SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended March 31,
2022.
Highlights of the first quarter include:
- Net income of $188.3 million or $1.72 per share
- AFFO per share increased 14.7% over the prior year
period
- Total revenue of $619.7 million, a 12.9% growth over the
prior year period
- Repurchased 1.3 million shares in the first quarter at an
average price per share of $332.00
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.71 per share
of the Company’s Class A Common Stock. The distribution is payable
June 14, 2022 to the shareholders of record at the close of
business on May 19, 2022.
“We are off to a very strong start to 2022,” commented Jeffrey
A. Stoops, President and Chief Executive Officer. “We produced
double-digit growth in AFFO per share while operationally executing
at a very high level. Our cash flows continue to grow, providing
multiple opportunities for the creation of additional shareholder
value. We materially increased our cash dividend while maintaining
a cash dividend / AFFO per share ratio of less than 25%. We are
experiencing strong demand in substantially all our markets. Based
on our backlogs and conversations with our customers, we expect
elevated leasing activities to continue through 2022 and into 2023.
All of our US wireless carrier customers are actively engaged in
building out their 5G networks and we are committed and have the
resources to help them achieve their goals. Our services personnel
have never been busier. Internationally, growth in the first
quarter was very strong, driven by organic lease-up, increased
CPI-based escalators and portfolio growth. We closed on the
Tanzania acquisition early in the first quarter, and we are off to
a good start in that new market. With spectrum auctions now
complete, we expect 5G deployments from our customers in Brazil and
South Africa, our two largest international markets, to begin to
accelerate. These activity levels have allowed us to increase our
2022 Outlook on all important metrics and give us tremendous
confidence in strong 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,
expected strong execution on our part 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, 2022 and comparisons to the prior year
period.
% Change
excluding
Q1 2022
Q1 2021
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
559.4
$
505.1
$
54.3
10.8%
10.3
%
Site development revenue
60.3
43.6
16.7
38.3%
38.3
%
Tower cash flow (1)
445.3
411.8
33.5
8.1%
7.8
%
Net income (loss)
188.3
(11.7)
200.0
NM
158.0
%
Earnings per share - diluted
1.72
(0.11)
1.83
NM
161.0
%
Adjusted EBITDA (1)
423.8
390.1
33.7
8.6%
8.2
%
AFFO (1)
324.3
286.3
38.0
13.3%
12.6
%
AFFO per share (1)
2.96
2.58
0.38
14.7%
14.0
%
(1) See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
NM - not meaningful.
Total revenues in the first quarter of 2022 were $619.7 million
compared to $548.7 million in the prior year period, an increase of
12.9%. Site leasing revenue in the first quarter of 2022 of $559.4
million was comprised of domestic site leasing revenue of $433.0
million and international site leasing revenue of $126.4 million.
Domestic cash site leasing revenue in the first quarter of 2022 was
$423.5 million compared to $402.2 million in the prior year period,
an increase of 5.3%. International cash site leasing revenue in the
first quarter of 2022 was $127.9 million compared to $102.3 million
in the prior year period, an increase of 25.1%, or an increase of
22.8% on a constant currency basis. Site development revenues in
the first quarter of 2022 were $60.3 million compared to $43.6
million in the prior year period, an increase of 38.3%.
Site leasing operating profit in the first quarter of 2022 was
$452.3 million, an increase of 10.4% over the prior year period.
Site leasing contributed 96.9% of the Company’s total operating
profit in the first quarter of 2022. Domestic site leasing segment
operating profit in the first quarter of 2022 was $367.2 million,
an increase of 8.5% over the prior year period. International site
leasing segment operating profit in the first quarter of 2022 was
$85.1 million, an increase of 19.4% from the prior year period.
Tower Cash Flow in the first quarter of 2022 of $445.3 million
was comprised of Domestic Tower Cash Flow of $358.4 million and
International Tower Cash Flow of $86.9 million. Domestic Tower Cash
Flow in the first quarter of 2022 increased 5.6% over the prior
year period and International Tower Cash Flow increased 20.0% over
the prior year period, or increased 17.9% on a constant currency
basis. Tower Cash Flow Margin was 80.8% in the first quarter of
2022, as compared to 81.6% for the prior year period.
Net income in the first quarter of 2022 was $188.3 million, or
$1.72 per share, and included a $72.9 million gain, net of taxes,
on the currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net loss in 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.
Adjusted EBITDA in the first quarter of 2022 was $423.8 million,
an 8.6% increase over the prior year period. Adjusted EBITDA Margin
in the first quarter of 2022 was 69.3% compared to 71.2% in the
prior year period.
Net Cash Interest Expense in the first quarter of 2022 was $79.8
million compared to $89.5 million in the prior year period, a
decrease of 10.8%.
AFFO in the first quarter of 2022 was $324.3 million, a 13.3%
increase over the prior year period. AFFO per share in the first
quarter of 2022 was $2.96, a 14.7% increase over the prior year
period.
Investing Activities
During the first quarter of 2022, SBA acquired 1,807
communication sites for total cash consideration of $215.4 million,
including 1,445 sites under the previously announced deal with
Airtel Tanzania for $176.1 million. SBA also built 86 towers during
the first quarter of 2022. As of March 31, 2022, SBA owned or
operated 36,017 communication sites, 17,363 of which are located in
the United States and its territories and 18,654 of which are
located internationally. In addition, the Company spent $8.7
million to purchase land and easements and to extend lease terms.
Total cash capital expenditures for the first quarter of 2022 were
$253.2 million, consisting of $12.3 million of non-discretionary
cash capital expenditures (tower maintenance and general corporate)
and $240.9 million of discretionary cash capital expenditures (new
tower builds, tower augmentations, acquisitions, and purchasing
land and easements).
Subsequent to the first quarter of
2022, the Company purchased or is under contract to purchase 358
communication sites and one data center for an aggregate
consideration of $177.1 million in cash. The Company anticipates
that these acquisitions will be consummated by the end of the
fourth quarter of 2022.
Financing Activities and
Liquidity
SBA ended the first quarter of 2022 with $12.7 billion of total
debt, $9.7 billion of total secured debt, $334.1 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $12.4 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.3x and 5.5x, respectively.
As of the date of this press release, the Company had $590.0
million outstanding under the $1.5 billion Revolving Credit
Facility.
During the first quarter of 2022, the Company repurchased 1.3
million shares of its Class A common stock for $431.6 million at an
average price per share of $332.00 under its $1.0 billion stock
repurchase plan. After these repurchases, the Company had $504.7
million of authorization remaining under the plan. Shares
repurchased were retired.
In the first quarter of 2022, the Company declared and paid a
cash dividend of $76.9 million.
Outlook
The Company is updating its full year 2022 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 2022 Outlook 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 2022 on acquiring revenue producing assets
not yet identified or under contract, the impact of which is not
reflected in the 2022 guidance. The Outlook also does not
contemplate any additional repurchases of the Company’s stock
during 2022, although the Company may ultimately spend capital to
repurchase additional stock during the remainder of the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.00 Brazilian Reais to 1.0 U.S. Dollar, 1.25
Canadian Dollars to 1.0 U.S. Dollar, 2,318 Tanzanian shillings to
1.0 U.S. Dollar, and 15.70 South African Rand to 1.0 U.S. Dollar
throughout the last three quarters of 2022.
Change from
Change from
February 28, 2022
February 28, 2022
Outlook
(in millions, except per share
amounts)
Full Year 2022
Outlook (7)
Excluding FX
Site leasing revenue (1)
$
2,273.0
to
$
2,293.0
$
38.0
$
17.0
Site development revenue
$
220.0
to
$
240.0
$
27.0
$
27.0
Total revenues
$
2,493.0
to
$
2,533.0
$
65.0
$
44.0
Tower Cash Flow (2)
$
1,802.0
to
$
1,822.0
$
23.0
$
9.0
Adjusted EBITDA (2)
$
1,704.0
to
$
1,724.0
$
31.0
$
18.0
Net cash interest expense (3)
$
325.0
to
$
330.0
$
5.0
$
5.5
Non-discretionary cash capital
expenditures (4)
$
47.0
to
$
57.0
$
2.0
$
2.0
AFFO (2)
$
1,286.0
to
$
1,326.0
$
23.0
$
10.0
AFFO per share (2) (5)
$
11.72
to
$
12.09
$
0.24
$
0.12
Discretionary cash capital expenditures
(6)
$
615.0
to
$
635.0
$
90.0
$
81.0
(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 109.7 million. Our
Outlook does not include the impact of any potential future
repurchases of the Company’s stock during 2022.
(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.
(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 25, 2022 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, April 25, 2022 at 5:00 PM
(EDT)
Dial-in Number:
(844) 867-6169
Access Code:
1653120
Conference Name:
SBA First quarter 2022 results
Replay Available:
April 25, 2022 at 11:00 PM to May 9, 2022
at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code: 9041995
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
2022 and thereafter, both domestically and internationally, and the
impact of customer 5G buildout and deployment, including in our
Brazil and South Africa markets, on such demand, (ii) the Company’s
future organic leasing growth, (iii) the Company’s leasing backlogs
and the impact of that backlog on future customer activity, (iv)
the Company’s future capital allocation and its impact on the
Company’s financial results and total shareholder return, (v) the
Company’s financial and operational performance in 2022, the
assumptions it made and the drivers contributing to its updated
full year guidance, (vi) the timing of closing for currently
pending acquisitions, and (vii) 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; (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, Tanzania,
and in other international markets; (11) the ability of Dish to
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 2022;
(15) the extent and duration of the impact of the COVID-19 pandemic
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. With respect to the recent acquisition of towers in
Tanzania and greenfield build operations in the Philippines, these
factors also include a variety of factors outside of the Company’s
control, including the accuracy of the information provided to the
Company, the health of the Tanzanian and Philippine economies and
wireless communications markets, and the willingness of carriers to
invest in their networks in those markets. Furthermore, the
Company’s forward-looking statements and its 2022 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 March 1, 2022.
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, South Africa,
the Philippines, and Tanzania. 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
ended March 31,
2022
2021
Revenues:
Site leasing
$
559,432
$
505,103
Site development
60,338
43,636
Total revenues
619,770
548,739
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
107,155
95,368
Cost of site development
45,773
34,406
Selling, general, and administrative
expenses (1)
62,124
51,601
Acquisition and new business initiatives
related
adjustments and expenses
5,104
5,001
Asset impairment and decommission
costs
8,512
4,903
Depreciation, accretion, and
amortization
174,323
183,881
Total operating expenses
402,991
375,160
Operating income
216,779
173,579
Other income (expense):
Interest income
2,502
632
Interest expense
(82,252)
(90,095)
Non-cash interest expense
(11,526)
(11,804)
Amortization of deferred financing
fees
(4,881)
(4,891)
Loss from extinguishment of debt, net
—
(11,652)
Other income (expense), net
108,161
(88,436)
Total other income (expense), net
12,004
(206,246)
Income (loss) before income taxes
228,783
(32,667)
(Provision) benefit for income taxes
(40,477)
20,922
Net income (loss)
188,306
(11,745)
Net loss attributable to noncontrolling
interests
317
—
Net income (loss) attributable to SBA
Communications
Corporation
$
188,623
$
(11,745)
Net income (loss) per common share
attributable to SBA
Communications Corporation:
Basic
$
1.75
$
(0.11)
Diluted
$
1.72
$
(0.11)
Weighted average number of common
shares
Basic
108,086
109,469
Diluted
109,544
109,469
(1)
Includes non-cash compensation of $24,116
and $19,584 for the three months ended March 31, 2022 and 2021,
respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
March 31,
December 31,
2022
2021
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
263,569
$
367,278
Restricted cash
69,781
65,561
Accounts receivable, net
121,583
101,950
Costs and estimated earnings in excess of
billings on uncompleted contracts
48,028
48,844
Prepaid expenses and other current
assets
36,462
30,813
Total current assets
539,423
614,446
Property and equipment, net
2,674,679
2,575,487
Intangible assets, net
2,909,789
2,803,247
Operating lease right-of-use assets,
net
2,362,287
2,268,470
Acquired and other right-of-use assets,
net
1,017,508
964,405
Other assets
638,414
575,644
Total assets
$
10,142,100
$
9,801,699
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
40,583
$
34,066
Accrued expenses
80,628
68,070
Current maturities of long-term debt
24,000
24,000
Deferred revenue
195,553
184,380
Accrued interest
23,710
49,096
Current lease liabilities
254,448
238,497
Other current liabilities
21,367
18,222
Total current liabilities
640,289
616,331
Long-term liabilities:
Long-term debt, net
12,607,332
12,278,694
Long-term lease liabilities
2,050,790
1,981,353
Other long-term liabilities
232,799
191,475
Total long-term liabilities
14,890,921
14,451,522
Redeemable noncontrolling interests
36,037
17,250
Shareholders' deficit:
Preferred stock - par value $0.01, 30,000
shares authorized, no shares issued or outstanding
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 107,806 shares and
108,956 shares issued and outstanding at
March 31, 2022 and December 31, 2021,
respectively
1,078
1,089
Additional paid-in capital
2,688,835
2,681,347
Accumulated deficit
(7,523,696)
(7,203,531)
Accumulated other comprehensive loss,
net
(591,364)
(762,309)
Total shareholders' deficit
(5,425,147)
(5,283,404)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
10,142,100
$
9,801,699
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended March 31,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
188,306
$
(11,745)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, accretion, and
amortization
174,323
183,881
(Gain) loss on remeasurement of U.S.
denominated intercompany loans
(109,644)
86,251
Non-cash compensation expense
24,747
20,422
Non-cash asset impairment and decommission
costs
8,366
4,791
Loss from extinguishment of debt, net
—
10,652
Deferred income tax provision
(benefit)
34,262
(26,837)
Other non-cash items reflected in the
Statements of Operations
16,896
17,413
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of
billings on uncompleted contracts, net
(9,812)
(4,523)
Prepaid expenses and other assets
(2,285)
3,517
Operating lease right-of-use assets,
net
33,682
29,865
Accounts payable and accrued expenses
(6,918)
(4,667)
Accrued interest
(25,384)
(27,347)
Long-term lease liabilities
(31,038)
(26,393)
Other liabilities
28,981
30,218
Net cash provided by operating
activities
324,482
285,498
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(215,181)
(1,052,676)
Capital expenditures
(38,008)
(24,536)
Other investing activities
(2,692)
628
Net cash used in investing activities
(255,881)
(1,076,584)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Revolving Credit
Facility
330,000
210,000
Proceeds from issuance of Senior Notes,
net of fees
—
1,485,670
Repayment of Senior Notes
—
(757,500)
Repurchase and retirement of common
stock
(431,667)
(168,923)
Payment of dividends on common stock
(76,873)
(63,412)
Proceeds from employee stock
purchase/stock option plans
10,836
10,838
Payments related to taxes on net
settlement of stock options and restricted stock units
(9,228)
(8,823)
Other financing activities
(6,818)
(6,507)
Net cash (used in) provided by financing
activities
(183,750)
701,343
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
15,961
(10,880)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(99,188)
(100,623)
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
435,626
342,808
End of period
$
336,438
$
242,185
Selected Capital Expenditure
Detail
For the three months ended
March 31,
2022
2021
(in thousands)
Construction and related costs
$
16,477
$
8,823
Augmentation and tower upgrades
9,274
7,560
Non-discretionary capital
expenditures:
Tower maintenance
9,327
7,313
General corporate
2,930
840
Total non-discretionary capital
expenditures
12,257
8,153
Total capital expenditures
$
38,008
$
24,536
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at December 31, 2021
17,356
16,821
34,177
Sites acquired during the first
quarter
9
1,798
1,807
Sites built during the first quarter
1
85
86
Sites decommissioned/reclassified during
the first quarter
(3)
(50)
(53)
Sites owned at March 31, 2022
17,363
18,654
36,017
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,
2022
2021
2022
2021
2022
2021
(in thousands)
Segment revenue
$
432,986
$
403,579
$
126,446
$
101,524
$
60,338
$
43,636
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(65,804)
(65,120)
(41,351)
(30,248)
(45,773)
(34,406)
Segment operating profit
$
367,182
$
338,459
$
85,095
$
71,276
$
14,565
$
9,230
Segment operating profit margin
84.8%
83.9%
67.3%
70.2%
24.1%
21.2%
Non-GAAP Financial Measures
The press release contains non-GAAP financial measures including
(i) Cash Site Leasing Revenue, Tower Cash Flow, and Tower Cash Flow
Margin; (ii) Adjusted EBITDA, Annualized Adjusted EBITDA, and
Adjusted EBITDA Margin; (iii) Funds from Operations (“FFO”),
Adjusted Funds from Operations (“AFFO”), and AFFO per share; (iv)
Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage
Ratio (collectively, our “Non-GAAP Debt Measures”); and (v) certain
financial metrics after eliminating the impact of changes in
foreign currency exchange rates (collectively, our “Constant
Currency Measures”).
We have included these non-GAAP financial measures because we
believe that they provide investors additional tools in
understanding our financial performance and condition.
Specifically, we believe that:
(1) Cash Site Leasing Revenue and Tower Cash Flow are useful
indicators of the performance of our site leasing operations;
(2) Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by excluding the impact of
our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation,
amortization and accretion) from our financial results. Management
also believes Adjusted EBITDA is frequently used by investors or
other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations.
Adjusted EBITDA should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance;
(3) FFO, AFFO and AFFO per share, which are metrics used by our
public company peers in the communication site industry, provide
investors useful indicators of the financial performance of our
business and permit investors an additional tool to evaluate the
performance of our business against those of our two principal
competitors. FFO, AFFO, and AFFO per share are also used to address
questions we receive from analysts and investors who routinely
assess our operating performance on the basis of these performance
measures, which are considered industry standards. We believe that
FFO helps investors or other interested parties meaningfully
evaluate financial performance by excluding the impact of our asset
base (primarily depreciation, amortization and accretion and asset
impairment and decommission costs). We believe that AFFO and AFFO
per share help investors or other interested parties meaningfully
evaluate our financial performance as they include (1) the impact
of our capital structure (primarily interest expense on our
outstanding debt) and (2) sustaining capital expenditures and
exclude the impact of (1) our asset base (primarily depreciation,
amortization and accretion and asset impairment and decommission
costs) and (2) certain non-cash items, including straight-lined
revenues and expenses related to fixed escalations and rent free
periods and the non-cash portion of our reported tax provision.
GAAP requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract. We only
use AFFO as a performance measure. AFFO should be considered only
as a supplement to net income computed in accordance with GAAP as a
measure of our performance and should not be considered as an
alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition
of FFO is consistent with how that term is defined by the National
Association of Real Estate Investment Trusts (“NAREIT”) and that
our definition and use of AFFO and AFFO per share is consistent
with those reported by the other communication site companies;
(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include
the full principal amount of our debt which will be due at maturity
and, to the extent that such measures are calculated on Net Debt
are net of our cash and cash equivalents, short-term restricted
cash, and short-term investments; and
(5) Our Constant Currency Measures provide management and
investors the ability to evaluate the performance of the business
without the impact of foreign currency exchange rate
fluctuations.
In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP
Debt Measures are components of the calculations used by our
lenders to determine compliance with certain covenants under our
Senior Credit Agreement and indentures relating to our 2020 Senior
Notes and 2021 Senior Notes. These non-GAAP financial measures are
not intended to be an alternative to any of the financial measures
provided in our results of operations or our balance sheet as
determined in accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
First quarter
2022 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
10.8
%
0.5
%
10.3
%
Total cash site leasing revenue
9.3
%
0.5
%
8.8
%
Int'l cash site leasing revenue
25.1
%
2.3
%
22.8
%
Total site leasing segment operating
profit
10.4
%
0.4
%
10.0
%
Int'l site leasing segment operating
profit
19.4
%
2.1
%
17.3
%
Total site leasing tower cash flow
8.1
%
0.3
%
7.8
%
Int'l site leasing tower cash flow
20.0
%
2.1
%
17.9
%
Net income (loss)
NM
NM
158.0
%
Earnings per share - diluted
NM
NM
161.0
%
Adjusted EBITDA
8.6
%
0.4
%
8.2
%
AFFO
13.3
%
0.7
%
12.6
%
AFFO per share
14.7
%
0.7
%
14.0
%
NM - not meaningful.
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,
2022
2021
2022
2021
2022
2021
(in thousands)
Site leasing revenue
$
432,986
$
403,579
$
126,446
$
101,524
$
559,432
$
505,103
Non-cash straight-line leasing revenue
(9,484)
(1,330)
1,483
754
(8,001)
(576)
Cash site leasing revenue
423,502
402,249
127,929
102,278
551,431
504,527
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(65,804)
(65,120)
(41,351)
(30,248)
(107,155)
(95,368)
Non-cash straight-line ground lease
expense
694
2,214
359
427
1,053
2,641
Tower Cash Flow
$
358,392
$
339,343
$
86,937
$
72,457
$
445,329
$
411,800
Tower Cash Flow Margin
84.6%
84.4%
68.0%
70.8%
80.8%
81.6%
Forecasted Tower Cash Flow for Full Year
2022
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 2022:
Full Year 2022
(in millions)
Site leasing revenue
$
2,273.0
to
$
2,293.0
Non-cash straight-line leasing revenue
(32.5)
to
(27.5)
Cash site leasing revenue
2,240.5
to
2,265.5
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(438.5)
to
(448.5)
Non-cash straight-line ground lease
expense
—
to
5.0
Tower Cash Flow
$
1,802.0
to
$
1,822.0
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,
2022
2021
(in thousands)
Net income (loss)
$
188,306
$
(11,745)
Non-cash straight-line leasing revenue
(8,001)
(576)
Non-cash straight-line ground lease
expense
1,053
2,641
Non-cash compensation
24,747
20,422
Loss from extinguishment of debt, net
—
11,652
Other (income) expense, net
(108,161)
88,436
Acquisition and new business initiatives
related adjustments and expenses
5,104
5,001
Asset impairment and decommission
costs
8,512
4,903
Interest income
(2,502)
(632)
Total interest expense (1)
98,659
106,790
Depreciation, accretion, and
amortization
174,323
183,881
Provision (benefit) for taxes (2)
41,711
(20,702)
Adjusted EBITDA
$
423,751
$
390,071
Annualized Adjusted EBITDA (3)
$
1,695,004
$
1,560,284
(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, 2022 and 2021, these
amounts included $1,234 and $220, 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,
2022
2021
(in thousands)
Total revenues
$
619,770
$
548,739
Non-cash straight-line leasing revenue
(8,001)
(576)
Total revenues minus non-cash
straight-line leasing revenue
$
611,769
$
548,163
Adjusted EBITDA
$
423,751
$
390,071
Adjusted EBITDA Margin
69.3%
71.2%
Forecasted Adjusted EBITDA for Full Year
2022
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 2022:
Full Year 2022
(in millions)
Net income
$
470.5
to
$
515.5
Non-cash straight-line leasing revenue
(32.5)
to
(27.5)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
101.0
to
96.0
Loss from extinguishment of debt, net
2.5
to
2.5
Other income, net
(61.0)
to
(61.0)
Acquisition and new business initiatives
related adjustments and expenses
23.5
to
18.5
Asset impairment and decommission
costs
30.0
to
25.0
Interest income
(11.0)
to
(8.0)
Total interest expense (1)
406.0
to
398.0
Depreciation, accretion, and
amortization
710.0
to
700.0
Provision for taxes (2)
65.0
to
60.0
Adjusted EBITDA
$
1,704.0
to
$
1,724.0
(1)
Total interest expense includes interest expense, non-cash
interest expense, and amortization of deferred financing fees.
(2)
Includes projections for franchise taxes and gross receipts
taxes, which will be reflected in the Statement of Operations in
Selling, general, and administrative expenses.
Funds from Operations (“FFO”), Adjusted
Funds from Operations (“AFFO”), and AFFO per share
The 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)
2022
2021
Net income (loss)
$
188,306
$
(11,745)
Real estate related depreciation,
amortization, and accretion
173,235
182,886
Asset impairment and decommission
costs
8,512
4,903
FFO
$
370,053
$
176,044
Adjustments to FFO:
Non-cash straight-line leasing revenue
(8,001)
(576)
Non-cash straight-line ground lease
expense
1,053
2,641
Non-cash compensation
24,747
20,422
Adjustment for non-cash portion of tax
provision (benefit)
34,262
(26,837)
Non-real estate related depreciation,
amortization, and accretion
1,088
995
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
16,407
16,695
Loss from extinguishment of debt, net
—
11,652
Other (income) expense, net
(108,161)
88,436
Acquisition and new business initiatives
related adjustments and expenses
5,104
5,001
Non-discretionary cash capital
expenditures
(12,257)
(8,153)
AFFO
$
324,295
$
286,320
Adjustments for joint venture partner
interest
(654)
—
AFFO attributable to SBA Communications
Corporation
$
323,641
$
286,320
Weighted average number of common shares
(1)
109,544
111,118
AFFO per share
$
2.96
$
2.58
AFFO per share attributable to SBA
Communications Corporation
$
2.95
$
2.58
(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
2022
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 2022:
(in millions, except per share
amounts)
Full Year 2022
Net income
$
470.5
to
$
515.5
Real estate related depreciation,
amortization, and accretion
700.0
to
695.0
Asset impairment and decommission
costs
30.0
to
25.0
FFO
$
1,200.5
to
$
1,235.5
Adjustments to FFO:
Non-cash straight-line leasing revenue
(32.5)
to
(27.5)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
101.0
to
96.0
Adjustment for non-cash portion of tax
provision
34.0
to
34.0
Non-real estate related depreciation,
amortization, and accretion
10.0
to
5.0
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
65.0
to
65.0
Loss from extinguishment of debt, net
2.5
to
2.5
Other income, net
(61.0)
to
(61.0)
Acquisition and new business initiatives
related adjustments and expenses
23.5
to
18.5
Non-discretionary cash capital
expenditures
(57.0)
to
(47.0)
AFFO
$
1,286.0
to
$
1,326.0
Weighted average number of common shares
(1)
109.7
to
109.7
AFFO per share
$
11.72
to
$
12.09
(1)
Our assumption for weighted average number
of common shares does not contemplate any additional repurchases of
the Company’s stock during 2022.
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,
2022
(in thousands)
2014-2C Tower Securities
$
620,000
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
2021-1C Tower Securities
1,165,000
2021-2C Tower Securities
895,000
2021-3C Tower Securities
895,000
Revolving Credit Facility
680,000
2018 Term Loan
2,310,000
Total secured debt
9,720,000
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
3,000,000
Total debt
$
12,720,000
Leverage
Ratio
Total debt
$
12,720,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(334,103)
Net debt
$
12,385,897
Divided by: Annualized Adjusted EBITDA
$
1,695,004
Leverage Ratio
7.3x
Secured Leverage
Ratio
Total secured debt
$
9,720,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(334,103)
Net Secured Debt
$
9,385,897
Divided by: Annualized Adjusted EBITDA
$
1,695,004
Secured Leverage Ratio
5.5x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220425005897/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
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