Castle International Corp. (NYSE: CCI) ("Crown Castle") reported results for the first quarter ended March 31, 2022 and increased its full year 2022 outlook, as reflected in the table below.
"We are seeing the benefit of a robust 5G leasing environment that contributed to the 9% AFFO per share growth we delivered in the first quarter and led to an increase in our operating expectations for the full year 2022," stated Jay Brown, Crown Castle’s Chief Executive Officer. "Consistent with the last couple of decades, it is clear to us that the U.S. represents the highest growth and lowest risk market in the world for communications infrastructure ownership. We believe our comprehensive offering of 40,000 towers, 115,000 small cells on air or under contract and 80,000 route miles of fiber provides shareholders with the largest exposure to the development of next-generation wireless networks in the best market to own shared network infrastructure. We expect the deployment of 5G in the U.S. to extend our opportunity to create long-term value for our shareholders while delivering dividend per share growth of 7% to 8% per year."
"After experiencing the highest level of tower application activity in our history last year, we expect elevated levels of tower leasing to continue this year and believe we will once again lead the U.S. tower industry with 6% organic tower revenue growth. At the same time, I believe 2022 will be an important transition year for our small cells and fiber business. Our team is focused on scaling our small cell deployment capabilities so we can accelerate from what we expect to be approximately 5,000 small cell nodes installed this year to more than 10,000 per year starting in 2023 as we deliver on our record backlog of more than 60,000 small cell nodes."
Site rental revenues. Site rental revenues grew 15%, or $207 million, from first quarter 2021 to first quarter 2022, inclusive of approximately $75 million in Organic Contribution to Site Rental Billings (see "Outlook" below for a definition of site rental billings) and a $126 million increase in straight-lined revenues. The $75 million in Organic Contribution to Site Rental Billings represents approximately 6.0% growth, comprised of approximately 9.4% growth from core leasing activity and contracted tenant escalations, net of approximately 3.4% from tenant non-renewals. First quarter 2022 site rental revenues benefited by approximately $15 million from items not expected to recur in 2022.
Income from continuing operations. Income from continuing operations for the first quarter 2022 was $421 million compared to $121 million for the first quarter 2021 and was predominantly impacted by the increase in site rental revenues as well as a reduction in losses on retirement of long-term obligations of $117 million.
Adjusted EBITDA. First quarter 2022 Adjusted EBITDA was $1.1 billion compared to $897 million for the first quarter 2021.
AFFO and AFFO per share. First quarter 2022 AFFO was $812 million, representing 10% growth from first quarter 2021. AFFO per share for first quarter 2022 was $1.87, representing 9% growth when compared to first quarter 2021.
Capital expenditures. Capital expenditures during the quarter were $281 million, comprised of $21 million of sustaining capital expenditures and $260 million of discretionary capital expenditures. Discretionary capital expenditures during the quarter primarily included approximately $209 million attributable to Fiber and approximately $45 million attributable to Towers.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $650 million in the aggregate, or $1.47 per common share, an increase of approximately 11% on a per share basis compared to the same period a year ago.
Financing activities. In March, Crown Castle issued $750 million in aggregate principal amount of senior unsecured notes with a five-year maturity and a coupon of 2.9%. Net proceeds from the senior notes offering were used to repay a portion of the outstanding indebtedness under Crown Castle's commercial paper program and related fees and expenses. Also in March, Crown Castle repaid in full the previously outstanding 3.720% Senior Secured Tower Revenue Notes, Series 2018-1, Class C-2023 and the previously outstanding 3.849% Secured Notes due 2023.
"We are experiencing strong leasing activity across our portfolio of towers as our customers upgrade and densify their networks as they roll out 5G, resulting in strong first quarter results and our increased expectations for the full year," stated Dan Schlanger, Crown Castle’s Chief Financial Officer. "We have also continued to strengthen our balance sheet to pursue investment opportunities consistent with our strategy that we believe will add to long-term dividend per share growth while navigating an increasing interest rate environment. We finished the quarter with a weighted average debt maturity of approximately 9 years, a weighted average interest rate of 3% and 85% of our outstanding debt being fixed rate. We believe our U.S. focused strategy offering towers, small cells and fiber, combined with our solid financial position, provide unique exposure to the most attractive wireless market fundamentals and support our ability to deliver attractive risk-adjusted returns through a compelling combination of dividends and growth."
The increase to the midpoint of the full year 2022 Outlook for site rental revenues and Adjusted EBITDA reflects an increase in expected Tower activity resulting in an additional $40 million in straight-lined revenues and $20 million in additional contribution from our services business.
The full year 2022 Outlook for AFFO is unchanged, reflecting a $20 million increase to the expected full year interest expense resulting from higher interest rates.