SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended March 31,
2021.
Highlights of the first quarter include:
- Net loss of $11.7 million or $(0.11) per share including a
$57.0 million loss, net of taxes, on currency-related remeasurement
of intercompany loans
- AFFO per share growth of 16.2% over the year earlier period
on a constant currency basis
- Signed a new global leasing agreement with Verizon
subsequent to quarter end
- Repurchased 0.7 million shares at an average price per share
of $258.33
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.58 per share
of the Company’s Class A Common Stock. The distribution is payable
June 15, 2021 to the shareholders of record at the close of
business on May 20, 2021.
“We had a strong start to 2021,” commented Jeffrey A. Stoops,
President and Chief Executive Officer. “We produced very solid
year-over-year growth in AFFO per share while operationally
executing at a very high level. We had several notable
accomplishments since the start of the year, including the closing
of our exciting PG&E acquisition, the completion of the lowest
cost unsecured senior notes offering in our history, and the
execution of new master agreements with both Verizon Wireless and
Dish. Our new agreement with Verizon cements SBA as a key partner
to Verizon in the deployment of their new C-Band spectrum for the
build out of their nationwide 5G network, while also extending the
committed terms under SBA’s existing Verizon lease agreements. With
the completion of the C-Band spectrum auction during the first
quarter and the stated network plans of our largest customers, we
had a very strong first quarter in our services business, while
seeing substantial growth in our backlog of both services business
and new lease and amendment applications. This increasing activity
level has allowed us to increase our 2021 full year services
outlook and gives us tremendous confidence in increased organic
leasing growth over the next couple of years. We believe the future
is very bright, and we are excited to support our customers in the
advancement of wireless networks across all of our markets. The
favorable operational environment, low cost of capital and
opportunistic allocation of capital into both quality new assets
and stock repurchases, should allow us to continue to produce
material growth in AFFO per share and total shareholder
return.”
Operating Results
The table below details select financial results for the three
months ended March 31, 2021 and comparisons to the prior year
period.
% Change
excluding
Q1 2021
Q1 2020
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
505.1
$
492.3
$
12.8
2.6%
5.1%
Site development revenue
43.6
24.7
18.9
76.6%
76.6%
Tower cash flow (1)
411.8
398.1
13.7
3.5%
5.6%
Net loss
(11.7)
(127.1)
115.4
90.8%
80.4%
Earnings per share - diluted
(0.11)
(1.14)
1.03
90.4%
86.4%
Adjusted EBITDA (1)
390.1
369.9
20.2
5.4%
7.6%
AFFO (1)
286.3
259.9
26.4
10.2%
13.3%
AFFO per share (1)
2.58
2.28
0.30
13.2%
16.2%
(1) See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the first quarter of 2021 were $548.7 million
compared to $517.0 million in the year earlier period, an increase
of 6.1%. Site leasing revenue in the quarter of $505.1 million was
comprised of domestic site leasing revenue of $403.6 million and
international site leasing revenue of $101.5 million. Domestic cash
site leasing revenue was $402.2 million in the first quarter of
2021 compared to $383.9 million in the year earlier period, an
increase of 4.8%. International cash site leasing revenue was
$102.3 million in the first quarter of 2021 compared to $106.1
million in the year earlier period, a decrease of 3.6%, or an
increase of 8.4% on a constant currency basis. Site development
revenues were $43.6 million in the first quarter of 2021 compared
to $24.7 million in the year earlier period, an increase of
76.6%.
Site leasing operating profit was $409.7 million, an increase of
3.3% over the year earlier period. Site leasing contributed 97.8%
of the Company’s total operating profit in the first quarter of
2021. Domestic site leasing segment operating profit was $338.5
million, an increase of 5.0% over the year earlier period.
International site leasing segment operating profit was $71.3
million, a decrease of 3.8% from the year earlier period.
Tower Cash Flow of $411.8 million for the first quarter of 2021
was comprised of Domestic Tower Cash Flow of $339.3 million and
International Tower Cash Flow of $72.5 million. Domestic Tower Cash
Flow for the quarter increased 4.9% over the prior year period and
International Tower Cash Flow decreased 3.0% from the prior year
period, or increased 8.3% on a constant currency basis. Tower Cash
Flow Margin was 81.6% for the first quarter of 2021, as compared to
81.2% for the year earlier period.
Net loss for the first quarter of 2021 was $11.7 million, or
$(0.11) per share, and included a $57.0 million loss, net of taxes,
on the currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net loss for the
first quarter of 2020 was $127.1 million, or $(1.14) per share, and
included a $152.8 million loss, net of taxes, on the
currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries.
Adjusted EBITDA for the quarter was $390.1 million, a 5.4%
increase over the prior year period. Adjusted EBITDA Margin was
71.2% in the first quarter of 2021 and compared to 71.9% in the
first quarter of 2020.
Net Cash Interest Expense was $89.5 million in the first quarter
of 2021 compared to $95.0 million in the first quarter of 2020, a
decrease of 5.8%.
AFFO for the quarter was $286.3 million, a 10.2% increase over
the prior year period. AFFO per share for the first quarter of 2021
was $2.58, a 13.2% increase over the prior year period, and 16.2%
on a constant currency basis.
Investing Activities
During the first quarter of 2021, SBA acquired 731 communication
sites, including wireless tenant licenses on 697 utility
transmission structures from the previously announced PG&E
transaction, for total cash consideration of $975.5 million. SBA
also built 62 towers during the first quarter of 2021. As of March
31, 2021, SBA owned or operated 33,711 communication sites, 17,259
of which are located in the United States and its territories, and
16,452 of which are located internationally. In addition, the
Company spent $6.5 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the first
quarter of 2021 were $1.1 billion, consisting of $8.2 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $1.1 billion of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
Subsequent to the first quarter of
2021, the Company has purchased or agreed to purchase 413
communication sites for an aggregate consideration of $110.2
million in cash. The Company anticipates that the majority of these
acquisitions will be consummated by the end of the third quarter of
2021.
Financing Activities and
Liquidity
SBA ended the first quarter of 2021 with $12.1 billion of total
debt, $8.0 billion of total secured debt, $240.2 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $11.9 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.6x and 5.0x, respectively.
On January 29, 2021, the Company issued $1.5 billion of
unsecured senior notes due February 1, 2029 (the “2021 Senior
Notes”). The 2021 Senior Notes accrue interest at a rate of 3.125%
per annum. Interest on the 2021 Senior Notes is due semi-annually
on February 1 and August 1 of each year, beginning on August 1,
2021. Net proceeds from this offering were used to fully redeem all
of the 4.000% Senior Notes (the “2017 Notes”) and to pay all
premiums and costs associated with such redemption, repay the
amounts outstanding under the Revolving Credit Facility, and for
general corporate purposes.
As of the date of this press release, the Company had $530.0
million outstanding under the $1.25 billion Revolving Credit
Facility.
During the first quarter of 2021, the Company repurchased 0.7
million shares of its Class A common stock for $168.9 million at an
average price per share of $258.33 under its $1.0 billion stock
repurchase plan. Shares repurchased were retired. As of the date of
this filing, the Company has $475.1 million of authorization
remaining under the plan.
In the first quarter of 2021, the Company declared and paid a
cash dividend of $63.4 million.
Outlook
The Company is updating its full year 2021 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 2021 Outlook reflects the previously
announced impact of the Verizon agreement and assumes the
acquisitions of only those communication sites under contract and
anticipated to close at the time of this press release. The Company
may spend additional capital in 2021 on acquiring revenue producing
assets not yet identified or under contract, the impact of which is
not reflected in the 2021 guidance. The Outlook also does not
contemplate any additional repurchases of the Company’s stock
during 2021, although the Company may ultimately spend capital to
repurchase some of its stock during the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.60 Brazilian Reais to 1.0 U.S. Dollar, 1.25
Canadian Dollars to 1.0 U.S. Dollar, and 14.90 South African Rand
to 1.0 U.S. Dollar throughout the last three quarters of 2021.
Change from
February 22, 2021
(in millions, except per share
amounts)
Full Year 2021
Outlook (7)
Site leasing revenue (1)
$
2,065.0
to
$
2,085.0
$
33.0
Site development revenue
$
155.0
to
$
175.0
$
15.0
Total revenues
$
2,220.0
to
$
2,260.0
$
48.0
Tower Cash Flow (2)
$
1,667.0
to
$
1,687.0
$
3.0
Adjusted EBITDA (2)
$
1,573.0
to
$
1,593.0
$
11.0
Net cash interest expense (3)
$
358.0
to
$
368.0
$
—
Non-discretionary cash capital
expenditures (4)
$
36.0
to
$
46.0
$
(1.0)
AFFO (2)
$
1,131.0
to
$
1,177.0
$
14.0
AFFO per share (2) (5)
$
10.15
to
$
10.57
$
0.155
Discretionary cash capital expenditures
(6)
$
1,225.0
to
$
1,245.0
$
25.0
(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 111.4 million.
Our Outlook does not include the impact of any potential future
repurchases of the Company’s stock during 2021.
(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. Amount excludes $77.1 million of cash capital
expenditures for acquisitions completed during the fourth quarter
of 2020 which were not funded until the first quarter of 2021.
(7) Changes from prior outlook are
measured based on the midpoint of outlook ranges provided.
Conference Call Information
SBA Communications Corporation will host a conference call on
Monday, April 26, 2021 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When: Monday, April 26, 2021 at 5:00 PM (EDT), please dial-in by
4:45 PM Dial-in Number: (877) 692-8955 Access Code: 5907785
Conference Name: SBA First quarter 2021 results Replay Available:
April 26, 2021 at 11:00 PM to May 10, 2021 at 12:00 AM (TZ:
Eastern) Replay Number: (866) 207-1041 – Access Code: 6037760
Internet Access: www.sbasite.com
Information Concerning Forward-Looking
Statements
This press release and our earnings call include forward-looking
statements, including statements regarding the Company’s
expectations or beliefs regarding (i) customer activity and demand
for the Company’s wireless communications infrastructure during
2021 and thereafter, (ii) the Company’s role in the continued
advancement of wireless networks; (iii) the Company’s future
capital allocation, including with respect to stock repurchases,
acquisition of new assets and its availability of capital for
additional investment; (iv) the Company’s financial and operational
performance in 2021, including the Company’s revised financial and
operational guidance, the assumptions and drivers contributing to
its full year guidance, and the ability to deliver material growth
in total shareholder return, (v) the timing of closing for
currently pending acquisitions, and (vi) foreign exchange rates and
their impact on the Company’s financial and operational
guidance.
The Company wishes to caution readers that these forward-looking
statements may be affected by the risks and uncertainties in the
Company’s business as well as other important factors may have
affected and could in the future affect the Company’s actual
results and could cause the Company’s actual results for subsequent
periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. With
respect to the Company’s expectations regarding all of these
statements, including its financial and operational guidance, such
risk factors include, but are not limited to: (1) the 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 provide
accretive portfolio growth; (3) the Company’s ability to accurately
identify and manage any risks associated with its acquired sites,
to effectively integrate such sites into its business and to
achieve the anticipated financial results; (4) the Company’s
ability to secure and retain as many site leasing tenants as
planned at anticipated lease rates, including its ability to
realize anticipated benefits under the new Verizon agreement; (5)
the impact of continued consolidation among wireless service
providers in the U.S. and internationally, including the impact of
the completed T-Mobile and Sprint merger, 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 economic climate for the wireless
communications industry in general and the wireless communications
infrastructure providers in particular in the United States,
Brazil, South Africa and in other international markets; (11) the
ability of Dish to become and compete as a nationwide carrier; (12)
the Company’s ability to obtain future financing at commercially
reasonable rates or at all; (13) the ability of the Company to
achieve its long-term stock repurchases strategy, which will
depend, among other things, on the trading price of the Company’s
common stock, which may be positively or negatively impacted by the
repurchase program, market and business conditions; (14) the
Company’s ability to achieve the new builds targets included in its
anticipated annual portfolio growth goals, which will depend, among
other things, on obtaining zoning and regulatory approvals,
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 2021; (15) the extent and
duration of the impact of the COVID-19 crisis on the global
economy, on the Company’s business and results of operations, and
on foreign currency exchange rates; and (16) the Company’s ability
to meet its total portfolio growth, which will depend, in addition
to the new build risks, on the availability of sufficient towers
for sale to meet our targets, competition from third parties for
such acquisitions and our ability to negotiate the terms of, and
acquire, these potential tower portfolios on terms that meet our
internal return criteria. With respect to its expectations
regarding the ability to close pending acquisitions, these factors
also include satisfactorily completing due diligence, the amount
and quality of due diligence that the Company is able to complete
prior to closing of any acquisition 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 the repurchases
under the Company’s stock repurchase program, the amount of shares
repurchased, if any, and the timing of such repurchases will depend
on, among other things, the trading price of the Company’s common
stock, which may be positively or negatively impacted by the
repurchase program, market and business conditions, the
availability of stock, the Company’s financial performance or
determinations following the date of this announcement in order to
use the Company’s funds for other purposes. Furthermore, the
Company’s forward-looking statements and its 2021 outlook assumes
that the Company continues to qualify for treatment as a REIT for
U.S. federal income tax purposes and that the Company’s business is
currently operated in a manner that complies with the REIT rules
and that it will be able to continue to comply with and conduct its
business in accordance with such rules. In addition, these
forward-looking statements and the information in this press
release is qualified in its entirety by cautionary statements and
risk factor disclosures contained in the Company’s Securities and
Exchange Commission filings, including the Company’s Annual Report
on Form 10-K filed with the Commission on February 25, 2021.
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 and South
Africa. 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.
For the three months
ended March 31,
2021
2020
Revenues:
Site leasing
$
505,103
$
492,356
Site development
43,636
24,711
Total revenues
548,739
517,067
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion, and amortization shown below):
Cost of site leasing
95,368
95,799
Cost of site development
34,406
19,715
Selling, general, and administrative
expenses (1)
51,601
49,617
Acquisition and new business initiatives
related adjustments and expenses
5,001
3,799
Asset impairment and decommission
costs
4,903
14,355
Depreciation, accretion, and
amortization
183,881
182,579
Total operating expenses
375,160
365,864
Operating income
173,579
151,203
Other income (expense):
Interest income
632
885
Interest expense
(90,095)
(95,851)
Non-cash interest expense
(11,804)
(2,406)
Amortization of deferred financing
fees
(4,891)
(5,139)
Loss from extinguishment of debt, net
(11,652)
(16,864)
Other expense, net
(88,436)
(226,299)
Total other expense, net
(206,246)
(345,674)
Loss before income taxes
(32,667)
(194,471)
Benefit for income taxes
20,922
66,538
Net loss
(11,745)
(127,933)
Net loss attributable to noncontrolling
interests
—
875
Net loss attributable to SBA
Communications Corporation
$
(11,745)
$
(127,058)
Net loss per common share attributable to
SBA Communications Corporation:
Basic
$
(0.11)
$
(1.14)
Diluted
$
(0.11)
$
(1.14)
Weighted average number of common
shares
Basic
109,469
111,908
Diluted
109,469
111,908
(1) Includes non-cash compensation of
$19,584 and $15,553 for the three months ended March 31, 2021 and
2020, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
March 31,
December 31,
2021
2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
176,622
$
308,560
Restricted cash
62,926
31,671
Accounts receivable, net
86,165
74,088
Costs and estimated earnings in excess of
billings on uncompleted contracts
38,574
34,796
Prepaid expenses and other current
assets
25,640
23,875
Total current assets
389,927
472,990
Property and equipment, net
2,608,526
2,677,326
Intangible assets, net
2,984,098
3,156,150
Operating lease right-of-use assets,
net
2,303,070
2,369,358
PG&E and other right-of-use assets,
net
956,945
4,202
Other assets
520,894
477,992
Total assets
$
9,763,460
$
9,158,018
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS, AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
33,610
$
109,969
Accrued expenses
57,218
63,031
Current maturities of long-term debt
24,000
24,000
Deferred revenue
174,351
113,117
Accrued interest
27,003
54,350
Current lease liabilities
231,952
236,037
Other current liabilities
12,630
14,297
Total current liabilities
560,764
614,801
Long-term liabilities:
Long-term debt, net
12,019,757
11,071,796
Long-term lease liabilities
2,035,371
2,094,363
Other long-term liabilities
179,068
186,246
Total long-term liabilities
14,234,196
13,352,405
Redeemable noncontrolling interests
13,677
15,194
Shareholders' deficit:
Preferred stock - par value $0.01, 30,000
shares authorized, no shares issued or outstanding
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 109,331 shares and 109,819 shares issued
and outstanding at March 31, 2021 and December 31, 2020,
respectively
1,093
1,098
Additional paid-in capital
2,610,472
2,586,130
Accumulated deficit
(6,848,313)
(6,604,028)
Accumulated other comprehensive loss,
net
(808,429)
(807,582)
Total shareholders' deficit
(5,045,177)
(4,824,382)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
9,763,460
$
9,158,018
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended March 31,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(11,745)
$
(127,933)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
183,881
182,579
Loss on remeasurement of U.S. dollar
denominated intercompany loans
86,251
230,132
Non-cash compensation expense
20,422
16,278
Non-cash asset impairment and decommission
costs
4,791
13,997
Loss from extinguishment of debt
10,652
16,864
Deferred income tax benefit
(26,837)
(72,204)
Other non-cash items reflected in the
Statements of Operations
17,413
1,402
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of billings on uncompleted contracts,
net
(4,523)
19,712
Prepaid expenses and other assets
3,517
(1,643)
Operating lease right-of-use assets,
net
29,865
30,181
Accounts payable and accrued expenses
(4,667)
(4,725)
Accrued interest
(27,347)
(18,197)
Long-term lease liabilities
(26,393)
(24,712)
Other liabilities
30,237
16,011
Net cash provided by operating
activities
285,517
277,742
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(1,052,676)
(89,531)
Capital expenditures
(24,536)
(39,291)
Other investing activities
628
(3,190)
Net cash used in investing activities
(1,076,584)
(132,012)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
Revolving Credit Facility
210,000
(5,000)
Proceeds from issuance of Senior Notes,
net of fees
1,485,670
988,516
Repayment of Senior Notes
(757,500)
(759,143)
Repurchase and retirement of common
stock
(168,923)
(203,330)
Payment of dividends on common stock
(63,412)
(52,201)
Other financing activities
(4,492)
(12,177)
Net cash provided by (used in) financing
activities
701,343
(43,335)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(10,899)
(13,900)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(100,623)
88,495
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
342,808
141,120
End of period
$
242,185
$
229,615
Selected Capital
Expenditure Detail
For the three months ended
March 31,
2021
2020
(in thousands)
Construction and related costs on new
builds
$
8,823
$
17,031
Augmentation and tower upgrades
7,560
13,031
Non-discretionary capital
expenditures:
Tower maintenance
7,313
8,194
General corporate
840
1,035
Total non-discretionary capital
expenditures
8,153
9,229
Total capital expenditures
$
24,536
$
39,291
Communication Site
Portfolio Summary
Domestic
International
Total
Sites owned at December 31, 2020
16,546
16,377
32,923
Sites acquired during the first
quarter
712
19
731
Sites built during the first quarter
2
60
62
Sites decommissioned/reclassified during
the first quarter
(1)
(4)
(5)
Sites owned at March 31, 2021
17,259
16,452
33,711
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 March 31,
ended March 31,
ended March 31,
2021
2020
2021
2020
2021
2020
(in thousands)
Segment revenue
$
403,579
$
386,345
$
101,524
$
106,011
$
43,636
$
24,711
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(65,120)
(63,905)
(30,248)
(31,894)
(34,406)
(19,715)
Segment operating profit
$
338,459
$
322,440
$
71,276
$
74,117
$
9,230
$
4,996
Segment operating profit margin
83.9%
83.5%
70.2%
69.9%
21.2%
20.2%
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”).
We have included these non-GAAP financial measures because we
believe that they provide investors additional tools in
understanding our financial performance and condition.
Specifically, we believe that:
(1) Cash Site Leasing Revenue and Tower Cash Flow are useful
indicators of the performance of our site leasing operations;
(2) Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by excluding the impact of
our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation,
amortization and accretion) from our financial results. Management
also believes Adjusted EBITDA is frequently used by investors or
other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations.
Adjusted EBITDA should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance;
(3) FFO, AFFO and AFFO per share, which are metrics used by our
public company peers in the communication site industry, provide
investors useful indicators of the financial performance of our
business and permit investors an additional tool to evaluate the
performance of our business against those of our two principal
competitors. FFO, AFFO, and AFFO per share are also used to address
questions we receive from analysts and investors who routinely
assess our operating performance on the basis of these performance
measures, which are considered industry standards. We believe that
FFO helps investors or other interested parties meaningfully
evaluate financial performance by excluding the impact of our asset
base (primarily depreciation, amortization and accretion and asset
impairment and decommission costs). We believe that AFFO and AFFO
per share help investors or other interested parties meaningfully
evaluate our financial performance as they include (1) the impact
of our capital structure (primarily interest expense on our
outstanding debt) and (2) sustaining capital expenditures and
exclude the impact of (1) our asset base (primarily depreciation,
amortization and accretion and asset impairment and decommission
costs) and (2) certain non-cash items, including straight-lined
revenues and expenses related to fixed escalations and rent free
periods and the non-cash portion of our reported tax provision.
GAAP requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract. We only
use AFFO as a performance measure. AFFO should be considered only
as a supplement to net income computed in accordance with GAAP as a
measure of our performance and should not be considered as an
alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition
of FFO is consistent with how that term is defined by the National
Association of Real Estate Investment Trusts (“NAREIT”) and that
our definition and use of AFFO and AFFO per share is consistent
with those reported by the other communication site companies;
(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include
the full principal amount of our debt which will be due at maturity
and, to the extent that such measures are calculated on Net Debt
are net of our cash and cash equivalents, short-term restricted
cash, and short-term investments; and
(5) Our Constant Currency Measures provide management and
investors the ability to evaluate the performance of the business
without the impact of foreign currency exchange rate
fluctuations.
In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP
Debt Measures are components of the calculations used by our
lenders to determine compliance with certain covenants under our
Senior Credit Agreement and indentures relating to our 2016 Senior
Notes, 2020 Senior Notes, and 2021 Senior Notes. These non-GAAP
financial measures are not intended to be an alternative to any of
the financial measures provided in our results of operations or our
balance sheet as determined in accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
First quarter
2021 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
2.6
%
(2.5
%)
5.1
%
Total cash site leasing revenue
3.0
%
(2.5
%)
5.5
%
Int'l cash site leasing revenue
(3.6
%)
(12.0
%)
8.4
%
Total site leasing segment operating
profit
3.3
%
(2.1
%)
5.4
%
Int'l site leasing segment operating
profit
(3.8
%)
(11.2
%)
7.4
%
Total site leasing tower cash flow
3.5
%
(2.1
%)
5.6
%
Int'l site leasing tower cash flow
(3.0
%)
(11.3
%)
8.3
%
Net loss
90.8
%
10.4
%
80.4
%
Earnings per share - diluted
90.4
%
4.0
%
86.4
%
Adjusted EBITDA
5.4
%
(2.2
%)
7.6
%
AFFO
10.2
%
(3.1
%)
13.3
%
AFFO per share
13.2
%
(3.0
%)
16.2
%
Cash Site Leasing Revenue, Tower Cash
Flow, and Tower Cash Flow Margin
The table below sets forth the reconciliation of Cash Site
Leasing Revenue and Tower Cash Flow to their most comparable GAAP
measurement and Tower Cash Flow Margin, which is calculated by
dividing Tower Cash Flow by Cash Site Leasing Revenue.
Domestic Site Leasing
Int'l Site Leasing
Total Site Leasing
For the three months
For the three months
For the three months
ended March 31,
ended March 31,
ended March 31,
2021
2020
2021
2020
2021
2020
(in thousands)
Site leasing revenue
$
403,579
$
386,345
$
101,524
$
106,011
$
505,103
$
492,356
Non-cash straight-line leasing revenue
(1,330)
(2,406)
754
65
(576)
(2,341)
Cash site leasing revenue
402,249
383,939
102,278
106,076
504,527
490,015
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(65,120)
(63,905)
(30,248)
(31,894)
(95,368)
(95,799)
Non-cash straight-line ground lease
expense
2,214
3,353
427
495
2,641
3,848
Tower Cash Flow
$
339,343
$
323,387
$
72,457
$
74,677
$
411,800
$
398,064
Tower Cash Flow Margin
84.4%
84.2%
70.8%
70.4%
81.6%
81.2%
Forecasted Tower Cash Flow for Full Year
2021
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 2021:
Full Year 2021
(in millions)
Site leasing revenue
$
2,065.0
to
$
2,085.0
Non-cash straight-line leasing revenue
(28.0)
to
(23.0)
Cash site leasing revenue
2,037.0
to
2,062.0
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(375.5)
to
(385.5)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Tower Cash Flow
$
1,667.0
to
$
1,687.0
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 March 31,
2021
2020
(in thousands)
Net loss
$
(11,745)
$
(127,933)
Non-cash straight-line leasing revenue
(576)
(2,341)
Non-cash straight-line ground lease
expense
2,641
3,848
Non-cash compensation
20,422
16,278
Loss from extinguishment of debt, net
11,652
16,864
Other expense, net
88,436
226,299
Acquisition and new business initiatives
related adjustments and expenses
5,001
3,799
Asset impairment and decommission
costs
4,903
14,355
Interest income
(632)
(885)
Total interest expense (1)
106,790
103,396
Depreciation, accretion, and
amortization
183,881
182,579
Benefit for taxes (2)
(20,702)
(66,311)
Adjusted EBITDA
$
390,071
$
369,948
Annualized Adjusted EBITDA (3)
$
1,560,284
$
1,479,792
(1) Total interest expense includes
interest expense, non-cash interest expense, and amortization of
deferred financing fees.
(2) For the three months ended March 31,
2021 and 2020, these amounts included $220 and $227, 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 March 31,
2021
2020
(in thousands)
Total revenues
$
548,739
$
517,067
Non-cash straight-line leasing revenue
(576)
(2,341)
Total revenues minus non-cash
straight-line leasing revenue
$
548,163
$
514,726
Adjusted EBITDA
$
390,071
$
369,948
Adjusted EBITDA Margin
71.2%
71.9%
Forecasted Adjusted EBITDA for Full Year
2021
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 2021:
Full Year 2021
(in millions)
Net income
$
214.5
to
$
262.5
Non-cash straight-line leasing revenue
(28.0)
to
(23.0)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
76.0
to
71.0
Loss from extinguishment of debt, net
11.0
to
12.0
Other expense, net
95.0
to
95.0
Acquisition and new business initiatives
related adjustments and expenses
21.0
to
17.0
Asset impairment and decommission
costs
26.5
to
21.5
Interest income
(3.0)
to
—
Total interest expense (1)
430.0
to
418.0
Depreciation, accretion, and
amortization
723.5
to
713.5
Provision (benefit) for taxes (2)
1.0
to
(5.0)
Adjusted EBITDA
$
1,573.0
to
$
1,593.0
(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”)
The table below sets forth the reconciliations of FFO and AFFO
to their most comparable GAAP measurement.
For the three months
ended March 31,
(in thousands, except per share
amounts)
2021
2020
Net loss
$
(11,745)
$
(127,933)
Real estate related depreciation,
amortization, and accretion
182,886
181,431
Asset impairment and decommission
costs
4,903
14,355
FFO
$
176,044
$
67,853
Adjustments to FFO:
Non-cash straight-line leasing revenue
(576)
(2,341)
Non-cash straight-line ground lease
expense
2,641
3,848
Non-cash compensation
20,422
16,278
Adjustment for non-cash portion of tax
benefit
(26,837)
(72,204)
Non-real estate related depreciation,
amortization, and accretion
995
1,148
Amortization of deferred financing costs
and debt discounts and non-cash interest expense
16,695
7,545
Loss from extinguishment of debt, net
11,652
16,864
Other expense, net
88,436
226,299
Acquisition and new business initiatives
related adjustments and expenses
5,001
3,799
Non-discretionary cash capital
expenditures
(8,153)
(9,229)
AFFO
$
286,320
$
259,860
Weighted average number of common shares
(1)
111,118
113,993
AFFO per share
$
2.58
$
2.28
(1) 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
2021
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 2021:
(in millions, except per share
amounts)
Full Year 2021
Net income
$
214.5
to
$
262.5
Real estate related depreciation,
amortization, and accretion
715.5
to
707.5
Asset impairment and decommission
costs
26.5
to
21.5
FFO
$
956.5
to
$
991.5
Adjustments to FFO:
Non-cash straight-line leasing revenue
(28.0)
to
(23.0)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
76.0
to
71.0
Adjustment for non-cash portion of tax
benefit
(27.0)
to
$
(27.0)
Non-real estate related depreciation,
amortization, and accretion
8.0
to
6.0
Amortization of deferred financing costs
and debt discounts and non-cash interest expense
59.0
to
60.0
Loss from extinguishment of debt, net
11.0
to
12.0
Other expense, net
95.0
to
95.0
Acquisition and new business initiatives
related adjustments and expenses
21.0
to
17.0
Non-discretionary cash capital
expenditures
(46.0)
to
(36.0)
AFFO
$
1,131.0
to
$
1,177.0
Weighted average number of common shares
(1)
111.4
to
111.4
AFFO per share
$
10.15
to
$
10.57
(1) Our assumption for weighted average
number of common shares does not contemplate any additional
repurchases of the Company’s stock during 2021.
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:
March 31,
2021
(in thousands)
2013-2C Tower Securities
$
575,000
2014-2C Tower Securities
620,000
2017-1C Tower Securities
760,000
2018-1C Tower Securities
640,000
2019-1C Tower Securities
1,165,000
2020-1C Tower Securities
750,000
2020-2C Tower Securities
600,000
Revolving Credit Facility
590,000
2018 Term Loan
2,334,000
Total secured debt
8,034,000
2016 Senior Notes
1,100,000
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
4,100,000
Total debt
$
12,134,000
Leverage
Ratio
Total debt
$
12,134,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(240,228)
Net debt
$
11,893,772
Divided by: Annualized Adjusted EBITDA
$
1,560,284
Leverage Ratio
7.6x
Secured Leverage
Ratio
Total secured debt
$
8,034,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(240,228)
Net Secured Debt
$
7,793,772
Divided by: Annualized Adjusted EBITDA
$
1,560,284
Secured Leverage Ratio
5.0x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210426005792/en/
Mark DeRussy, CFA Capital Markets 561-226-9531 Lynne Hopkins
Media Relations 561-226-9431
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