The paragraph is an introduction to the Q1 2025 Crown Castle Earnings Conference Call. The operator explains the call format and introduces Kris Hinson, Vice President of Corporate Finance and Treasurer, who acknowledges the audience and states the participants on the call. He notes that supplemental materials are available on the company's website and that the call will contain forward-looking statements with associated risks. Non-GAAP financial measures will also be discussed, with reconciliations available online. Kris then hands the call over to Dan Schlanger, Interim President and CEO, who expresses gratitude to the Board for their confidence in him during the interim period as they search for a new CEO.

The speaker is enthusiastic about transforming their company into a dedicated US tower business by selling their Fiber segment. Their priorities include successfully closing the sale of their small cell and fiber solutions segments, achieving financial goals for 2025, and maximizing shareholder value. Early strong quarterly results and progress toward their 2026 sale goal bolster their confidence. They believe they have a unique value creation opportunity as the sole publicly traded US-focused tower company, benefiting from increased US mobile data demand and investment linked to 5G deployment. This historical growth in tower demand is expected to continue, supporting the company's positive outlook.

Over the past two decades, the US tower business has shown resilience, with consistent cash site rental revenue growth despite economic fluctuations, like recessions and varying treasury yields. The company plans to leverage being a pure-play tower company to enhance customer service, operational excellence, and profitability, thereby promoting top and bottom line growth. Their capital allocation strategy balances shareholder returns with maintaining financial flexibility, largely due to the significant cash flows generated by the business. They intend to pay a quarterly dividend constituting about 75-80% of anticipated AFFO, excluding prepaid rent amortization, with the board planning to reduce the annualized dividend per share to $4.25 by the second quarter of 2025. Post-sale transaction, they expect annual capital expenditures net of prepaid rent to range from $150 million to $250 million.

The paragraph outlines Crown Castle's capital expenditure plans, which include modifying towers, purchasing land, and investing in technology to boost profitability. The company plans a $3 billion share repurchase program aligning with the sale of its fiber solutions and small cell businesses. Crown Castle aims to use approximately $6 billion from the sale proceeds to repay debt, maintaining an investment-grade credit rating, and positioning itself as a pure-play tower company by 2026. They are focused on strong operational improvements and shareholder returns, highlighted by good first-quarter results and confidence in their 2025 outlook. The paragraph concludes by welcoming Sunit Patel as the new Chief Financial Officer, who has already made significant contributions.

The paragraph discusses Crown Castle's current focus on closing the sale of its fiber business and positioning its tower business to maximize shareholder value. The fiber segment's results are reported as discontinued operations, and the full year 2025 outlook and first quarter results exclude its contributions. Financing expenses are included in continuing operations, and SG&A has been allocated between continuing and discontinued operations, though these allocations may not accurately reflect future expenses. Adjusted EBITDA, AFFO, and AFFO per share may not represent expected performance after the sale. The first quarter showed a strong start, with a 5.1% tower organic growth in site rental revenues, excluding the impact of Sprint cancellations.

The paragraph discusses the company's financial performance and outlook. Growth benefited from a $3 million non-recurring contribution from intercompany billings. Site rental revenues included $19 million of straight-lined revenues, expected to turn negative by 2025. Adjusted EBITDA and AFFO were positively impacted by reduced repair costs due to timing and seasonality. There was also a slight decrease in interest expenses from lower short-term borrowing rates. The full-year outlook remains unchanged, with expected organic growth of 4.5%, adjusted EBITDA of $2.8 billion, and AFFO of $1.8 billion. Free cash flow from discontinued operations is expected to reach $250 million in 2025. The company generated $53 million in free cash flow in the first quarter, or $75 million excluding a working capital increase. Looking forward, expected annual AFFO is between $2.3 billion and $2.4 billion. The company remains in a strong financial position with significant liquidity and aims to maintain its investment-grade rating after selling its fiber business.

The paragraph is from an earnings call discussing the company's recent performance and future strategy. The company ended the quarter with a strong financial position, including a significant amount of fixed-rate debt and availability under their credit facility, while maintaining their discretionary capital expenditure outlook. They are focused on separating their fiber business and maximizing shareholder value for their tower business, which is concentrated solely in the U.S. The company's leadership faced some changes, with Dan moving into the Acting CEO position and Sunit's hiring. The questioner, Jonathan Atkin, seeks details on these leadership changes and the company's strategy for growth and capital returns. Daniel Schlanger responds by referring back to a press release for specifics on the leadership change and expresses his enthusiasm for the company's future.

The speaker expresses confidence in a strategy focused on creating long-term value for shareholders through the separation of their fiber and small cell businesses. They emphasize the importance of completing this separation efficiently, leveraging the experience of a colleague, Sunit, in the process. The speaker suggests this focus on the U.S. tower market simplifies their business narrative and will help grow revenues and reduce costs. While they will not pursue major mergers and acquisitions in the short term due to this focus, they are interested in "build to suit" opportunities if returns are favorable and are keen on investing organically in their tower business. The paragraph ends with a transition to a question from Ric Prentiss from Raymond James, who also welcomes Sunit.

The paragraph is a conversation involving Sunit Patel and Daniel Schlanger, discussing Patel's transition from a board member to CFO at Crown. Patel is enthusiastic about Crown's focus on the tower business, emphasizing the potential for automation, system improvements, and enhanced customer experience. Daniel Schlanger discusses the timeline for a transaction, clarifying that while not difficult, it requires regulatory approvals from various states and the federal government, which is a time-consuming process expected to complete in the first half of 2026.

The paragraph discusses the company's efforts to work closely with counterparties and governmental agencies to expedite a deal. The speaker mentions their progress in separating businesses to meet buyer requirements, specifically working well with Zayo and EQT. Ric Prentiss notes the success of the first quarter and asks about future lease activity and the possibility of adjusting guidance. Daniel Schlanger responds, indicating that business activity levels are expected to remain consistent between 2024 and 2025, with no significant changes anticipated in new leasing numbers compared to previous quarters.

The paragraph discusses the company's optimism about its financial performance for 2025, particularly in terms of leasing activity and organic growth. While the first quarter exceeded expectations, the company remains cautious and maintains its initial guidance of $105 million to $115 million in leasing and 4.5% growth. The company expresses satisfaction with its cost management efforts, which have been a focus in recent years, leading to a reduction in personnel and overall cost control. They are hopeful these measures will continue to positively impact their numbers throughout 2025 but note that it's still early to be certain about the year's outcomes.

In the paragraph, Michael Rollins from Citi asks about the balance of activities between colocations (colo) and amendments, and any changes in carrier discussions. Daniel Schlanger responds that there hasn't been a significant shift between colocation and amendment activities; both have seen increased levels of activity from 2023 to 2025. Conversations with carrier customers remain positive, with carriers focused on network quality due to competitive pressures, which can be beneficial for tower companies. However, predicting when increased activities related to these pressures will occur is challenging. Rollins also asks about handling churn from the Sprint merger starting in 2026, but Schlanger's response focuses more on recent activities and carrier dynamics.

The paragraph discusses a company's perspective on competitive pressure and customer interactions related to network quality. The firm acknowledges challenges, particularly with Sprint churn, but sees its overall churn rate remaining within a normal range of 1% to 2%. The focus is on improving churn management while maintaining business stability. Additionally, a question is raised about the board's criteria for choosing a CEO, highlighting possible changes in priorities given a more streamlined company compared to 18 months ago.

The paragraph consists of a discussion between company representatives during an earnings call. They emphasize the need for a leader with the ability to drive the company forward as a tower-only entity, focusing on reducing costs, improving customer experience, and increasing revenue. The leader should have public company experience, align with the strategy of being a US tower-focused company, and be able to manage the capital allocation framework that includes dividends, share repurchases, maintaining investment-grade debt, and investing in growth. Additionally, Sunit Patel, the new CFO, is asked about his strategic priorities, specifically regarding leverage reductions and stock buybacks, and is also questioned about the demand in the services side of the business.

The key focus for the company this year is completing a separation and transaction, while positioning itself as a US tower-only entity. This involves operational, system, and platform adjustments, as well as defining the optimal cost structure and customer improvements. For financial strategy, the company aims to maintain an investment-grade status, reduce debt, and return capital to shareholders via buybacks and dividends, while also allowing room for growth investments. Additionally, there is high demand in their services business, despite exiting the construction services sector, with ongoing positive activity in both services and leasing.

In the paragraph, Alexander Waters transitions the discussion to Benjamin Swinburne from Morgan Stanley, who asks about the expense management and margin performance of the business. Benjamin is interested in understanding the strong Q1 EBITDA margin and how expenses will be phased throughout the year, questioning whether steady revenue will impact EBITDA. He also inquires about any tax implications of an upcoming fiber and small cell sale. Daniel Schlanger responds that there are no tax implications from the sale, and the strong Q1 margins were partly due to seasonality and timing of expenses, which are expected to occur later in the year. They are also focused on cost control efforts.

The paragraph discusses a company's efforts to maintain a lower cost structure moving forward, although they aren't entirely confident yet in declaring it sustainable. It mentions the impact of straight-lining on their finances, noting it will turn negative by year's end, affecting EBITDA. This complexity suggests that early-year data isn't fully indicative of the full year's performance. Benjamin Swinburne acknowledges this explanation. Nicholas Del Deo then congratulates Dan and Sunit on their new appointments and inquires about ongoing operational improvement projects initiated previously under Steven. Daniel Schlanger confirms that these projects are still progressing and are not awaiting review by a new CEO, as they believe these improvements are necessary for their tower business.

The paragraph discusses the company's ongoing efforts to improve operations before a new CEO assumes leadership. They are focused on automating processes, upgrading systems, and digitizing assets to enhance efficiency and customer experience. The aim is to have these improvements made quickly, ideally before the new CEO starts, to benefit everyone involved. The company is narrowing its focus to tower operations to improve further. Nicholas Del Deo and Daniel Schlanger engage in a brief exchange before addressing a question from Richard Choe of JPMorgan. Choe inquires about core new leasing activity and backlog. Schlanger states the activity level is consistent across various carriers, without specifying details on business backlog, as it's not something they typically discuss.

In the paragraph, Batya Levi from UBS poses questions regarding the allocation of SG&A (Selling, General, and Administrative) expenses between business segments, specifically in relation to the tower business. She inquires if there is a specific percentage for allocating SG&A back to the tower business and how cost savings might influence the annual AFFO (Adjusted Funds From Operations) growth range of $250 million to $370 million. Additionally, she asks whether the regulatory approval process will review both small cell and fiber businesses simultaneously. Daniel Schlanger responds, explaining that SG&A is allocated following accounting rules, with costs directly related to fiber solutions and small cell business going to discontinued operations, while shared costs remain with the tower business and Crown Castle's operations.

The paragraph discusses the anticipated cost structure for a tower-only company after a deal is expected to close around mid-2026. It explains that the company's current cost structure is not representative of the future structure and mentions a projected view of the run rate AFFO at the time of the deal's closing to highlight potential benefits from lower costs. It also notes the possibility of refining cost and revenue estimates as the year progresses but cautions against expecting a precise AFFO projection until closer to the deal’s closing. Additionally, it covers the regulatory review process, explaining that the transaction involves selling assets to two different buyers, each requiring a separate regulatory review, but both taking place concurrently. Finally, there is a brief mention of Batya Levi and an operator transitioning to a question from Jonathan Chaplin of New Street Research.

In the paragraph, Jonathan Chaplin asks about the potential cost reductions in SG&A and details regarding the $3 billion share repurchase program following a deal. Daniel Schlanger responds that they cannot currently quantify potential cost reductions or provide specifics on the share repurchase timing, as it depends on various factors. They plan to update on expected financial outcomes as the deal closure approaches. Schlanger emphasizes that they aim to use capital for share repurchases, but the approach will depend on market conditions at the time of the transaction's closing.

In the conversation, Daniel Schlanger discusses the company's goal to maintain an investment grade rating with a target leverage of 6 to 6.5 times EBITDA, emphasizing the stability of the US tower business's cash flow. Brandon Nispel from KeyBanc Capital Markets inquires about tower leasing bookings for the quarter. Schlanger responds that leasing activity is expected to remain consistent, contributing to a 4.5% growth rate. Brendan Lynch from Barclays asks about potential regulatory issues that could affect the deal's closure. The discussions highlight the company's stability and growth expectations in its tower leasing business.

In the paragraph, Daniel Schlanger discusses the anticipated lack of regulatory issues for a transaction expected to close in the first quarter of 2025. He expresses confidence, noting that 90% of their 2025 growth is already contracted, leaving only 10% to achieve, reflecting strong business visibility and optimism. Brendan Lynch asks about the impact of Master Lease Agreements (MLAs) on growth, and Schlanger explains that while growth primarily stems from contracted MLAs, any additional carrier deployments could either fall within existing agreements or be considered incremental, depending on the structure of each MLA.

The paragraph highlights the speakers' confidence in having potential growth beyond existing contracts and stability due to current agreements. It concludes with the end of a Q&A session and the overall conference, thanking attendees for their participation.

This summary was generated with AI and may contain some inaccuracies.