Crown Castle’s AFFO In Excess of Cash Dividends Paid

Image: Crown Castle’s shares look to be bottoming, and the firm’s AFFO is expected to remain well above cash dividends paid during 2024.

By Brian Nelson, CFA

On July 17, Crown Castle (CCI) reported mixed second quarter results in which adjusted funds from operations (AFFO) beat expectations, while revenue came in a bit light. The headline numbers weren’t great. Site rental revenues fell 9% in the second quarter of 2024, while net income dropped 45%. Adjusted EBITDA fell 15%, while AFFO dropped 21% on a per-share basis, to $1.62.

On an organic basis, things looked a bit better. Organic contribution to site rental billings was $63 million, up 4.7% from the same period a year ago after excluding an unfavorable impact from Sprint cancellations. Though net income, adjusted EBITDA, and AFFO faced pressure in the quarter, the company’s AFFO still outpaced what the company paid in dividends during the quarter, $1.565 per common share. Management commentary was positive in the press release:

Having implemented the operational changes announced in June, we delivered second quarter results in line with expectations and remain on track to meet our full year guidance. The business continues to perform well as we focus on delivering for our customers and shareholders. The resilience of our top-line growth is complemented by our strong balance sheet, which is well-positioned to provide stability and flexibility as we continue to evaluate strategic paths forward. We finished the second quarter with 89% fixed rate debt, a weighted average maturity of 7 years, only 8% of our debt maturing through 2025, and approximately $5.5 billion of liquidity under our revolving credit facility. 

Crown Castle reiterated its outlook for 2024 that it issued on June 11. It expects site rental billings of $5.74-$5.78 billion, site rental revenues in the range of $6.317-$6.362 billion, adjusted EBITDA between $4.143-$4.193 billion, and AFFO per share in the range of $6.91-$7.02. Though Crown Castle’s full year performance reveals pressure, the company’s AFFO remains in excess of its annual dividend rate of $6.26, and with a dividend yield of ~5.9%, we think it makes the cut for inclusion to the High Yield Dividend Newsletter portfolio.