SBA Communications Corporation (Nasdaq:SBAC) ("SBA" or the
"Company") today reported results for the quarter ended June 30,
2017.
Highlights of the second quarter
include:
- Increased Full Year Outlook
- Net income of $9.2 million or $0.08 per
share
- AFFO per share growth of 17% over the year earlier
period, excluding the impact of the 2016 Oi reserve
- Repurchased 1.9 million shares through July 31,
2017
“The second quarter was another steady one for
SBA,” commented Jeffrey A. Stoops, President and CEO. “U.S. leasing
activity was up over the second quarter of last year as well as
sequentially from the first quarter, while international leasing
activity remained steady. Portfolio growth was also up in the
second quarter over first quarter levels, reflecting timing of
opportunities. Supplementing increased portfolio growth was a
resumption of a healthy amount of stock repurchases, consistent
with our long-stated goal of keeping our balance sheet fully
invested to target levels. With substantial spectrum and 5G
deployments on the horizon in both the U.S. and internationally, we
expect customer demand to remain solid for years to come. Against
that demand, we intend to continue to execute well and we expect to
continue to favor allocating capital to portfolio growth and stock
repurchases. We continue to remain on track to achieve our long
term goal of $10 or more of AFFO per share in 2020.”
Operating Results
The table below details select financial results for the three
months ended June 30, 2017 and the quarter over quarter
comparisons.
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% Change |
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excluding FX |
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and |
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|
Q2 2017 |
|
Q2 2016 |
|
$ Change |
|
% Change |
|
Oi reserve (1) |
|
|
|
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|
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|
|
|
|
|
|
|
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|
|
Consolidated |
|
(in millions, except per share
amounts) |
Site leasing
revenue |
|
$ |
403.0 |
|
$ |
381.8 |
|
$ |
21.2 |
|
|
|
5.6 |
% |
|
|
4.5 |
% |
Site development
revenue |
|
|
24.3 |
|
|
23.7 |
|
|
0.6 |
|
|
|
2.5 |
% |
|
|
2.5 |
% |
Tower cash flow
(1) |
|
|
317.2 |
|
|
296.4 |
|
|
20.8 |
|
|
|
7.0 |
% |
|
|
6.1 |
% |
Net income |
|
|
9.2 |
|
|
32.7 |
|
|
(23.5 |
) |
|
|
(71.7 |
%) |
|
|
(17.3 |
%) |
Earnings per share -
diluted |
|
|
0.08 |
|
|
0.26 |
|
|
(0.18 |
) |
|
|
(69.2 |
%) |
|
|
(25.7 |
%) |
Adjusted EBITDA
(1) |
|
|
298.8 |
|
|
261.6 |
|
|
37.2 |
|
|
|
14.2 |
% |
|
|
6.5 |
% |
AFFO (1) |
|
|
211.2 |
|
|
169.3 |
|
|
41.9 |
|
|
|
24.8 |
% |
|
|
12.2 |
% |
AFFO per share (1) |
|
|
1.73 |
|
|
1.35 |
|
|
0.38 |
|
|
|
28.1 |
% |
|
|
14.7 |
% |
(1) Non-GAAP metrics, please see the
reconciliations and other disclosures under “Non-GAAP Financial
Measures” later in this press release.
Total revenues in the second quarter of 2017
were $427.3 million compared to $405.5 million in the year earlier
period, an increase of 5.4%. Site leasing revenue in the quarter of
$403.0 million was comprised of domestic site leasing revenue of
$325.3 million and international site leasing revenue of $77.7
million. Domestic cash site leasing revenue was $325.0 million in
the second quarter of 2017 compared to $312.8 million in the year
earlier period, an increase of 3.9%. International cash site
leasing revenue was $73.8 million in the second quarter of 2017
compared to $60.3 million in the year earlier period, an increase
of 22.5%.
Site leasing operating profit was $313.7
million, an increase of 6.2% over the year earlier period. Site
leasing contributed 98.7% of the Company’s total operating profit
in the second quarter of 2017. Domestic site leasing segment
operating profit was $260.1 million, an increase of 3.8% over the
year earlier period. International site leasing segment operating
profit was $53.6 million, an increase of 19.9% over the year
earlier period.
Tower Cash Flow for the second quarter of 2017
of $317.2 million was comprised of Domestic Tower Cash Flow of
$266.5 million and International Tower Cash Flow of $50.7 million.
Domestic Tower Cash Flow for the quarter increased 4.3% over the
prior year period and International Tower Cash Flow increased 23.9%
over the prior year period. Tower Cash Flow Margin was 79.5% and
79.4% for the second quarter of 2017 and 2016, respectively.
Net Cash Interest Expense was $75.5 million in
the second quarter of 2017 compared to $80.9 million in the second
quarter of 2016.
Net income for the second quarter of 2017 was
$9.2 million, or $0.08 per share, and included a $20.4 million loss
on the currency related remeasurement of a U.S. dollar denominated
intercompany loan with a Brazilian subsidiary, while net income for
the second quarter of 2016 was $32.7 million, or $0.26 per share,
and included a $47.4 million gain on the currency related
remeasurement of a U.S. dollar denominated intercompany loan with a
Brazilian subsidiary, partially offset by the $16.5 million Oi
reserve.
Adjusted EBITDA for the quarter was $298.8
million, a 7.4% increase over the prior year period adjusted to
exclude the impact of the prior year Oi reserve. Adjusted EBITDA
Margin was 70.6% in the second quarter of 2017 compared to 70.1% in
the second quarter of 2016 adjusted to exclude the impact of the Oi
reserve.
AFFO for the quarter was $211.2 million, a 13.7%
increase over the prior year period adjusted to exclude the impact
of the prior year Oi reserve. AFFO per share for the second quarter
of 2017 was $1.73, a 16.9% increase over the second quarter of 2016
adjusted to exclude the impact of the Oi reserve.
Investing Activities
During the second quarter of 2017, SBA purchased
228 communication sites and the rights to manage 37 additional
communication sites for total consideration of $124.2 million. This
amount was comprised of the issuance of 487,963 shares of Class A
common stock and $60.9 million paid in cash during or subsequent to
the end of the quarter. SBA also built 96 towers during the second
quarter of 2017. As of June 30, 2017, SBA owned or operated
26,562 communication sites, 15,947 of which are located in the
United States and its territories, and 10,615 of which are located
internationally. In addition, the Company spent $16.4 million to
purchase land and easements and to extend lease terms. Total cash
capital expenditures for the second quarter of 2017 were $73.2
million, consisting of $8.1 million of non-discretionary cash
capital expenditures (tower maintenance and general corporate) and
$65.1 million of discretionary cash capital expenditures (new tower
builds, tower augmentations, acquisitions, and purchasing land and
easements).
Subsequent to the second quarter of 2017, the
Company acquired 68 communication sites for an aggregate
consideration of $16.5 million in cash. In addition, the Company
has agreed to purchase in the U.S. and internationally 97
communication sites for an aggregate amount of $60.9 million. The
Company anticipates that these acquisitions will be consummated by
the end of the fourth quarter of 2017.
Financing Activities and Liquidity
SBA ended the second quarter with $8.8 billion
of total debt, $6.9 billion of total secured debt, $194.8 million
of cash and cash equivalents, short-term restricted cash, and
short-term investments, and $8.6 billion of Net Debt. SBA’s
Net Debt and Net Secured Debt to Annualized Adjusted EBITDA
Leverage Ratios were 7.2x and 5.6x, respectively.
As of the date of this press release, SBA had
$215.0 million outstanding under its $1.0 billion Revolving Credit
Facility.
During the second quarter of 2017, the Company
repurchased 1.2 million shares of its Class A common stock for
$155.0 million, at an average price per share of $134.41.
Subsequent to June 30, 2017, the Company repurchased 0.7 million
shares of its Class A common stock for $95.0 million, at an average
price per share of $135.92. As of the date of this press release,
the Company had $750.0 million of authorization remaining under its
current stock repurchase plan.
During the second quarter of 2017, the Company
issued, through a trust, $760.0 million of Secured Tower Revenue
Securities Series 2017-1C with an anticipated repayment date of
April 2022 at a fixed interest rate of 3.168% per annum. The net
proceeds were used to prepay the full amount of the Secured Tower
Revenue Securities Series 2012-1C outstanding (including accrued
and unpaid interest) and for general corporate purposes.
Outlook
The Company is updating its full year 2017
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 2017 Outlook assumes the
acquisitions of only those communication sites under contract at
the time of this press release. The Company may spend
additional capital in 2017 on acquiring revenue producing assets
not yet identified or under contract, the impact of which is not
reflected in the 2017 guidance. The Outlook does not contemplate
any new financings or any additional repurchases of the Company’s
stock during 2017 other than those financings and repurchases
completed as of the date of this press release.
The Company’s Outlook assumes an average foreign
currency exchange rate of 3.30 Brazilian Reais to 1.0 U.S. Dollar
and 1.31 Canadian Dollars to 1.0 U.S. Dollar for the last two
quarters of 2017, including an assumption of 3.25 Brazilian Reais
to 1.0 U.S. Dollar during the third quarter of 2017.
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|
|
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|
|
(in millions,
except per share amounts) |
Full Year 2017 |
|
|
|
|
|
|
|
|
Site leasing revenue
(1) |
$ |
1,608.0 |
|
to |
|
$ |
1,623.0 |
Site development
revenue |
$ |
90.0 |
|
to |
|
$ |
100.0 |
Total revenues |
$ |
1,698.0 |
|
to |
|
$ |
1,723.0 |
Tower Cash Flow
(2) |
$ |
1,266.0 |
|
to |
|
$ |
1,281.0 |
Adjusted EBITDA
(2) |
$ |
1,189.0 |
|
to |
|
$ |
1,204.0 |
Net cash interest
expense (3) |
$ |
302.0 |
|
to |
|
$ |
312.0 |
Non-discretionary cash
capital expenditures (4) |
$ |
29.0 |
|
to |
|
$ |
39.0 |
AFFO (2) |
$ |
822.0 |
|
to |
|
$ |
858.0 |
AFFO per share
(2) (5) |
$ |
6.75 |
|
to |
|
$ |
7.04 |
Discretionary cash
capital expenditures (6) |
$ |
385.0 |
|
to |
|
$ |
405.0 |
(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 121.8 million. Our Outlook does not include the
impact of any additional repurchases of the Company’s stock during
2017 other than those repurchases completed or agreed to as of the
date of this press release.(6) Consists of new tower builds, tower
augmentations, communication site acquisitions and ground lease
purchases. Does not include expenditures for acquisitions of
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 Monday, July 31, 2017 at 5:00 PM (ET) to discuss
the quarterly results. The call may be accessed as follows:
When: |
|
Monday, July 31, 2017
at 5:00 PM (ET) |
Dial-in Number: |
|
(800) 230-1059 |
Conference Name: |
|
SBA second quarter
results |
Replay Available: |
|
July 31, 2017 at 8:00
PM (ET) through August 14, 2017 at 11:59 PM (ET) |
Replay Number: |
|
(800) 475-6701 |
Access Code: |
|
427343 |
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 and its progress
toward achieving that goal, (ii) future domestic and international
customer demand and the timing and impact of spectrum deployments,
(iii) the Company’s intentions for future capital allocation, (iv)
the Company’s financial and operational guidance for the full year
2017, (v) timing of closing for currently pending acquisitions,
(vi) the Company’s expectations regarding additional capital
spending in 2017, and (vii) the Company’s expectations regarding
foreign exchange rates and their impact on the Company’s financial
and operational guidance. Furthermore, the Company’s 2017 outlook
assumes that the Company’s business is currently operated in a
manner that complies with the REIT rules and that the Company is
able to qualify and to remain qualified as a REIT and the timing of
such qualification. 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 March 1,
2017.
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 2017. 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 six months |
|
|
ended June 30, |
|
ended June 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Site
leasing |
|
$ |
403,001 |
|
|
$ |
381,843 |
|
|
$ |
800,551 |
|
|
$ |
756,293 |
|
Site
development |
|
|
24,293 |
|
|
|
23,689 |
|
|
|
50,106 |
|
|
|
49,008 |
|
Total
revenues |
|
|
427,294 |
|
|
|
405,532 |
|
|
|
850,657 |
|
|
|
805,301 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues (exclusive of depreciation, accretion, |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization shown below): |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
site leasing |
|
|
89,337 |
|
|
|
86,493 |
|
|
|
178,719 |
|
|
|
169,255 |
|
Cost of
site development |
|
|
20,007 |
|
|
|
20,074 |
|
|
|
41,595 |
|
|
|
39,907 |
|
Selling, general, and
administrative (1)(2) |
|
|
33,394 |
|
|
|
47,664 |
|
|
|
67,618 |
|
|
|
78,071 |
|
Acquisition related
adjustments and expenses |
|
|
2,306 |
|
|
|
2,821 |
|
|
|
5,274 |
|
|
|
6,003 |
|
Asset impairment and
decommission costs |
|
|
8,140 |
|
|
|
14,691 |
|
|
|
16,491 |
|
|
|
20,874 |
|
Depreciation,
accretion, and amortization |
|
|
159,520 |
|
|
|
159,723 |
|
|
|
318,551 |
|
|
|
319,524 |
|
Total
operating expenses |
|
|
312,704 |
|
|
|
331,466 |
|
|
|
628,248 |
|
|
|
633,634 |
|
Operating
income |
|
|
114,590 |
|
|
|
74,066 |
|
|
|
222,409 |
|
|
|
171,667 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
2,909 |
|
|
|
2,737 |
|
|
|
6,143 |
|
|
|
4,603 |
|
Interest
expense |
|
|
(78,456 |
) |
|
|
(83,682 |
) |
|
|
(156,058 |
) |
|
|
(167,486 |
) |
Non-cash
interest expense |
|
|
(717 |
) |
|
|
(460 |
) |
|
|
(1,421 |
) |
|
|
(915 |
) |
Amortization of deferred financing fees |
|
|
(4,949 |
) |
|
|
(5,325 |
) |
|
|
(11,647 |
) |
|
|
(10,590 |
) |
Loss from
extinguishment of debt, net |
|
|
(1,961 |
) |
|
|
— |
|
|
|
(1,961 |
) |
|
|
— |
|
Other
(expense) income, net |
|
|
(18,793 |
) |
|
|
47,376 |
|
|
|
(3,844 |
) |
|
|
93,275 |
|
Total
other expense |
|
|
(101,967 |
) |
|
|
(39,354 |
) |
|
|
(168,788 |
) |
|
|
(81,113 |
) |
Income
before provision for income taxes |
|
|
12,623 |
|
|
|
34,712 |
|
|
|
53,621 |
|
|
|
90,554 |
|
Provision for income
taxes |
|
|
(3,390 |
) |
|
|
(2,001 |
) |
|
|
(6,789 |
) |
|
|
(4,206 |
) |
Net income |
|
$ |
9,233 |
|
|
$ |
32,711 |
|
|
$ |
46,832 |
|
|
$ |
86,348 |
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.26 |
|
|
$ |
0.39 |
|
|
$ |
0.69 |
|
Diluted |
|
$ |
0.08 |
|
|
$ |
0.26 |
|
|
$ |
0.38 |
|
|
$ |
0.69 |
|
Weighted average number
of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
121,455 |
|
|
|
125,125 |
|
|
|
121,253 |
|
|
|
125,261 |
|
Diluted |
|
|
122,437 |
|
|
|
125,783 |
|
|
|
122,087 |
|
|
|
125,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes non-cash compensation of $10,030 and $8,785 for the
three months ended June 30, 2017 and 2016, respectively, and
$18,856 and $16,471 for the six months ended June 30, 2017 and
2016, respectively.(2) Includes the impact of the $16,498 Oi
reserve for the three and six months ended June 30, 2016.
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands, except par values) |
|
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
|
2016 |
|
ASSETS |
|
(unaudited) |
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
164,521 |
|
|
$ |
146,109 |
|
Restricted cash |
|
|
30,093 |
|
|
|
36,786 |
|
Accounts
receivable, net |
|
|
75,739 |
|
|
|
78,344 |
|
Costs and
estimated earnings in excess of billings on uncompleted
contracts |
|
|
12,304 |
|
|
|
11,127 |
|
Prepaid
and other current assets |
|
|
53,807 |
|
|
|
52,205 |
|
Total
current assets |
|
|
336,464 |
|
|
|
324,571 |
|
Property and equipment,
net |
|
|
2,774,398 |
|
|
|
2,792,076 |
|
Intangible assets,
net |
|
|
3,569,045 |
|
|
|
3,656,924 |
|
Other assets |
|
|
628,946 |
|
|
|
587,374 |
|
Total
assets |
|
$ |
7,308,853 |
|
|
$ |
7,360,945 |
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT |
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
29,155 |
|
|
$ |
28,320 |
|
Accrued
expenses |
|
|
96,193 |
|
|
|
61,129 |
|
Current
maturities of long-term debt |
|
|
772,517 |
|
|
|
627,157 |
|
Deferred
revenue |
|
|
98,793 |
|
|
|
101,098 |
|
Accrued
interest |
|
|
42,042 |
|
|
|
44,503 |
|
Other
current liabilities |
|
|
7,719 |
|
|
|
11,240 |
|
Total
current liabilities |
|
|
1,046,419 |
|
|
|
873,447 |
|
Long-term
liabilities: |
|
|
|
|
|
|
Long-term
debt, net |
|
|
7,906,188 |
|
|
|
8,148,426 |
|
Other
long-term liabilities |
|
|
341,927 |
|
|
|
334,993 |
|
Total
long-term liabilities |
|
|
8,248,115 |
|
|
|
8,483,419 |
|
Shareholders'
deficit: |
|
|
|
|
|
|
Prefer.
stock-par value $.01, 30,000 shares authorized, no shares issued or
outst. |
|
|
— |
|
|
|
— |
|
Common
stock - Class A, par value $.01, 400,000 shares authorized,
120,981 |
|
|
|
|
|
|
and
121,004 shares issued and outstanding at June 30, 2017 |
|
|
|
|
|
|
and
December 31, 2016, respectively |
|
|
1,210 |
|
|
|
1,210 |
|
Additional paid-in capital |
|
|
2,127,093 |
|
|
|
2,010,520 |
|
Accumulated deficit |
|
|
(3,735,062 |
) |
|
|
(3,637,467 |
) |
Accumulated other comprehensive loss |
|
|
(378,922 |
) |
|
|
(370,184 |
) |
Total
shareholders' deficit |
|
|
(1,985,681 |
) |
|
|
(1,995,921 |
) |
Total
liabilities and shareholders' deficit |
|
$ |
7,308,853 |
|
|
$ |
7,360,945 |
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS |
(unaudited) (in thousands) |
|
|
For the three months |
|
|
ended June 30, |
|
|
2017 |
|
|
2016 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net
income |
|
$ |
9,233 |
|
|
$ |
32,711 |
|
Adjust.
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation, accretion, and amortization |
|
|
159,520 |
|
|
|
159,723 |
|
Non-cash
asset impairment and decommission costs |
|
|
6,672 |
|
|
|
13,556 |
|
Non-cash
compensation expense |
|
|
10,194 |
|
|
|
8,893 |
|
Amortization of deferred financing fees |
|
|
4,949 |
|
|
|
5,325 |
|
Loss
(gain) on remeasurement of U.S. denominated intercompany loan |
|
|
20,417 |
|
|
|
(47,367 |
) |
Provision
for doubtful accounts (1) |
|
|
488 |
|
|
|
16,905 |
|
Other
non-cash items reflected in the Statements of Operations |
|
|
986 |
|
|
|
72 |
|
Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts
receivable and costs and estimated earnings in excess of
billings |
|
|
|
|
|
|
on
uncompleted contracts, net |
|
|
(2,523 |
) |
|
|
8,679 |
|
Prepaid
expenses and other assets |
|
|
(6,298 |
) |
|
|
(13,576 |
) |
Accounts
payable and accrued expenses |
|
|
4,480 |
|
|
|
2,967 |
|
Accrued
interest |
|
|
22,829 |
|
|
|
13,628 |
|
Other
liabilities |
|
|
946 |
|
|
|
8,576 |
|
Net cash
provided by operating activities |
|
|
231,893 |
|
|
|
210,092 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisitions (2) |
|
|
(39,530 |
) |
|
|
(56,872 |
) |
Capital
expenditures |
|
|
(33,688 |
) |
|
|
(34,601 |
) |
Other
investing activities |
|
|
(11,146 |
) |
|
|
(5,615 |
) |
Net cash
used in investing activities |
|
|
(84,364 |
) |
|
|
(97,088 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Net
borrowings (repayments) under Revolving Credit Facility |
|
|
(130,000 |
) |
|
|
10,000 |
|
Payment
for the redemption of 2012-1C Tower Securities |
|
|
(610,000 |
) |
|
|
— |
|
Proceeds
from issuance of Tower Securities, net of fees |
|
|
750,153 |
|
|
|
— |
|
Repurchase and retirement of common stock, inclusive of fees |
|
|
(140,019 |
) |
|
|
(100,018 |
) |
Other
financing activities |
|
|
18,028 |
|
|
|
(960 |
) |
Net cash
used in financing activities |
|
|
(111,838 |
) |
|
|
(90,978 |
) |
Effect of
exchange rate changes on cash, cash equivalents, and restricted
cash |
|
|
(3,969 |
) |
|
|
8,977 |
|
NET CHANGE IN CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH |
|
|
31,722 |
|
|
|
31,003 |
|
CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH: |
|
|
|
|
|
|
Beginning
of period |
|
|
165,471 |
|
|
|
131,633 |
|
End of
period |
|
$ |
197,193 |
|
|
$ |
162,636 |
|
|
|
|
|
|
|
|
|
|
(1) Includes the impact of the $16,498 Oi reserve for the three
months ended June 30, 2016.(2) Excludes $63.3 million of
acquisition costs paid through the issuance of 487,963 shares of
Class A common stock.
Selected Capital Expenditure Detail
|
|
For the three |
|
For the six |
|
|
months ended |
|
months ended |
|
|
June 30, 2017 |
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
(in thousands) |
Construction and
related costs on new builds |
|
$ |
15,983 |
|
$ |
32,799 |
Augmentation and tower
upgrades |
|
|
9,647 |
|
|
20,762 |
Non-discretionary
capital expenditures: |
|
|
|
|
|
|
Tower
maintenance |
|
|
7,049 |
|
|
13,696 |
General
corporate |
|
|
1,009 |
|
|
2,178 |
Total
non-discretionary capital expenditures |
|
|
8,058 |
|
|
15,874 |
Total
capital expenditures |
|
$ |
33,688 |
|
$ |
69,435 |
|
|
|
|
|
|
|
Communication Site Portfolio Summary
|
|
Domestic |
|
International |
|
Total |
|
|
|
|
|
|
|
Sites owned at March
31, 2017 |
|
15,907 |
|
|
10,377 |
|
|
26,284 |
|
Sites acquired during
the second quarter |
|
65 |
|
|
163 |
|
|
228 |
|
Sites built during the
second quarter |
|
14 |
|
|
82 |
|
|
96 |
|
Sites
reclassified/decommissioned during the second quarter |
|
(39 |
) |
|
(7 |
) |
|
(46 |
) |
Sites
owned at June 30, 2017 |
|
15,947 |
|
|
10,615 |
|
|
26,562 |
|
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
ended June 30, |
|
ended June 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Segment revenue |
|
$ |
325,324 |
|
|
$ |
316,842 |
|
|
$ |
77,677 |
|
|
$ |
65,001 |
|
|
$ |
24,293 |
|
|
$ |
23,689 |
|
Segment cost of
revenues (excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, accretion, and amort.) |
|
|
(65,251 |
) |
|
|
(66,199 |
) |
|
|
(24,086 |
) |
|
|
(20,294 |
) |
|
|
(20,007 |
) |
|
|
(20,074 |
) |
Segment
operating profit |
|
$ |
260,073 |
|
|
$ |
250,643 |
|
|
$ |
53,591 |
|
|
$ |
44,707 |
|
|
$ |
4,286 |
|
|
$ |
3,615 |
|
Segment
operating profit margin |
|
|
79.9% |
|
|
|
79.1% |
|
|
|
69.0% |
|
|
|
68.8% |
|
|
|
17.6% |
|
|
|
15.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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”) and the
impact of the prior year 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. We believe that we are operating
in a manner that complies with the REIT rules as of January 1,
2016, and as a result, we made the election to be subject to tax as
a REIT commencing with our taxable year ended December 31, 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,
short-term restricted cash, and short-term investments;
(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; and
(6) Excluding the prior year $16.5 million 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 the Oi
reserve
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) Net income,
(5) diluted earnings per share, (6) Adjusted EBITDA, and (7) 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 Oi reserve
recorded in the second quarter of 2016.
|
|
|
|
|
|
|
|
|
|
Growth |
|
|
|
|
|
|
Growth |
|
|
|
excluding |
|
|
Second quarter |
|
|
|
excluding |
|
|
|
foreign |
|
|
2017 year |
|
Foreign |
|
foreign |
|
|
|
currency |
|
|
over year |
|
currency |
|
currency |
|
|
|
impact and |
|
|
growth rate |
|
impact |
|
impact |
|
Oi reserve |
|
Oi reserve |
|
|
|
|
|
|
|
|
|
|
|
Total site leasing
revenue |
|
5.6 |
% |
|
1.1 |
% |
|
4.5 |
% |
|
0.0 |
% |
|
4.5 |
% |
Total cash site leasing
revenue |
|
6.9 |
% |
|
1.1 |
% |
|
5.8 |
% |
|
0.0 |
% |
|
5.8 |
% |
Int'l cash site leasing
revenue |
|
22.5 |
% |
|
7.0 |
% |
|
15.5 |
% |
|
0.0 |
% |
|
15.5 |
% |
Total site leasing
segment operating profit |
|
6.2 |
% |
|
1.0 |
% |
|
5.2 |
% |
|
0.0 |
% |
|
5.2 |
% |
Int'l site leasing
segment operating profit |
|
19.9 |
% |
|
6.5 |
% |
|
13.4 |
% |
|
0.0 |
% |
|
13.4 |
% |
Total site leasing
tower cash flow |
|
7.0 |
% |
|
0.9 |
% |
|
6.1 |
% |
|
0.0 |
% |
|
6.1 |
% |
Int'l site leasing
tower cash flow |
|
23.9 |
% |
|
6.6 |
% |
|
17.3 |
% |
|
0.0 |
% |
|
17.3 |
% |
Net income |
|
(71.7 |
%) |
|
(63.8 |
%) |
|
(7.9 |
%) |
|
9.4 |
% |
|
(17.3 |
%) |
Earnings per share -
diluted |
|
(69.2 |
%) |
|
(53.8 |
%) |
|
(15.4 |
%) |
|
10.3 |
% |
|
(25.7 |
%) |
Adjusted EBITDA |
|
14.2 |
% |
|
0.9 |
% |
|
13.3 |
% |
|
6.8 |
% |
|
6.5 |
% |
AFFO |
|
24.8 |
% |
|
1.5 |
% |
|
23.3 |
% |
|
11.1 |
% |
|
12.2 |
% |
AFFO per share |
|
28.1 |
% |
|
2.2 |
% |
|
25.9 |
% |
|
11.2 |
% |
|
14.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
ended June 30, |
|
ended June 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Site leasing
revenue |
|
$ |
325,324 |
|
|
$ |
316,842 |
|
|
$ |
77,677 |
|
|
$ |
65,001 |
|
|
$ |
403,001 |
|
|
$ |
381,843 |
|
Non-cash straight-line
leasing revenue |
|
|
(290 |
) |
|
|
(4,069 |
) |
|
|
(3,835 |
) |
|
|
(4,706 |
) |
|
|
(4,125 |
) |
|
|
(8,775 |
) |
Cash site
leasing revenue |
|
|
325,034 |
|
|
|
312,773 |
|
|
|
73,842 |
|
|
|
60,295 |
|
|
|
398,876 |
|
|
|
373,068 |
|
Site leasing cost of
revenues (excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, accretion, and amortization) |
|
|
(65,251 |
) |
|
|
(66,199 |
) |
|
|
(24,086 |
) |
|
|
(20,294 |
) |
|
|
(89,337 |
) |
|
|
(86,493 |
) |
Non-cash straight-line
ground lease expense |
|
|
6,753 |
|
|
|
8,866 |
|
|
|
940 |
|
|
|
928 |
|
|
|
7,693 |
|
|
|
9,794 |
|
Tower
Cash Flow |
|
$ |
266,536 |
|
|
$ |
255,440 |
|
|
$ |
50,696 |
|
|
$ |
40,929 |
|
|
$ |
317,232 |
|
|
$ |
296,369 |
|
Tower
Cash Flow Margin |
|
|
82.0% |
|
|
|
81.7% |
|
|
|
68.7% |
|
|
|
67.9% |
|
|
|
79.5% |
|
|
|
79.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted Tower Cash Flow for Full Year
2017
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 2017:
|
Full Year 2017 |
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Site leasing
revenue |
$ |
1,608.0 |
|
|
to |
|
$ |
1,623.0 |
|
Non-cash straight-line
leasing revenue |
|
(18.0 |
) |
|
to |
|
|
(13.0 |
) |
Cash site
leasing revenue |
|
1,590.0 |
|
|
to |
|
|
1,610.0 |
|
Site leasing cost of
revenues (excluding |
|
|
|
|
|
|
|
depreciation, accretion, and amortization) |
|
(352.0 |
) |
|
to |
|
|
(362.0 |
) |
Non-cash straight-line
ground lease expense |
|
28.0 |
|
|
to |
|
|
33.0 |
|
Tower
Cash Flow |
$ |
1,266.0 |
|
|
to |
|
$ |
1,281.0 |
|
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Net
income |
|
$ |
9,233 |
|
|
$ |
32,711 |
|
Non-cash straight-line leasing revenue |
|
|
(4,125 |
) |
|
|
(8,775 |
) |
Non-cash straight-line ground lease expense |
|
|
7,693 |
|
|
|
9,794 |
|
Non-cash compensation |
|
|
10,194 |
|
|
|
8,893 |
|
Loss from extinguishment of debt, net |
|
|
1,961 |
|
|
|
— |
|
Other expense (income) |
|
|
18,793 |
|
|
|
(47,376 |
) |
Acquisition related adjustments and expenses |
|
|
2,306 |
|
|
|
2,821 |
|
Asset impairment and decommission costs |
|
|
8,140 |
|
|
|
14,691 |
|
Interest income |
|
|
(2,909 |
) |
|
|
(2,737 |
) |
Total interest expense (1) |
|
|
84,122 |
|
|
|
89,467 |
|
Depreciation, accretion, and amortization |
|
|
159,520 |
|
|
|
159,723 |
|
Provision for taxes (2) |
|
|
3,857 |
|
|
|
2,402 |
|
Adjusted EBITDA |
|
$ |
298,785 |
|
|
$ |
261,614 |
|
Oi reserve |
|
|
— |
|
|
|
16,498 |
|
Adjusted EBITDA excluding Oi reserve |
|
$ |
298,785 |
|
|
$ |
278,112 |
|
Annualized Adjusted EBITDA excluding Oi reserve (3) |
|
$ |
1,195,140 |
|
|
$ |
1,112,448 |
|
|
|
|
|
|
|
|
|
|
(1) Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.(2) For the three months ended June 30, 2017 and
2016, these amounts included $467 and $401, 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. Only the 2016 period
excludes the Oi reserve.
The calculation of Adjusted EBITDA Margin is as
follows:
|
|
|
|
|
For the three months |
|
|
|
|
|
ended June 30, |
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Total revenues |
|
|
|
|
$ |
427,294 |
|
|
$ |
405,532 |
|
Non-cash straight-line
leasing revenue |
|
|
|
|
|
(4,125 |
) |
|
|
(8,775 |
) |
Total
revenues minus non-cash straight-line leasing revenue |
|
|
|
|
$ |
423,169 |
|
|
$ |
396,757 |
|
Adjusted
EBITDA excluding Oi reserve |
|
|
|
|
$ |
298,785 |
|
|
$ |
278,112 |
|
Adjusted
EBITDA Margin excluding Oi reserve |
|
|
|
|
|
70.6% |
|
|
|
70.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted Adjusted EBITDA for Full Year 2017
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 2017:
|
Full Year 2017 |
|
|
|
|
|
|
|
(in millions) |
Net income |
$ |
78.0 |
|
to |
$ |
124.0 |
|
Non-cash
straight-line leasing revenue |
|
(18.0 |
) |
to |
|
(13.0 |
) |
Non-cash
straight-line ground lease expense |
|
28.0 |
|
to |
|
33.0 |
|
Non-cash
compensation |
|
40.0 |
|
to |
|
35.0 |
|
Loss from
extinguishment of debt, net |
|
2.0 |
|
to |
|
2.0 |
|
Other
(income) expense |
|
8.0 |
|
to |
|
3.0 |
|
Acquisition related adjustments and expenses |
|
15.0 |
|
to |
|
11.0 |
|
Asset
impairment and decommission costs |
|
35.0 |
|
to |
|
30.0 |
|
Interest
income |
|
(11.0 |
) |
to |
|
(9.0 |
) |
Total
interest expense (1) |
|
348.0 |
|
to |
|
336.0 |
|
Depreciation, accretion, and amortization |
|
646.0 |
|
to |
|
636.0 |
|
Provision
for taxes (2) |
|
18.0 |
|
to |
|
16.0 |
|
Adjusted
EBITDA |
$ |
1,189.0 |
|
to |
$ |
1,204.0 |
|
|
|
|
|
|
|
|
|
(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”) and Adjusted Funds from Operations
(“AFFO”)
We use FFO as defined by NAREIT. Given that we have elected 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 June 30, |
(in
thousands, except per share amounts) |
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
9,233 |
|
|
$ |
32,711 |
|
Real estate
related depreciation, amortization, and accretion |
|
|
158,521 |
|
|
|
158,378 |
|
Adjustments
for unconsolidated joint ventures |
|
|
218 |
|
|
|
— |
|
FFO (1) |
|
$ |
167,972 |
|
|
$ |
191,089 |
|
Adjustments
to FFO: |
|
|
|
|
|
|
Non-cash straight-line leasing revenue |
|
|
(4,125 |
) |
|
|
(8,775 |
) |
Non-cash straight-line ground lease expense |
|
|
7,693 |
|
|
|
9,794 |
|
Non-cash compensation |
|
|
10,194 |
|
|
|
8,893 |
|
Adjustment for non-cash portion of tax provision (2) |
|
|
(548 |
) |
|
|
(208 |
) |
Non-real estate related depreciation, amortization, and
accretion |
|
|
999 |
|
|
|
1,345 |
|
Amortization of deferred financing costs and debt
discounts |
|
|
5,666 |
|
|
|
5,785 |
|
Loss from extinguishment of debt, net |
|
|
1,961 |
|
|
|
— |
|
Other expense (income) |
|
|
18,793 |
|
|
|
(47,376 |
) |
Acquisition related adjustments and expenses |
|
|
2,306 |
|
|
|
2,821 |
|
Asset impairment and decommission costs |
|
|
8,140 |
|
|
|
14,691 |
|
Non-discretionary cash capital expenditures |
|
|
(8,058 |
) |
|
|
(8,749 |
) |
Adjustments for unconsolidated joint ventures |
|
|
255 |
|
|
|
— |
|
AFFO |
|
$ |
211,248 |
|
|
$ |
169,310 |
|
Oi
reserve |
|
|
— |
|
|
|
16,498 |
|
AFFO excluding Oi reserve |
|
$ |
211,248 |
|
|
$ |
185,808 |
|
Weighted
average number of common shares (3) |
|
|
122,437 |
|
|
|
125,783 |
|
AFFO per
share |
|
$ |
1.73 |
|
|
$ |
1.35 |
|
AFFO per
share excluding Oi reserve |
|
$ |
1.73 |
|
|
$ |
1.48 |
|
|
|
|
|
|
|
|
|
|
(1) FFO, as previously defined, for the second quarter of 2016
was $190,881, which excludes $208 related to 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 second quarter
of 2016 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 second
quarter of 2017. (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 Full Year 2017
The table below sets forth the reconciliation of the forecasted
AFFO and AFFO per share set forth in the Outlook section to its
most comparable GAAP measurement for the full year 2017:
(in millions,
except per share amounts) |
Full Year 2017 |
|
|
|
|
|
|
Net income |
$ |
78.0 |
|
to |
$ |
124.0 |
|
Real estate related
depreciation, amortization, and accretion |
|
638.0 |
|
to |
|
630.0 |
|
Adjustments for
unconsolidated joint ventures |
|
1.0 |
|
to |
|
0.5 |
|
FFO |
$ |
717.0 |
|
to |
$ |
754.5 |
|
Adjustments to
FFO: |
|
|
|
|
|
Non-cash
straight-line leasing revenue |
|
(18.0 |
) |
to |
|
(13.0 |
) |
Non-cash
straight-line ground lease expense |
|
28.0 |
|
to |
|
33.0 |
|
Non-cash
compensation |
|
40.0 |
|
to |
|
35.0 |
|
Non-real
estate related depreciation, amortization, and accretion |
|
8.0 |
|
to |
|
6.0 |
|
Amort. of
deferred financing costs and debt discounts |
|
25.0 |
|
to |
|
25.0 |
|
Loss from
extinguishment of debt, net |
|
2.0 |
|
to |
|
2.0 |
|
Other
(income) expense |
|
8.0 |
|
to |
|
3.0 |
|
Acquisition related adjustments and expenses |
|
15.0 |
|
to |
|
11.0 |
|
Asset
impairment and decommission costs |
|
35.0 |
|
to |
|
30.0 |
|
Non-discretionary cash capital expenditures |
|
(39.0 |
) |
to |
|
(29.0 |
) |
Adjustments for unconsolidated joint ventures |
|
1.0 |
|
to |
|
0.5 |
|
AFFO |
$ |
822.0 |
|
to |
$ |
858.0 |
|
Weighted average number
of common shares (1) |
|
121.8 |
|
|
|
121.8 |
|
AFFO per share |
$ |
6.75 |
|
|
$ |
7.04 |
|
|
|
|
|
|
|
|
|
(1) Our assumption for weighted average number of common shares
does not contemplate any additional repurchases of the Company’s
stock during 2017 other than those repurchases completed as of the
date of this press release.
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:
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
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 |
|
2017-1C
Tower Securities |
|
|
760,000 |
|
Revolving
Credit Facility |
|
|
150,000 |
|
2014 Term
Loan |
|
|
1,455,000 |
|
2015 Term
Loan |
|
|
490,000 |
|
Total secured debt |
|
|
6,925,000 |
|
2014
Senior Notes |
|
|
750,000 |
|
2016
Senior Notes |
|
|
1,100,000 |
|
Total unsecured debt |
|
|
1,850,000 |
|
Total debt |
|
$ |
8,775,000 |
|
|
|
|
|
Leverage
Ratio |
|
|
|
Total
debt |
|
$ |
8,775,000 |
|
Less: Cash
and cash equivalents, short-term restricted cash and short-term
investments |
|
|
(194,843 |
) |
Net debt |
|
$ |
8,580,157 |
|
Divided
by: Annualized Adjusted EBITDA |
|
$ |
1,195,140 |
|
Leverage
Ratio |
|
|
7.2 |
x |
|
|
|
|
Secured
Leverage Ratio |
|
|
|
Total
secured debt |
|
$ |
6,925,000 |
|
Less: Cash
and cash equivalents, short-term restricted cash and short-term
investments |
|
|
(194,843 |
) |
Net Secured Debt |
|
$ |
6,730,157 |
|
Divided
by: Annualized Adjusted EBITDA |
|
$ |
1,195,140 |
|
Secured
Leverage Ratio |
|
|
5.6 |
x |
|
|
|
|
Contacts
Mark DeRussy, CFA
Capital Markets
561-226-9531
Lynne Hopkins
Media Relations
561-226-9431
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