SBA Communications Corporation Reports 2nd Quarter Results; Updates
2004 Guidance BOCA RATON, Fla., July 29 /PRNewswire-FirstCall/ --
SBA Communications Corporation (NASDAQ:SBAC) ("SBA" or the
"Company") today reported results for the second quarter ended June
30, 2004. Highlights of the results include: -- Year over Year:
Site leasing revenue growth of 11.8%. Tower cash flow growth of
17.6%. Loss from continuing operations reduced by 49.9%. Adjusted
EBITDA growth of 23.1%. -- Net debt/Annualized Adjusted EBITDA
leverage ratio reduced 1.6x from Q1 2004. Operating Results Total
revenues in the second quarter of 2004 were $56.3 million, compared
to $46.0 million in the year earlier period. Site leasing revenue
of $35.5 million and site leasing gross profit (tower cash flow) of
$24.8 million were up 11.8% and 17.6%, respectively, over the year
earlier period. Same tower revenue and site leasing gross profit
growth on the 3,039 towers owned at June 30, 2003 and 2004 were 10%
and 16%, respectively. Site leasing gross profit margin in the
second quarter was 70.0%, a 340 basis point improvement over the
year earlier period. Site leasing contributed 93.6% of the
Company's gross profit in the second quarter of 2004. Site
development revenues were $20.9 million compared to $14.3 million
in the year earlier period. Site development gross profit margin
was 8.1% in the second quarter, compared to 9.0% in the year
earlier period. As previously announced, the Company adopted a plan
to sell all of its services business in the western United States.
The Company has sold and/or closed certain portions of the western
services' business, and continues its efforts to sell the remaining
portions. The results of the Company's western services segment are
reflected as discontinued operations in accordance with generally
accepted accounting principles for the three and six month periods
ended June 30, 2004 and 2003. Other than the net loss information
presented below, all other financial information contained in the
text of this press release is from the Company's continuing
operations. Selling, general and administrative expenses were $7.1
million in the second quarter, compared to $6.8 million in the year
earlier period. Loss from continuing operations for the second
quarter was $22.8 million or $0.40 per share, compared to $45.4
million or $0.89 per share in the year earlier period. Net loss in
the second quarter of 2004 was $23.2 million, or $0.41 per share,
compared to a net loss of $67.6 million, or $1.32 per share, in the
year earlier period. Excluding $2.0 million of charges relating to
asset impairment and the write-off of deferred financing fees and
extinguishment of debt, second quarter 2004 loss from continuing
operations was $20.8 million or $0.36 per share. Adjusted EBITDA
was $19.5 million, compared to $15.9 million in the year earlier
period, or a 23.1% increase. Adjusted EBITDA margin was 34.7%. Net
cash interest expense and non-cash interest expense was $11.7
million and $6.8 million, respectively, in the second quarter of
2004, compared to $22.4 million and $0.7 million in the year
earlier period. Cash provided by operating activities for the three
months ended June 30, 2004 was $12.6 million, compared to $10.4
million for the three months ended June 30, 2003. Investing
Activities During the quarter, SBA sold or otherwise disposed of 6
towers, five of which were previously held for sale, ending the
quarter with 3,077 towers. Excluding 32 towers that were held for
sale, SBA owned, as of June 30, 2004, 3,045 towers in continuing
operations. During the quarter the Company returned 14 towers to
continuing operations that were previously classified as held for
sale. Financial information for all periods presented in this press
release reflects the results of such 14 towers included in
continuing operations. Capital expenditures for the second quarter
were $1.4 million, down from $3.0 million in the year earlier
period. Current period capital expenditures were reduced by the
return of a $0.3 million deposit associated with a prior new tower
build project. In the second quarter, the Company recognized a loss
of $0.6 million on the disposition of its western services segment,
substantially all of which was non-cash in nature. Financing
Activities and Liquidity SBA ended the second quarter with $295.0
million outstanding under its $400.0 million senior credit
facility, $289.3 million of 9-3/4% senior discount notes, $304.3
million of 10-1/4% senior notes, and net debt of $860.5 million,
down from $867.2 million of net debt at March 31, 2004. The
Company's net debt to annualized adjusted EBITDA leverage ratio
dropped from 12.6x at March 31, 2004 to 11.0x at June 30, 2004.
Debt amounts as of March 31 and June 30, 2004 exclude approximately
$4.4 million and $4.2 million, respectively, of deferred gain from
the termination of a derivative in 2002. In the second quarter of
2004, SBA repurchased $34.8 million of its 10-1/4% senior notes.
The Company paid cash of $33.2 million plus accrued interest and
issued 390,000 shares of its Class A common stock. Liquidity at
June 30, 2004 was approximately $54.2 million, consisting of $28.2
million of cash and restricted cash, and approximately $26.0
million of additional availability under the senior credit
facility. "We enjoyed strong growth in the second quarter on very
solid operating results that were improved in substantially all
respects from last quarter and the year-earlier period," commented
Jeffrey A. Stoops, SBA's President and Chief Executive Officer.
"Our customers were very active with their network development
activity in the second quarter. Customer activity and backlog in
both our site leasing and services segments remain strong, which we
believe bodes well for our results for the remainder of the year
and into 2005. Cash flows continue to improve, driven by strong
organic growth, low capital expenditures and our continued
repurchases and retirement of our high-yield indebtedness. Our
repurchase and retirements of the high-yield debt has allowed us to
continue to reduce the weighted average cost of our debt and our
interest expense. Both leasing revenue and tower cash flow growth
rates accelerated from the first quarter. Finally, and perhaps most
importantly, we reduced our net debt to annualized adjusted EBITDA
leverage ratio materially and ahead of plan this quarter, which we
believe will create improved value for our shareholders and a
stronger company. Moving forward, we intend to continue to focus on
growing our adjusted EBITDA and cash flows, and further reducing
our leverage ratio." Outlook The Company has provided its Third
Quarter 2004 and updated its Full Year 2004 Outlook for anticipated
results from continuing operations. The midpoints of the ranges of
our Full Year 2004 Outlook have been increased in the areas of site
leasing revenue, site leasing gross profit, site development
revenue, total revenues, Adjusted EBITDA, cash flow from operating
activities and capital expenditures. 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.
Quarter ending September 30, 2004 Full year 2004 (in millions) Site
leasing revenue $35.0 $36.5 $140. 0 $144.0 Site development
revenue(1) 18.0 21.0 74.0 82.0 Total revenues(1) 53.0 57.5 214.0
226.0 Site leasing gross profit 25.0 26.0 99.0 102.0 Net cash
interest expense 11.0 12.5 47.0 50.0 Non-cash interest expense(2)
7.0 8.0 27.5 28.5 Adjusted EBITDA(1) 19.0 20.5 74.0 80.0 Cash flow
from operating activities(3) (3.0) 1.0 25.0 35.0 Capital
expenditures 2.0 3.0 8.0 10.0 (1) Excludes results from SBA's
services segment in the western U.S., which is treated as
discontinued operations. (2) Excludes amortization of debt issuance
costs. (3) Full year includes $15.2 million benefit from first
quarter conversion of short-term investment into cash. Refer to the
following exhibits for a reconciliation of Adjusted EBITDA and net
debt to the most comparable GAAP measures. Conference Call
Information SBA Communications Corporation will host a conference
call Friday, July 30, 2004 at 10:00 A.M. EDT to discuss the
quarterly results. The call may be accessed as follows: Dial-in
number: 888-428-4479 Conference call name: "SBA Second Quarter
Results" Replay: July 30, 2004 at 5:00 P.M. to August 13, 2004 at
11:59 P.M. Number: 800-475-6701 Access Code: 737787 Internet
access: http://www.sbasite.com/ Information Concerning
Forward-Looking Statements This press release includes forward
looking statements, including statements regarding (i) the effect
of customer activity and backlogs in both leasing and service
segments during 2004 and 2005; (ii) the Company's third quarter
2004 and full year 2004 guidance; (iii) the impact of the Company's
reduced leverage on its financial health and the Company's
expectations regarding growth in adjusted EBITDA and cash flows,
and additional deleveraging. These forward-looking statements may
be affected by the risks and uncertainties in the Company's
business. This information is qualified in its entirety by
cautionary statements and risk factor disclosure contained in the
Company's Securities and Exchange Commission filings, including the
Company's report on Form 10-K filed with the Commission on March
12, 2004. The Company wishes to caution readers that certain
important factors may have affected and could in the future affect
the Company's actual results and could cause the Company's actual
results for subsequent periods to differ materially from those
expressed in any forward-looking statement made by or on behalf of
the Company. With respect to the Company's expectations regarding
all of these statements, including its financial 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 secure as
many site leasing tenants as planned at anticipated lease rates,
(3) the Company's ability to expand its site leasing business, (4)
the Company's ability to retain current lessees on towers, (5) the
Company's ability to secure and deliver anticipated services
business at contemplated margins, (6) the Company's ability to
increase revenues and maintain or decrease expenses and cash
capital expenditures, (7) the Company's ability to continue to
comply with covenants and the terms of its senior credit facility
and to access sufficient capital to fund its operations, (8) the
business climate for the wireless communications industry in
general and the wireless communications infrastructure providers in
particular, and (9) the continued dependence on towers and
outsourced site development services by the wireless communications
industry. Information on Non-GAAP financial measures is presented
below under "Unaudited Consolidated Statements of Operations." This
press release will be available on our website at
http://www.sbasite.com/ through August 13, 2004. For additional
information about SBA, please contact Pam Kline, Vice-
President-Capital Markets, at (561) 995-7670, or visit our website
at http://www.sbasite.com/. SBA is a leading independent owner and
operator of wireless communications infrastructure in the United
States. 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 towers
to a variety of wireless service providers under long-term lease
contracts. Since it was founded in 1989, SBA has participated in
the development of over 25,000 antenna sites in the United States.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except per share amounts) (unaudited) For the three months For the
six months ended June 30, ended June 30, 2004 2003 2004 2003
Revenues: Site leasing $35,454 $31,702 $69,387 $62,747 Site
development 20,893 14,275 37,819 30,333 Total revenues 56,347
45,977 107,206 93,080 Cost of revenues (exclusive of depreciation,
accretion and amortization shown below): Cost of site leasing
10,639 10,595 20,852 21,345 Cost of site development 19,208 12,983
35,571 27,230 Total cost of revenues 29,847 23,578 56,423 48,575
Gross profit 26,500 22,399 50,783 44,505 Operating expenses:
Selling, general and administrative 7,096 6,826 14,277 15,214
Restructuring and other charges 58 349 221 1,077 Asset impairment
charges 1,543 10,265 1,560 10,717 Depreciation, accretion and
amortization 20,559 20,663 41,243 42,337 Total operating expenses
29,256 38,103 57,301 69,345 Operating loss from continuing
operations (2,756) (15,704) (6,518) (24,840) Other income
(expense): Interest income 54 123 196 253 Interest expense (11,717)
(22,513) (25,545) (39,643) Non-cash interest expense (6,756) (723)
(14,013) (5,800) Amortization of debt issuance costs (873) (1,272)
(1,711) (2,427) Loss from write-off of deferred financing fees and
extinguishment of debt (454) (4,841) (22,671) (4,842) Other 9 (35)
71 10 Total other expense (19,737) (29,261) (63,673) (52,449) Loss
from continuing operations before provision for income taxes and
cumulative effect of changes in accounting principles (22,493)
(44,965) (70,191) (77,289) Provision for income taxes (274) (435)
(550) (935) Loss from continuing operations before cumulative
effect of changes in accounting principles (22,767) (45,400)
(70,741) (78,224) Loss from discontinued operations, net of income
taxes (479) (22,182) (427) (22,568) Loss before cumulative effect
of changes in accounting principles (23,246) (67,582) (71,168)
(100,792) Cumulative effect of changes in accounting principles --
-- -- (545) Net loss $(23,246) $(67,582) $(71,168) $(101,337) For
the three months For the six months ended June 30, ended June 30,
2004 2003 2004 2003 Basic and Diluted Loss Per Common Share
Amounts: Loss from continuing operations before cumulative effect
of changes in accounting principles $ (0.40) $ (0.89) $ (1.26) $
(1.53) Loss from discontinued operations (0.01) (0.43) (0.01)
(0.44) Cumulative effect of changes in accounting principles -- --
-- (0.01) Net loss per common share $(0.41) $(1.32) $ (1.27)
$(1.98) Weighted average number of common shares 56,933 51,133
56,116 51,132 Other Data: Adjusted EBITDA $19,529 $15,868
Annualized tower cash flow $99,260 $84,428 Non-GAAP Financial
Measures This press release includes disclosures regarding Adjusted
EBITDA, Annualized Adjusted EBITDA, and Adjusted EBITDA margin,
which are non-GAAP financial measures. Adjusted EBITDA is defined
as loss from continuing operations plus net interest expenses,
taxes, depreciation, accretion and amortization, asset impairment
charges, non-cash compensation, restructuring and other charges,
and other expenses. We have included information regarding Adjusted
EBITDA and Adjusted EBITDA margin because we believe these items
are indicators of the profitability and performance of our core
operations and reflects the changes in our operating results. In
addition, Adjusted EBITDA is a component of the calculation used by
our lenders to determine compliance with some of our debt
instruments, particularly our senior credit facility. Neither
Adjusted EBITDA, Adjusted EBITDA, nor Adjusted EBITDA margin are
intended to be alternative measures of operating income or gross
profit margin as determined in accordance with generally accepted
accounting principles. Adjusted EBITDA and Annualized Adjusted
EBITDA margin for the three months ended June 30, 2004 and 2003 and
March 31, 2004, is calculated below: For the three months For the
three months ended June 30, ended March 31, 2004 2003 2004 (in
thousands) Loss from continuing operations $(22,767) $(45,400)
$(47,974) Interest income (54) (123) (142) Interest expense 19,346
24,508 21,923 Depreciation, accretion and amortization 20,559
20,663 20,684 Asset impairment charges 1,543 10,265 17 Provision
for income taxes 274 435 276 Write-off of deferred financing fees,
loss on extinguishment of debt, and other expenses, net 445 4,876
22,155 Non-cash compensation (included in selling, general and
administrative) 126 210 115 Restructuring and other charges 57 349
164 Other expenses (included in selling, general and
administrative) -- 85 -- Adjusted EBITDA(1) $19,529 $15,868 $17,218
Annualized Adjusted EBITDA(2) $78,116 $63,472 Adjusted EBITDA
margin(3) 34.7% 34.5% (1) Adjusted EBITDA for the three months
ended September 2004 and full year 2004 will be calculated the same
way. (2) Annualized Adjusted EBITDA for a particular quarterly
period is Adjusted EBITDA for the quarter multiplied by four. (3)
Adjusted EBITDA margin for a particular quarterly period is
Adjusted EBITDA divided by Total Revenues for such period. Our net
debt to annualized Adjusted EBITDA leverage ratio as of June 30,
2004 and March 31, 2004 is calculated below: June 30, 2004 March
31, 2004 Long-term debt $889,573 $898,590 Current portion of
long-term debt 3,254 2,458 Less: Deferred gain on termination of
derivative (4,198) (4,381) Cash and cash equivalents (21,828)
(19,164) Restricted cash (6,333) (10,350) Net debt $860,468
$867,153 Divided by: Annualized Adjusted EBITDA $78,116 $68,872
Leverage ratio 11.0x 12.6x UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands, except par values) June 30, 2004December 31,
2003 ASSETS Current assets: Cash and cash equivalents $21,828
$8,338 Short-term investments -- 15,200 Restricted cash 6,333
10,344 Accounts receivable, net of allowances of $2,006 and $1,400
in 2004 and 2003, respectively 16,827 19,414 Other current assets
19,272 15,236 Assets held for sale 731 1,751 Total current assets
64,991 70,283 Property and equipment, net 816,545 854,857 Deferred
financing fees, net 19,332 24,253 Other long-term assets 33,592
33,589 Total assets $934,460 $982,982 LIABILITIES AND SHAREHOLDERS'
(DEFICIT) EQUITY Current liabilities: Accounts payable and accrued
expenses $ 29,676 $ 29,218 Interest payable 13,564 20,319 Long-term
debt, current portion 3,254 11,538 Other current liabilities 13,166
14,364 Liabilities held for sale -- 608 Total current liabilities
59,660 76,047 Long-term liabilities: Long-term debt 889,573 859,220
Deferred revenue 504 511 Other long-term liabilities 3,688 3,327
Total long-term liabilities 893,765 863,058 Shareholders' (deficit)
equity (18,965) 43,877 Total liabilities and shareholders'
(deficit) equity $934,460 $982,982 UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands) For the six months ended
June 30, 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss
$(71,168) $(101,337) Depreciation, accretion and amortization
41,243 42,406 Other non-cash items reflected in Statements of
Operations 18,248 47,241 Write off of deferred financing fees and
loss on extinguishment of debt 22,670 4,842 Changes in operating
assets and liabilities 4,038 12,414 Net cash provided by operating
activities 15,031 5,566 CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,384) (9,090) Acquisitions and related
earn-outs (401) (2,530) Proceeds from sale of fixed assets 804
142,510 Payment of restricted cash 4,399 (33,168) Net cash provided
by investing activities 1,418 97,722 CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from employee stock purchase/ option plans 96
22 Borrowings under senior credit facility, net of financing fees
314,348 217,413 Repayment of senior credit facility and notes
payable (151,774) (335,049) Redemption/repurchase of 12% senior
discount notes and 101/4% senior notes (165,629) (24,775) Net cash
provided used in financing activities (2,959) (142,389) Net
increase (decrease) in cash and cash equivalents 13,490 (39,101)
CASH AND CASH EQUIVALENTS: Beginning of period 8,338 61,141 End of
period $21,828 $22,040 For the three For the six months ended
months ended June 30, 2004 June 30, 2004 SELECTED CAPITAL
EXPENDITURE DETAIL: (in thousands) Tower new build construction:
Return of deposit on construction in progress $ (300) $(300) Towers
completed in period -- -- Towers completed in prior periods 133 615
Work in process 11 121 (156) 436 Operating tower expenditures:
Tower upgrades/augmentations 595 978 Maintenance/improvement
capital expenditures 702 1,182 1,297 2,160 General corporate
expenditures 249 788 Totals $1,390 $3,384 DATASOURCE: SBA
Communications Corporation CONTACT: Pam Kline,
Vice-President-Capital Markets, SBA Communications Corporation,
+1-561-995-7670 Web site: http://www.sbasite.com/
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