Crown Castle(CCI) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company maintained its full-year 2023 outlook for revenue, adjusted EBITDA, and AFFO despite industry changes [8][25] - The expected low point of AFFO is anticipated in the first half of 2024, with a return to growth in the second half of 2024 and beyond [9][25] - The 2024 outlook shows a year-over-year decline in site rental revenues of $140 million, adjusted EBITDA of$ 260 million, and AFFO of $275 million due to specific headwinds [30][36] Business Line Data and Key Metrics Changes - For towers, organic revenue growth is expected to be 4.5% in 2024, while small cells are projected to grow by 13% driven by increased leasing activity [11][31] - Fiber solutions are expected to see organic growth of 3%, with overall consolidated organic growth projected at 5% in 2024, up from 4% in 2023 [12][30] - The company plans to deploy a record 14,000 small cell nodes in 2024, reflecting a 40% increase in new nodes [21][24] Market Data and Key Metrics Changes - The company has 40,000 towers, 115,000 small cells, and 85,000 route miles of fiber concentrated in top U.S. markets, positioning it well for long-term growth in data demand [13][42] - The demand for small cells is increasing as carriers focus on network densification to meet consumer needs [10][37] Company Strategy and Development Direction - The company is committed to maintaining its dividend in 2024 despite the impact from non-recurring Sprint cancellations and lower service contributions [8][20] - A disciplined approach to capital allocation is emphasized, with a focus on generating superior expected returns for investments [16][23] - The company aims to streamline operations to reduce long-term costs and improve customer experience [12][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying growth of the business, driven by persistent data demand and the need for network upgrades [10][41] - The company anticipates a return to sustainable dividend growth beyond 2025 as it navigates current headwinds [25][76] - Management highlighted the importance of maintaining a strong balance sheet and liquidity to support future growth [39][40] Other Important Information - The company has achieved$ 105 million in annual run rate savings from its restructuring plan [20][34] - Dan Schlanger, the CFO, will be departing the company in March 2024, and a search for his replacement is underway [17][26] Q&A Session All Questions and Answers Question: Can you characterize the current leasing activity and expectations for next year? - Management expects leasing activity in 2024 to be similar to the second half of 2023, with good visibility into contracted revenue [46][47] Question: What are the returns for small cells and any differences in pricing? - Returns for small cells remain attractive, with co-location economics exceeding 20% [56][58] Question: Do you have significant non-core assets or ground leases? - The company has minimal non-core assets, and ground leases have been extended for long durations, providing opportunities to lower capital costs [59][60] Question: How does the current stock price affect capital allocation decisions? - The lower stock price makes share repurchases more attractive, but the company remains focused on long-term growth opportunities [63][64] Question: What are the trends in the core fiber business? - The fiber business is seeing a return to growth with reduced churn and increased leasing activity from existing customers [78][79] Question: What are the expected cost increases for 2024? - Cost increases are attributed to ground lease escalations, labor costs, and the absence of one-time savings from 2023 [108]