Crown Castle(CCI) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents Crown Castle Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements for Crown Castle Inc. as of June 30, 2025, highlighting the reclassification of the Fiber Business as discontinued operations and its impact on financial results Condensed Consolidated Balance Sheet This section provides the condensed consolidated balance sheet, highlighting changes in assets, liabilities, and equity, particularly due to the reclassification of the Fiber Business Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024, in millions) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $31,636 | $32,736 | -3.4% | | Total Liabilities | $33,018 | $32,869 | +0.5% | | Total Equity (Deficit) | $(1,382) | $(133) | -939.1% | - Total assets decreased primarily due to the reclassification and valuation of the Fiber Business as discontinued operations. Total liabilities increased slightly, while the total equity turned into a larger deficit, driven by dividends in excess of earnings and the net loss for the period - Current assets of discontinued operations were $420 million, and non-current assets were $10,182 million as of June 30, 2025, reflecting the pending sale of the Fiber Business[17] Condensed Consolidated Statement of Operations This section presents the condensed consolidated statement of operations, detailing revenues, income from continuing and discontinued operations, and net income or loss Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $1,060 | $1,107 | $2,121 | $2,221 | | Income from Continuing Operations | $265 | $265 | $549 | $559 | | Income (Loss) from Discontinued Operations | $26 | $(14) | $(722) | $3 | | Net Income (Loss) | $291 | $251 | $(173) | $562 | | Diluted EPS | $0.67 | $0.58 | $(0.40) | $1.29 | - For the six months ended June 30, 2025, the company reported a net loss of $173 million, primarily driven by a $1.082 billion loss from the disposal of discontinued operations (the Fiber Business)[19] - Site rental revenue, the main source of income, decreased to $1.008 billion in Q2 2025 from $1.064 billion in Q2 2024[19] Condensed Consolidated Statement of Cash Flows This section outlines the condensed consolidated statement of cash flows, showing cash generated from operations, investing, and financing activities Cash Flow Summary (Six Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash from operating activities | $1,473 | $1,367 | | Net cash used for investing activities | $(523) | $(650) | | Net cash used for financing activities | $(971) | $(666) | - Operating cash flow increased to $1.47 billion for the first six months of 2025. The largest uses of cash were for dividends ($1.15 billion) and debt redemptions ($700 million)[23] Notes to Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, including significant events like the Fiber Business sale and segment reporting - On March 13, 2025, the company signed a definitive agreement to sell its Fiber Business for $8.5 billion in cash proceeds to Zayo Group and EQT. The transaction is expected to close in the first half of 2026[32][44] - Due to the pending sale, the Fiber Business is presented as discontinued operations. A loss from disposal of $1.1 billion was recognized for the six months ended June 30, 2025[33][44] - Following the reclassification, the company has one reportable segment consisting of its towers operations, which includes approximately 40,000 towers[38][79][80] Future Contracted Revenue (as of June 30, 2025, in millions) | Period | Contracted Amounts (in millions) | | :--- | :--- | | Six Months Ending Dec 31, 2025 | $1,981 | | Year 2026 | $3,981 | | Year 2027 | $4,054 | | Year 2028 | $3,931 | | Year 2029 | $3,231 | | Thereafter | $11,594 | | Total | $28,772 | - Total debt and other obligations stood at $24.29 billion as of June 30, 2025. In May 2025, the company repaid the $700 million Tower Revenue Notes, Series 2015-2[62][67] - The company declared dividends of $1.565 per share for Q1 2025 and $1.063 per share for Q2 2025[76] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section details the company's financial performance, strategic direction, and liquidity, focusing on the impact of the Fiber Business sale and the performance of the remaining towers segment General Overview This section provides a general overview of the company's core business, strategic focus, and the reclassification of the Fiber Business as discontinued operations - The company's core business is owning, operating, and leasing approximately 40,000 towers in the U.S. Site rental revenues constitute 95% of consolidated net revenues for Q2 2025[96][101] - A definitive agreement was signed on March 13, 2025, to sell the Fiber Business for $8.5 billion. Consequently, this business is now reported as discontinued operations[98][99] - The company's strategy focuses on growing cash flows from existing towers, returning cash to stockholders through dividends and share repurchases, and investing capital efficiently[102] - As of June 30, 2025, the company has approximately $28.8 billion of expected future cash inflows from tenant contracts, with a weighted-average remaining term of about six years[107] Results of Operations This section analyzes the company's operational performance, including revenue trends, expense changes, and the impact of discontinued operations on net income Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Site rental revenues | $1,008 | $1,064 | $(56) | -5% | | Net income (loss) | $291 | $251 | $40 | 16% | | Adjusted EBITDA | $705 | $727 | $(22) | -3% | - The 5% decrease in Q2 site rental revenues was primarily driven by higher tower non-renewals, including $51 million related to Sprint Cancellations, and a decrease in prepaid rent amortization[115][117][118] - Selling, general and administrative (SG&A) expenses decreased by 27% in Q2 2025 compared to Q2 2024, mainly due to the absence of advisory fees from a 2024 proxy contest and cost savings from restructuring[120] - For the first six months of 2025, the company reported a net loss of $173 million, compared to a net income of $562 million in the prior year, due to a $1.1 billion loss on the disposal of the Fiber Business[130][143][144] Liquidity and Capital Resources This section discusses the company's liquidity position, cash flow generation, capital expenditures, and plans for the proceeds from the Fiber Business sale Liquidity Position (as of June 30, 2025, in millions) | Item | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $260 | | Undrawn 2016 Revolver availability | $6,560 | | Total Debt and other obligations | $24,290 | - Net cash provided by operating activities for the first six months of 2025 was $1.5 billion, an 8% increase from the same period in 2024[153][154] - Total capital expenditures for continuing operations were $80 million for the first six months of 2025, down from $86 million in the prior year period. Sustaining capital expenditures were minimal at $13 million[157] - Upon closing the Fiber Business sale, the company expects to use proceeds to repay debt and fund share repurchases[152] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures like Adjusted EBITDA and their reconciliation to GAAP measures - The company uses non-GAAP measures like Adjusted EBITDA, Adjusted Site Rental Gross Margin, and Adjusted Services and Other Gross Margin to evaluate financial performance[170][175] Adjusted EBITDA Reconciliation Summary (in millions) | Period | Net Income (Loss) | Adjusted EBITDA | | :--- | :--- | :--- | | Q2 2025 | $291 | $705 | | Q2 2024 | $251 | $727 | | 6 Months 2025 | $(173) | $1,428 | | 6 Months 2024 | $562 | $1,481 | - Management uses Adjusted EBITDA for resource allocation, performance assessment, incentive compensation calculations, and in presentations to the board of directors[172] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details the company's exposure to market risks, primarily interest rate risk on its floating-rate debt, and the potential impact of interest rate changes - The primary market risk is interest rate risk on the company's floating rate debt and potential future borrowings[181] - As of June 30, 2025, the company had $3.4 billion of floating rate debt, representing approximately 14% of its total debt[185] - A hypothetical 0.25% increase in market interest rates would increase the company's interest expense by approximately $8 million over a 12-month period[183] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[190] - No material changes were made to the company's internal control over financial reporting during the second quarter of 2025[191] PART II—OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, and exhibits filed with the report ITEM 1. LEGAL PROCEEDINGS This section refers to the notes to financial statements for details on legal proceedings, which management believes will not materially affect the company's financial position - For information on legal proceedings, the report refers to Note 9 of the condensed consolidated financial statements[193] - Management believes that the resolution of current legal matters will not have a material adverse effect on the company's financial condition[75] ITEM 1A. RISK FACTORS This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There are no material changes to the risk factors discussed in the 2024 Form 10-K[194] ITEM 5. OTHER INFORMATION This section indicates that no other information is reported under this item for the period - No information was reported under this item[195] ITEM 6. EXHIBITS This section provides an index of the exhibits filed with the Form 10-Q, including the Stock Purchase Agreement for the Fiber Business sale, corporate governance documents, and certifications - The exhibit index lists documents filed with the report, including the Stock Purchase Agreement dated March 13, 2025, and Sarbanes-Oxley certifications[197]