point that of is 'XX. the been got give a that through to the about talking of get ourselves ahead

we're that XXXX. of we of is kind smaller math in As gap what referenced be than walked the saying in XXXX essence, expect through it you there the and in is gap, to

So form the the at the shareholders in we've up is of cash done generated generation cash how the year. and the our any business we've paid out the we've business, we've sized historically, to of dividend. set business, by flow dividend the as in what given looked That's

look to of that think where and events specific events the business we try be figure of those business the to is into as consolidation those believe macroeconomic period do we seeing and through the this associated the on cash carriers which business, look worked we As headwinds try do an the were in of of flow changes, we anomaly the is and more out would the the what through the normalized. beyond got we out time horizon with generation

maintain as to time return And past we'll the sense we payout As we get a dividend the it to we will that. go view period first and and then And between our be into look growth of the The once then business widest XXXX. to we it of XXXX. close in 'XX. the 'XX that the second half and through generation was of believe the beyond 'XX get of in dividend made in that, will cash gap half

try the we're, set 'XX, essence, events level a believe, we could these growth, of we through generation 'XX. and gap that return we'll XXXX. smaller in dividend between to maintain in and level and be cash the in to So current in then movements The at the dividend in these will looking

Ric Prentiss

clear. That's Good.

Okay. small question cells. One other side on on the my

decommissioned the from X,XXX within Sprint. to assumed number? a there I those that or were decommissioned they are is same? net And Was it. third quarter, think Or you in we're nodes with that Are quarter? -- there gross mentioned 'XX, the XX,XXX second more be nodes mid-'XX almost a done were of in sorry, in

Jay A. Brown

contracted the which why little those a there's of from this have nodes -- is bit total XXX,XXX. most churn. the saw at reflective XXX,XXX of That's Most come come our point, out you and On to nodes down movement. X,XXX, of

those of way their have through. most So worked

are the talk and same. net we number The when for XX,XXX, gross about XXXX,

expect don't we cell in So XXXX churn meaningful nodes. small of any

that there So to of. need offset aware there's be no you made

Ric Prentiss

half million the reflective? million $XX churn the $XX Sprint and the guidance, is essence basically of year then of kind And Good. 'XX the that in

Daniel Schlanger

the It's hitting year's rollover exactly. churn this XXXX. of Basically, Yes.

Ric Prentiss

that's the that half in second then. to first half And gets concept back kind the versus a half being second factor contributing of better that

Daniel Schlanger

Yes.

Ric Prentiss

Dan, best wishes.

Daniel Schlanger

you. Thank

Operator

America. from next Barden The is Bank of of question David

David Barden

couple a Just on the side. small cell

Jay happen? kind up happen that XX% of this So of with because make to do seen at has time step-up second what kind that when is does then of before. And the step in organization, deployment you no guys or you're shrinking of How happening kind to the Dan, ever we've a rate the larger than in discretionary the we the both Or and billion is the terms question XX,XXX assume terms anomaly cash normal, future? is more and of deployments node, new CapEx of related discretionary of kind of foreseeable this no this kind is, that kind CapEx the is for norm? of in more like $X.X of should more an

Jay A. Brown

we business adjusting terms On in we to were internal going peaks adjusted then the side. well of activity the costs the movement go exclusively side. and were almost question, in based what the we on of tower operating tower to the And both we your first side provided the second as that as levels of that we tower that made related down happened half the the on for those of on services staffing the reduction tower changes on deliver the we're as from -- were both in of volume leasing those XG 'XX think XXXX. we saw into to and both And

add navigating significant making the my in nodes. resources which the about see ourselves think some of to significant as side, refining our a the don't to additional in on and increase more at we team use about this we and need cell through both tackle successful and segment some As us of in processes our amount for resources I of comments, the growth small fiber talked technology I of in municipalities, believe

in of and efficiently. as plan long can that as it the about business be we we lead the and thoughtful looking Our more well the making that sure time work of been for for work team engage benefits the preparing ways has this. to is really do have we And one

job The team has of a that. good done really

believe the of job to we're and talking the that And without reduction about on changes the cost shrinkage come from not business. structure upward of segment deliver I we're cost growth the really So the has the material that side. prepared to

that's On discretionary paired in activity. amount to think going long-term really doing if operating give your we're hard and be a the we of haven't level be we that CapEx, forecast a say, to activity the yes, CapEx because to of XXXX, of that level with. what that's that question what in we is in about given I similar expect with to you second around it's around the level would the activity would that the we're At demand

We're continuing the business percentage at. mentioned come in them have that navigate colocation an we would Those as of levels expected we greater see towards returns, I come to question, at earlier -- nodes. to move to a in and expect

that expectations. multi-tenant with were So we're line seeing deliver in returns the model, multi-tenant systems

the they're as carriers is the as will consumers network we we And believe And currently that densify go generally our today view small long then the an cells to XG what are a than more going taking need degree. even densification network. as to out continue they greater that use way,

believe, So that in how sense unfolds it opportunity just around may or relative them, us creates upward I addressable investments that about will cells, see that the -- those we'll they us back my in for have need to alternatives? makes other not. trends market it. total those the talked through opportunities and to process think upward on to have And comments markets rigorous to in see for small do put that for investment the these it to I in And us have for trends we whether come, particular those as opportunity do sense make pursue

Operator

The is from next Williams with Cowen. question Greg

Gregory Williams

you best, the echoing thank Just I the for and support. comments wish for Dan. the you all

Just $XX is million parts if the et the $XX it's wondering first cost It break on it's up ground ] cost like question $XX lease for 'XX. savings. higher piece there million the escalations, [ cetera. looks if even I'm after you can the million just out to

returns. the the comments And is then the question cell around small on second just

on just a good it's system basis. towers saying You're multi-tenant as as

update So is to rates as kind think small lease-up cells there we that of towers? in vis-a-vis of any

Daniel Schlanger

XXXX. with then first question Yes. start higher Appreciate comments. the I'll the And in Thanks, Greg. cost on

bunch a on hit of them. You

cost has that side. on major single a experienced, in in we those towers our year our that leases at increases to the expense be under as line So P&L we the about ground large item have we X% increase in. And ground leases baked per do cost. have That

labor for people increasing the faced cost every for who with are hiring is people with -- with work cost people Secondly, going faced because we're other up company, of we, is here, inflation. like

more cost increase we the XXXX of which things XXXX, get won't had half were going onetime of show type referencing. also. that you little of lastly, some to in you And then increases an a those When back the occur bit just into savings up, you add

Jay A. Brown

colocated the what your initially on be returns, we've historically a on towers. actually would with be the small continue second from view, tenant than and continue first and our colocated historically seen the tenant to question second to in around Greg, will have system be, -- cells been particular better

double for or towers are at capital When with what are we towers. capital a yield those what double acquired tower our invested ground we cells, were small built, about initial than more the to are on initial the is. Whether we into put historically returns

you well When can system, yields we see in small those supplement, get kind cell with capital. low get Generally order we're yields, invested on we're double-digit low tenants a double-digit X second in to range. to order tenant get on towers the the as to to in of in to over the

low XX% on yields. we system, tenant we're And a a then to high get third when teens,

places in even disclosure very in some of where of that X that for we see some exceed the those we attractive markets that gave time would tenants, that a have some of last the In significant a towers we've of been and get multi-tenant period around could we've long quarter the systems. historically. You returns got number

the of at early So we're stages colocation.

amount holders. time we've small in we So over of United lot those the will in believe believe tenants, markets a yet, as shareholder carriers multi-tenant like those years. across the the demand, of but assets yields. on in this dense of in result XX continue trend with side States, growth network, and in cell been and years believe populations that significant we've it's for equity the and -- in consistently build and a adding the towers, system to and see best over the growth the seen over increases we'll value in continue to value are to we're returns And create drive business towards many to not time, entire do towers I what will And colocation have that time, lot creation over as going yields able assets of data we densify over will a

Operator

Next Deutsche Niknam question is Bank. from Matt of

Matthew Niknam

quick ones. X Just

ramp-up the us share growth, help you side of expectation maybe half be through share than cost of? on it AFFO First, Is can if anything savings per parts second the moving think in of the first AFFO per in terms improved Is for the better driving to half. on to 'XX leasing? be there cognizant

progression think us year. the Is the secondly, then end the in from to path how higher? just you quarter around exit stair step about could that a there. XX% the it, through if help And Just XX-ish third the by the, think that on call services, percent of of linear? next rate to range more Is

Daniel Schlanger

combination the really we in than the on works question out just first what's our works business in year on see which of the typically in half in first. a more returned XXXX, better half, in it's called business, how XXXX bit to and that and It's second XXXX. the of driving seasonality didn't second our Matt, normal a of kind Yes.

to have churn half we was some the events year, hit not the the of addition of second. mentioning, Ric of first In that kind the

half that of we AFFO in added think would up to point being first of that all the lead so And the low in XXXX.

Jay A. Brown

exchange question, that the second I'm referring question you're business. assuming margins the the you're in Matt, the the asking, of Is margins? on that your to

Matthew Niknam

Yes. Right.

Jay A. Brown

Yes.

the on help pre-installation, XXXX that Okay. to for bleed our that that range margins we do services our to business project install over and would a services. and this the that a our has there XX% lower perform management the assets of on with performed Those than we'll have. customers. much into be the be that beginning The basis, we exit of margins have services the the preconstruction customers are in we on current historically around Those the margins, construction will some go-forward

ramps foreseeable better. on -- business the of a on away really for business what the we as the over the to seeing is year a margins change business So course and going the legacy you're that perform future, the will mix down goes are long continue that and

longer the moved you're we And time all will will of legacy that have get half of of performing the no virtually the be services seeing to year, So been guide. next results. by those out in the that second

Operator

is Markets. final Brandon Nispel Capital The question from of KeyBanc

Brandon Nispel

lot and tower Dan, unpack the 'XX. years, you and for Hoping both best several your guys Great. help luck. thanks leasing over last sort could all of for XQ of a the

leasing of about But business. XX%. contracted talked went nature this You've the always roughly year-over-year basis, on sort down a of

hoping half or And your a sort the So for half in year-over-year like expectations of drivers you about of standpoint. I versus unpack first could was then sequential second from 'XX. talk leasing tower sort

could remaining unpack you that the side tower just $XXX then a cell guided fiber and the and And the secondly, I Sprint hoping churn from was small to million, cancellation. from the one-off you've churns

Jay A. Brown

customers what's take looked I'll second we at XXXX the guide the numbers Sure. first that from question, for about came guide can the tower leasing question. 'XX, XX% Brandon, activity walk and the of in this to in our contracted. and that activity, seeing is embedded point we at the Dan the through as we for on were

tower There shows then of XX% get of sight calendar months year this 'XX a on in rollover 'XX. year we of activity the got go up that in amount by some calendar where that is is, that we for we'll goes about line XX don't definition, there year the year this have see to. So in to full calendar tenant still and

of equipment of to be site is with We're our sites. been add XG, off not to of to with additional we absolutely going XG. macro out peak has our and needed a the build they're tower as investing done XG view there came to done And that not addition carriers

activity towers and believe is we macro in beyond deploy efficient tower and the the side, is to we've 'XX, the are there the the feel and the about good that that where continue, we'll most capacity. good the the way as years will with good -- seen conversations in it's network that but them, see had work based be not that about on where on So only that still activity still guidance we've ahead activity feel

so good to growth carriers, believe, And we'll a tower solve continue the will need, assets in those period see And can the of time. portfolio. to extent continue the sites the we for that to prioritize macro in long towers and

So we've the just at reset our expectations we XG, about but where we from were are this good feel from point of forward. peak going where

Daniel Schlanger

on million Yes. $XXX And question second of churn. the the

on it's the side, see low in we've million range which similar going be X% tower of the think On end to churn to to of $XX a our in very on the and X% in 'XX seen what 'XX, what we'll churn tower. we is

cells, small will of -- small 'XX similar similarly, very our X% cells. about the be On

you the add all around And So in as When the is up, take believe out without $XXX in mentioned, you maybe so to from Sprint -- those we the cancellation. solutions, XX% as down long of closer as fiber 'XX million. Jay 'XX, churn X% coming neighborhood $XXX million. in to

So when you add all about get you $XXX those total churn. to up, million

Jay A. Brown

want the work I team to the for the opportunity We'll into everyone, joining to excited continued soon. talk and just with 'XX finish joining. for look business ahead got talking thanks, the all they thank to morning. We've XXXX continue the Thanks I support, to we of forward this us you the the as quarter results we for grow broadly seeing call have Well, appreciate And and done soon. that about and deliver good so year our out and beyond. to for a get far. to

Operator

now concluded. for today's you presentation. has attending conference The Thank

You may now disconnect.

Crown Castle (CCI) 19 Oct 232023 Q3 Earnings call transcript