SBA Communications Corporation (Nasdaq:SBAC) ("SBA" or the
"Company") today reported results for the quarter ended September
30, 2016.
“The third quarter was another solid quarter for
SBA,” commented Jeffrey A. Stoops, President and Chief Executive
Officer. “Organic leasing demand was steady, consistent with
both the type and amount of customer activity experienced all
year. Amendment activity in the U.S. was very strong, with
our customers adding to or modifying existing macro sites to refarm
2G and 3G uses to 4G LTE or to add new spectrum to their
networks. In our international markets, customer activity was
more balanced between new macro sites and additions or
modifications to existing macro sites. Our Outlook for the
Fourth Quarter of 2016 assumes customer activity remains materially
the same as we have experienced during the first three quarters of
the year. We executed very well in the third quarter,
producing once again industry-leading operating margins. We
allocated capital in the quarter opportunistically and in our
opinion very attractively, spread among portfolio growth, stock
repurchases and ground purchases. We ended the quarter within our
target leverage range. Finally, we completed a refinancing of
a material portion of our indebtedness on very favorable terms,
substantially reducing our interest costs on that portion of our
capital structure. AFFO continues to increase, and our share
count continues to decrease. We expect this same trend to continue
in the fourth quarter. Our third quarter success in each of these
areas, organic growth, operating performance, asset growth, stock
repurchases and financing, positively contributes to our long term
goal of producing AFFO of $10 or more per share in 2020.”
Operating Results
Total revenues in the third quarter of 2016 were
$411.3 million compared to $410.7 million in the year earlier
period, an increase of 0.1%. Site leasing revenue of $388.2 million
increased 4.3% over the year earlier period. Domestic site leasing
revenue and International site leasing revenue were $319.1 million
and $69.1 million, respectively, in the third quarter of 2016.
Domestic cash site leasing revenue was $316.8 million in the third
quarter of 2016 compared to $306.9 million in the year earlier
period, an increase of 3.2%. International cash site leasing
revenue was $64.0 million in the third quarter of 2016 compared to
$53.5 million in the year earlier period, an increase of 19.7%.
Eliminating the impact of changes in foreign currency exchange
rates, total site leasing revenue and International cash site
leasing revenue would have increased 3.3% and 13.2%, respectively,
over the year earlier period. Site development revenues were $23.2
million in the third quarter of 2016 compared to $38.7 million in
the year earlier period, a decrease of 40.2%.
Site leasing operating profit was $301.8
million, an increase of 3.8% over the year earlier period. Site
leasing contributed 98.7% of the Company’s total operating profit
in the third quarter of 2016. Domestic site leasing segment
operating profit was $253.8 million, an increase of 1.7% over the
year earlier period. International site leasing segment operating
profit was $48.1 million, a increase of 16.9% when compared to the
year earlier period. Eliminating the impact of changes in foreign
currency exchange rates, total site leasing operating profit and
International site leasing segment operating profit would have
increased 3.0% and 10.9%, respectively, over the year earlier
period.
Tower Cash Flow for the third quarter of 2016
was $302.8 million, a 5.3% increase over the year earlier period.
Tower Cash Flow Margin for the third quarter of 2016 was 79.5%
compared to 79.8% in the year earlier period. Domestic Tower Cash
Flow for the third quarter of 2016 was $258.9 million compared to
$251.0 million in the year earlier period, an increase of 3.2%.
International Tower Cash Flow for the third quarter of 2016 was
$43.9 million compared to $36.6 million in the year earlier period,
an increase of 19.9%. Eliminating the impact of foreign currency
exchange rates, total Tower Cash Flow and International Tower Cash
Flow would have increased 4.5% and 14.0%, respectively, over the
year earlier period.
Site development segment operating profit margin
was 17.4% in the third quarter of 2016 compared to 21.6% in the
year earlier period.
Net Cash Interest Expense was $80.3 million in
the third quarter of 2016 compared to $80.6 million in the year
earlier period.
Net loss for the third quarter of 2016 was $15.4
million or $0.12 per share compared to a net loss of $155.9 million
or $1.23 per share in the year earlier period. Net loss for the
third quarter of 2016 included a $34.5 million loss on the
extinguishment of the 5.75% Senior Notes and the 2010-2C Tower
Securities. Net loss for the third quarter of 2015 included a
$112.1 million loss on the remeasurement of the Brazilian
intercompany loan.
Adjusted EBITDA in the third quarter of 2016 was
$283.2 million compared to $275.2 million in the year earlier
period, an increase of 2.9%. Eliminating the impact of foreign
currency exchange rates, Adjusted EBITDA would have increased 2.2%
over the year earlier period. Adjusted EBITDA Margin was 70.1% in
the third quarter of 2016 compared to 69.0% in the year earlier
period.
AFFO increased 4.1% to $191.5 million in the
third quarter of 2016 compared to $183.9 million in the year
earlier period. AFFO per share increased 7.0% to $1.53 in the third
quarter of 2016 compared to $1.43 in the year earlier period. On a
constant currency basis and excluding iDen specific churn, AFFO per
share would have increased 9.8% over the year earlier period.
Investing Activities
During the third quarter of 2016, SBA purchased
157 communication sites for $30.9 million in cash. SBA also built
93 towers during the third quarter of 2016. As of September
30, 2016, SBA owned or operated 25,878 communication sites, 15,845
of which are located in the United States and its territories, and
10,033 of which are located internationally. In addition, the
Company spent $11.5 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the third
quarter of 2016 were $76.4 million, consisting of $8.1 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $68.3 million of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
Subsequent to the third quarter of 2016, the Company acquired 41
communication sites for an aggregate consideration of $16.0 million
in cash. In addition, the Company has agreed to purchase in the
U.S. and internationally 294 communication sites for an aggregate
amount of $68.5 million. The Company anticipates that most of these
acquisitions will be consummated by the end of the first quarter of
2017.
Financing Activities and Liquidity
SBA ended the third quarter with $9.1 billion of
total debt, $6.8 billion of total secured debt, $717.9 million of
cash and cash equivalents, short-term restricted cash, and
short-term investments (which amount reflects funds received from
the offering of the 2016 Senior Notes described below but not yet
used as of the end of the quarter to redeem the 5.625% Senior Notes
as discussed below), and $8.4 billion of Net Debt. SBA’s Net
Debt and Net Secured Debt to Annualized Adjusted EBITDA Leverage
Ratios were 7.4x and 5.4x, respectively.
As of the date of this press release, SBA had
$100.0 million outstanding under its $1.0 billion Revolving Credit
Facility.
During the third quarter of 2016, the Company
repurchased 0.5 million shares of its Class A common stock for
$52.3 million, at an average price per share of $108.63. Subsequent
to the third quarter of 2016, the Company repurchased 0.2 million
shares of its Class A common stock for $25.1 million, at an average
price per share of $108.76. As of the date of this press release,
the Company had a remaining authorization to repurchase $472.6
million of Class A common stock under its current $1.0 billion
stock repurchase program.
On July 7, 2016, the Company, through its
existing SBA Tower Trust, issued $700.0 million of 2.877% Secured
Tower Revenue Securities Series 2016-1C which have an anticipated
repayment date of July 2021 and a final maturity date of July 2046
(the “2016 Tower Securities”). Net proceeds from this offering were
used to make a cash distribution to SBA Guarantor LLC which were
further distributed (1) to prepay the full $550.0 million
outstanding on the 5.101% Secured Tower Revenue Securities Series
2010-2C and (2) for general corporate purposes.
On August 15, 2016, the Company issued $1.1
billion in aggregate principal amount of its 4.875% Senior Notes
due 2024 (the "2016 Senior Notes"). Net proceeds from the 2016
Senior Notes were used (1) to redeem all of the outstanding
principal amount of the 5.75% Senior Notes due 2020 and $250.0
million of the outstanding principal amount of the 5.625% Senior
Notes and the associated call premium and (2) for general corporate
purposes.
On October 1, 2016, the Company redeemed in full
the $500.0 million outstanding on the 5.625% Senior Notes and on
October 3, 2016 paid the principal, associated call premium, and
accrued interest using net proceeds from the 2016 Senior Notes
(described above), borrowings under the Revolving Credit Facility,
and cash on hand.
Outlook
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 fourth quarter 2016 Outlook and
full year 2016 Outlook assume the acquisitions of only those
communication sites under contract at the time of this press
release. The Company may spend additional capital in 2016 on
acquiring revenue producing assets not yet identified or under
contract, the impact of which is not reflected in the 2016
guidance. The Outlook does not contemplate any new financings or
any additional repurchases of the Company’s stock during 2016 other
than those financings and repurchases completed as of the date of
this press release.
The Company’s updated Outlook assumes an average
foreign currency exchange rate of 3.25 and 3.48 Brazilian Reais to
1.0 U.S. Dollar and 1.30 and 1.32 Canadian Dollars to 1.0 U.S.
Dollar for the fourth quarter of 2016 and full year 2016 Outlook,
respectively. When compared to the Company’s full year 2016 Outlook
provided July 28, 2016, the variances in the actual third quarter
foreign currency exchange rates versus the Company’s assumptions,
and the changes in the Company’s foreign currency rate assumptions
for the remainder of the year positively impacted the full year
2016 Outlook by approximately $5.5 million for Site Leasing
Revenue, $3.2 million for Tower Cash Flow, $3.0 million for
Adjusted EBITDA, and $3.2 million for AFFO.
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Quarter ending |
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Full |
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December 31, 2016 |
|
Year 2016 |
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|
($'s in millions) |
Site leasing revenue
(1) |
$ |
390.5 |
to |
$ |
395.5 |
|
$ |
1,535.0 |
to |
$ |
1,540.0 |
Site development
revenue |
$ |
21.5 |
to |
$ |
26.5 |
|
$ |
93.7 |
to |
$ |
98.7 |
Total revenues |
$ |
412.0 |
to |
$ |
422.0 |
|
$ |
1,628.7 |
to |
$ |
1,638.7 |
Tower Cash Flow
(2) |
$ |
303.5 |
to |
$ |
308.5 |
|
$ |
1,194.0 |
to |
$ |
1,199.0 |
Adjusted EBITDA
(2)(3) |
$ |
283.0 |
to |
$ |
288.0 |
|
$ |
1,119.0 |
to |
$ |
1,124.0 |
Net cash interest
expense (4) |
$ |
73.5 |
to |
$ |
75.5 |
|
$ |
316.7 |
to |
$ |
318.7 |
Non-discretionary cash
capital expenditures (5) |
$ |
8.0 |
to |
$ |
9.0 |
|
$ |
32.6 |
to |
$ |
33.6 |
AFFO (2)(3) |
$ |
195.5 |
to |
$ |
204.5 |
|
$ |
755.2 |
to |
$ |
764.2 |
Discretionary cash
capital expenditures (6) |
$ |
75.0 |
to |
$ |
85.0 |
|
$ |
346.1 |
to |
$ |
356.1 |
(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)
Full year 2016 Outlook excludes the impact of the $16.5 million Oi
reserve recorded in Q2 2016.(4) 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. (5) Consists of tower maintenance and
general corporate capital expenditures.(6) Consists of new tower
builds, tower augmentations, communication site acquisitions and
ground lease purchases. Does not include expenditures for revenue
producing assets not under contract at the date of this press
release.
Conference Call Information
SBA Communications Corporation will host a
conference call on Tuesday, November 1, 2016 at 5:00 PM (ET) to
discuss the quarterly results. The call may be accessed as
follows:
When: |
Tuesday, November 1, 2016 at 5:00 PM (ET) |
Dial-in Number: |
(800) 230-1085 |
Conference Name: |
SBA third quarter results |
Replay Available: |
November 1, 2016 at 8:00 PM (ET) through November
15, 2016 at 11:59 PM (ET) |
Replay Number: |
(800) 475-6701 |
Access Code: |
401885 |
Internet Access: |
www.sbasite.com |
Information Concerning Forward-Looking
Statements
This press release includes forward-looking
statements, including statements regarding the Company’s
expectations or beliefs regarding (i) the Company’s long term goal
of producing AFFO of $10 or more per share in 2020, (ii) the impact
of the Company’s organic growth, operating performance, asset
growth, stock repurchases and financing on such goal, (iii) the
increase in AFFO per share and decrease in the Company’s share
count in the fourth quarter of 2016, (iv) the Company’s stock
repurchase program and the impact of stock repurchases, (v) the
Company’s financial and operational guidance for the fourth quarter
of 2016 and full year 2016, (vi) timing of closing for currently
pending acquisitions, (vii) spending additional capital in 2016 on
acquiring revenue producing assets not yet identified or under
contract, (viii) Canada and Brazil’s foreign exchange rates and
their impact on the Company’s financial and operational guidance,
(ix) the impact associated with iDen and non-iDen churn, (x) its
ability to qualify and to remain qualified as a REIT and the timing
of such qualification, and (xi) that the Company’s business is
currently operated in a manner that complies with the REIT rules.
These forward-looking statements may be affected by the risks and
uncertainties in the Company’s business. This information 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 annual report on Form
10-K filed with the Commission on February 26, 2016.
The Company wishes to caution readers that
certain 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 ability and willingness of wireless service
providers to maintain or increase their capital expenditures; (2)
the Company’s ability to identify and acquire sites at prices and
upon terms that will allow the portfolio growth to be accretive;
(3) the Company’s ability to accurately identify 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
impact of continued consolidation among wireless service providers
on the Company’s leasing revenue; (6) the Company’s ability to
successfully manage the risks associated with international
operations, including risks associated with foreign currency
exchange rates; (7) the Company’s ability to secure and deliver
anticipated services business at contemplated margins; (8) the
Company’s ability to maintain expenses and cash capital
expenditures at appropriate levels for its business while seeking
to attain its investment goals; (9) the Company’s ability to
acquire land underneath towers on terms that are accretive; (10)
the Company’s ability to realize economies of scale from its tower
portfolio; (11) the economic climate for the wireless
communications industry in general and the wireless communications
infrastructure providers in particular in the United States,
Brazil, and internationally; (12) the continued dependence on
towers and outsourced site development services by the wireless
carriers; (13) the Company’s ability to protect its rights to land
under its towers; (14) the Company’s ability to obtain future
financing at commercially reasonable rates or at all; (15) the
Company’s ability to continue to receive payments from Oi in
accordance with the terms of our contracts; and (16) the Company’s
ability to qualify for treatment as a REIT for U.S. federal income
tax purposes and to comply with and conduct its business in
accordance with such rules. With respect to the Company’s plan for
new builds, these factors also include zoning and regulatory
approvals, weather, 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 2016. 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 and
its ability to accurately anticipate the future performance of the
acquired towers, 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. With respect to 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.
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 first choice
provider and leading owner and operator of wireless communications
infrastructure in North, Central, and South America. By “Building
Better Wireless,” SBA generates revenue from two primary businesses
– site leasing and site development services. The primary focus of
the Company is the leasing of antenna space on its multi-tenant
communication sites to a variety of wireless service providers
under long-term lease contracts. 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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
|
|
Site leasing |
|
$ |
|
388,168 |
|
|
$ |
|
371,993 |
|
|
$ |
|
1,144,461 |
|
|
$ |
|
1,112,182 |
|
Site development |
|
|
|
23,151 |
|
|
|
|
38,742 |
|
|
|
|
72,159 |
|
|
|
|
119,351 |
|
Total revenues |
|
|
|
411,319 |
|
|
|
|
410,735 |
|
|
|
|
1,216,620 |
|
|
|
|
1,231,533 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of
depreciation, accretion, |
|
|
|
|
|
|
|
|
|
|
|
|
and amortization shown
below): |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of site leasing |
|
|
|
86,354 |
|
|
|
|
81,346 |
|
|
|
|
255,609 |
|
|
|
|
243,298 |
|
Cost of site development |
|
|
|
19,114 |
|
|
|
|
30,387 |
|
|
|
|
59,021 |
|
|
|
|
91,662 |
|
Selling, general, and
administrative (1)(2) |
|
|
|
32,255 |
|
|
|
|
27,872 |
|
|
|
|
110,326 |
|
|
|
|
86,017 |
|
Acquisition related
adjustments and expenses |
|
|
|
2,970 |
|
|
|
|
364 |
|
|
|
|
8,974 |
|
|
|
|
7,483 |
|
Asset impairment and
decommission costs |
|
|
|
2,305 |
|
|
|
|
63,353 |
|
|
|
|
23,180 |
|
|
|
|
74,185 |
|
Depreciation,
accretion, and amortization |
|
|
|
160,111 |
|
|
|
|
164,330 |
|
|
|
|
479,635 |
|
|
|
|
498,560 |
|
Total operating expenses |
|
|
|
303,109 |
|
|
|
|
367,652 |
|
|
|
|
936,745 |
|
|
|
|
1,001,205 |
|
Operating income |
|
|
|
108,210 |
|
|
|
|
43,083 |
|
|
|
|
279,875 |
|
|
|
|
230,328 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
3,101 |
|
|
|
|
1,276 |
|
|
|
|
7,704 |
|
|
|
|
2,284 |
|
Interest expense |
|
|
|
(83,426 |
) |
|
|
|
(81,877 |
) |
|
|
|
(250,913 |
) |
|
|
|
(238,439 |
) |
Non-cash interest expense |
|
|
|
(585 |
) |
|
|
|
(449 |
) |
|
|
|
(1,500 |
) |
|
|
|
(1,051 |
) |
Amortization of deferred financing
fees |
|
|
|
(5,445 |
) |
|
|
|
(4,803 |
) |
|
|
|
(16,035 |
) |
|
|
|
(13,973 |
) |
Loss from extinguishment of debt,
net |
|
|
|
(34,512 |
) |
|
|
— |
|
|
|
(34,512 |
) |
|
|
— |
Other income (expense), net |
|
|
|
(1,139 |
) |
|
|
|
(111,250 |
) |
|
|
|
92,137 |
|
|
|
|
(178,710 |
) |
Total other expense |
|
|
|
(122,006 |
) |
|
|
|
(197,103 |
) |
|
|
|
(203,119 |
) |
|
|
|
(429,889 |
) |
Income (loss) before provision for
income taxes |
|
|
|
(13,796 |
) |
|
|
|
(154,020 |
) |
|
|
|
76,756 |
|
|
|
|
(199,561 |
) |
Provision for income
taxes |
|
|
|
(1,574 |
) |
|
|
|
(1,926 |
) |
|
|
|
(5,780 |
) |
|
|
|
(7,112 |
) |
Net income (loss) |
|
$ |
|
(15,370 |
) |
|
$ |
|
(155,946 |
) |
|
$ |
|
70,976 |
|
|
$ |
|
(206,673 |
) |
Net income (loss) per
common share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
|
(0.12 |
) |
|
$ |
|
(1.23 |
) |
|
$ |
|
0.57 |
|
|
$ |
|
(1.61 |
) |
Diluted |
|
$ |
|
(0.12 |
) |
|
$ |
|
(1.23 |
) |
|
$ |
|
0.56 |
|
|
$ |
|
(1.61 |
) |
Weighted average number
of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
124,604 |
|
|
|
|
127,170 |
|
|
|
|
125,041 |
|
|
|
|
128,397 |
|
Diluted |
|
|
|
124,604 |
|
|
|
|
127,170 |
|
|
|
|
125,742 |
|
|
|
|
128,397 |
|
(1) Includes non-cash compensation of $7,970 and $6,631 for the
three months ended September 30, 2016 and 2015, respectively, and
$24,440 and $21,604 for the nine months ended September 30, 2016
and 2015, respectively.(2) Includes the impact of the $16,498 Oi
reserve for the nine months ended September 30, 2016.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands, except par
values) |
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2016 |
|
2015 |
ASSETS |
|
(unaudited) |
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
165,225 |
|
|
$ |
|
118,039 |
|
Restricted cash |
|
|
|
552,473 |
|
|
|
|
25,353 |
|
Short-term investments |
|
|
|
221 |
|
|
|
|
706 |
|
Accounts receivable, net |
|
|
|
74,637 |
|
|
|
|
83,326 |
|
Costs and estimated earnings in
excess of billings on uncompleted contracts |
|
|
|
12,011 |
|
|
|
|
16,934 |
|
Prepaid and other current
assets |
|
|
|
53,632 |
|
|
|
|
49,602 |
|
Total current assets |
|
|
|
858,199 |
|
|
|
|
293,960 |
|
Property and equipment,
net |
|
|
|
2,780,112 |
|
|
|
|
2,782,353 |
|
Intangible assets,
net |
|
|
|
3,710,817 |
|
|
|
|
3,735,413 |
|
Other assets (1) |
|
|
|
566,594 |
|
|
|
|
501,254 |
|
Total assets |
|
$ |
|
7,915,722 |
|
|
$ |
|
7,312,980 |
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT |
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
|
23,904 |
|
|
$ |
|
27,105 |
|
Accrued expenses |
|
|
|
60,474 |
|
|
|
|
63,755 |
|
Current maturities of long-term
debt |
|
|
|
515,876 |
|
|
|
|
20,000 |
|
Deferred revenue |
|
|
|
94,502 |
|
|
|
|
97,083 |
|
Accrued interest |
|
|
|
35,541 |
|
|
|
|
53,365 |
|
Other current liabilities |
|
|
|
8,469 |
|
|
|
|
12,063 |
|
Total current liabilities |
|
|
|
738,766 |
|
|
|
|
273,371 |
|
Long-term
liabilities: |
|
|
|
|
|
|
Long-term debt, net (1) |
|
|
|
8,515,392 |
|
|
|
|
8,432,070 |
|
Other long-term liabilities |
|
|
|
330,626 |
|
|
|
|
313,683 |
|
Total long-term liabilities |
|
|
|
8,846,018 |
|
|
|
|
8,745,753 |
|
|
|
|
|
|
|
|
Shareholders'
deficit: |
|
|
|
|
|
|
Preferred stock - par value $.01,
30,000 shares authorized, no shares issued |
|
|
|
|
|
|
or outstanding |
|
|
— |
|
|
— |
Common stock - Class A, par value
$.01, 400,000 shares authorized, 124,297 |
|
|
|
|
|
|
and 125,743 shares issued and
outstanding at September 30, 2016 |
|
|
|
|
|
|
and December 31, 2015,
respectively |
|
|
|
1,243 |
|
|
|
|
1,257 |
|
Additional paid-in capital |
|
|
|
1,999,503 |
|
|
|
|
1,962,713 |
|
Accumulated deficit |
|
|
|
(3,299,422 |
) |
|
|
|
(3,168,069 |
) |
Accumulated other comprehensive
loss |
|
|
|
(370,386 |
) |
|
|
|
(502,045 |
) |
Total shareholders' deficit |
|
|
|
(1,669,062 |
) |
|
|
|
(1,706,144 |
) |
Total liabilities and shareholders'
deficit |
|
$ |
|
7,915,722 |
|
|
$ |
|
7,312,980 |
|
(1) During the first quarter of 2016, the Company adopted an
accounting standard update on the presentation of debt issuance
costs. The new guidance requires debt issuance costs related to a
recognized debt liability to be presented in the balance sheet as a
direct deduction from the carrying amount of the debt liability on
the condensed consolidated balance sheets. The December 31, 2015
condensed consolidated balance sheet was retrospectively adjusted
to reflect this change.
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS |
(unaudited) (in thousands) |
|
|
|
|
|
|
|
|
|
For the three months |
|
|
ended September 30, |
|
|
2016 |
|
2015 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
|
(15,370 |
) |
|
$ |
|
(155,946 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation, accretion, and
amortization |
|
|
|
160,111 |
|
|
|
|
164,330 |
|
Deferred income tax expense
(benefit) |
|
|
|
(637 |
) |
|
|
|
3 |
|
Non-cash asset impairment and
decommission costs |
|
|
|
1,298 |
|
|
|
|
61,993 |
|
Non-cash compensation expense |
|
|
|
8,076 |
|
|
|
|
6,702 |
|
Amortization of deferred financing
fees |
|
|
|
5,445 |
|
|
|
|
4,803 |
|
Loss on remeasurement of U.S.
denominated intercompany loan |
|
|
|
2,704 |
|
|
|
|
112,130 |
|
Loss from extinguishment of debt,
net |
|
|
|
34,512 |
|
|
|
— |
Other non-cash items reflected in
the Statements of Operations |
|
|
|
2,419 |
|
|
|
|
(2,415 |
) |
Changes in operating assets and
liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts receivable and costs and
estimated earnings in excess of billings |
|
|
|
|
|
|
on uncompleted contracts, net |
|
|
|
(12,413 |
) |
|
|
|
17,781 |
|
Prepaid expenses and other
assets |
|
|
|
(3,971 |
) |
|
|
|
(28,780 |
) |
Accounts payable and accrued
expenses |
|
|
|
(552 |
) |
|
|
|
6,781 |
|
Accrued interest |
|
|
|
(30,963 |
) |
|
|
|
(13,430 |
) |
Other liabilities |
|
|
|
8,413 |
|
|
|
|
(14,747 |
) |
Net cash provided by operating
activities |
|
|
|
159,072 |
|
|
|
|
159,205 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisitions |
|
|
|
(42,698 |
) |
|
|
|
(85,629 |
) |
Capital expenditures |
|
|
|
(33,659 |
) |
|
|
|
(43,919 |
) |
Other investing activities |
|
|
|
5,571 |
|
|
|
|
(573 |
) |
Net cash used in investing
activities |
|
|
|
(70,786 |
) |
|
|
|
(130,121 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Net borrowings (repayments) under
Revolving Credit Facility |
|
|
|
120,000 |
|
|
|
|
240,000 |
|
Repayment of Term Loans |
|
|
|
(5,000 |
) |
|
|
|
(10,000 |
) |
Repurchase and retirement of common
stock, inclusive of fees |
|
|
|
(52,320 |
) |
|
|
|
(250,041 |
) |
Payment of restricted cash to
settle 5.625% Senior Notes |
|
|
|
(514,065 |
) |
|
|
— |
Payment for the redemption of 5.75%
Senior Notes |
|
|
|
(825,795 |
) |
|
|
— |
Proceeds from 2016 Senior Notes,
net of fees and original issue discount |
|
|
|
1,078,387 |
|
|
|
— |
Payment for the redemption of
2010-2C Tower Securities |
|
|
|
(550,000 |
) |
|
|
— |
Proceeds from 2016-1C Tower
Securities, net of fees |
|
|
|
690,584 |
|
|
|
— |
Other financing activities |
|
|
|
1,978 |
|
|
|
|
4,770 |
|
Net cash used in financing
activities |
|
|
|
(56,231 |
) |
|
|
|
(15,271 |
) |
Effect of exchange rate changes on
cash and cash equivalents |
|
|
|
(786 |
) |
|
|
|
(10,388 |
) |
NET INCREASE IN CASH
AND CASH EQUIVALENTS |
|
|
|
31,269 |
|
|
|
|
3,425 |
|
CASH AND CASH
EQUIVALENTS: |
|
|
|
|
|
|
Beginning of period |
|
|
|
133,956 |
|
|
|
|
69,846 |
|
End of period |
|
$ |
|
165,225 |
|
|
$ |
|
73,271 |
|
Selected Capital Expenditure Detail
|
|
|
|
|
|
|
|
|
For the three |
|
For the nine |
|
|
months ended |
|
months ended |
|
|
September 30, 2016 |
|
September 30, 2016 |
|
|
|
|
|
|
|
|
|
(in thousands) |
New tower build
construction |
|
$ |
16,795 |
|
$ |
51,487 |
Tower
upgrades/augmentations |
|
|
8,805 |
|
|
28,201 |
Non-discretionary
capital expenditures: |
|
|
|
|
|
|
Maintenance/improvement capital
expenditures |
|
|
7,076 |
|
|
21,125 |
General corporate expenditures |
|
|
983 |
|
|
3,507 |
Total non-discretionary capital
expenditures |
|
|
8,059 |
|
|
24,632 |
Total capital expenditures |
|
$ |
33,659 |
|
$ |
104,320 |
Communication Site Portfolio Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
International |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sites owned at June 30,
2016 |
|
|
15,843 |
|
|
|
9,827 |
|
|
|
25,670 |
|
Sites acquired during
the third quarter |
|
|
34 |
|
|
|
123 |
|
|
|
157 |
|
Sites built during the
third quarter |
|
|
8 |
|
|
|
85 |
|
|
|
93 |
|
Sites
reclassified/decommissioned during the third quarter |
|
|
(40 |
) |
|
|
(2 |
) |
|
|
(42 |
) |
Sites owned at September 30,
2016 |
|
|
15,845 |
|
|
|
10,033 |
|
|
|
25,878 |
|
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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Segment revenue |
|
$ |
|
319,109 |
|
|
$ |
|
313,131 |
|
|
$ |
|
69,059 |
|
|
$ |
|
58,862 |
|
|
$ |
|
23,151 |
|
|
$ |
|
38,742 |
|
Segment cost of
revenues (excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, accretion,
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization) |
|
|
|
(65,353 |
) |
|
|
|
(63,587 |
) |
|
|
|
(21,001 |
) |
|
|
|
(17,759 |
) |
|
|
|
(19,114 |
) |
|
|
|
(30,387 |
) |
Segment operating profit |
|
$ |
|
253,756 |
|
|
$ |
|
249,544 |
|
|
$ |
|
48,058 |
|
|
$ |
|
41,103 |
|
|
$ |
|
4,037 |
|
|
$ |
|
8,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit
margin |
|
|
|
79.5 |
% |
|
|
|
79.7 |
% |
|
|
|
69.6 |
% |
|
|
|
69.8 |
% |
|
|
|
17.4 |
% |
|
|
|
21.6 |
% |
Non-GAAP Financial Measures
The press release contains non-GAAP financial
measures including (i) Cash Site Leasing Revenue; (ii) Tower Cash
Flow and Tower Cash Flow Margin; (iii) Adjusted EBITDA, Annualized
Adjusted EBITDA, and Adjusted EBITDA Margin; (iv) Net Debt, Net
Secured Debt, Leverage Ratio, and Secured Leverage Ratio
(collectively, our “Non-GAAP Debt Measures”); (v) Funds from
Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), and
AFFO per share; and (vi) certain financial metrics after
eliminating the impact of changes in foreign currency exchange
rates (collectively, our “Constant Currency Measures”), the impact
of iDen-related churn, and the impact of the Oi
reserve.
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. On October 3, 2016, SBA’s Board
authorized SBA to take the steps necessary to be subject to tax as
a REIT commencing with the taxable year ending December 31, 2016.
We believe that we are operating in a manner that complies with the
REIT rules as of January 1, 2016. As a result, we have updated our
definition of FFO. Under the revised definition, FFO no longer
includes an adjustment to reflect our estimate of our cash taxes
had we been a REIT. However, AFFO continues to exclude the non-cash
portion of our reported tax provision. We refer to the prior
definition as FFO, as previously defined. 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). 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 our
(1) asset base (primarily depreciation, amortization and accretion)
and (2) certain non-cash items, including straight-lined revenues
and expenses related to fixed escalations and rent free periods.
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;
(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;
(6) Excluding the impact of iDen-related churn,
which represents the roll-off of Sprint leases for the discontinued
technology, provides management and investors a better
understanding of our core growth rate without the impact of what we
believe is a non-recurring event; and
(7) Excluding the Oi reserve provides management
and investors the ability to better analyze our core results
without the impact of what we believe is a non-recurring event.
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
2014 Senior Notes and 2016 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 and the Impact of 2015 iDen-related
Churn
We eliminate the impact of changes in foreign
currency exchange rates for each of the following financial metrics
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period. The table
below provides the reconciliation of the reported growth rate
year-over-year of each of the following measures to the growth rate
after eliminating the impact of changes in foreign currency
exchange rates to such measure: (1) total site leasing revenue,
total cash site leasing revenue, and International cash site
leasing revenue, (2) total site leasing segment operating profit
and International site leasing segment operating profit, (3) total
Tower Cash Flow and International Tower Cash Flow, (4) Adjusted
EBITDA, and (5) AFFO and AFFO per share. The table also provides
the reconciliation of the reported year-over-year growth rates of
these measures to the growth rates after eliminating the impact of
the iDen-related lease terminations that occurred during 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth |
|
|
Third |
|
|
|
Growth |
|
|
|
excluding |
|
|
quarter |
|
|
|
excluding |
|
|
|
foreign |
|
|
2016 year |
|
Foreign |
|
foreign |
|
iDen |
|
currency, and |
|
|
over year |
|
currency |
|
currency |
|
churn |
|
iDen churn |
|
|
growth rate |
|
impact |
|
impact |
|
impact |
|
impact |
|
|
|
|
|
|
|
|
|
|
|
Total site leasing
revenue |
|
|
4.3 |
% |
|
|
1.0 |
% |
|
|
3.3 |
% |
|
|
(2.2 |
%) |
|
|
5.5 |
% |
Total cash site leasing
revenue |
|
|
5.7 |
% |
|
|
1.0 |
% |
|
|
4.7 |
% |
|
|
(2.3 |
%) |
|
|
7.0 |
% |
Int'l cash site leasing
revenue |
|
|
19.7 |
% |
|
|
6.5 |
% |
|
|
13.2 |
% |
|
-- |
|
|
13.2 |
% |
Total site leasing
segment oper. profit |
|
|
3.8 |
% |
|
|
0.8 |
% |
|
|
3.0 |
% |
|
|
(2.8 |
%) |
|
|
5.8 |
% |
Int'l site leasing
segment oper. profit |
|
|
16.9 |
% |
|
|
6.0 |
% |
|
|
10.9 |
% |
|
-- |
|
|
10.9 |
% |
Total site leasing
tower cash flow |
|
|
5.3 |
% |
|
|
0.8 |
% |
|
|
4.5 |
% |
|
|
(2.9 |
%) |
|
|
7.4 |
% |
Int'l site leasing
tower cash flow |
|
|
19.9 |
% |
|
|
5.9 |
% |
|
|
14.0 |
% |
|
-- |
|
|
14.0 |
% |
Adjusted EBITDA |
|
|
2.9 |
% |
|
|
0.7 |
% |
|
|
2.2 |
% |
|
|
(3.0 |
%) |
|
|
5.2 |
% |
AFFO |
|
|
4.1 |
% |
|
|
1.1 |
% |
|
|
3.0 |
% |
|
|
(4.5 |
%) |
|
|
7.5 |
% |
AFFO per share |
|
|
7.0 |
% |
|
|
1.4 |
% |
|
|
5.6 |
% |
|
|
(4.2 |
%) |
|
|
9.8 |
% |
Cash Site Leasing Revenue, Tower Cash Flow, and
Tower Cash Flow Margin
The tables below set 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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Site leasing
revenue |
|
$ |
|
319,109 |
|
|
$ |
|
313,131 |
|
|
$ |
|
69,059 |
|
|
$ |
|
58,862 |
|
|
$ |
|
388,168 |
|
|
$ |
|
371,993 |
|
Non-cash straight-line
leasing revenue |
|
|
|
(2,280 |
) |
|
|
|
(6,247 |
) |
|
|
|
(5,054 |
) |
|
|
|
(5,395 |
) |
|
|
|
(7,334 |
) |
|
|
|
(11,642 |
) |
Cash site leasing revenue |
|
|
|
316,829 |
|
|
|
|
306,884 |
|
|
|
|
64,005 |
|
|
|
|
53,467 |
|
|
|
|
380,834 |
|
|
|
|
360,351 |
|
Site leasing cost of
revenues (excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation,
accretion, and amortization) |
|
|
|
(65,353 |
) |
|
|
|
(63,587 |
) |
|
|
|
(21,001 |
) |
|
|
|
(17,759 |
) |
|
|
|
(86,354 |
) |
|
|
|
(81,346 |
) |
Non-cash straight-line
ground lease expense |
|
|
|
7,420 |
|
|
|
|
7,657 |
|
|
|
|
903 |
|
|
|
|
898 |
|
|
|
|
8,323 |
|
|
|
|
8,555 |
|
Tower Cash Flow |
|
$ |
|
258,896 |
|
|
$ |
|
250,954 |
|
|
$ |
|
43,907 |
|
|
$ |
|
36,606 |
|
|
$ |
|
302,803 |
|
|
$ |
|
287,560 |
|
Tower Cash Flow Margin |
|
|
|
81.7 |
% |
|
|
|
81.8 |
% |
|
|
|
68.6 |
% |
|
|
|
68.5 |
% |
|
|
|
79.5 |
% |
|
|
|
79.8 |
% |
Forecasted Tower Cash Flow for Quarter Ended
December 31, 2016 and Full Year 2016
The tables below set forth the reconciliation of
forecasted Tower Cash Flow set forth in the Outlook section to its
most comparable GAAP measurement for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Site Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ending |
|
Full |
|
December 31, 2016 |
|
Year 2016 |
|
($'s in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Site leasing
revenue |
$ |
|
390.5 |
|
to |
$ |
|
395.5 |
|
|
$ |
|
1,535.0 |
|
to |
$ |
|
1,540.0 |
|
Non-cash straight-line
leasing revenue |
|
|
(7.5 |
) |
to |
|
|
(6.5 |
) |
|
|
|
(32.5 |
) |
to |
|
|
(31.5 |
) |
Cash site leasing revenue |
|
|
383.0 |
|
to |
|
|
389.0 |
|
|
|
|
1,502.5 |
|
to |
|
|
1,508.5 |
|
Site leasing cost of
revenues (excluding |
|
|
|
|
|
|
|
|
|
|
|
depreciation,
accretion, and amortization) |
|
|
(87.0 |
) |
to |
|
|
(89.0 |
) |
|
|
|
(342.5 |
) |
to |
|
|
(344.5 |
) |
Non-cash straight-line
ground lease expense |
|
|
7.5 |
|
to |
|
|
8.5 |
|
|
|
|
34.0 |
|
to |
|
|
35.0 |
|
Tower Cash Flow |
$ |
|
303.5 |
|
to |
$ |
|
308.5 |
|
|
$ |
|
1,194.0 |
|
to |
$ |
|
1,199.0 |
|
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, |
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Net
loss |
|
$ |
|
(15,370 |
) |
|
$ |
|
(155,946 |
) |
Non-cash straight-line
leasing revenue |
|
|
|
(7,334 |
) |
|
|
|
(11,642 |
) |
Non-cash straight-line
ground lease expense |
|
|
|
8,323 |
|
|
|
|
8,555 |
|
Non-cash
compensation |
|
|
|
8,076 |
|
|
|
|
6,702 |
|
Loss from
extinguishment of debt, net |
|
|
|
34,512 |
|
|
|
— |
Other (income)
expense |
|
|
|
1,139 |
|
|
|
|
111,250 |
|
Acquisition related
adjustments and expenses |
|
|
|
2,970 |
|
|
|
|
364 |
|
Asset impairment and
decommission costs |
|
|
|
2,305 |
|
|
|
|
63,353 |
|
Interest income |
|
|
|
(3,101 |
) |
|
|
|
(1,276 |
) |
Total interest expense
(1) |
|
|
|
89,456 |
|
|
|
|
87,129 |
|
Depreciation,
accretion, and amortization |
|
|
|
160,111 |
|
|
|
|
164,330 |
|
Provision for taxes
(2) |
|
|
|
2,123 |
|
|
|
|
2,369 |
|
Adjusted EBITDA |
|
$ |
|
283,210 |
|
|
$ |
|
275,188 |
|
Annualized Adjusted
EBITDA (3) |
|
$ |
|
1,132,840 |
|
|
$ |
|
1,100,752 |
|
(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, 2016
and 2015, these amounts included $549 and $443, respectively, 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, |
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Total revenues |
|
|
|
|
$ |
|
411,319 |
|
|
$ |
|
410,735 |
|
Non-cash straight-line
leasing revenue |
|
|
|
|
|
|
(7,334 |
) |
|
|
|
(11,642 |
) |
Total revenues minus non-cash
straight-line leasing revenue |
|
|
|
|
$ |
|
403,985 |
|
|
$ |
|
399,093 |
|
Adjusted EBITDA |
|
|
|
|
$ |
|
283,210 |
|
|
$ |
|
275,188 |
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
70.1 |
% |
|
|
|
69.0 |
% |
Forecasted Adjusted EBITDA for the Quarter Ended December 31,
2016 and Full Year 2016
The table below sets for the reconciliation of the forecasted
Adjusted EBITDA set forth in the Outlook section to its most
comparable GAAP measurement for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ending |
|
Full |
|
December 31, 2016 |
|
Year 2016 |
|
($'s in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
|
(5.5 |
) |
to |
$ |
|
9.5 |
|
|
$ |
|
67.0 |
|
to |
$ |
|
82.0 |
|
Non-cash straight-line leasing
revenue |
|
|
(7.5 |
) |
to |
|
|
(6.5 |
) |
|
|
|
(32.5 |
) |
to |
|
|
(31.5 |
) |
Non-cash straight-line ground lease
expense |
|
|
7.5 |
|
to |
|
|
8.5 |
|
|
|
|
34.0 |
|
to |
|
|
35.0 |
|
Non-cash compensation |
|
|
9.0 |
|
to |
|
|
7.0 |
|
|
|
|
34.0 |
|
to |
|
|
32.0 |
|
Loss from extinguishment of debt,
net |
|
|
18.0 |
|
to |
|
|
18.0 |
|
|
|
|
52.0 |
|
to |
|
|
52.0 |
|
Other (income) expense |
|
|
5.5 |
|
to |
|
|
5.5 |
|
|
|
|
(87.0 |
) |
to |
|
|
(87.0 |
) |
Acquisition related adjustments and
expenses |
|
|
5.0 |
|
to |
|
|
4.0 |
|
|
|
|
14.0 |
|
to |
|
|
13.0 |
|
Asset impairment and decommission
costs |
|
|
7.0 |
|
to |
|
|
5.0 |
|
|
|
|
30.0 |
|
to |
|
|
28.0 |
|
Interest income |
|
|
(3.5 |
) |
to |
|
|
(2.5 |
) |
|
|
|
(11.0 |
) |
to |
|
|
(10.0 |
) |
Total interest expense (1) |
|
|
84.0 |
|
to |
|
|
82.0 |
|
|
|
|
352.5 |
|
to |
|
|
350.5 |
|
Depreciation, accretion, and
amortization |
|
|
160.5 |
|
to |
|
|
155.5 |
|
|
|
|
639.5 |
|
to |
|
|
634.5 |
|
Provision for taxes |
|
|
3.0 |
|
to |
|
|
2.0 |
|
|
|
|
10.0 |
|
to |
|
|
9.0 |
|
Adjusted EBITDA |
$ |
|
283.0 |
|
to |
$ |
|
288.0 |
|
|
$ |
|
1,102.5 |
|
to |
$ |
|
1,107.5 |
|
Oi reserve |
|
— |
to |
|
— |
|
|
|
16.5 |
|
to |
|
|
16.5 |
|
Adjusted EBITDA net of the Oi
reserve |
$ |
|
283.0 |
|
to |
$ |
|
288.0 |
|
|
$ |
|
1,119.0 |
|
to |
$ |
|
1,124.0 |
|
(1) Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
Funds from Operations (“FFO”) and Adjusted Funds from Operations
(“AFFO”)
We use FFO as defined by NAREIT. Given that we have announced
our intention to elect REIT status as of January 1, 2016 and our
belief that we are operating in a manner that complies with the
REIT rules, FFO no longer includes an adjustment to reflect our
estimate of our cash taxes had we been a REIT. However, AFFO
continues to exclude the non-cash portion of our reported tax
provision.
The tables below set forth the reconciliations of FFO and AFFO
to their most comparable GAAP measurement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months |
|
|
|
|
|
ended September 30, |
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Net
loss |
|
$ |
|
(15,370 |
) |
|
$ |
|
(155,946 |
) |
Real estate
related depreciation, amortization, and accretion |
|
|
|
158,863 |
|
|
|
|
162,811 |
|
FFO (1) |
|
$ |
|
143,493 |
|
|
$ |
|
6,865 |
|
Adjustments
to FFO: |
|
|
|
|
|
|
Non-cash straight-line
leasing revenue |
|
|
|
(7,334 |
) |
|
|
|
(11,642 |
) |
Non-cash straight-line
ground lease expense |
|
|
|
8,323 |
|
|
|
|
8,555 |
|
Non-cash
compensation |
|
|
|
8,076 |
|
|
|
|
6,702 |
|
Adjustment for non-cash
portion of tax provision (2) |
|
|
|
(1,163 |
) |
|
|
|
436 |
|
Non-real estate related
depreciation, amortization, and accretion |
|
|
|
1,248 |
|
|
|
|
1,519 |
|
Amortization of
deferred financing costs and debt discounts |
|
|
|
6,030 |
|
|
|
|
5,252 |
|
Loss from
extinguishment of debt, net |
|
|
|
34,512 |
|
|
|
— |
Other (income)
expense |
|
|
|
1,139 |
|
|
|
|
111,250 |
|
Acquisition related
adjustments and expenses |
|
|
|
2,970 |
|
|
|
|
364 |
|
Asset impairment and
decommission costs |
|
|
|
2,305 |
|
|
|
|
63,353 |
|
Non-discretionary cash
capital expenditures |
|
|
|
(8,059 |
) |
|
|
|
(8,727 |
) |
AFFO |
|
$ |
|
191,540 |
|
|
$ |
|
183,927 |
|
|
|
|
|
|
|
|
Weighted
average number of common shares (3) |
|
|
|
125,381 |
|
|
|
|
128,279 |
|
|
|
|
|
|
|
|
AFFO per
share |
|
$ |
|
1.53 |
|
|
$ |
|
1.43 |
|
(1) FFO, as previously defined, for the third
quarter of 2016 was $142,330, which excludes $1,163 related to the
impact from the update of the definition. FFO, as previously
defined, for the third quarter of 2015 was $7,301, which excludes
$436 related to the impact from the update of the definition.
These amounts represent the adjustment for the non-cash portion of
tax provision in a manner which is consistent with our commencement
of operations as a REIT on January 1, 2016.(2) Adjusts the income
tax provision during the third quarter of 2015 to reflect our
estimate of cash income taxes (primarily foreign taxes) that would
have been payable had we been a REIT. Removes the non-cash portion
of the tax provision for the third quarter of 2016.(3) For purposes
of the AFFO per share calculation, the basic weighted average
number of common shares has been adjusted to include the dilutive
effect of stock options and restricted stock units.
Forecasted AFFO for the Quarter Ended December 31, 2016 and Full
Year 2016
The table below sets forth the reconciliation of the forecasted
AFFO set forth in the Outlook section to its most comparable GAAP
measurement for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ending |
|
Full |
|
December 31, 2016 |
|
Year 2016 |
|
($'s in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
|
(5.5 |
) |
to |
$ |
|
9.5 |
|
|
$ |
|
67.0 |
|
to |
$ |
|
82.0 |
|
Real estate related
deprec., amort., and accretion |
|
|
158.5 |
|
to |
|
|
153.5 |
|
|
|
|
631.5 |
|
to |
|
|
626.5 |
|
FFO (1) |
$ |
|
153.0 |
|
to |
$ |
|
163.0 |
|
|
$ |
|
698.5 |
|
to |
$ |
|
708.5 |
|
Adjustments to
FFO: |
|
|
|
|
|
|
|
|
|
|
|
Non-cash straight-line leasing
revenue |
|
|
(7.5 |
) |
to |
|
|
(6.5 |
) |
|
|
|
(32.5 |
) |
to |
|
|
(31.5 |
) |
Non-cash straight-line ground lease
expense |
|
|
7.5 |
|
to |
|
|
8.5 |
|
|
|
|
34.0 |
|
to |
|
|
35.0 |
|
Non-cash compensation |
|
|
9.0 |
|
to |
|
|
7.0 |
|
|
|
|
34.0 |
|
to |
|
|
32.0 |
|
Adjustment for non-cash portion of
tax provision (2) |
|
|
(0.5 |
) |
to |
|
|
1.5 |
|
|
|
|
(0.2 |
) |
to |
|
|
1.8 |
|
Non-real estate related deprec.,
amort., and accretion |
|
|
2.0 |
|
to |
|
|
2.0 |
|
|
|
|
8.0 |
|
to |
|
|
8.0 |
|
Amort. of deferred financing costs
and debt discounts |
|
|
4.5 |
|
to |
|
|
5.5 |
|
|
|
|
20.5 |
|
to |
|
|
21.5 |
|
Loss from extinguishment of debt,
net |
|
|
18.0 |
|
to |
|
|
18.0 |
|
|
|
|
52.0 |
|
to |
|
|
52.0 |
|
Other (income) expense |
|
|
5.5 |
|
to |
|
|
5.5 |
|
|
|
|
(87.0 |
) |
to |
|
|
(87.0 |
) |
Acquisition related adjustments and
expenses |
|
|
5.0 |
|
to |
|
|
4.0 |
|
|
|
|
14.0 |
|
to |
|
|
13.0 |
|
Asset impairment and decommission
costs |
|
|
7.0 |
|
to |
|
|
5.0 |
|
|
|
|
30.0 |
|
to |
|
|
28.0 |
|
Non-discretionary cash capital
expenditures |
|
|
(8.0 |
) |
to |
|
|
(9.0 |
) |
|
|
|
(32.6 |
) |
to |
|
|
(33.6 |
) |
AFFO |
$ |
|
195.5 |
|
to |
$ |
|
204.5 |
|
|
$ |
|
738.7 |
|
to |
$ |
|
747.7 |
|
Oi reserve |
|
— |
to |
|
— |
|
|
|
16.5 |
|
to |
|
|
16.5 |
|
AFFO net of the Oi reserve |
$ |
|
195.5 |
|
to |
$ |
|
204.5 |
|
|
$ |
|
755.2 |
|
to |
$ |
|
764.2 |
|
(1) Full year 2016 Outlook for FFO, as previously defined is
$698.2 million to $710.2 million, which excludes the impact of the
adjustment for the non-cash portion of the tax provision.(2)
Adjusts the income tax provision during the third quarter of 2015
to reflect our estimate of cash income taxes (primarily foreign
taxes) that would have been payable had we been a REIT. Removes the
non-cash portion of the tax provision for the third quarter of
2016.
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, |
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
2012-1C
Tower Securities |
|
$ |
|
610,000 |
|
2013-1C
Tower Securities |
|
|
|
425,000 |
|
2013-2C
Tower Securities |
|
|
|
575,000 |
|
2013-1D
Tower Securities |
|
|
|
330,000 |
|
2014-1C
Tower Securities |
|
|
|
920,000 |
|
2014-2C
Tower Securities |
|
|
|
620,000 |
|
2015-1C
Tower Securities |
|
|
|
500,000 |
|
2016-1C
Tower Securities |
|
|
|
700,000 |
|
Revolving
Credit Facility |
|
|
|
150,000 |
|
2014 Term
Loan (carrying value of $1,455,214) |
|
|
|
1,466,250 |
|
2015 Term
Loan (carrying value of $485,344) |
|
|
|
493,750 |
|
Total secured
debt |
|
|
|
6,790,000 |
|
5.625%
Senior Notes |
|
|
|
500,000 |
|
2014
Senior Notes (carrying value of $736,487) |
|
|
|
750,000 |
|
2016
Senior Notes (carrying value of $1,078,665) |
|
|
|
1,100,000 |
|
Total unsecured
debt |
|
|
|
2,350,000 |
|
Total debt |
|
$ |
|
9,140,000 |
|
|
|
|
|
Leverage
Ratio |
|
|
|
Total
debt |
|
$ |
|
9,140,000 |
|
Less: Cash
and cash equivalents, short-term restricted cash and short-term
investments |
|
|
|
(717,919 |
) |
Net debt |
|
$ |
|
8,422,081 |
|
Divided
by: Annualized Adjusted EBITDA |
|
$ |
|
1,132,840 |
|
Leverage
Ratio |
|
|
7.4x |
|
|
|
|
Secured
Leverage Ratio |
|
|
|
Total
secured debt |
|
$ |
|
6,790,000 |
|
Less: Cash
and cash equivalents, short-term restricted cash and short-term
investments |
|
|
|
(717,919 |
) |
Net Secured Debt |
|
$ |
|
6,072,081 |
|
Divided
by: Annualized Adjusted EBITDA |
|
$ |
|
1,132,840 |
|
Secured
Leverage Ratio |
|
|
5.4x |
Contacts
Mark DeRussy, CFA
Capital Markets
561-226-9531
Lynne Hopkins
Media Relations
561-226-9431
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