Executives
Fiona McKone - Vice President, Finance
Jay Brown - Chief Financial Officer, Senior Vice President
W. Benjamin Moreland - President, Chief Executive Officer, Director
John P. Kelly - Executive Vice Chairman of the Board
Analysts
Richard Prentiss - Raymond James
Jason Armstrong - Goldman Sachs
David Barden - Banc of America Securities
Simon Flannery - Analyst
Michael Rollins - Citigroup
Bret Feldman - Analyst
Analyst for Jonathan Shetalcro - Analyst
Brad Quartz - Analyst
Presentation
Operator
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Crown Castle International Corp. second quarter 2008 earnings conference. (Operator Instructions) I would now like to turn the conference over to Miss Fiona McKone, VP of Finance. Please go ahead, Madam.
Fiona McKone
Thank you. Good morning, everyone and thank you for joining us as we review our second quarter 2008 results. With me on the call this morning are Ben Moreland, Crown Castle's CEO; Jay Brown, Crown Castle's CFO; and John Kelly, Crown Castle's Executive Vice Chairman.
This conference call will contain forward-looking statements and information based on management’s current expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove to have been correct.
Such forward-looking statements are subject to certain risks, uncertainties, and assumptions. Information about the potential factors that could affect the company’s financial results are available in the press release and in the risk factors sections of the company’s filings with the SEC.
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.
In addition, today’s call includes discussion of certain non-GAAP financial measures, including adjusted EBITDA, recurring cash flow, and recurring cash flow per share. Tables reconciling such non-GAAP financial measures are available under the investors section of the company’s website at crowncastle.com.
With that, I will turn the call over to Jay.
Jay Brown
Thanks, Fiona and good morning, everyone. As you’ve seen in the press release, we reported another excellent quarter of results. During the second quarter, we generated revenues of $379.5 million. Site rental revenue increased $26.2 million to $348.5 million, or up approximately 8% from the second quarter 2007, in line with our target. Substantially all of this growth was achieved organically across the assets that we owned as of the second quarter 2007.
Service revenue was $31 million, up approximately 50% from the same period last year. Gross margin was site revenue rental defined as tower revenues less the cost of operations was $234.8 million, an increase of $24.6 million, or up 12% from $210 million for the second quarter 2007.
Adjusted EBITDA for the second quarter 2008 was $213 million, an increase of $26.6 million, or up 14% from the second quarter 2007, ahead of our expectation. As a result of diligently managing our direct tower expenses in G&A, in the second quarter we were able to convert 100% of our year-over-year growth in site rental revenue into adjusted EBITDA.
Recurring cash flow defined as adjusted EBITDA less interest expense, less sustaining capital expenditures increased 31% to $119.2 million from $90.9 million in the second quarter 2007.
We significantly exceeded our targeted annual growth rate of 20% to 25% growth in recurring cash flow per share by achieving 34% growth from the second quarter of 2007. Our continued strategy of investing cash to maximize long-term cash flow per share, coupled with the strong operating performance of our towers has enabled us to deliver results above our target. I believe our operating results demonstrate our ability to consistently growth revenues and cash flow even in challenging economic times.
During the quarter, capital expenditures were $140.7 million. Sustaining capital expenditures totaled approximately $5 million. Revenue generating capital expenditures were $135.7 million. This was comprised of $73.5 million for land purchases, $18.4 million of CapEx for revenue enhancing activities on existing sites, and $43.8 million on the acquisition and construction of new sites.
Turning to the balance sheet as of June 30, 2008, at quarter end we had approximately $98.8 million of cash, excluding restricted cash. Total debt to adjusted EBITDA as of June 30, 2008 was 7.2 times, and interest coverage, or adjusted EBITDA to interest expense was 2.4 times. Securitized tower revenue notes totaled $5.3 billion and other debt totaled approximately $856 million, for total debt at the end of the quarter of $6.1 billion. The other debt was comprised of $792 million under our corporate credit facility, and $63.7 million of our 4% convertible notes. We also had $314.3 million of our 6.25 convertible preferred stock outstanding as of June 30, 2008. Lastly, we had $100 million of availability under our revolving credit facility
No comments:
Post a Comment