SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended September
30, 2024.
Highlights of the third quarter include:
- Net income of $255.9 million or $2.40 per share
- Industry-leading AFFO per share of $3.32
- Increased full year 2024 outlook across all key
metrics
- Issued $2.07 billion of Tower Securities at a blended
effective rate of 4.778%, more than 1% below the previously
estimated rate
- Entered into an agreement to purchase over 7,000 sites in
Central America from Millicom
Subsequent to the third quarter of 2024, SBA entered into an
agreement to purchase over 7,000 communication sites in Central
America from Millicom International Cellular S.A. (“Millicom”) for
approximately $975.0 million in cash. These sites are located in
Guatemala, Honduras, Panama, El Salvador, and Nicaragua, with
significantly all cash flows denominated in USD. The sites to be
acquired in this transaction are anticipated to produce
approximately $129.0 million of revenues and $89.0 million of tower
cash flow during their first full year of operations after closing.
Upon closing, Millicom will enter into country-specific Master
Lease Agreements (“MLAs”) to lease back space on all acquired sites
for an initial term of 15 years. The MLAs will also incorporate an
extension to SBA’s approximately 1,500 existing site leases with
Millicom for a new 15-year term. Additionally, as part of the
purchase agreement, SBA and Millicom have agreed to a seven-year
exclusivity right for SBA to build up to 2,500 build-to-suit sites
in Central America for Millicom with new leases on any sites built
having an initial lease term of 15 years. This transaction is
expected to close some time in 2025.
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.98 per share
of the Company’s Class A Common Stock. The distribution is payable
December 12, 2024 to the shareholders of record at the close of
business on November 14, 2024.
“We continued to execute well during the third quarter,
producing operational and financial results in line with our
expectations,” commented Brendan Cavanagh, President and Chief
Executive Officer. “Carrier activity in the US increased from
levels during the first half of the year, indicating a positive
upward trajectory that we anticipate will carry through the balance
of 2024 and into 2025. Leasing results across our international
markets also remained very solid during the quarter, and our
services business had its strongest quarter of the year in terms of
both revenue and gross profit. Our positive results and momentum
have allowed us to increase our full year outlook for all key
financial metrics. During the quarter, we also made significant
progress with regard to our balance sheet, refinancing $1.8 billion
in upcoming debt maturities at rates well below our estimates from
just a few months ago, repricing our $2.3 billion Term Loan B to
reduce our interest rate by 25 basis points, and locking in a new
forward starting interest rate hedge in order to minimize exposure
under our floating rate debt. These accomplishments demonstrate our
access to attractively priced capital and our position as a
preferred issuer across the various debt markets in which we
participate. In addition, in support of our stated desire to secure
our position as a leader in each market where we operate and to
align ourselves with the leading carriers in each market,
subsequent to quarter-end we entered into a purchase agreement with
Millicom for over 7,000 sites throughout Central America. As a
result of this transaction and the strength of our existing
portfolio in the region, we will be the leading tower company
across all of Central America. We are excited to support Millicom
in advancing their network goals, as well as broadly growing access
to wireless services throughout these markets. We are well situated
to continue opportunistically taking advantage of value enhancing
investments in new assets and stock repurchases, as well as to
capture growth from our customers’ accelerating network
investments.”
Operating Results
The table below details select financial results for the three
months ended September 30, 2024 and comparisons to the prior year
period.
% Change
excluding
Q3 2024
Q3 2023
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
625.7
$
637.4
$
(11.7
)
(1.8
%)
0.3
%
Site development revenue
41.9
45.1
(3.2
)
(7.1
%)
(7.1
%)
Tower cash flow (1)
507.6
511.7
(4.1
)
(0.8
%)
1.1
%
Net income
255.9
85.4
170.5
199.6
%
106.9
%
Earnings per share - diluted
2.40
0.80
1.59
198.4
%
109.3
%
Adjusted EBITDA (1)
472.6
482.1
(9.5
)
(2.0
%)
(0.2
%)
AFFO (1)
358.3
364.1
(5.8
)
(1.6
%)
0.7
%
AFFO per share (1)
3.32
3.34
(0.02
)
(0.6
%)
1.8
%
(1)
See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the third quarter of 2024 were $667.6 million
compared to $682.5 million in the prior year period, a decrease of
2.2%. Site leasing revenue in the third quarter of 2024 of $625.7
million was comprised of domestic site leasing revenue of $464.9
million and international site leasing revenue of $160.8 million.
Domestic cash site leasing revenue in the third quarter of 2024 was
$463.9 million compared to $461.0 million in the prior year period,
an increase of 0.6%. International cash site leasing revenue in the
third quarter of 2024 was $160.8 million compared to $169.4 million
in the prior year period, a decrease of 5.1%, or an increase of
2.8% on a constant currency basis. Site development revenues in the
third quarter of 2024 were $41.9 million compared to $45.1 million
in the prior year period, a decrease of 7.1%.
Site leasing operating profit in the third quarter of 2024 was
$507.8 million, a decrease of 2.2% from the prior year period. Site
leasing contributed 98.2% of the Company’s total operating profit
in the third quarter of 2024. Domestic site leasing segment
operating profit in the third quarter of 2024 was $396.0 million, a
decrease of 1.4% from the prior year period. International site
leasing segment operating profit in the third quarter of 2024 was
$111.8 million, a decrease of 4.9% from the prior year period.
Tower Cash Flow in the third quarter of 2024 of $507.6 million
was comprised of Domestic Tower Cash Flow of $394.1 million and
International Tower Cash Flow of $113.5 million. Domestic Tower
Cash Flow in the third quarter of 2024 increased 0.2% over the
prior year period and International Tower Cash Flow decreased 4.2%
from the prior year period, or increased 3.8% on a constant
currency basis. Tower Cash Flow Margin was 81.3% in the third
quarter of 2024, as compared to 81.2% for the prior year
period.
Net income in the third quarter of 2024 was $255.9 million, or
$2.40 per share, and included a $16.2 million gain, net of taxes,
on the currency-related remeasurement of intercompany loans with
foreign subsidiaries which are denominated in a currency other than
the subsidiaries’ functional currencies. Net income in the third
quarter of 2023 was $85.4 million, or $0.80 per share, and included
a $31.2 million loss, net of taxes, on the currency-related
remeasurement of intercompany loans with foreign subsidiaries which
are denominated in a currency other than the subsidiaries’
functional currencies.
Adjusted EBITDA in the third quarter of 2024 was $472.6 million,
a 2.0% decrease from the prior year period. Adjusted EBITDA Margin
in the third quarter of 2024 was 70.9% compared to 71.4% in the
prior year period.
Net Cash Interest Expense in the third quarter of 2024 was $88.7
million compared to $94.1 million in the prior year period, a
decrease of 5.7%.
AFFO in the third quarter of 2024 was $358.3 million, a 1.6%
decrease from the prior year period. AFFO per share in the third
quarter of 2024 was $3.32, a 0.6% decrease from the prior year
period, or a 1.8% increase on a constant currency basis.
Investing Activities
During the third quarter of 2024, SBA acquired 51 communication
sites for total cash consideration of $194.1 million. SBA also
built 147 towers during the third quarter of 2024. As of September
30, 2024, SBA owned or operated 39,762 communication sites, 17,477
of which are located in the United States and its territories and
22,285 of which are located internationally. In addition, the
Company spent $12.9 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the third
quarter of 2024 were $272.1 million, consisting of $14.3 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $257.8 million of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
Subsequent to the third quarter of 2024, in addition to the
sites under contract with Millicom, the Company purchased or is
under contract to purchase 45 communication sites for an aggregate
consideration of $16.3 million in cash that it expects to close by
the end of the first quarter of 2025.
Financing Activities and
Liquidity
SBA ended the third quarter of 2024 with $12.4 billion of total
debt, $9.4 billion of total secured debt, $263.6 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $12.1 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
6.4x and 4.8x, respectively.
During the third quarter of 2024, the Company, through its
wholly owned subsidiary, SBA Senior Finance II, executed and priced
an amendment to its Senior Credit Agreement to (1) reduce the
stated rate of interest of the Initial Term Loans from, at SBA
Senior Finance II’s election, the Base Rate plus 100 basis points
or Term SOFR plus 200 basis points to, at SBA Senior Finance II’s
election, the Base Rate plus 75 basis points or Term SOFR plus 175
basis points, and (2) amend certain other terms and conditions
under the Senior Credit Agreement. This transaction was closed on
October 2, 2024.
During the third quarter of 2024, the Company, through an
existing trust, executed and priced $1.45 billion of 4.831% Secured
Tower Revenue Securities Series 2024-1C which have an anticipated
repayment date of October 9, 2029 and a final maturity date of
October 8, 2054 (the “2024-1C Tower Securities”) and $620.0 million
of 4.654% Secured Tower Revenue Securities Series 2024-2C which
have an anticipated repayment date of October 8, 2027 and a final
maturity date of October 8, 2054 (the “2024-2C Tower Securities”).
The Tower Securities were issued on October 11, 2024. The aggregate
$2.07 billion of 2024-1C Tower Securities and 2024-2C Tower
Securities have a blended effective interest rate of 4.778% and a
weighted average life through the anticipated repayment date of 4.4
years. Net proceeds from this offering were used to repay the
aggregate principal amount of the 2014-2C Tower Securities ($620.0
million) and the remaining proceeds will be used to repay the
aggregate principal amount of the 2019-1C Tower Securities ($1.165
billion), the 2019-1R Tower Securities ($61.4 million), and for
general corporate purposes.
During the third quarter of 2024, the Company, through its
wholly owned subsidiary, SBA Senior Finance II, entered into a
forward-starting interest rate swap agreement for a portion of its
2024 Term Loan to swap $1.0 billion of notional value accruing
interest at one month Term SOFR for a fixed rate of 3.000%. The
swap has an effective start date of March 31, 2025 (coinciding with
the expiration date of the current 0.050%, $1.95 billion notional
value swap) and a maturity date of April 11, 2028. This swap is in
addition to the forward-starting interest rate swap previously
executed in November 2023. The combined notional value of both
forward-starting swaps of $2.0 billion will effectively fix one
month Term SOFR at a blended fixed rate of 3.415% from March 31,
2025 to April 11, 2028.
As of the date of this press release, the Company had no amount
outstanding under its $2.0 billion Revolving Credit Facility.
The Company did not repurchase any shares of its Class A common
stock during the third quarter of 2024. As of the date of this
filing, the Company has $204.7 million of authorization remaining
under its approved repurchase plan.
In the third quarter of 2024, the Company declared and paid a
cash dividend of $105.3 million.
Outlook
The Company is updating its full year 2024 Outlook for
anticipated results. The Outlook provided is based on a number of
assumptions that the Company believes are reasonable at the time of
this press release. Information regarding potential risks that
could cause the actual results to differ from these forward-looking
statements is set forth below and in the Company’s filings with the
Securities and Exchange Commission.
The Company’s full year 2024 Outlook assumes the acquisitions of
only those communication sites under contract which are expected to
close prior to year-end at the time of this press release. The
Company may spend additional capital in 2024 on acquiring revenue
producing assets not yet identified or under contract, the impact
of which is not reflected in the 2024 guidance. The Outlook also
does not contemplate any additional repurchases of the Company’s
stock or new debt financings during 2024, although the Company may
ultimately spend capital to repurchase stock or issue new debt
during the remainder of the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.65 Brazilian Reais to 1.0 U.S. Dollar, 1.36
Canadian Dollars to 1.0 U.S. Dollar, 2,730 Tanzanian shillings to
1.0 U.S. Dollar, and 17.60 South African Rand to 1.0 U.S. Dollar
throughout the fourth quarter of 2024.
Change from
Change from
July 29, 2024
July 29, 2024
Outlook
(in millions, except per share
amounts)
Full Year 2024
Outlook (7)
Excluding FX
Site leasing revenue (1)
$
2,520.0
to
$
2,530.0
$
8.0
$
5.5
Site development revenue
$
140.0
to
$
150.0
$
5.0
$
5.0
Total revenues
$
2,660.0
to
$
2,680.0
$
13.0
$
10.5
Tower Cash Flow (2)
$
2,040.0
to
$
2,050.0
$
6.0
$
4.0
Adjusted EBITDA (2)
$
1,890.0
to
$
1,900.0
$
9.0
$
7.5
Net cash interest expense (3)
$
355.0
to
$
361.0
$
(2.0
)
$
(2.0
)
Non-discretionary cash capital
expenditures (4)
$
51.0
to
$
57.0
$
(2.0
)
$
(2.0
)
AFFO (2)
$
1,427.0
to
$
1,454.0
$
10.5
$
8.5
AFFO per share (2) (5)
$
13.20
to
$
13.45
$
0.09
$
0.07
Discretionary cash capital expenditures
(6)
$
490.0
to
$
500.0
$
150.0
$
149.0
(1)
The Company’s Outlook for site leasing
revenue includes revenue associated with pass through reimbursable
expenses.
(2)
See the reconciliation of this non-GAAP
financial measure presented below under “Non-GAAP Financial
Measures.”
(3)
Net cash interest expense is defined as
interest expense less interest income. Net cash interest expense
does not include amortization of deferred financing fees or
non-cash interest expense.
(4)
Consists of tower maintenance and general
corporate capital expenditures.
(5)
Outlook for AFFO per share is calculated
by dividing the Company’s outlook for AFFO by an assumed weighted
average number of diluted common shares of 108.1 million. Outlook
does not include the impact of any potential future repurchases of
the Company’s stock during 2024.
(6)
Consists of new tower builds, tower
augmentations, communication site acquisitions and ground lease
purchases. Does not include easements or payments to extend lease
terms and expenditures for acquisitions of revenue producing assets
not under contract at the date of this press release.
(7)
Changes from prior outlook are measured
based on the midpoint of outlook ranges provided.
Conference Call Information
SBA Communications Corporation will host a conference call on
Monday, October 28, 2024 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, October 28, 2024 at 5:00 PM
(ET)
Dial-in Number:
(877) 692-8955
Access Code:
3722027
Conference Name:
SBA Third quarter 2024 results
Replay Available:
October 28, 2024 at 11:00 PM to November
11, 2024 at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code: 8723461
Internet Access:
www.sbasite.com
Information Concerning Forward-Looking
Statements
This press release and the Company’s earnings call include
forward-looking statements, including statements regarding the
Company’s expectations or beliefs regarding (i) execution of the
Company’s growth strategies and the impacts to its financial
performance, (ii) organic leasing growth in the U.S. and the
drivers of that growth, including continued investments by, and
market demands on, the Company’s customers, (iii) the Company’s
capital allocation strategy, (iv) the Company’s anticipations
regarding interest rates, (v) the Company’s outlook for financial
and operational performance in 2024, the assumptions it made and
the drivers contributing to its updated full year guidance, (vi)
the timing of closing for currently pending acquisitions, (vii) the
Company’s tower portfolio growth and positioning for future growth,
(viii) asset purchases, share repurchases, and debt financings,
(ix) carrier activity in the U.S., (x) network consumption growth
and network strain, (xi) the Company’s ability to capture growth
from customers’ accelerating network investments, (xii) the
purchase agreement with Millicom, including the anticipated
revenues, tower cash flows and other anticipated benefits of the
sites under contract with Millicom, (xiii) our international
business, (xiv) the Company’s operations and markets, and (xv)
foreign exchange rates and their impact on the Company’s financial
and operational guidance and the Company’s 2024 Outlook.
The Company wishes to caution readers that these forward-looking
statements may be affected by the risks and uncertainties in the
Company’s business as well as other important factors may have
affected and could in the future affect the Company’s actual
results and could cause the Company’s actual results for subsequent
periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. With
respect to the Company’s expectations regarding all of these
statements, including its financial and operational guidance, such
risk factors include, but are not limited to: (1) the impact of
recent macro-economic conditions, including increasing interest
rates, inflation and financial market volatility on (a) the ability
and willingness of wireless service providers to maintain or
increase their capital expenditures, (b) the Company’s business and
results of operations, and on foreign currency exchange rates and
(c) consumer demand for wireless services, (2) the economic climate
for the wireless communications industry in general and the
wireless communications infrastructure providers in particular in
the United States, Brazil, South Africa, Tanzania, and in other
international markets; (3) the Company’s ability to accurately
identify and manage any risks associated with its acquired sites,
to effectively integrate such sites into its business and to
achieve the anticipated financial results; (4) the Company’s
ability to secure and retain as many site leasing tenants as
planned at anticipated lease rates; (5) the Company’s ability to
manage expenses and cash capital expenditures at anticipated
levels; (6) the impact of continued consolidation among wireless
service providers in the U.S. and internationally, on the Company’s
leasing revenue and the ability of Dish to compete as a nationwide
carrier; (7) the Company’s ability to successfully manage the risks
associated with international operations, including risks
associated with foreign currency exchange rates; (8) the Company’s
ability to secure and deliver anticipated services business at
contemplated margins; (9) the Company’s ability to acquire land
underneath towers on terms that are accretive; (10) the Company’s
ability to obtain future financing at commercially reasonable rates
or at all; (11) the Company’s ability to achieve the new builds
targets included in its anticipated annual portfolio growth goals,
which will depend, among other things, on obtaining zoning and
regulatory approvals, availability of labor and supplies, and other
factors beyond the Company’s control that could affect the
Company’s ability to build additional towers in 2024; and (12) the
Company’s ability to meet its total portfolio growth, which will
depend, in addition to the new build risks, on the Company’s
ability to identify and acquire sites at prices and upon terms that
will provide accretive portfolio growth, competition from third
parties for such acquisitions and our ability to negotiate the
terms of, and acquire, these potential tower portfolios on terms
that meet our internal return criteria.
With respect to its expectations regarding the ability to close
pending acquisitions, these factors also include satisfactorily
completing due diligence, the amount and quality of due diligence
that the Company is able to complete prior to closing of any
acquisition, the ability to receive required regulatory approval,
the ability and willingness of each party to fulfill their
respective closing conditions and their contractual obligations and
the availability of cash on hand or borrowing capacity under the
Revolving Credit Facility to fund the consideration, its ability to
accurately anticipate the future performance of the acquired towers
and any challenges or costs associated with the integration of such
towers. With respect to the repurchases under the Company’s stock
repurchase program, the amount of shares repurchased, if any, and
the timing of such repurchases will depend on, among other things,
the trading price of the Company’s common stock, which may be
positively or negatively impacted by the repurchase program, market
and business conditions, the availability of stock, the Company’s
financial performance or determinations following the date of this
announcement in order to use the Company’s funds for other
purposes. Furthermore, the Company’s forward-looking statements and
its 2024 outlook assumes that the Company continues to qualify for
treatment as a REIT for U.S. federal income tax purposes and that
the Company’s business is currently operated in a manner that
complies with the REIT rules and that it will be able to continue
to comply with and conduct its business in accordance with such
rules. In addition, these forward-looking statements and the
information in this press release is qualified in its entirety by
cautionary statements and risk factor disclosures contained in the
Company’s Securities and Exchange Commission filings, including the
Company’s most recently filed Annual Report on Form 10-K.
This press release contains non-GAAP financial measures.
Reconciliation of each of these non-GAAP financial measures and the
other Regulation G information is presented below under “Non-GAAP
Financial Measures.”
This press release will be available on our website at
www.sbasite.com.
About SBA Communications
Corporation
SBA Communications Corporation is a leading independent owner
and operator of wireless communications infrastructure including
towers, buildings, rooftops, distributed antenna systems (DAS) and
small cells. With a portfolio of more than 39,000 communications
sites in 15 markets throughout the Americas, Africa, and the
Philippines, SBA is listed on NASDAQ under the symbol SBAC. Our
organization is part of the S&P 500 and is one of the top Real
Estate Investment Trusts (REITs) by market capitalization. For more
information, please visit: www.sbasite.com.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited) (in thousands,
except per share amounts)
For the three months
For the nine months
ended September 30,
ended September 30,
2024
2023
2024
2023
Revenues:
Site leasing
$
625,697
$
637,440
$
1,880,430
$
1,880,851
Site development
41,898
45,104
105,504
155,709
Total revenues
667,595
682,544
1,985,934
2,036,560
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
117,948
118,277
346,893
353,411
Cost of site development
32,391
31,493
82,705
114,914
Selling, general, and administrative
expenses (1)
60,087
64,821
191,161
200,412
Acquisition and new business initiatives
related
adjustments and expenses
5,388
5,612
19,379
16,622
Asset impairment and decommission
costs
12,670
33,063
87,928
92,320
Depreciation, accretion, and
amortization
63,515
180,674
204,444
544,909
Total operating expenses
291,999
433,940
932,510
1,322,588
Operating income
375,596
248,604
1,053,424
713,972
Other income (expense):
Interest income
6,999
5,266
21,359
12,765
Interest expense
(95,711
)
(99,322
)
(289,632
)
(301,835
)
Non-cash interest expense
(7,192
)
(7,898
)
(22,715
)
(29,655
)
Amortization of deferred financing
fees
(5,185
)
(5,097
)
(15,405
)
(15,129
)
Loss from extinguishment of debt, net
—
—
(4,428
)
—
Other income (expense), net
23,700
(48,330
)
(125,811
)
29,961
Total other expense, net
(77,389
)
(155,381
)
(436,632
)
(303,893
)
Income before income taxes
298,207
93,223
616,792
410,079
Provision for income taxes
(42,316
)
(7,861
)
(46,906
)
(22,192
)
Net income
255,891
85,362
569,886
387,887
Net loss attributable to noncontrolling
interests
2,643
2,057
6,020
4,397
Net income attributable to SBA
Communications
Corporation
$
258,534
$
87,419
$
575,906
$
392,284
Net income per common share attributable
to SBA
Communications Corporation:
Basic
$
2.41
$
0.81
$
5.35
$
3.62
Diluted
$
2.40
$
0.80
$
5.33
$
3.60
Weighted-average number of common
shares
Basic
107,486
108,373
107,683
108,288
Diluted
107,922
108,891
108,072
109,017
(1)
Includes non-cash compensation of $15,732
and $20,615 for the three months ended September 30, 2024 and 2023,
respectively, and $54,376 and $63,709 for the nine months ended
September 30, 2024 and 2023, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
September 30,
December 31,
2024
2023
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
186,339
$
208,547
Restricted cash
61,019
38,129
Accounts receivable, net
111,018
182,746
Costs and estimated earnings in excess of
billings on uncompleted contracts
24,742
16,252
Prepaid expenses and other current
assets
67,149
38,593
Total current assets
450,267
484,267
Property and equipment, net
2,783,921
2,711,719
Intangible assets, net
2,492,360
2,455,597
Operating lease right-of-use assets,
net
2,322,890
2,240,781
Acquired and other right-of-use assets,
net
1,379,281
1,473,601
Other assets
772,944
812,476
Total assets
$
10,201,663
$
10,178,441
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
54,438
$
42,202
Accrued expenses
89,312
92,622
Current maturities of long-term debt
23,000
643,145
Deferred revenue
183,978
235,668
Accrued interest
32,088
57,496
Current lease liabilities
270,922
273,464
Other current liabilities
14,105
18,662
Total current liabilities
667,843
1,363,259
Long-term liabilities:
Long-term debt, net
12,296,479
11,681,170
Long-term lease liabilities
1,930,943
1,865,686
Other long-term liabilities
432,158
404,161
Total long-term liabilities
14,659,580
13,951,017
Redeemable noncontrolling interests
49,092
35,047
Shareholders' deficit:
Preferred stock - par value $0.01, 30,000
shares authorized, no shares issued or outstanding
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 107,506 shares and
108,050 shares issued and outstanding at
September 30, 2024 and December 31, 2023,
respectively
1,075
1,080
Additional paid-in capital
2,941,520
2,894,060
Accumulated deficit
(7,393,799
)
(7,450,824
)
Accumulated other comprehensive loss,
net
(723,648
)
(615,198
)
Total shareholders' deficit
(5,174,852
)
(5,170,882
)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
10,201,663
$
10,178,441
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
255,891
$
85,362
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
63,515
180,674
Loss (gain) on remeasurement of U.S.
denominated intercompany loans
(24,948
)
46,516
Non-cash compensation expense
16,373
21,374
Non-cash asset impairment and decommission
costs
9,063
29,284
Deferred and non-cash income tax provision
(benefit)
30,179
(1,204
)
Other non-cash items reflected in the
Statements of Operations
16,878
17,242
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of
billings on uncompleted contracts, net
(27,079
)
9,107
Prepaid expenses and other assets
(11,327
)
(5,513
)
Operating lease right-of-use assets,
net
31,025
36,084
Accounts payable and accrued expenses
16,799
6,247
Accrued interest
(25,481
)
(24,833
)
Long-term lease liabilities
(36,051
)
(34,848
)
Other liabilities
(10,186
)
(51,811
)
Net cash provided by operating
activities
304,651
313,681
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(207,387
)
(53,114
)
Capital expenditures
(64,756
)
(61,393
)
Proceeds from sale of investments, net
4,180
20,369
Other investing activities
(5,939
)
(9,392
)
Net cash used in investing activities
(273,902
)
(103,530
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
Revolving Credit Facility
40,000
(80,000
)
Repurchase and retirement of common
stock
—
(53,652
)
Payment of dividends on common stock
(105,344
)
(92,131
)
Other financing activities
(569
)
(4,993
)
Net cash used in financing activities
(65,913
)
(230,776
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
3,512
(2,800
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(31,652
)
(23,425
)
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
283,144
255,509
End of period
$
251,492
$
232,084
Selected Capital Expenditure
Detail
For the three
For the nine
months ended
months ended
September 30, 2024
September 30, 2024
(in thousands)
Construction and related costs
$
38,799
$
96,683
Augmentation and tower upgrades
11,644
38,485
Non-discretionary capital
expenditures:
Tower maintenance
12,992
33,792
General corporate
1,321
3,640
Total non-discretionary capital
expenditures
14,313
37,432
Total capital expenditures
$
64,756
$
172,600
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at June 30, 2024
17,461
22,283
39,744
Sites acquired during the third
quarter
38
13
51
Sites built during the third quarter
9
138
147
Sites decommissioned/reclassified/sold
during the third quarter
(31
)
(149
)
(180
)
Sites owned at September 30, 2024
17,477
22,285
39,762
Segment Operating Profit and Segment
Operating Profit Margin
Domestic site leasing and International site leasing are the two
segments within our site leasing business. Segment operating profit
is a key business metric and one of our two measures of segment
profitability. The calculation of Segment operating profit for each
of our segments is set forth below.
Domestic Site Leasing
Int'l Site Leasing
Site Development
For the three months
For the three months
For the three months
ended September 30,
ended September 30,
ended September 30,
2024
2023
2024
2023
2024
2023
(in thousands)
Segment revenue
$
464,860
$
468,371
$
160,837
$
169,069
$
41,898
$
45,104
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(68,908
)
(66,768
)
(49,040
)
(51,509
)
(32,391
)
(31,493
)
Segment operating profit
$
395,952
$
401,603
$
111,797
$
117,560
$
9,507
$
13,611
Segment operating profit margin
85.2
%
85.7
%
69.5
%
69.5
%
22.7
%
30.2
%
Non-GAAP Financial Measures
The press release contains non-GAAP financial measures including
(i) Cash Site Leasing Revenue, Tower Cash Flow, and Tower Cash Flow
Margin; (ii) Adjusted EBITDA, Annualized Adjusted EBITDA, and
Adjusted EBITDA Margin; (iii) Funds from Operations (“FFO”),
Adjusted Funds from Operations (“AFFO”), and AFFO per share; (iv)
Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage
Ratio (collectively, our “Non-GAAP Debt Measures”); and (v) certain
financial metrics after eliminating the impact of changes in
foreign currency exchange rates (collectively, our “Constant
Currency Measures”).
We have included these non-GAAP financial measures because we
believe that they provide investors additional tools in
understanding our financial performance and condition.
Specifically, we believe that:
(1) Cash Site Leasing Revenue and Tower Cash Flow are useful
indicators of the performance of our site leasing operations;
(2) Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by excluding the impact of
our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation,
amortization and accretion) from our financial results. Management
also believes Adjusted EBITDA is frequently used by investors or
other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations.
Adjusted EBITDA should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance;
(3) FFO, AFFO and AFFO per share, which are metrics used by our
public company peers in the communication site industry, provide
investors useful indicators of the financial performance of our
business and permit investors an additional tool to evaluate the
performance of our business against those of our two principal
competitors. FFO, AFFO, and AFFO per share are also used to address
questions we receive from analysts and investors who routinely
assess our operating performance on the basis of these performance
measures, which are considered industry standards. We believe that
FFO helps investors or other interested parties meaningfully
evaluate financial performance by excluding the impact of our asset
base (primarily depreciation, amortization and accretion and asset
impairment and decommission costs). We believe that AFFO and AFFO
per share help investors or other interested parties meaningfully
evaluate our financial performance as they include (1) the impact
of our capital structure (primarily interest expense on our
outstanding debt) and (2) sustaining capital expenditures and
exclude the impact of (1) our asset base (primarily depreciation,
amortization and accretion and asset impairment and decommission
costs) and (2) certain non-cash items, including straight-lined
revenues and expenses related to fixed escalations and rent free
periods and the non-cash portion of our reported tax provision.
GAAP requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract. We only
use AFFO as a performance measure. AFFO should be considered only
as a supplement to net income computed in accordance with GAAP as a
measure of our performance and should not be considered as an
alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition
of FFO is consistent with how that term is defined by the National
Association of Real Estate Investment Trusts (“NAREIT”) and that
our definition and use of AFFO and AFFO per share is consistent
with those reported by the other communication site companies;
(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include
the full principal amount of our debt which will be due at maturity
and, to the extent that such measures are calculated on Net Debt
are net of our cash and cash equivalents, short-term restricted
cash, and short-term investments; and
(5) Our Constant Currency Measures provide management and
investors the ability to evaluate the performance of the business
without the impact of foreign currency exchange rate
fluctuations.
In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP
Debt Measures are components of the calculations used by our
lenders to determine compliance with certain covenants under our
Senior Credit Agreement and indentures relating to our 2020 Senior
Notes and 2021 Senior Notes. These non-GAAP financial measures are
not intended to be an alternative to any of the financial measures
provided in our results of operations or our balance sheet as
determined in accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
Third quarter
2024 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
(1.8%)
(2.1%)
0.3%
Total cash site leasing revenue
(0.9%)
(2.1%)
1.2%
Int'l cash site leasing revenue
(5.1%)
(7.9%)
2.8%
Total site leasing segment operating
profit
(2.2%)
(1.8%)
(0.4%)
Int'l site leasing segment operating
profit
(4.9%)
(7.9%)
3.0%
Total site leasing tower cash flow
(0.8%)
(1.9%)
1.1%
Int'l site leasing tower cash flow
(4.2%)
(8.0%)
3.8%
Net income
199.6%
92.7%
106.9%
Earnings per share — diluted
198.4%
89.1%
109.3%
Adjusted EBITDA
(2.0%)
(1.8%)
(0.2%)
AFFO
(1.6%)
(2.3%)
0.7%
AFFO per share
(0.6%)
(2.4%)
1.8%
Cash Site Leasing Revenue, Tower Cash
Flow, and Tower Cash Flow Margin
The table below sets forth the reconciliation of Cash Site
Leasing Revenue and Tower Cash Flow to their most comparable GAAP
measurement and Tower Cash Flow Margin, which is calculated by
dividing Tower Cash Flow by Cash Site Leasing Revenue.
Domestic Site Leasing
Int'l Site Leasing
Total Site Leasing
For the three months
For the three months
For the three months
ended September 30,
ended September 30,
ended September 30,
2024
2023
2024
2023
2024
2023
(in thousands)
Site leasing revenue
$
464,860
$
468,371
$
160,837
$
169,069
$
625,697
$
637,440
Non-cash straight-line leasing revenue
(1,004
)
(7,371
)
(61
)
323
(1,065
)
(7,048
)
Cash site leasing revenue
463,856
461,000
160,776
169,392
624,632
630,392
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(68,908
)
(66,768
)
(49,040
)
(51,509
)
(117,948
)
(118,277
)
Non-cash straight-line ground lease
expense
(873
)
(1,062
)
1,818
634
945
(428
)
Tower Cash Flow
$
394,075
$
393,170
$
113,554
$
118,517
$
507,629
$
511,687
Tower Cash Flow Margin
85.0
%
85.3
%
70.6
%
70.0
%
81.3
%
81.2
%
Forecasted Tower Cash Flow for Full Year
2024
The table below sets forth the reconciliation of forecasted
Tower Cash Flow set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2024:
Full Year 2024
(in millions)
Site leasing revenue
$
2,520.0
to
$
2,530.0
Non-cash straight-line leasing revenue
(11.5
)
to
(6.5
)
Cash site leasing revenue
2,508.5
to
2,523.5
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(457.0
)
to
(467.0
)
Non-cash straight-line ground lease
expense
(11.5
)
to
(6.5
)
Tower Cash Flow
$
2,040.0
to
$
2,050.0
Adjusted EBITDA, Annualized Adjusted
EBITDA, and Adjusted EBITDA Margin
The table below sets forth the reconciliation of Adjusted EBITDA
to its most comparable GAAP measurement.
For the three months
ended September 30,
2024
2023
(in thousands)
Net income
$
255,891
$
85,362
Non-cash straight-line leasing revenue
(1,065
)
(7,048
)
Non-cash straight-line ground lease
expense
945
(428
)
Non-cash compensation
16,373
21,374
Other (income) expense, net
(23,700
)
48,330
Acquisition and new business initiatives
related adjustments and expenses
5,388
5,612
Asset impairment and decommission
costs
12,670
33,063
Interest income
(6,999
)
(5,266
)
Total interest expense (1)
108,088
112,317
Depreciation, accretion, and
amortization
63,515
180,674
Provision for taxes (2)
41,514
8,141
Adjusted EBITDA
$
472,620
$
482,131
Annualized Adjusted EBITDA (3)
$
1,890,480
$
1,928,524
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
For the three months ended September 30,
2024 this amount includes $0.8 million of benefit from franchise
and gross receipts taxes reflected in the Statements of Operations
in selling, general and administrative expenses. For the three
months ended September 30, 2023, this amount includes $0.3 million
of franchise and gross receipts taxes reflected in the Statements
of Operations in selling, general and administrative expenses.
(3)
Annualized Adjusted EBITDA is calculated
as Adjusted EBITDA for the most recent quarter multiplied by
four.
The calculation of Adjusted EBITDA Margin is as follows:
For the three months
ended September 30,
2024
2023
(in thousands)
Total revenues
$
667,595
$
682,544
Non-cash straight-line leasing revenue
(1,065
)
(7,048
)
Total revenues minus non-cash
straight-line leasing revenue
$
666,530
$
675,496
Adjusted EBITDA
$
472,620
$
482,131
Adjusted EBITDA Margin
70.9
%
71.4
%
Forecasted Adjusted EBITDA for Full Year
2024
The table below sets forth the reconciliation of the forecasted
Adjusted EBITDA set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2024:
Full Year 2024
(in millions)
Net income
$
765.5
to
$
800.5
Non-cash straight-line leasing revenue
(11.5
)
to
(6.5
)
Non-cash straight-line ground lease
expense
(11.5
)
to
(6.5
)
Non-cash compensation
76.0
to
71.0
Loss from extinguishment of debt, net
4.5
to
4.5
Other expense, net
166.0
to
166.0
Acquisition and new business initiatives
related adjustments and
expenses
27.5
to
22.5
Asset impairment and decommission
costs
120.5
to
115.5
Interest income
(43.5
)
to
(38.5
)
Total interest expense (1)
457.5
to
447.5
Depreciation, accretion, and
amortization
277.0
to
267.0
Provision for taxes (2)
62.0
to
57.0
Adjusted EBITDA
$
1,890.0
to
$
1,900.0
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
Includes projections for franchise taxes
and gross receipts taxes, which will be reflected in the Statement
of Operations in Selling, general, and administrative expenses.
Funds from Operations (“FFO”), Adjusted
Funds from Operations (“AFFO”), and AFFO per share
The tables below set forth the reconciliations of FFO, AFFO, and
AFFO per share to their most comparable GAAP measurement.
For the three months
ended September 30,
2024
2023
(in thousands)
($ per share)
(in thousands)
($ per share)
Net income
$
255,891
$
2.37
$
85,362
$
0.78
Real estate related depreciation,
amortization, and accretion
61,993
0.57
179,076
1.64
Asset impairment and decommission
costs
12,670
0.12
33,063
0.30
FFO
$
330,554
$
3.06
$
297,501
$
2.72
Adjustments to FFO:
Non-cash straight-line leasing revenue
(1,065
)
(0.01
)
(7,048
)
(0.06
)
Non-cash straight-line ground lease
expense
945
0.01
(428
)
—
Non-cash compensation
16,373
0.15
21,374
0.20
Adjustment for non-cash portion of tax
provision (benefit)
30,179
0.28
(1,205
)
(0.01
)
Non-real estate related depreciation,
amortization, and accretion
1,522
0.01
1,598
0.01
Amortization of deferred financing costs
and
debt discounts and non-cash interest
expense
12,377
0.11
12,995
0.12
Other (income) expense, net
(23,700
)
(0.21
)
48,330
0.44
Acquisition and new business initiatives
related adjustments
and expenses
5,388
0.05
5,612
0.05
Non-discretionary cash capital
expenditures
(14,313
)
(0.13
)
(14,678
)
(0.13
)
AFFO
$
358,260
$
3.32
$
364,051
$
3.34
Adjustments for joint venture partner
interest
(1,553
)
(0.01
)
(1,217
)
(0.01
)
AFFO attributable to SBA
Communications
Corporation
$
356,707
$
3.31
$
362,834
$
3.33
Diluted weighted average number of common
shares
107,922
108,891
Forecasted AFFO for the Full Year
2024
The tables below set forth the reconciliations of the forecasted
AFFO and AFFO per share set forth in the Outlook section to their
most comparable GAAP measurements for the full year 2024:
(in millions, except per share
amounts)
Full Year 2024
(in millions)
($ per share)
Net income
$
765.5
to
$
800.5
$
7.08
to
$
7.41
Real estate related depreciation,
amortization,
and accretion
263.0
to
258.0
2.43
to
2.39
Asset impairment and decommission
costs
120.5
to
115.5
1.11
to
1.07
FFO
$
1,149.0
to
$
1,174.0
$
10.62
to
$
10.87
Adjustments to FFO:
Non-cash straight-line leasing revenue
(11.5
)
to
(6.5
)
(0.11
)
to
(0.06
)
Non-cash straight-line ground lease
expense
(11.5
)
to
(6.5
)
(0.11
)
to
(0.06
)
Non-cash compensation
76.0
to
71.0
0.70
to
0.66
Adjustment for non-cash portion of tax
provision
17.0
to
17.0
0.16
to
0.16
Non-real estate related depreciation,
amortization, and accretion
14.0
to
9.0
0.13
to
0.08
Amortization of deferred financing costs
and
debt discounts and non-cash interest
expense
53.0
to
54.0
0.49
to
0.50
Loss from extinguishment of debt, net
4.5
to
4.5
0.04
to
0.04
Other expense, net
166.0
to
166.0
1.54
to
1.54
Acquisition and new business initiatives
related
adjustments and expenses
27.5
to
22.5
0.25
to
0.21
Non-discretionary cash capital
expenditures
(57.0
)
to
(51.0
)
(0.51
)
to
(0.49
)
AFFO
$
1,427.0
to
$
1,454.0
$
13.20
to
$
13.45
Adjustments for joint venture partner
interest
(6.0
)
to
(6.0
)
(0.06
)
to
(0.06
)
AFFO attributable to SBA
Communications
Corporation
$
1,421.0
to
$
1,448.0
$
13.14
to
$
13.39
Diluted weighted average number of common
shares (1)
108.1
to
108.1
(1)
Our assumption for weighted average number
of common shares does not contemplate any additional repurchases of
the Company’s stock during 2024.
Net Debt, Net Secured Debt, Leverage
Ratio, and Secured Leverage Ratio
Net Debt is calculated using the notional principal amount of
outstanding debt. Under GAAP policies, the notional principal
amount of the Company's outstanding debt is not necessarily
reflected on the face of the Company's financial statements.
The Net Debt and Leverage calculations are as follows:
September 30,
2024
(in thousands)
2014-2C Tower Securities
$
620,000
2019-1C Tower Securities
1,165,000
2020-1C Tower Securities
750,000
2020-2C Tower Securities
600,000
2021-1C Tower Securities
1,165,000
2021-2C Tower Securities
895,000
2021-3C Tower Securities
895,000
2022-1C Tower Securities
850,000
Revolving Credit Facility
160,000
2024 Term Loan
2,288,500
Total secured debt
9,388,500
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
3,000,000
Total debt
$
12,388,500
Leverage
Ratio
Total debt
$
12,388,500
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(263,603
)
Net debt
$
12,124,897
Divided by: Annualized Adjusted EBITDA
$
1,890,480
Leverage Ratio
6.4x
Secured Leverage
Ratio
Total secured debt
$
9,388,500
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(263,603
)
Net Secured Debt
$
9,124,897
Divided by: Annualized Adjusted EBITDA
$
1,890,480
Secured Leverage Ratio
4.8x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028810261/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
SBA Communications (NASDAQ:SBAC)
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From Oct 2024 to Nov 2024
SBA Communications (NASDAQ:SBAC)
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From Nov 2023 to Nov 2024
