SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended June 30,
2022.
Highlights of the second quarter include:
- Net income of $69.2 million or $0.64 per share
- AFFO per share increased 16.3% over the prior year
period
- Total revenue of $652.0 million, representing a 13.3% growth
over the prior year period
- Entered into an agreement to purchase approximately 2,600
sites in Brazil
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
September 20, 2022 to the shareholders of record at the close of
business on August 25, 2022.
“Our second-quarter performance was very strong,” stated Jeffrey
Stoops, President and CEO. “Wireless carrier activity was, and
remains, robust across most of our markets. In both leasing and
services, we are extremely busy fulfilling the needs and requests
of our customers as they continue to pursue a high level of network
investment. Against this demand, we continue to execute very well.
We achieved another record for US services revenue in the quarter.
We believe domestic and international activity will remain strong
into 2023 and perhaps beyond, given the size and scope of our
customers’ 5G deployment plans. With respect to capital allocation,
we continue to be very disciplined around target leverage levels,
and very opportunistic as to allocating capital to portfolio growth
or stock repurchases. Consistent with that approach, we have
entered into an agreement to acquire approximately 2,600 additional
towers in Brazil on terms that we believe are very attractive and
will upon closing be immediately accretive to AFFO per share. The
acquired towers will be very complementary to our existing towers
in Brazil and we expect to integrate these assets smoothly, quickly
and with no ongoing material incremental SG&A expense. As a
result of these positive results, prospects and investment, we are
increasing our 2022 Outlook across all key financial metrics.”
Operating Results
The table below details select financial results for the three
months ended June 30, 2022 and comparisons to the prior year
period.
% Change
excluding
Q2 2022
Q2 2021
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
580.2
$
524.1
$
56.1
10.7
%
10.1
%
Site development revenue
71.8
51.4
20.4
39.5
%
39.5
%
Tower cash flow (1)
459.6
421.2
38.4
9.1
%
8.5
%
Net income
69.2
152.7
(83.5
)
(54.7
%)
42.2
%
Earnings per share - diluted
0.64
1.37
(0.73
)
(53.3
%)
43.7
%
Adjusted EBITDA (1)
437.8
400.2
37.6
9.4
%
8.8
%
AFFO (1)
335.3
293.5
41.8
14.2
%
13.3
%
AFFO per share (1)
3.07
2.64
0.43
16.3
%
15.2
%
(1) See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the second quarter of 2022 were $652.0 million
compared to $575.5 million in the prior year period, an increase of
13.3%. Site leasing revenue in the second quarter of 2022 of $580.2
million was comprised of domestic site leasing revenue of $442.1
million and international site leasing revenue of $138.1 million.
Domestic cash site leasing revenue in the second quarter of 2022
was $431.8 million compared to $408.3 million in the prior year
period, an increase of 5.8%. International cash site leasing
revenue in the second quarter of 2022 was $138.6 million compared
to $106.3 million in the prior year period, an increase of 30.4%,
or 27.1% on a constant currency basis. Site development revenues in
the second quarter of 2022 were $71.8 million compared to $51.4
million in the prior year period, an increase of 39.5%.
Site leasing operating profit in the second quarter of 2022 was
$468.7 million, an increase of 9.3% over the prior year period.
Site leasing contributed 96.4% of the Company’s total operating
profit in the second quarter of 2022. Domestic site leasing segment
operating profit in the second quarter of 2022 was $376.3 million,
an increase of 6.0% over the prior year period. International site
leasing segment operating profit in the second quarter of 2022 was
$92.4 million, an increase of 25.1% from the prior year period.
Tower Cash Flow in the second quarter of 2022 of $459.6 million
was comprised of Domestic Tower Cash Flow of $366.5 million and
International Tower Cash Flow of $93.1 million. Domestic Tower Cash
Flow in the second quarter of 2022 increased 5.9% over the prior
year period and International Tower Cash Flow increased 23.7% over
the prior year period, or increased 20.4% on a constant currency
basis. Tower Cash Flow Margin was 80.6% in the second quarter of
2022, as compared to 81.9% for the prior year period.
Net income in the second quarter of 2022 was $69.2 million, or
$0.64 per share, and included a $43.1 million loss, net of taxes,
on the currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net income in the
second quarter of 2021 was $152.7 million, or $1.37 per share, and
included a $73.6 million gain, net of taxes, on the
currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries.
Adjusted EBITDA in the second quarter of 2022 was $437.8
million, a 9.4% increase over the prior year period. Adjusted
EBITDA Margin in the second quarter of 2022 was 68.2% compared to
70.7% in the prior year period.
Net Cash Interest Expense in the second quarter of 2022 was
$82.8 million compared to $90.0 million in the prior year period, a
decrease of 8.0%.
AFFO in the second quarter of 2022 was $335.3 million, a 14.2%
increase over the prior year period. AFFO per share in the second
quarter of 2022 was $3.07, a 16.3% increase over the prior year
period.
Investing Activities
During the second quarter of 2022, SBA acquired 210
communication sites and one data center in Brazil, for total cash
consideration of $127.3 million. SBA also built 100 towers during
the second quarter of 2022. As of June 30, 2022, SBA owned or
operated 36,297 communication sites, 17,395 of which are located in
the United States and its territories and 18,902 of which are
located internationally. In addition, the Company spent $9.9
million to purchase land and easements and to extend lease terms.
Total cash capital expenditures for the second quarter of 2022 were
$191.4 million, consisting of $11.7 million of non-discretionary
cash capital expenditures (tower maintenance and general corporate)
and $179.7 million of discretionary cash capital expenditures (new
tower builds, tower augmentations, acquisitions, and purchasing
land and easements).
Subsequent to the second quarter of 2022, the Company purchased
or is under contract to purchase approximately 200 communication
sites for an aggregate consideration of $85.0 million in cash. The
Company anticipates that these acquisitions will be consummated by
the end of the fourth quarter of 2022. Additionally, the Company is
under contract to purchase approximately 2,600 sites from Grupo
TorreSur (GTS) in Brazil for $725.0 million, which is expected to
close during the fourth quarter of 2022. The sites to be acquired
in this transaction are anticipated to produce approximately $68.0
million of Tower Cash Flow during their first full year of
operations after closing based on current estimates of future
foreign currency exchange rates.
Financing Activities and
Liquidity
SBA ended the second quarter of 2022 with $12.6 billion of total
debt, $9.6 billion of total secured debt, $288.4 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $12.3 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.0x and 5.3x, respectively.
As of the date of this press release, the Company had $480.0
million outstanding under its $1.5 billion Revolving Credit
Facility.
The Company did not repurchase any shares of its Class A common
stock during the second quarter of 2022. As of the date of this
filing, the Company has $504.7 million of authorization remaining
under its approved repurchase plan.
In the second quarter of 2022, the Company declared and paid a
cash dividend of $76.6 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 acquisition from GTS
in Brazil is assumed to close on November 1, 2022, for purposes of
the Outlook ranges provided. 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 5.35 Brazilian Reais to 1.0 U.S. Dollar, 1.29
Canadian Dollars to 1.0 U.S. Dollar, 2,330 Tanzanian shillings to
1.0 U.S. Dollar, and 16.70 South African Rand to 1.0 U.S. Dollar
throughout the last two quarters of 2022.
Change from
Change from
April 25, 2022
April 25, 2022
Outlook
(in millions, except per share
amounts)
Full Year 2022
Outlook (7)
Excluding FX
Site leasing revenue (1)
$
2,297.0
to
$
2,317.0
$
24.0
$
36.0
Site development revenue
$
260.0
to
$
280.0
$
40.0
$
40.0
Total revenues
$
2,557.0
to
$
2,597.0
$
64.0
$
76.0
Tower Cash Flow (2)
$
1,821.0
to
$
1,841.0
$
19.0
$
26.0
Adjusted EBITDA (2)
$
1,731.0
to
$
1,751.0
$
27.0
$
33.0
Net cash interest expense (3)
$
335.0
to
$
340.0
$
10.0
$
10.0
Non-discretionary cash capital
expenditures (4)
$
46.0
to
$
56.0
$
(1.0
)
$
(1.0
)
AFFO (2)
$
1,300.0
to
$
1,340.0
$
14.0
$
20.0
AFFO per share (2) (5)
$
11.87
to
$
12.24
$
0.15
$
0.20
Discretionary cash capital expenditures
(6)
$
1,410.0
to
$
1,430.0
$
795.0
$
801.0
(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 109.5 million. 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, August 1, 2022 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, August 1, 2022 at 5:00 PM
(EDT)
Dial-in Number:
(877) 692-8955
Access Code:
3362526
Conference Name:
SBA Second quarter 2022 results
Replay Available:
August 1, 2022 at 11:00 PM to August 15,
2022 at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code: 3252031
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 into 2023
and beyond, both domestically and internationally, and the impact
of customer 5G buildout and deployment plans, on such demand, (ii)
the Company’s future capital allocation, (iii) the Company’s
financial and operational performance in 2022, the assumptions it
made and the drivers contributing to its updated full year
guidance, (iv) the timing of closing for currently pending
acquisitions, including the GTS acquisition, (v) the impact of the
GTS acquisition, including future financial results from the GTS
towers, the timing and ease of integration of such towers and that
there will be no ongoing material incremental SG&A expense
arising from such acquisition, 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; (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
and its expectations with respect to the GTS acquisition, these
factors also include satisfactorily completing due diligence, the
amount and quality of due diligence that the Company is able to
complete prior to closing of any acquisition, the ability to
receive required regulatory approval, the ability and willingness
of each party to fulfill their respective closing conditions and
their contractual obligations and the availability of cash on hand
or borrowing capacity under the Revolving Credit Facility to fund
the consideration, its ability to accurately anticipate the future
performance of the acquired towers and any challenges or costs
associated with the integration of such towers. With respect to the
repurchases under the Company’s stock repurchase program, the
amount of shares repurchased, if any, and the timing of such
repurchases will depend on, among other things, the trading price
of the Company’s common stock, which may be positively or
negatively impacted by the repurchase program, market and business
conditions, the availability of stock, the Company’s financial
performance or determinations following the date of this
announcement in order to use the Company’s funds for other
purposes. Furthermore, the Company’s forward-looking statements and
its 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
For the six months
ended June 30,
ended June 30,
2022
2021
2022
2021
Revenues:
Site leasing
$
580,233
$
524,095
$
1,139,665
$
1,029,197
Site development
71,773
51,433
132,111
95,069
Total revenues
652,006
575,528
1,271,776
1,124,266
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
111,515
95,350
218,670
190,718
Cost of site development
54,497
40,409
100,269
74,815
Selling, general, and administrative
expenses (1)
63,274
53,945
125,398
105,546
Acquisition and new business initiatives
related
adjustments and expenses
6,829
6,794
11,933
11,795
Asset impairment and decommission
costs
8,521
3,797
17,033
8,700
Depreciation, accretion, and
amortization
176,392
175,469
350,716
359,350
Total operating expenses
421,028
375,764
824,019
750,924
Operating income
230,978
199,764
447,757
373,342
Other income (expense):
Interest income
1,517
547
4,020
1,179
Interest expense
(84,315
)
(90,544
)
(166,566
)
(180,639
)
Non-cash interest expense
(11,529
)
(11,812
)
(23,054
)
(23,615
)
Amortization of deferred financing
fees
(4,922
)
(4,865
)
(9,804
)
(9,755
)
Loss from extinguishment of debt, net
—
(2,020
)
—
(13,672
)
Other (expense) income, net
(66,141
)
108,849
42,019
20,410
Total other (expense) income, net
(165,390
)
155
(153,385
)
(206,092
)
Income before income taxes
65,588
199,919
294,372
167,250
Benefit (provision) for income taxes
3,563
(47,250
)
(36,914
)
(26,328
)
Net income
69,151
152,669
257,458
140,922
Net loss attributable to noncontrolling
interests
365
—
682
—
Net income attributable to SBA
Communications
Corporation
$
69,516
$
152,669
$
258,140
$
140,922
Net income per common share attributable
to SBA
Communications Corporation:
Basic
$
0.64
$
1.40
$
2.39
$
1.29
Diluted
$
0.64
$
1.37
$
2.36
$
1.27
Weighted average number of common
shares
Basic
107,850
109,412
107,966
109,441
Diluted
109,347
111,301
109,443
111,210
(1)
Includes non-cash compensation of
$23,248 and $21,077 for the three months ended June 30, 2022 and
2021, respectively, and $47,364 and $40,661 for the six months
ended June 30, 2022 and 2021, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
June 30,
December 31,
2022
2021
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
183,067
$
367,278
Restricted cash
64,495
65,561
Accounts receivable, net
115,137
101,950
Costs and estimated earnings in excess of
billings on uncompleted contracts
54,781
48,844
Prepaid expenses and other current
assets
77,419
30,813
Total current assets
494,899
614,446
Property and equipment, net
2,677,983
2,575,487
Intangible assets, net
2,800,562
2,803,247
Operating lease right-of-use assets,
net
2,355,881
2,268,470
Acquired and other right-of-use assets,
net
1,002,785
964,405
Other assets
679,827
575,644
Total assets
$
10,011,937
$
9,801,699
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
41,455
$
34,066
Accrued expenses
85,697
68,070
Current maturities of long-term debt
662,720
24,000
Deferred revenue
199,829
184,380
Accrued interest
50,841
49,096
Current lease liabilities
256,572
238,497
Other current liabilities
21,086
18,222
Total current liabilities
1,318,200
616,331
Long-term liabilities:
Long-term debt, net
11,817,504
12,278,694
Long-term lease liabilities
2,047,385
1,981,353
Other long-term liabilities
227,578
191,475
Total long-term liabilities
14,092,467
14,451,522
Redeemable noncontrolling interests
39,881
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, 107,872 shares and
108,956 shares issued and outstanding at
June 30, 2022 and December 31, 2021,
respectively
1,079
1,089
Additional paid-in capital
2,717,963
2,681,347
Accumulated deficit
(7,531,180
)
(7,203,531
)
Accumulated other comprehensive loss,
net
(626,473
)
(762,309
)
Total shareholders' deficit
(5,438,611
)
(5,283,404
)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
10,011,937
$
9,801,699
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended June 30,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
69,151
$
152,669
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
176,392
175,469
Loss (gain) on remeasurement of U.S.
denominated intercompany loans
63,716
(111,295
)
Non-cash compensation expense
23,900
21,643
Non-cash asset impairment and decommission
costs
8,598
3,498
Loss from extinguishment of debt, net
—
2,020
Deferred income tax (benefit)
provision
(11,250
)
40,996
Other non-cash items reflected in the
Statements of Operations
19,067
20,416
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of
billings on uncompleted contracts, net
1,734
11,105
Prepaid expenses and other assets
(12,604
)
(6,112
)
Operating lease right-of-use assets,
net
35,498
27,130
Accounts payable and accrued expenses
3,938
7,766
Accrued interest
27,136
39,389
Long-term lease liabilities
(31,952
)
(28,379
)
Other liabilities
(1,209
)
(3,531
)
Net cash provided by operating
activities
372,115
352,784
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(138,397
)
(77,175
)
Capital expenditures
(52,963
)
(30,839
)
Purchase of investments, net
(38,823
)
—
Other investing activities
369
(156
)
Net cash used in investing activities
(229,814
)
(108,170
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under Revolving Credit
Facility
(150,000
)
(505,000
)
Proceeds from issuance of Tower
Securities, net of fees
—
1,152,631
Repayment of Tower Securities
—
(760,000
)
Payment of dividends on common stock
(76,565
)
(63,481
)
Proceeds from employee stock
purchase/stock option plans, net of taxes
9,011
25,125
Other financing activities
(6,700
)
(5,224
)
Net cash used in financing activities
(224,254
)
(155,949
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(3,507
)
7,960
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(85,460
)
96,625
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
336,438
242,185
End of period
$
250,978
$
338,810
Selected Capital Expenditure
Detail
For the three
For the six
months ended
months ended
June 30, 2022
June 30, 2022
(in thousands)
Construction and related costs
$
26,968
$
43,445
Augmentation and tower upgrades
14,258
23,532
Non-discretionary capital
expenditures:
Tower maintenance
10,069
19,396
General corporate
1,668
4,598
Total non-discretionary capital
expenditures
11,737
23,994
Total capital expenditures
$
52,963
$
90,971
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at March 31, 2022
17,363
18,654
36,017
Sites acquired during the second
quarter
31
179
210
Sites built during the second quarter
2
98
100
Sites decommissioned/reclassified during
the second quarter
(1
)
(29
)
(30
)
Sites owned at June 30, 2022
17,395
18,902
36,297
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,
2022
2021
2022
2021
2022
2021
(in thousands)
Segment revenue
$
442,084
$
418,829
$
138,149
$
105,266
$
71,773
$
51,433
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(65,768
)
(63,948
)
(45,747
)
(31,402
)
(54,497
)
(40,409
)
Segment operating profit
$
376,316
$
354,881
$
92,402
$
73,864
$
17,276
$
11,024
Segment operating profit margin
85.1
%
84.7
%
66.9
%
70.2
%
24.1
%
21.4
%
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.
Second quarter
2022 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
10.7%
0.6%
10.1%
Total cash site leasing revenue
10.8%
0.6%
10.2%
Int'l cash site leasing revenue
30.4%
3.3%
27.1%
Total site leasing segment operating
profit
9.3%
0.5%
8.8%
Int'l site leasing segment operating
profit
25.1%
3.2%
21.9%
Total site leasing tower cash flow
9.1%
0.6%
8.5%
Int'l site leasing tower cash flow
23.7%
3.3%
20.4%
Net income
(54.7%)
(96.9%)
42.2%
Earnings per share - diluted
(53.3%)
(97.0%)
43.7%
Adjusted EBITDA
9.4%
0.6%
8.8%
AFFO
14.2%
0.9%
13.3%
AFFO per share
16.3%
1.1%
15.2%
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 June 30,
ended June 30,
ended June 30,
2022
2021
2022
2021
2022
2021
(in thousands)
Site leasing revenue
$
442,084
$
418,829
$
138,149
$
105,266
$
580,233
$
524,095
Non-cash straight-line leasing revenue
(10,267
)
(10,547
)
421
1,032
(9,846
)
(9,515
)
Cash site leasing revenue
431,817
408,282
138,570
106,298
570,387
514,580
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(65,768
)
(63,948
)
(45,747
)
(31,402
)
(111,515
)
(95,350
)
Non-cash straight-line ground lease
expense
413
1,594
308
413
721
2,007
Tower Cash Flow
$
366,462
$
345,928
$
93,131
$
75,309
$
459,593
$
421,237
Tower Cash Flow Margin
84.9
%
84.7
%
67.2
%
70.8
%
80.6
%
81.9
%
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
$
2,297.0
to
$
2,317.0
Non-cash straight-line leasing revenue
(37.5
)
to
(32.5
)
Cash site leasing revenue
2,259.5
to
2,284.5
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
$
1,821.0
to
$
1,841.0
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,
2022
2021
(in thousands)
Net income
$
69,151
$
152,669
Non-cash straight-line leasing revenue
(9,846
)
(9,515
)
Non-cash straight-line ground lease
expense
721
2,007
Non-cash compensation
23,900
21,643
Loss from extinguishment of debt, net
—
2,020
Other expense (income), net
66,141
(108,849
)
Acquisition and new business initiatives
related adjustments and expenses
6,829
6,794
Asset impairment and decommission
costs
8,521
3,797
Interest income
(1,517
)
(547
)
Total interest expense (1)
100,766
107,221
Depreciation, accretion, and
amortization
176,392
175,469
(Benefit) provision for taxes (2)
(3,302
)
47,485
Adjusted EBITDA
$
437,756
$
400,194
Annualized Adjusted EBITDA (3)
$
1,751,024
$
1,600,776
(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, 2022
and 2021, these amounts included $261 and $235, 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 June 30,
2022
2021
(in thousands)
Total revenues
$
652,006
$
575,528
Non-cash straight-line leasing revenue
(9,846
)
(9,515
)
Total revenues minus non-cash
straight-line leasing revenue
$
642,160
$
566,013
Adjusted EBITDA
$
437,756
$
400,194
Adjusted EBITDA Margin
68.2
%
70.7
%
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
$
439.5
to
$
484.5
Non-cash straight-line leasing revenue
(37.5
)
to
(32.5
)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
106.5
to
101.5
Other income, net
(14.0
)
to
(14.0
)
Acquisition and new business initiatives
related adjustments and expenses
29.5
to
24.5
Asset impairment and decommission
costs
36.5
to
31.5
Interest income
(9.5
)
to
(6.5
)
Total interest expense (1)
414.5
to
406.5
Depreciation, accretion, and
amortization
707.5
to
697.5
Provision for taxes (2)
58.0
to
53.0
Adjusted EBITDA
$
1,731.0
to
$
1,751.0
(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 June 30,
(in thousands, except per share
amounts)
2022
2021
Net income
$
69,151
$
152,669
Real estate related depreciation,
amortization, and accretion
175,190
176,340
Asset impairment and decommission
costs
8,521
3,797
FFO
$
252,862
$
332,806
Adjustments to FFO:
Non-cash straight-line leasing revenue
(9,846
)
(9,515
)
Non-cash straight-line ground lease
expense
721
2,007
Non-cash compensation
23,900
21,643
Adjustment for non-cash portion of tax
(benefit) provision
(11,250
)
40,991
Non-real estate related depreciation,
amortization, and accretion
1,202
(871
)
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
16,451
16,677
Loss from extinguishment of debt, net
—
2,020
Other expense (income), net
66,141
(108,849
)
Acquisition and new business initiatives
related adjustments and expenses
6,829
6,794
Non-discretionary cash capital
expenditures
(11,737
)
(10,198
)
AFFO
$
335,273
$
293,505
Adjustments for joint venture partner
interest
(971
)
—
AFFO attributable to SBA Communications
Corporation
$
334,302
$
293,505
Weighted average number of common shares
(1)
109,347
111,301
AFFO per share
$
3.07
$
2.64
AFFO per share attributable to SBA
Communications Corporation
$
3.06
$
2.64
(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
$
439.5
to
$
484.5
Real estate related depreciation,
amortization, and accretion
698.5
to
693.5
Asset impairment and decommission
costs
36.5
to
31.5
FFO
$
1,174.5
to
$
1,209.5
Adjustments to FFO:
Non-cash straight-line leasing revenue
(37.5
)
to
(32.5
)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
106.5
to
101.5
Adjustment for non-cash portion of tax
provision
23.0
to
23.0
Non-real estate related depreciation,
amortization, and accretion
9.0
to
4.0
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
65.0
to
65.0
Other income, net
(14.0
)
to
(14.0
)
Acquisition and new business initiatives
related adjustments and expenses
29.5
to
24.5
Non-discretionary cash capital
expenditures
(56.0
)
to
(46.0
)
AFFO
$
1,300.0
to
$
1,340.0
Weighted average number of common shares
(1)
109.5
to
109.5
AFFO per share
$
11.87
to
$
12.24
(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:
June 30,
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
530,000
2018 Term Loan
2,304,000
Total secured debt
9,564,000
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
3,000,000
Total debt
$
12,564,000
Leverage
Ratio
Total debt
$
12,564,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(288,360)
Net debt
$
12,275,640
Divided by: Annualized Adjusted EBITDA
$
1,751,024
Leverage Ratio
7.0x
Secured Leverage
Ratio
Total secured debt
$
9,564,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(288,360)
Net Secured Debt
$
9,275,640
Divided by: Annualized Adjusted EBITDA
$
1,751,024
Secured Leverage Ratio
5.3x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220801005684/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
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