Crown Castle Inc (CCI) 2014 Q2 法說會逐字稿

Good day, everyone, and welcome to the Crown Castle International second-quarter 2014 earnings results conference call. Today's call is being recorded.

And I'd now like to turn the conference over to Son Nguyen. Please go ahead, sir.

Thank you, Vicky, and good morning, everyone. Thank you for joining us today as we review our second-quarter 2014 results. With me on the call this morning are Ben Moreland, Crown Castle's Chief Executive Officer; and a Jay Brown, Crown Castle's Chief Financial Officer.

To aid the discussion, we have posted supplemental materials in the Investor section of our website at crowncastle.com, which we will refer to throughout the call this morning.

This conference call will contain forward-looking statements which are subject to certain risks, uncertainties, and assumptions, and actual results may vary materially from those expected. Information about potential factors which could affect our results is available in the press release and the risk factors section of the Company's SEC filings.

Our statements are made as of today, July 24, 2014, and we assume no obligation to update any forward-looking statements. In addition, today's call includes discussions of certain non-GAAP financial measures. These reconciling -- such non-GAAP financial measures are available in the supplemental information package in the Investor section of the Company's website at crowncastle.com.

With that, I'll turn the call over to Jay.

Thanks, Son, and good morning, everyone. We had another great quarter in Q2 2014, exceeding the high end of our previously issued outlook for site rental revenue, adjusted EBITDA, and AFFO. The excellent results achieved during the second quarter allow us to increase our outlook for full-year 2014. During the quarter, we also made significant progress integrating the AT&T Towers, and we expect to substantially complete the integration by the fall of this year.

Turning to slide 3, in the second quarter, site rental revenue grew 21% year-over-year from $617 million to $746 million. Organic site rental revenue, before non-renewals, increased by $50 million, an increase of approximately 9% compared to the same period in 2013. The approximately 9% organic site rental revenue growth is comprised of approximately 4% growth from cash escalations in our customer lease contracts, and approximately 5% growth from new leasing activity.

As a part of the new leasing activity, we are continuing to see very strong demand for our small cell networks. At the end of the second quarter, we had nearly 13,000 small cell nodes on-air or under construction, and over 6000 miles of fiber. In addition, we have executed contracts for over 3500 new small cell nodes to build, and we are at various stages of preconstruction work, including design and permitting. Site rental revenue from our small cell networks is up approximately 26% year-over-year, and small cells generated 6% of consolidated site rental revenues.

For the quarter, non-renewal of tenant leases reaching their contractual term end dates, inclusive of Sprint's iDEN decommissioning, was in line with our expectations of approximately 2% of site rental revenue.

As shown on slide 4, site rental gross margin increased $72 million to $509 million, up 16% from the second quarter of 2013. In Q2, our site rental operating expenses of $237 million came in higher than our previously provided Q2 outlook range by $2 million.

Excluding a non-cash purchase accounting adjustment related to our acquisition of AT&T towers, our site rental operating expenses would've been within our guidance range. This non-cash item doesn't impact adjusted EBITDA or AFFO. For the full year 2014, this non-cash item results in an increase to site rental operating expenses of approximately $3 million, and is reflected in our revised outlook.

Adjusted EBITDA for Q2 increased 19% from the same quarter in 2013. This growth is attributable to the increase in site rental gross margin, inclusive of the AT&T towers and the strong performance from network services, and offset, to a small degree, by increased G&A. Compared to the same quarter last year, site rental gross margin and adjusted EBITDA margin percentages were negatively impacted by the AT&T tower transaction, which have an average tenancy of 1.7 tenants; and, therefore, lower margins when compared to our legacy assets, with approximately 3 tenants per tower.

In addition, site rental gross margin and adjusted EBITDA were impacted by the investment we have made in our people, processes, and assets over the last several quarters, which shows up in our increased run rate of site rental and network services operating expenses, as well as G&A.

This increase in costs is being made to accommodate the high level of leasing activity we are experiencing on both towers and small cells. I would also note that the increase in contribution from network services alone far exceeds the totality of the increase in run rate costs. The increase in costs to manage an expanded portfolio is consistent with our past practice, and our strategy to provide the highest level of customer service in the industry.

To provide some context, in 2007 when we closed the Global Signal acquisition of approximately 11,000 towers, site rental gross margin, post-acquisition, was 64% compared to 70% prior to the acquisition. In a period of two years, margins returned to 70%, reaching 75% within four years. The investment we made in additional staffing during that timeframe positioned us to meaningfully grow our business, as site rental revenues increased from $1.3 billion in 2007 to $1.9 billion over the same four-year period.

In the absence of additional acquisitions, we expect to see our site rental gross margin and adjusted EBITDA margin percentages expand as carriers add equipment to our sites, reflecting the high operating leverage of our business and increasing the yield on our assets.

AFFO for the second quarter was $351 million compared to $273 million for the same period a year ago, an increase of 28%. On a per-share basis, AFFO was up 13%, increasing from $0.93 per share to $1.05 per share.

Moving on to investments and financing activities as shown on slide 5, during the quarter we closed on an 8-year, $850 million senior notes offering with a coupon of 4.875%. Proceeds from the offering were used to refinance $800 million of existing debt that had a weighted average coupon of approximately 6%. Today, our weighted average cost of debt stands at 4.2%, with a weighted average maturity of 6 years. Our total net debt to last-quarter annualized adjusted EBITDA is 5.3 times, and adjusted EBITDA to cash interest expense is 4.3 times.

We expect to continue to delever through growth in adjusted EBITDA with the goal of reducing debt to adjusted EBITDA below 5 times, which we believe should position us for an investment grade credit rating.

During the second quarter, we invested $167 million in capital expenditures. These capital expenditures included $25 million on our land lease purchase program. During the quarter, we extended 389 land leases on our sites by an average of approximately 26 years. This extension activity impacted consolidated, recurring, cash ground lease expense by approximately 10 basis points.

Additionally, we purchased land beneath 125 of our towers during the quarter. Today, approximately one-third of our site rental gross margin is generated from towers on land we own, and approximately 70% on land we own or lease for more than 20 years. Where we have ground leases, the average term remaining on our ground leases is approximately 29 years.

Since we began this important effort, we have completed over 16,000 individual land transactions. Our proactive approach to achieving long-term control of the ground beneath our sites is core to our business as we look to control our largest operating expense.

Of the remaining capital expenditures, we invested $129 million on revenue-generating capital expenditures, consisting of $96 million on existing sites and $33 million on the construction of new sites, primarily small cell construction activity. We also spent approximately $13 million on sustaining CapEx, which was below our second-quarter 2014 outlook. However, we've not adjusted our full-year outlook for sustaining capital expenditures, as we expect to perform the same sustaining CapEx activities within 2014, completing this expected work during the second half of the year.

Further, during the quarter we paid a quarterly common stock dividend of $0.35 per-share, or $117 million in aggregate.

On slide 6, I'd like to spend a minute to discuss the sequential impact to the third quarter of 2014 as it relates to adjusted EBITDA and AFFO. Our Q3 2014 outlook for adjusted EBITDA assumes that network services margin contribution to be similar to Q2 of 2014, which is meaningfully higher than our previous outlook for second half of 2014.

And consistent with my prior comments regarding our investment in people, processes, and assets, we expect to incur higher G&A expenses in Q3 2014 as compared to Q2 2014. In addition to the flowthrough impact from adjusted EBITDA, our Q3 2014 outlook for AFFO also reflects higher anticipated sustaining capital expenditures as compared to Q2, related to the buildout of additional office space, and for the timing reason I previously mentioned.

Turning to 2014 outlook on slide 7, based on our second-quarter results and taking into account the change in our exchange rate assumption for Australia, we have increased full-year 2014 outlook for site rental revenues, adjusted EBITDA, and AFFO by $7 million, $34 million, and $30 million, respectively, at the midpoint.

As shown on slide 8, the midpoint of our 2014 outlook for site rental revenues implies growth of 20% on an as-reported basis, or approximately $491 million compared to full-year 2013. On an organic basis, before non-renewals, our 2014 outlook implies revenue growth of approximately 9% year-over-year at the midpoint. This 9% is comprised of approximately 5% from new leasing activity, and approximately 4% from escalations on existing customer lease contracts.

Further, based on Sprint's stated intention to decommission their iDEN network and our contractual terms with Sprint, we expect approximately 3% of our run rate site rental revenues to be impacted by the iDEN network decommissioning. These iDEN leases have effective term end dates spread throughout 2014 and 2015. As such, we expect our site rental revenues to be impacted by approximately $30 million in 2014, and $60 million to $70 million in 2015.

On an organic basis, net of non-renewals, our 2014 outlook implies revenue growth of approximately 6% year-over-year at the midpoint. Our increased 2014 outlook for adjusted EBITDA implies 17% growth year-over-year, reflecting higher expected contribution from network services, as well as our acquisition of the AT&T towers.

Our team continues to do an outstanding job at executing for our customers. While much of the growth in network services can be attributed to the increase in our asset portfolio over the last several years, our team has captured more of the services opportunities related to our towers by working closely with our carrier customers. With the demand for wireless infrastructure expected to continue, we believe that the contribution from network services should be sustainable for some time.

Moving on to AFFO on slide 9, our increased outlook for full-year 2014 reflects the increase in our outlook for adjusted EBITDA, offset somewhat by higher sustaining capital expenditures. At the midpoint, AFFO of $1.38 billion for 2014 implies per-share growth of 13% over full-year 2013. Based on our 2014 outlook, we expect to generate approximately $1.6 billion between AFFO and net prepaid rent.

Approximately 30% of this $1.6 billion is allocated to dividends. Another 40% is allocated to planned but discretionary capital expenditures, such as land purchases, construction of towers, and small cells, and other capital expenditures associated with additional leasing activity. The remaining 30% is available to pursue share purchases and acquisitions, in addition to increasing the amount we plan to spend on revenue-generating capital expenditures.

As we've discussed previously, over the next five years we expect to increase our dividend per share by at least 15% annually. We currently have a net operating loss balance, or NOL, of approximately $2 billion, which we would expect to utilize prior to 2020. We expect that once the NOLs are exhausted, our dividend payout as a percentage of AFFO will increase from the approximately 30% today to something in the area of 70% to 80%, which implies a compound annual growth rate of our dividend in excess of 20% over this period of time.

Currently, we are utilizing the flexibility afforded by the NOLs to make accretive, long-term, discretionary investments. These discretionary investments may include acquisitions; the construction of new sites, including small cell networks; land purchases; and the purchase of our own security. When considering these investments, we evaluate each opportunity based on our goal of maximizing our long-term dividend and AFFO per share.

This strategy is not new. Over a very long period of time, our approach to capital allocation, combined with strong execution, has driven significant growth in the AFFO per share.

So, in summary, we had a great second quarter, and I believe that our capital allocation strategy will enhance our long-term growth of AFFO per share and dividends.

And with that, I will turn the call over to Ben.

Thanks, Jay, and thanks to all of you for joining us on the call this morning. As Jay just discussed, the second quarter was another excellent quarter, positioning us once again to raise our full-year outlook.

As shown on slide 10, we are continuing our track record of consistent execution over a long period of time. Through strong execution and disciplined capital allocation, we have delivered strong AFFO per-share growth, growing AFFO per share at a compound annual growth rate of 17% since 2007.

Importantly, this growth transcended the financial crisis of 2008 and 2009, and continues today, while we have taken decisive steps to position ourselves as the US market leader, with unmatched scale and capabilities. Today, we have new opportunities in small cells and tower leasing, unforeseen just a few years ago. And we created this future runway of growth without materially altering the risk profile of the Company.

For the full year of 2014, our midpoint of our outlook suggests AFFO per share growth of 13% compared to 2013, plus the dividends we initiated this year. We are committed to extending this track record of growth over the long term, and we believe that the growth in the AFFO per share and dividends will deliver attractive, long-term total shareholder returns.

Quite frankly, the degree to which we accomplish this goal over the long term is heavily dependent on our ability to increase tenants on the approximately $9 billion in investments we have made over the last few years, with the T-Mobile tower and AT&T tower transactions and the NextG small cell acquisition.

In many ways, our approach to capital allocation is a reflection of our corporate strategy: we think long-term. We've invested deeply in the US, as we believe the US market offers the most compelling risk-adjusted returns. Simply, our goal with capital allocation is to maximize our long-term dividend paying capacity from growth and AFFO per share. We believe that this goal dovetails nicely with our recent commencement of operations as a REIT.

Going one step further, in assessing our long-term dividend-paying capacity, we take into consideration many aspects, including the quality of our underlying cash flows, our long-term growth potential, and the risks associated with our business.

When evaluating potential discretionary investments, we seek to maximize AFFO per share relative to comparable investments, such as share repurchases. Since 2003 we have invested $2.9 billion in share purchases, buying back over 100 million shares or share equivalents, at an average price of approximately $28 per share. As such, we view our investment hurdle rate as the long-term total shareholder return we would expect from purchasing our shares, as measured by the growth in dividend and AFFO over that same period of time.

Further, when it comes to various alternative investments, whether they are domestic or international assets, or small cells or macro towers, we adjust the comparative returns to take into account any perceived differences in the underlying risk of the investment. Adjustments are made to account for such things as currency and political risks, differences in business fundamentals, and available financing sources. For the T-Mobile and AT&T transactions, our investment thesis is that we should be able to replicate the performance of our legacy assets with these newly acquired assets over time.

As shown on slide 11, we believe the T-Mobile and AT&T tower assets, with an average tenancy of 1.6 and 1.7 tenants, respectively, provide an opportunity to enhance our long-term AFFO per-share growth by adding tenants. Tower assets that we've owned and operated for more than 10 years have approximately 3 tenants per tower today, and an excess of $90,000 in revenues per tower; and currently yield 15% on total invested capital, representing significant shareholder value creation when compared to the initial yield at the time of purchase of approximately 4% to 5%, similar to the T-Mobile and AT&T transactions.

With our history of acquiring and operating carrier portfolios, we believe that these new assets will perform and achieve yields similar to our legacy assets. Further, as Jay stated, we are currently investing in our people, processes, and assets to position us, over the long-term, to realize the lease up potential on these new towers which have significant available capacity.

These assets are well located, as we've stated before, with a significant concentration in the top 100 markets where the majority of carrier spending occurs.

And, most importantly, our investments were made based on our view that there will be continued and significant wireless network investment over the next decade to support the services that we have all come to depend on. We believe the case for continuing investment in wireless infrastructure in the US is very compelling for the wireless carriers.

As shown on slide 12, the US market, with $189 billion in wireless service revenue, is supporting $34 billion in capital investments on behalf of the carriers, is uniquely attractive due to its relative size and robustness compared to other markets. Increasingly, there is a high correlation between network investment and customer satisfaction, leading carriers to continue to upgrade their wireless networks to improve network quality, increase capacity, and add functionality in order to remain competitive and grow.

This virtuous cycle was reinforced just this week, as Verizon indicated on their earnings call their continuing commitment to network investment, with wireless CapEx expected to be up significantly year-over-year. They are not alone in this pursuit, as Sprint, AT&T, and T-Mobile are each aggressively investing in LTE upgrades, adding capacity and broadband speed. And our portfolio of sites and capabilities are fully engaged at this point, helping them pursue this endeavor.

Further, as can be seen on slide 12, there is also a high correlation between unit economics and carrier capital investment. With strong unit economics of $50-plus per subscriber per month, or $600 annually, US carriers are able to generate positive incremental returns on their capital investment on a scale that dwarfs other geographies. The relatively high ARPU is supported by the staggering growth in mobile data consumption by US subscribers.

In CTIA's latest report, during 2013, mobile data consumption was estimated to have more than doubled when compared to 2012. Moreover, consumers are increasingly becoming more reliant on mobile in their everyday lives.

According to CDC's National Center for Health Statistics, at the end of last year approximately 41% of US households relied solely on wireless phones. CTIA reports that this number jumps to over 55% when including households that have, but do not rely on, wireline services. The average US consumer spends more than 50% of his or her Internet time on mobile devices currently. In fact, according to Pew Research, 34% of mobile US subscribers use their mobile devices as their primary device to access the Internet.

Today it seems as though almost every aspect of our lives have gone mobile -- mobile retail, mobile banking, mobile health, and mobile security, streaming entertainment, cloud computing, and connected devices are all driving increased network usage. With these new applications and the introduction of the adoption of data intensive mobile devices, Cisco projects that mobile data traffic, even after accounting for Wi-Fi offloading, will grow at a compound annual growth rate of 50%, or an eight-fold increase over the next five years.

To meet the growing demand by consumers and drive incremental returns as the pie gets larger, we believe US carriers will continue to find it attractive to invest in their networks. And as carriers continue to invest, consumers and businesses have quickly absorbed the network capacity added by the carriers, leading to a reinforcing cycle of investment by the carriers, and increased usage by the end consumer. This recurring cycle of investment has led to continuous network improvements, giving us confidence that we will benefit from a long runway of sustained, organic revenue growth.

Before wrapping up, I'd like to spend a minute on our small cell activity. More and more, carriers are turning to small cells to address capacity and coverage issues that cannot be solved by macro tower sites alone. As a result, we are seeing activity on the small cells front from all four major wireless carriers. As Jay mentioned, year-over-year site revenues from small cells is up 26%, with a robust pipeline in front of us.

To date, our yield on invested capital for small cells is already in excess of 6%, including the $1 billion investment we made in the NextG acquisition, which was acquired with an initial yield of approximately 4%.

Due to the high operating leverage and significant demand, we expect that the lease up for small cells will continue to drive meaningful increases in yield. We believe the runway of opportunities in small cells is very similar to what we saw in towers back in the early 2000s.

As the largest provider of small cells, with over 13,000 nodes and over 6,000 miles of fiber feeding them, our scale and expertise position us to capitalize on this growing opportunity, and we expect to continue to make investments in this area.

To wrap up, our investments over the last few years have expanded our portfolio to nearly 40,000 towers and over 13,000 nodes, positioning us as the US market leader in shared wireless infrastructure. I'm very pleased with the progress we've made on the integration of the AT&T towers, while handling very high levels of activity in the business on all fronts. We are keenly focused on delivering for our carrier customers, and extending our track record of growth in AFFO per share for many years to come.

With that, operator, I would like to turn the call over for questions.

(Operator Instructions). Simon Flannery, Morgan Stanley.

Ben, nice overview. Thank you. I wonder if you can square some of the headlines we're hearing about spending freezes at the carriers, and other issues out of the equipment providers. You've had strong services businesses. You've got a good outlook for the second half of the year. So what are you actually seeing in the field? Are you seeing any signs of this? Because, clearly, there is a little bit of a disconnect that people are trying to get their heads around.

And on the services, I think you talked about it being strong into Q3. Can you just give us a little bit of a longer-term outlook? Is this something, as we go into 2015, you see these levels being maintained as well? Thanks.

Sure, Simon. First of all, on the capital spending side with the carriers, we're seeing a lot of activity. And I believe that AT&T addressed this on their call. Any slowdown or deferment in the second half of the year that AT&T may be pursuing is completely immaterial to what we're seeing. And we have a tremendous amount of activity going on, frankly, with all four wireless carriers.

And application volume, if you include new site installations as well as amendments for us, year-to-date are up materially from last year. Now, we do have a larger portfolio, I would acknowledge, but we got a lot going on, on that front. And as evidenced by 9% organic revenue growth in our outlook is -- that's moving. That's a lot of work going on. So we are thrilled with what we see happening by all four carriers as they're working on LTE.

Your second question around services is one we continue to spend a lot of time on as a management team. Our group out there in the field -- and many of them are listening -- continue to amaze, and are doing a fantastic job of capturing the opportunities in serving our customers in the field and assisting them on getting on our sites. And the scope of that work has increased over time.

A lot of it has increased because the size of the portfolio has increased. But we are increasingly becoming confident that there is certainly a run rate of opportunity out there in this business. And we've gone back and looked at it since 2007, 2008, and 2009, where we've come to add capability, and there's always a lot of stuff going on in our sites, which is a recurring opportunity for us.

So, you saw us raise guidance for the second half of the year, such that it's going to look a lot like the first half of the year. And as we look out into 2015 -- I'm not going to give you guidance yet on 2015 -- but we're pretty confident that that level of activity is going to be there for quite some time.

Great, thank you.

David Barden, Bank of America.

I think that the confusion a little bit around the quarter, in looking at the third quarter outlook, Jay, is just trying to square the 9% organic revenue growth with site rental gross margin guidance that suggests we might have another sequential downtick in the business. And obviously the implied full-year guidance says we're going to tick back up in the fourth quarter.

But if you could help us waterfall the moving parts, so we can see what's growing in the business, and then where the headwinds are in a more granular form, down to the site rental gross margin level, that would be super-helpful.

And then I guess the second question I would have is relative to the full-year 2014 AFFO, 13% growth outlook. How much of that, year-over-year, is coming from the AT&T portfolio acquisition? Thanks.

Sure. On your first question, the movements quarter to quarter, and the way we moved the outlook I think for the balance of the year, we're certainly benefiting in terms of the outlook from FX. And we've slightly raised our expectation for FX based on actual levels that we saw during the second quarter. So that's the majority of the reason why we raised site rental revenues.

The flow-through of that -- I made several comments which are really driving that, too. One is that we had a purchased -- a non-cash purchase adjustment related to our AT&T acquisition. That flows through those site rental gross margin numbers. Once we get down to EBITDA, we adjust that non-cash item out, both at an adjusted EBITDA and AFFO. So that's a part of the consideration.

And then the second part of the consideration, which was planned when we did the acquisition -- as we're staffing up -- my comments around staffing and increase in the people -- those were anticipated, both in our outlook as well as in our underwriting model for the AT&T towers. And I think for the most part, we've gotten those costs in, and will have them in by the third quarter.

So I think you correctly point out the squeeze for the fourth quarter would suggest that there is movement upward in site rental gross margin. And so once we get all the costs into the run rate, which I think we'll have mostly done by the third quarter, you'll start to see those upward trends that we're used to.

On the 13%, we bought the AT&T assets at basically a 5% yield, going in. And when you consider our combination of use of debt, as well as stock, the transaction was slightly accretive by a couple of pennies in the calendar year 2014, or on a run rate basis, if you want to think about it that way. So the contribution at the AFFO per share line would be relatively minimal from the acquisition; almost none.

If you look at the nominal numbers, in terms of site rental revenue growth and margin and EBITDA and the absolute dollars of AFFO, obviously it contributed meaningfully. But at the per share line, there's very little impact from the acquisition and the way we financed it.

Great. Okay, good. That's helpful. Thank you, guys.

Kevin Smithen, Macquarie Capital.

This is Will for Kevin. If there are no more large deals in the US to do, you are going to have significant excess free cash flow in borrowing capacity in 2015. Can you discuss a little more how you think about that capital allocation? And are you now open to deals in Brazil or other emerging markets?

Yes, Will. This is Ben. I'll take a crack at that. We've got a lot going on, as I talked about in my comments. And I don't think it's a big stretch to see that we may find the ability to spend virtually all of our discretionary free cash flow right here at home, around our core business. And in particularly as the pipeline around small cells grows, we're going to put a lot of money to work at very productive rates for carriers that we know and love.

So that's really where our primary focus is today. We'll always look at something internationally. But my working assumption today is that we'll be priced out of anything out there, so I'm not assuming that we're going to do anything in Latin America or Brazil, specifically to your question. Just based almost solely on where I've seen assets trade, I don't think we're a player at those levels. So, we've got a lot on our plate here going deeper in the US market.

As Jay mentioned, we've got 3,500 sites in terms of nodes on the pipeline to be built, and that's growing. So we've got a lot to do with our capital right here at home.

Thank you. And I have one follow-up. Is there any number that you give as the addressable remaining sites that you would potentially purchase in the US?

I wouldn't speculate on that. We look at things as they come up. And I think one of my threshold comments that I think it's important to repeat -- and we'll always look at acquisitions, as we have, obviously, over time -- but the real value creation for Crown Castle going forward is around organic growth. And it all goes back to that slide in this deck today where we need to turn 17,000 towers from a 5% yield to a 15% yield over time. And that's the value driver in this business.

Acquisitions obviously become the platform to do that. You have to have the assets to do that. But we have the assets today, and we have our work cut out for us. And so we've got a full plate of value creation opportunities right here.

All right, thank you.

Ric Prentiss, Raymond James.

Couple questions. Ben, you mentioned the 3,500 nodes that are in the pipeline. What kind of cost or CapEx should we be thinking about, and timeline to bring those online?

Ric, this is Jay. The 3,500 -- I would assume, rough math, between $100,000 and $120,000 per node to build those out. And typically, the timeline, from the time of executing contracts -- and those 3,500, just to be clear, my comments were all preconstruction phase. So we're in the design and permitting phase of that 3,500. That's probably an 18-month to 30-month timeline to get those on-air.

And then the 13,000 that you have, did you say some of those are under construction, still?

Some of them are at the final stage of construction. Correct.

Okay. And then when you think about capital deployment, stock buyback is there. The stock has underperformed the other two public tower guys. So when you look at your multiple, where you're trading at, and your growth rate, how do you look at deploying small cell versus stock buyback? When does, all of the sudden, the acquisition of your own stock become more interesting, possibly?

Yes, Ric. We always do this analysis on a relative basis. So where we see the opportunity in the returns on our share repurchases are always compared at that point in time against other opportunities that we have.

So, in the case of, specifically to your question, is we would evaluate small cell opportunities, and our appetite to invest in small cells. They would be comparative against whatever the then multiple is on our equity, and what we think the growth prospects are in our underlying business.

And we constantly update that analysis. And the capital spend is discretionary, so at a point in time where we think the return is higher for Project A over Project B, then we tend to move the capital around, aiming towards the investment that we think delivers the highest return on AFFO per share as a proxy for ultimately what our dividend capacity is going to be. So it's really a relative measure, and we adjust it based on where we see the market opportunities.

And a small cell obviously is a very important part of your story: 6% of your business, growing 26% a year. Is there a time where that becomes a segment reported item also as far as revenue, gross margins, contribution, et cetera?

Well, there may be a day for that. I think as we operate the business today it falls underneath our site rental leasing business. It all falls under our Chief Operating Officer, and we operate the business very similar. It has very similar characteristics to the tower side in terms of the margins, the incremental margins that we see as we add additional tenants. So there may be a day for that; I won't preclude it from ever happening. But I think at the moment it looks very similar to what towers does.

One more quick one, if I could. A lot of people talking about Sprint Spark, the high-frequency build outs; T-Mobile lowband. Is there anything in your guidance yet for those? Have you seen anything in the services business as a leading indicator from Sprint going into that new phase, and T-Mobile going into the new phase?

Specifically with T-Mobile, that's more likely a 2015 event, is what it's looking to us. We're going to get pretty late in the year before we see a lot of that. So the answer to that would be no, until we give you 2015 guidance.

With respect to Sprint, we are seeing a tremendous amount of service opportunity from Sprint related to the Network Vision upgrades and the 2.5 upgrades that you talked about. And it is also coming through, to some degree, in site rental revenue growth. It's implied -- without being able to be specific -- it's certainly implied, and contributing to this overall 9% growth for the year.

Great. Thanks, guys.

Phil Cusick, JPMorgan.

As usual, following up on Ric Prentiss. (laughter) So, can you talk about services a little bit more? We've talked about services for a long time. And usually you give guidance that, yes, this was a great quarter, but we're pretty conservative going forward. Now it seems like you have a little bit better visibility. You talk about Sprint ramping up, 2.5, but is there also -- are you moving to longer contracts that give you more real visibility when giving guidance? Is that how we should think about it?

And then, second, (multiple speakers) can you help us -- I'm sorry. Go ahead, Jay.

No, this is Ben. Phil, I'd say not so much longer contracts, but a longer track record of success; where, frankly, our teams are teaching me really that this is a business that they are extremely good at, and have the capacity to continue to grow. And so maybe it's on my plate to say I have become more confident in our ability to continue to attract and win this business, and execute for carriers.

And we also look at it -- I think it's helpful to parse through how much of the growth is because of the growth in portfolio, versus actually growth and the per-site metrics. And that -- we're up about -- I guess over the last four years, up about 50% at a per-site level in terms of penetration, even though the business is up much larger than that. It has more than doubled over that same period, but a lot of that is because of the growth in the portfolio.

So maybe it's an education of the CEO that our guys are really good at this, and this is going to remain a very key component of our story, and what we do with carrier customers to provide that high touch experience and control our assets, at the end of the day.

Okay. And can you give us an idea of how much of your AFFO is coming from the services side?

I think what I would probably suggest that you would do, Phil, if you were going to try to estimate that, is I would take about 40% of the G&A, roughly -- probably between 35% and 45% of the G&A -- say, 40% of the G&A, and allocate it to the services business. So take our gross margin, if you want to do historical or forward-looking, take the gross margin from services and subtract out the G&A, and use that as a contribution.

Obviously as we think about leveraging the business, we would typically think about leveraging the site rental portion of the business. So you may want to apply some portion of the debt, or maybe not. There would not be any sustaining capital expenditures of any significant amount associated with that. So that's probably the best way to go about it.

Okay. Thanks, Jay.

Amir Rozwadowski, Barclays.

Wanted to follow up on the questions around some of the trajectory of carrier spending here, if I may. Certainly it looks like -- if we look at the CapEx numbers for the carriers that have reported -- on a year-over-year basis, they look fairly healthy. But clearly, there seems to be a bit of front-end loading with respect to their spending.

Wanted to just touch base there, because I understand there's various nuances when it comes to the very specific buckets in terms of where they're spending. But it seems as though you folks feel very comfortable raising your outlook for the year in terms of the spending trajectory that you're seeing.

Is that largely coming from densification initiatives that they're spending on? And what gives you to have comfort that that carries forward into 2015?

Yes, Amir, this is Ben. That's a critical question; and, obviously, the main driver in our business and confidence in the future. Without getting into specifically what each carrier is doing -- because we typically don't do that; we let you speak to them -- as you can see from the Verizon call this week and AT&T, that they are spending a whole lot of money. AT&T reconfirming their capital budget for the whole year at around $21 billion. Verizon being up significantly year-over-year through the first six months.

And we're seeing a significant amount of activity from both of those carriers, as well as Sprint and T-Mobile. But they are in different phases. And so this is where we gain a lot of confidence in the runway of growth that we're going to see. So, starting with Verizon and AT&T, we're seeing them complete really their first initial phase of LTE build, and really approaching 300 million covered POPs.

And then immediately following on, and we're well into it this year with both of those carriers on adding additional installations, brand-new macro site installations - co-los, if you will -- which adds densification to their networks. And that is happening in a very material way throughout the country.

It is not a stretch, then, to walk down the line to Sprint and T-Mobile, as they are also working very aggressively on completing their LTE rollout. And we would expect, then, that to follow on with densification on both of those networks over time as the capacity gets consumed on these LTE networks, as is currently happening, and the need for additional sites becomes more and more acute.

That is beginning to happen. We're getting some search rings out of Sprint. Would certainly expect to see that out of T-Mobile over time. And what we're seeing over time -- many of us have been in this industry 15 years plus -- we're seeing now a more continuous spend. Not so much a cycle anymore, but just a continuous spend level against ever-increasing ARPUs, really driven by data from us as consumers.

And the pie is actually getting bigger. As we all find more uses for tablets and smartphones, the pie is getting bigger. And as we talked about in the prepared remarks, incremental return on that incremental dollar of investment is alive and well. And so we sort of see it as a continuous spend, as opposed to these fits and starts that we had over the last decade.

And then, if I may, I will follow up. You folks are uniquely positioned, particularly when it comes to the exposure on the small cell side. We've had a lot of discussions with the carriers in talking about the value between the macro and the small cell. But I think the general tone, at least right now from what we're hearing, is that from a macro site perspective, it still provides the best bang for the buck. And continued investment on the macro site is necessary to deliver the types of speeds that they're promising over the next couple of years. Is that something that you folks agree with? Or would love to hear your thoughts on that front.

Absolutely I agree with that. We own 40,000 towers. It's 94% of our revenue stream, and you've got to believe we agree with that. So the macro site is still the most efficient way to add capacity, and the most expeditious way to add capacity in a market. What we're seeing on the small cell business, though, is an augmentation or a complement to that, where there's areas where the density of the urban footprint is such that a macro site really won't suffice, and they're needing to reuse that spectrum in a much smaller cell environment.

And, therefore, we're seeing an additional architecture emerge, as we've talked about for years. And it is emerging in a very big way now around distributed antenna systems, or small cells, euphemistically. Again, we use those interchangeably. But essentially, small antennas driven by fiber-fed electronics on light poles and streetlamps, and other things like that, to augment where a macro cell is not sufficient; or, otherwise, they'd need to reuse the spectrum in a much smaller environment in terms of a much smaller cell.

But we absolutely endorse your first view, which is macro sites are the first solution, and that's why we own 40,000 of them.

And then if I may, just one like quick question. When we go back to the PCIA trade show last fall, and also this past spring, I think one of the themes that emerged was that we're seeing a resurgence in actually new tower builds in the US, clearly off of a base of very minimal incremental tower builds. Are you folks still experiencing that? Are you still seeing that in the marketplace?

We're seeing a few opportunities. I will tell you, it goes back to Jay's capital allocation discussion. We'll do them where we think we can make money. It's usually the place where new entrants enter the market at initial yields on the assets that, frankly, we have been uninterested in pursuing. So we may let others build some of those, if those economics are not enticing to us. We're going to do some this year. Probably over the next 12 months, I would guess 100 or maybe 150, but not material to our results.

Excellent. Thank you very much for the incremental color.

Jonathan Schildkraut, Evercore.

Two questions, please. The first is, Ben, I'd love to get a breakdown of the drivers of growth in the quarter. Historically, you've given us some perspective of amendments versus new cell sites, and then what percent of that is falling under the MLA umbrellas that you have.

And then my second question has to do with the dividend growth story that Jay laid out, which I think is very compelling. And I was wondering if we might get a little perspective, because you talked about the NOL roll-off, but maybe we could get a little perspective on what is happening with D&A. By my records, you guys bought 7,000 towers -- I don't know, 17%, 18% of your portfolio in 1998, 1999. And I'm wondering how we might think about the D&A associated with that original portfolio, as we look at our projections, and also try to understand some of the dividend distribution capabilities. Thanks.

Sure. On the first question around where we are with leasing, it's very similar to what we expected for the full year. There was about 10% of the activity that we're seeing that's falling under the pre-sold MLAs that we negotiated several years ago. So there's very little of the activity that's falling under those pre-sold agreements.

In terms of the activity that we're seeing across all of the assets, we're seeing in the neighborhood of about three-quarters to 80% of the activity coming from new tenant installations, and the balance of it coming from amendments to existing sites.

We've seen that activity, I would point out, across all of the carriers and all of the portfolios, including the two most recent purchases that we've had, where we're already seeing some amendment activity that is driving site rental revenue growth across the portfolio.

So, I know we talked about that some in the past, and it's coming about in about the same magnitude as we had expected going into the balance of the year.

Your question about the net operating losses and the depreciation that we see from a tax standpoint -- the tax depreciation is faster on an asset purchase than what it is for the GAAP statements. And so as we have gone through the process, and you roll back all the way to our original acquisitions, and then as you think about the impact to us from the more recent acquisitions, the two recent acquisitions that we've done were in the form of prepaid leases.

So our payments out, from a tax standpoint -- those are reflected against the cost of the asset. Or if you want to think about it as D&A costs, those are reflected across the term of those leases, over 20-plus years. So there's minimal impact to our NOLs as a result of those two acquisitions.

A simple way of thinking about it is we bought the assets on a 5% yield, which if the cost is over 20 years, then basically -- day one, there's no NOL that's building. So each dollar of revenue and, therefore, margin that we had is going to effectively go against our net operating loss, and reduce the amount of NOL that we've built over a long period of time.

So, as I look out over the next five years, I certainly believe by 2020, given the pace that we're on with growth, I think we will exhaust that NOL by then. It may be, depending on how the dynamics work out, it may be a year to two years prior to that 2020 date. Just depending upon the flow of things like prepaid rent, and other things that may affect that net operating loss.

But I think for modeling purposes, without getting into much more detail than what I just walked through, I think probably the best way to think about it is us exhausting it somewhere in that 2019, 2020 timeframe if the growth rate continues at the current pace. And then if it accelerates or decelerates, we'll update that view.

All right, thank you very much.

Imari Love, Morningstar.

Just quickly back on small nodes, you said it was 6% of site rental revs. Can we get a gauge of how the returns on invested capital compare, relative to the returns you're seeing on the macro sites? So you mentioned for the macro sites over 10 years, it is around 15%; around 5% on the early end of that. Can you give us a gauge of where small nodes fit on that spectrum?

Sure, happy to, and that's really part of the enthusiasm that we share for that business. As I mentioned, if you think about the original acquisition of size, where we spent $1 billion on the NextG acquisition at about a 4% yield, we have burned through that to the point today where the entire -- for a run rate of business is about a 6% yield on invested capital. So you can then infer that the incremental business we've gotten, past the acquisition, is substantially above that.

As we go forward, our expectation in what we're seeing is that the returns on this business, we expect will exceed over 10 years what we've seen in the tower business. And we are obviously very pleased with the results we've posted on the legacy assets, as we talked about in the earlier part of this call.

But we're on the trajectory today with small cells, and the anticipated co-location that will happen in these very dense and attractive markets where we're building these systems, that we think we'll frankly exceed by a significant margin what we've accomplished on the tower sites.

Okay, thank you.

Batya Levi, UBS.

A couple of follow-ups. Looking at your estimates for revenue from existing customers, it looks like you increased your projections for the next four years of about 1.5% to 2%.

Can you help us reconcile why we didn't see a similar increase in the site rental outlook for 2014, and how we can think about that, versus the 9% organic growth that you are seeing today? Does that suggest that we should be expecting a similar organic growth for 2015?

And the second question I had is, as you go through the expected turn from iDEN, what's your experience with Sprint's renewal activity for these towers? I also noticed that you slightly lowered your expectations for rental revenue from Sprint at time of renewal for future periods. Can you talk about what drove that? Thank you.

Sure. On the first question, you will see those tables, over the long period of time, increase as we have. So, those tables reflect actual leases under contract, and we're not going to forecast that table for the forecasted growth during the calendar year. So as quarters past, we would assume that the next 12 months forward or two years forward, the revenue numbers in that table will increase commensurate with the growth that we actually achieved during the previous quarter.

So, that table is not -- it's intended to be forward-looking, in terms of the contracts that we have on the books today. But we don't adjust those contracts based on our expectation for growth over the subsequent periods, or multiple periods.

With regards to Sprint, some of that is going to be the impact of the leasing they did in the quarter, as well as the decommissionings that actually happened in the quarter, as well as any extensions that we saw on those leases. And those can come from simple things like if they amend a site. And this would be true for all of the carriers. There may be an amendment on a site, and they may take out a lease over a longer period of time, and it may adjust that table.

So, in all likelihood, as you are pouring in to that detail, it's a combination of the leases that happened in the quarter, any non-renewals that happened in the quarter, as well as there could be extensions, both likely related to things like an amendment on an individual site.

Okay, thank you.

Michael Bowen, Pacific Crest.

I wanted to touch back on slide 11. I noticed that the yield increase for the T-Mobile and AT&T assets -- it looks like you're basically targeting tenant additions. But I also wanted to know if there was anything assumed in there with regard to amendment or escalation activity.

And then with regard to that, can you also -- I apologize if I missed this -- but can you give us any idea of how long you may think it will take, from a time standpoint, to possibly move from that 5% to the 15% levels? Thanks.

As soon as we possibly can, would be about all I could answer to the second one. (laughter) But in terms of -- if you look at the historical legacy sites, that $90,000 in revenue per tower obviously includes amendments over time, as well as escalations over time, which all goes into that rollup of that number.

We've elected to give you a simple metric -- not the only metric, but a simple metric -- around tenancy, because that seems to be helpful for people to be able to quantify to kind of get it around in their head about how many tenants per tower, and then what the opportunity is.

But over time, obviously existing tenants and new tenants amend, as well as escalate. And that all contributes into that overall 15% yield on invested capital on those legacy sites. And again, to your timing question, as soon as we possibly can. That's about all I can tell you.

Well, yes. With regard to that, I noticed that the left-hand column -- obviously owned and operated for greater than 10 years -- getting the 15%, has that been somewhat linear or more parabolic?

It's over -- the average term that we've owned those assets is about 14 years. It's been fairly linear over that period of time. And I think one of the dynamics, Michael, when we talk about the business -- and there was an earlier question about -- do we see activity slowing in the first half or the second half of the year? I think our observation would be that while it is common for people to look at our business and try to find inflection points, where maybe the carriers are going to spend a lot more capital or spend a lot less capital, as we look at our business over a long period of time, the capital spend on our sites has been relatively consistent; within a relatively small band of up or down.

And so, as we look at our business, we are less prone to try to find the inflection points, and look more for themes. And the theme to us is that the carriers are seeing tremendous growth from data. And that is a long-term runway that we think is going to continue to drive site rental revenue, and ultimately AFFO per share. And that's how we've made the bulk of these investments over the last couple of years.

The only thing I'd add to that is, while it may be tempting to think that those legacy assets are, quote, full and done, as we continue to parse through our portfolio and look at it every quarter, those legacy assets continue to lease at a very attractive rate, and add additional revenue and obviously escalation off of a bigger number. So, they continue to grow, and more than pay their way around here, and that continues.

Thanks. And one other thing. I think you mentioned today, as far as back at PCIA in the spring, that there was some portfolios. I believe you said at that time in Europe where some infrastructure funds had been outbidding yourself and perhaps some of the others. When you look at these portfolios of assets, can you help us understand where the disconnect -- or maybe not disconnect -- but where the sticking point is, or the difference in methodology, when you value those portfolios versus some of the others who are obviously paying more.

Yes. Obviously, I don't know what's behind others' view. We can only speak for ourselves. We come at it and look at, what is the co-location opportunity in those markets? How much capital will the carriers actually spend in those markets? That was our attempt, on that one page today, to talk about the relative scale opportunity in the US versus emerging markets, or even some other developed countries. The US continues to just be enormous by comparison.

And so we look at the opportunity around lease up. We also -- we look at the inherent cost of capital and risk-adjusted return that you need to apply to an asset. When you send a wire transfer into a different currency on that one day, that's not dollar cost averaging in. You are long that day, with very little variable input into the cost structure of our business. So, I liken it sometimes to buying power plants in foreign countries. You are sort of long that day.

So, you have to put a cost of capital differential into the currency at just surely from the difference in currency risk. And local borrowing rates in local countries are a pretty good proxy to start. So we put all that in the pot and walk through it. And our result, at the end of the day, is we have found that either buying our own stock or buying assets in the US market tend to, we think, provide a higher risk-adjusted return on invested capital. Others differ and disagree, but that's our view.

And from time to time, that causes us to pass on what would initially be a very accretive acquisition. But we don't think that's the right barometer for whether the acquisition is long-term, value-creating for the Company.

Okay. Thanks, guys.

Colby Synesael, Cowen and Company.

Two questions, if I may. The first one, as you wrap up integrating the AT&T portfolio -- and then obviously you've had the T-Mobile portfolio for now, just over a year and a half -- is it fair for us to assume, as we go into the back of this year, and then increasingly into 2015 -- and I'm not asking for explicit guidance by any means -- but is it fair to assume that we should start to see new leasing activity accelerate from this aspect alone? Just curious with that.

And then the second question is just on MLAs. It seems like the logic for setting up those MLAs a few years ago seems to have now run its course, at least for some of the carriers. What is the likelihood of renewing MLAs, perhaps with different terms, both on your end as well as on the carrier's end? And when could we potentially see that happen?

Okay. On the first question, Colby, when you say -- when you ask the question about accelerating new leasing activity, certainly on a consolidated basis, we would expect that as a result of integrating these assets, we will have more nominal dollars of new leasing activity coming in.

As you look at our supplement, and the comments that I made around organic site rental revenue growth, we have a base that is consistent. So maybe a common term might be something like same tower sales would be the closest thing to have our organic site rental revenue number.

As the AT&T towers get into a one-year vintage, if you will, they will go into that math. And I'm not sure I would suggest to you that our organic growth rates will be higher as a result of that, because you will have a then larger base upon which we'll be growing.

But I think certainly, on a nominal basis, we would expect that the leasing activity will pick up at a consolidated level, as we have those assets online and we're performing the full suite of Crown's services and leasing activities across the larger portfolio.

On the MLAs?

And just to punctuate that, the 9% organic growth, if that opportunity exists in the market as we certainly believe it does, and that continues on a multi-year track, we'll be just fine.

In terms of your second question on MLAs, Colby, we'll look at it as facts and circumstances dictate, as things come up, as we always do. And we try to be economically rational, and make the right decision on what's going to result in the best outcome for us, and the most expedient way to handle the amendment activity or a desire of the carrier to get on the site.

So that goes together. But it's -- we'll look at it, facts-dependent. And I really wouldn't have any prediction today as to where that will take us in the future.

I think we would look at the ones that we've done today, and feel like we cut very good deals, and think we did better than we otherwise would have, in most cases.

We do back-check that; and, so far, so good. We are very pleased with the outcome there.

We're all living with today the flipside of the arrangement that we made with Sprint years ago, related to the iDEN decommissioning that they indicated was coming to us. And we saw a benefit on the upside, from the early days of Network Vision. And today we look at that run rate, and it's about 6%, roughly, above where we were going into the process. So we're feeling in the results today and will next year the downside of it, the decommissioning side. But on a net basis, the result of that agreement was up about 6% from where it would have been otherwise.

So we do backward-look at each of these that we've made, and feel like in each case we've done really well. And I think also from the carrier perspective, their goal in doing those was to accelerate and speed up the process in which they've gotten on our towers. And I think if you were to ask them, I think they would indicate to you it certainly accomplished their goal, as well.

Great. Thanks for the color.

Jonathan Chaplin, New Street.

So, it seems like the tower cash flow margins have been declining steadily over the course of the last year or so. Is the pressure all been a function of the investments you're making for the T-Mobile and AT&T towers? Or are there other factors depressing margins there as well? And can you give us a sense for how quickly you expect margins to re-inflate, now that you're at the end of the integration process with AT&T?

Yes, Jonathan. Yes, the decrease that you've seen in our tower cash flow margins has all been a result of the acquisitions that we've made. We've acquired two portfolios that had, respectively, 1.6 and 1.7 tenants per tower with T-Mobile and AT&T. So the margins on those assets was significantly lower than the legacy towers that we had, that had margins in the high 70% range, and 3 tenants per tower.

So as we put those lower leased assets into the portfolio, it lowered our overall margins. I think most of that is basically in the run rate, as I mentioned in my comments; both on the expense side and the revenue side, at this point. And so absent any other acquisitions, I think we'll go back on a pace where you see expanding margins on the go-forward, all driven by the amount of topline revenue growth that we have.

Got it. Thank you.

And we'll take one more question this morning.

Tim Horan, Oppenheimer.

Ben, do you think the networks are keeping up with the demand, or is utilization increasing or decreasing? And is there much variability between the different carriers at this point?

And then, secondly, maybe can you talk about is there much just in CapEx going on at this point? Are we basically done with the fiber buildouts, and a lot of the incremental CapEx is going to be more success based antennas or line cards? Any thoughts there would be great. Thanks.

Sure. In terms of keeping up with demand, just as a casual observer and listening to the carriers' calls, I would say no. And from watching their behavior, where they're going very, very aggressively towards adding capacity, you have to conclude, no, they are not keeping up. And that's a good thing for us. It's a good thing for them, as a matter of fact, because there is more ARPU out there to -- as the pie grows, to argue over. And so that's a good dynamic, as the entire industry grows.

But just given the behavior and the speed and the pace and activity that we see, I honestly don't remember it being any busier than it is right now for us. And that goes to really everything that we see, whether it be services activity, leasing activity. Obviously we have this little integration going on, which adds a little level of complexity to what we see; and then the growing and building small cell side of the house. We are as busy as we've ever been. So I would have to conclude that that's going to continue for some time.

And, fundamentally, a result of all of this is consumers continuing to eat a lot of bandwidth.

In terms of it being level smoothed between all the different carriers, I talked about that a little earlier. It is a little bit different, depending upon where the carrier is in their LTE deployment cycle. And with Verizon and AT&T being further ahead than Sprint and T-Mobile, but that doesn't give us really any pause. Because I think the dynamic of the spend to capture that incremental dollar is true with all of the carriers. And we fully expect them to come back and add density to their networks over time.

We are already seeing that, just very beginnings with Sprint. We expect to see that with T-Mobile. We're seeing some of those early conversations. And then as I mentioned earlier in my comments, that's very aggressively happening with Verizon and AT&T right now.

And then on -- just in CapEx spending?

No. I think we see this as a continuous program for the foreseeable future. Less cycles and swings up and down, and more of a steady pursuit of more and more bandwidth and capacity in these networks as -- whether you're talking machine-to-machine or tablet growth -- all these things that are expanding the usage of the network, and expanding the revenue opportunity, is a very good dynamic for our business and for the carriers. And that's what's happening right now.

And lastly, you've been doing 17% AFFO growth per year. This year is a little bit below, given the acquisitions. Do you think you can get back to the 17% level on a sustainable basis?

Well, I don't know about that, but you'd have to at least give me credit for the dividend this year. So, the 13 would really be 15 if you added the dividend. So, we think that's pretty good, given the acquisitions we've done and everything we're working on, and the Sprint churn headwind that we have this year.

So, if you were to adjust for the odd -- the nature of the iDEN churn, that number would be actually 16 this year, plus the dividend at 2. So, look, you can tell from the gross activity that we're pretty excited about what we see, and we got a lot going on.

Thanks, guys.

You bet. With that, I think we'll wrap up the call. I know it's a very busy earnings week for everybody. I appreciate you jumping on the call with us now for 70 minutes, and look forward to seeing you at some conferences in the fall, and on the third-quarter call. Thank you.

And thank you very much. That does conclude our conference for today. I'd like to thank everyone for your participation, and have a great day.