SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended December
31, 2020.
Highlights of the fourth quarter include:
- Net income of $105.8 million or $0.94 per share and site
leasing revenue of $493.0 million
- AFFO per share growth of 18.8% over the year earlier period
on a constant currency basis
- Repurchased 2.2 million shares cumulatively in the fourth
quarter and subsequent to quarter end
- Signed a new master lease agreement with Dish subsequent to
quarter end
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.58 per share
of the Company’s Class A common stock, an increase of approximately
25% over the dividend paid in the fourth quarter. The distribution
is payable March 26, 2021 to the shareholders of record at the
close of business on March 10, 2021.
“We had a very strong finish to 2020, producing material growth
in AFFO per share well ahead of plan,” commented Jeffrey A. Stoops,
President and Chief Executive Officer. “The fourth quarter was our
strongest of the year in terms of customer activity, and we
continued to execute very well notwithstanding the ongoing impact
of Covid-19 to varying degrees across all of our markets. I want to
express my continued gratitude to our employees, customers and
vendors for their extraordinary efforts during these difficult
times. With the CBRS and C-Band auctions now a reality in the US,
our recently-announced master agreement with Dish, and important
spectrum auctions planned for our international markets over the
next two years, we believe we are on the cusp of another increase
in operational activity and demand for our infrastructure likely to
begin in the second half of 2021 and continue for years thereafter.
Together with these favorable business prospects, we find ourselves
in a low-interest rate environment with a low cost of capital and
abundant sources of financing. As a result, we have stayed fully
invested and intend to stay fully invested in our business,
repurchasing since our last earnings release 1.8 million shares of
our stock and just last week closing on our very exciting
transaction with PG&E, among other portfolio growth
transactions we have consummated. We are extremely confident and
excited about our future, so much so that we have just approved an
increase to our quarterly dividend of approximately 25%. While a
substantial increase, this dividend on an annual basis represents
less than 23% of the midpoint of our AFFO in our 2021 Outlook,
leaving us substantial capital for additional investment. We
believe we will continue to produce material growth in AFFO per
share and, including the dividend, total shareholder return.”
Operating Results
The table below details select financial results for the three
months ended December 31, 2020 and comparisons to the prior year
period.
% Change
excluding
Q4 2020
Q4 2019
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
493.0
$
481.1
$
11.9
2.5%
6.1%
Site development revenue
43.0
32.6
10.4
31.9%
31.9%
Tower cash flow (1)
402.2
387.4
14.8
3.8%
6.9%
Net income
105.8
67.4
38.4
57.0%
26.2%
Earnings per share - diluted
0.94
0.59
0.35
59.3%
28.9%
Adjusted EBITDA (1)
380.6
362.4
18.2
5.0%
8.1%
AFFO (1)
280.1
248.8
31.3
12.6%
17.0%
AFFO per share (1)
2.49
2.18
0.31
14.2%
18.8%
(1)
See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the fourth quarter of 2020 were $536.0 million
compared to $513.7 million in the year earlier period, an increase
of 4.3%. Site leasing revenue in the quarter of $493.0 million was
comprised of domestic site leasing revenue of $393.0 million and
international site leasing revenue of $100.0 million. Domestic cash
site leasing revenue was $391.9 million in the fourth quarter of
2020 compared to $377.7 million in the year earlier period, an
increase of 3.8%. International cash site leasing revenue was
$100.9 million in the fourth quarter of 2020 compared to $100.4
million in the year earlier period, an increase of 0.5%, or 18.2%
on a constant currency basis. Site development revenues were $43.0
million in the fourth quarter of 2020 compared to $32.6 million in
the year earlier period, an increase of 31.9%.
Site leasing operating profit was $399.3 million, an increase of
3.4% over the year earlier period. Site leasing contributed 97.9%
of the Company’s total operating profit in the fourth quarter of
2020. Domestic site leasing segment operating profit was $328.5
million, an increase of 3.8% over the year earlier period.
International site leasing segment operating profit was $70.7
million, an increase of 1.3% over the year earlier period.
Tower Cash Flow of $402.2 million for the fourth quarter of 2020
was comprised of Domestic Tower Cash Flow of $330.1 million and
International Tower Cash Flow of $72.1 million. Domestic Tower Cash
Flow for the quarter increased 4.0% over the prior year period and
International Tower Cash Flow increased 3.0% over the prior year
period, or 20.1% on a constant currency basis. Tower Cash Flow
Margin was 81.6% for the fourth quarter of 2020, as compared to
81.0% for the year earlier period.
Net income for the fourth quarter of 2020 was $105.8 million, or
$0.94 per share, and included a $53.1 million gain, net of taxes,
on the currency related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net income for the
fourth quarter of 2019 was $67.4 million, or $0.59 per share, and
included a $23.7 million gain, net of taxes, on the currency
related remeasurement of U.S. dollar denominated intercompany loans
with foreign subsidiaries.
Adjusted EBITDA for the quarter was $380.6 million, a 5.0%
increase over the prior year period. Adjusted EBITDA Margin was
71.0% in the fourth quarter of 2020 and 2019.
Net Cash Interest Expense was $85.9 million in the fourth
quarter of 2020 compared to $96.5 million in the fourth quarter of
2019, a decrease of 11.0%.
AFFO for the quarter was $280.1 million, a 12.6% increase over
the prior year period. AFFO per share for the fourth quarter of
2020 was $2.49, a 14.2% increase over the prior year period, and
18.8% on a constant currency basis.
Investing Activities
During the fourth quarter of 2020, SBA acquired 104
communication sites for total cash consideration of $133.5 million
paid during or subsequent to the end of the quarter. SBA also built
106 towers during the fourth quarter of 2020. As of December 31,
2020, SBA owned or operated 32,923 communication sites, 16,546 of
which are located in the United States and its territories, and
16,377 of which are located internationally. In addition, the
Company spent $16.4 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the fourth
quarter of 2020 were $104.7 million, consisting of $10.0 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $94.7 million of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
Subsequent to the fourth quarter of
2020, the Company acquired 25 communication sites for an aggregate
consideration of $8.4 million in cash. In addition, on February 16,
2021, the Company closed on the acquisition of wireless tenant
licenses on 697 utility transmission structures related to the
previously announced PG&E transaction for $954.0 million of
cash consideration. The balance of the PG&E transaction is
anticipated to close by the end of the third quarter. Furthermore,
the Company has agreed to purchase and anticipates closing on 299
additional communication sites for an aggregate amount of $72.7
million. The Company anticipates that the majority of these
acquisitions will be consummated by the end of the second quarter
of 2021.
Financing Activities and
Liquidity
SBA ended the fourth quarter of 2020 with $11.2 billion of total
debt, $7.8 billion of total secured debt, $340.9 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $10.8 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.1x and 4.9x, respectively.
On January 29, 2021, the Company issued $1.5 billion of
unsecured senior notes due February 1, 2029 (the “2021 Senior
Notes”). The 2021 Senior Notes accrue interest at a rate of 3.125%
per annum. Interest on the 2021 Senior Notes is due semi-annually
on February 1 and August 1 of each year, beginning on August 1,
2021. Net proceeds from this offering were used to fully redeem all
of the 4.000% Senior Notes (the “2017 Notes”) and to pay all
premiums and costs associated with such redemption, repay the
amounts outstanding under the Revolving Credit Facility, and for
general corporate purposes.
As of the date of this press release, as a result of the closing
of the PG&E transaction, the Company had $630.0 million
outstanding under the $1.25 billion Revolving Credit Facility.
During the fourth quarter of 2020, the Company repurchased 1.7
million shares of its Class A common stock for $480.3 million at an
average price per share of $290.89 under its $1.0 billion stock
repurchase plan. Subsequent to December 31, 2020, the Company
repurchased 0.5 million shares of its Class A common stock for
$144.0 million, at an average price per share of $262.16. Shares
repurchased were retired. As of the date of this filing, the
Company has $500.0 million of authorization remaining under the
plan.
In the fourth quarter of 2020, the Company declared and paid a
cash dividend of $51.5 million.
Outlook
The Company is providing its initial full year 2021 Outlook for
anticipated results. The Outlook provided is based on a number of
assumptions that the Company believes are reasonable at the time of
this press release. Information regarding potential risks that
could cause the actual results to differ from these forward-looking
statements is set forth below and in the Company’s filings with the
Securities and Exchange Commission.
The Company’s full year 2021 Outlook assumes the acquisitions of
only those communication sites under contract and anticipated to
close at the time of this press release. The Company may spend
additional capital in 2021 on acquiring revenue producing assets
not yet identified or under contract, the impact of which is not
reflected in the 2021 guidance. The Outlook also does not
contemplate any additional repurchases of the Company’s stock
during 2021, although the Company may ultimately spend capital to
repurchase some of its stock during the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.55 Brazilian Reais to 1.0 U.S. Dollar, 1.28
Canadian Dollars to 1.0 U.S. Dollar, and 15.04 South African Rand
to 1.0 U.S. Dollar for the full year 2021 outlook. When compared to
2020 actual foreign currency exchange rates, these 2021 foreign
currency rate assumptions negatively impacted the 2021 full year
Outlook by approximately $14 million for leasing revenue, $10
million for Tower Cash Flow, $10 million for Adjusted EBITDA and
$10 million for AFFO.
(in millions, except per share
amounts)
Full Year 2021
Site leasing revenue (1)
$
2,032.0
to
$
2,052.0
Site development revenue
$
140.0
to
$
160.0
Total revenues
$
2,172.0
to
$
2,212.0
Tower Cash Flow (2)
$
1,664.0
to
$
1,684.0
Adjusted EBITDA (2)
$
1,562.0
to
$
1,582.0
Net cash interest expense (3)
$
358.0
to
$
368.0
Non-discretionary cash capital
expenditures (4)
$
37.0
to
$
47.0
AFFO (2)
$
1,117.0
to
$
1,163.0
AFFO per share (2) (5)
$
10.00
to
$
10.41
Discretionary cash capital expenditures
(6)
$
1,200.0
to
$
1,220.0
(1)
The Company’s Outlook for site leasing
revenue includes revenue associated with pass through reimbursable
expenses.
(2)
See the reconciliation of this non-GAAP
financial measure presented below under “Non-GAAP Financial
Measures.”
(3)
Net cash interest expense is defined as
interest expense less interest income. Net cash interest expense
does not include amortization of deferred financing fees or
non-cash interest expense.
(4)
Consists of tower maintenance and general
corporate capital expenditures.
(5)
Outlook for AFFO per share is calculated
by dividing the Company’s outlook for AFFO by an assumed weighted
average number of diluted common shares of 111.7 million. Our
Outlook does not include the impact of any potential future
repurchases of the Company’s stock during 2021.
(6)
Consists of new tower builds, tower
augmentations, communication site acquisitions and ground lease
purchases. Does not include expenditures for acquisitions of
revenue producing assets not under contract at the date of this
press release.
Conference Call Information
SBA Communications Corporation will host a conference call on
Monday, February 22, 2021 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, February 22, 2021 at 5:00 PM
(EDT), please dial-in by 4:45 PM
Dial-in Number:
(877) 692-8955
Access Code:
1527350
Conference Name:
SBA Fourth Quarter Results
Replay Available:
February 22, 2021 at 11:00 PM to March 8,
2021 at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code: 4810660
Internet Access:
www.sbasite.com
Information Concerning Forward-Looking
Statements
This press release and our earnings call include forward-looking
statements, including statements regarding the Company’s
expectations or beliefs regarding (i) customer activity and demand
for the Company’s wireless communications infrastructure during
2021 and thereafter and the timing of such activity and demand,
(ii) the impact of economic conditions on capital spending,
including the continued impact of the COVID-19 pandemic, (iii) the
availability and sources of financing; (iv) the Company’s future
capital allocation, including with respect to its increased
dividend and its availability of capital for additional investment;
(v) the Company’s financial and operational performance in 2021,
including growth in AFFO per share and total shareholder return,
(vi) the Company’s financial and operational guidance for the full
year 2021, the assumptions it made and the drivers contributing to
its full year guidance, (vii) the timing of closing for currently
pending acquisitions, and (viii) 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, including the
impact of the completed T-Mobile and Sprint merger, on the
Company’s leasing revenue; (6) the Company’s ability to
successfully manage the risks associated with international
operations, including risks associated with foreign currency
exchange rates; (7) the Company’s ability to secure and deliver
anticipated services business at contemplated margins; (8) the
Company’s ability to maintain expenses and cash capital
expenditures at appropriate levels for its business while seeking
to attain its investment goals; (9) the Company’s ability to
acquire land underneath towers on terms that are accretive; (10)
the economic climate for the wireless communications industry in
general and the wireless communications infrastructure providers in
particular in the United States, Brazil, South Africa and in other
international markets; (11) the ability of Dish to become and
compete as a nationwide carrier; (12) the Company’s ability to
obtain future financing at commercially reasonable rates or at all;
(13) the ability of the Company to achieve its long-term stock
repurchases strategy, which will depend, among other things, on the
trading price of the Company’s common stock, which may be
positively or negatively impacted by the repurchase program, market
and business conditions; (14) the Company’s ability to achieve the
new builds targets included in its anticipated annual portfolio
growth goals, which will depend, among other things, on obtaining
zoning and regulatory approvals, weather, availability of labor and
supplies and other factors beyond the Company’s control that could
affect the Company’s ability to build additional towers in 2021;
(15) the extent and duration of the impact of the COVID-19 crisis
on the global economy, on the Company’s business and results of
operations, and on foreign currency exchange rates; and (16) the
Company’s ability to meet its total portfolio growth, which will
depend, in addition to the new build risks, on the availability of
sufficient towers for sale to meet our targets, competition from
third parties for such acquisitions and our ability to negotiate
the terms of, and acquire, these potential tower portfolios on
terms that meet our internal return criteria. With respect to its
expectations regarding the ability to close pending acquisitions,
these factors also include satisfactorily completing due diligence,
the amount and quality of due diligence that the Company is able to
complete prior to closing of any acquisition and its ability to
accurately anticipate the future performance of the acquired
towers, the ability to receive required regulatory approval, the
ability and willingness of each party to fulfill their respective
closing conditions and their contractual obligations and the
availability of cash on hand or borrowing capacity under the
Revolving Credit Facility to fund the consideration. With respect
to the repurchases under the Company’s stock repurchase program,
the amount of shares repurchased, if any, and the timing of such
repurchases will depend on, among other things, the trading price
of the Company’s common stock, which may be positively or
negatively impacted by the repurchase program, market and business
conditions, the availability of stock, the Company’s financial
performance or determinations following the date of this
announcement in order to use the Company’s funds for other
purposes. Furthermore, the Company’s forward-looking statements and
its 2021 outlook assumes that the Company continues to qualify for
treatment as a REIT for U.S. federal income tax purposes and that
the Company’s business is currently operated in a manner that
complies with the REIT rules and that it will be able to continue
to comply with and conduct its business in accordance with such
rules. In addition, these forward-looking statements and the
information in this press release is qualified in its entirety by
cautionary statements and risk factor disclosures contained in the
Company’s Securities and Exchange Commission filings, including the
Company’s Annual Report on Form 10-K filed with the Commission on
February 24, 2020 and Quarterly Report on Form 10-Q filed with the
Commission on November 5, 2020.
This press release contains non-GAAP financial measures.
Reconciliation of each of these non-GAAP financial measures and the
other Regulation G information is presented below under “Non-GAAP
Financial Measures.”
This press release will be available on our website at
www.sbasite.com.
About SBA Communications
Corporation
SBA Communications Corporation is a first choice provider and
leading owner and operator of wireless communications
infrastructure in North, Central, and South America and South
Africa. By “Building Better Wireless,” SBA generates revenue from
two primary businesses – site leasing and site development
services. The primary focus of the Company is the leasing of
antenna space on its multi-tenant communication sites to a variety
of wireless service providers under long-term lease contracts. For
more information please visit: www.sbasite.com.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited) (in thousands,
except per share amounts)
For the three months
For the year
ended December 31,
ended December 31,
2020
2019
2020
2019
Revenues:
Site leasing
$
492,947
$
481,100
$
1,954,472
$
1,860,858
Site development
42,958
32,559
128,666
153,787
Total revenues
535,905
513,659
2,083,138
2,014,645
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
93,659
94,785
373,778
373,951
Cost of site development
34,333
26,474
102,750
119,080
Selling, general, and administrative
expenses (1)
47,412
43,962
194,267
192,717
Acquisition and new business initiatives
related
adjustments and expenses
4,024
5,559
16,582
15,228
Asset impairment and decommission
costs
10,994
9,472
40,097
33,103
Depreciation, accretion, and
amortization
180,383
179,487
721,970
697,078
Total operating expenses
370,805
359,739
1,449,444
1,431,157
Operating income
165,100
153,920
633,694
583,488
Other income (expense):
Interest income
641
808
2,981
5,500
Interest expense
(86,545
)
(97,355
)
(367,874
)
(390,036
)
Non-cash interest expense
(11,803
)
(1,239
)
(24,870
)
(3,193
)
Amortization of deferred financing
fees
(4,847
)
(7,133
)
(20,058
)
(22,466
)
Loss from extinguishment of debt, net
—
—
(19,463
)
(457
)
Other income (expense), net
77,986
35,349
(222,159
)
14,053
Total other expense, net
(24,568
)
(69,570
)
(651,443
)
(396,599
)
Income (loss) before income taxes
140,532
84,350
(17,749
)
186,889
(Provision) benefit for income taxes
(34,347
)
(16,794
)
41,796
(39,605
)
Net income
106,185
67,556
24,047
147,284
Net (income) loss attributable to
noncontrolling interests
(404
)
(206
)
57
(293
)
Net income attributable to SBA
Communications
Corporation
$
105,781
$
67,350
$
24,104
$
146,991
Net income per common share attributable
to SBA
Communications Corporation:
Basic
$
0.96
$
0.60
$
0.22
$
1.30
Diluted
$
0.94
$
0.59
$
0.21
$
1.28
Weighted average number of common
shares
Basic
110,707
112,288
111,532
112,809
Diluted
112,538
114,306
113,465
114,693
(1)
Includes non-cash compensation of $16,525
and $12,163 for the three months ended December 31, 2020 and 2019,
and $66,816 and $71,180 for the twelve months ended December 31,
2020 and 2019, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
December 31,
December 31,
2020
2019
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
308,560
$
108,309
Restricted cash
31,671
30,243
Accounts receivable, net
74,088
132,125
Costs and estimated earnings in excess of
billings on uncompleted contracts
34,796
26,313
Prepaid expenses and other current
assets
23,875
37,281
Total current assets
472,990
334,271
Property and equipment, net
2,677,326
2,794,602
Intangible assets, net
3,156,150
3,626,773
Right-of-use assets, net
2,373,560
2,572,217
Other assets
477,992
432,078
Total assets
$
9,158,018
$
9,759,941
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
109,969
$
31,846
Accrued expenses
63,031
67,618
Current maturities of long-term debt
24,000
522,090
Deferred revenue
113,117
113,507
Accrued interest
54,350
49,269
Current lease liabilities
236,037
247,015
Other current liabilities
14,297
16,948
Total current liabilities
614,801
1,048,293
Long-term liabilities:
Long-term debt, net
11,071,796
9,812,335
Long-term lease liabilities
2,094,363
2,279,400
Other long-term liabilities
186,246
270,868
Total long-term liabilities
13,352,405
12,362,603
Redeemable noncontrolling interests
15,194
16,052
Shareholders' deficit:
Preferred stock - par value $0.01, 30,000
shares authorized, no shares issued or outstanding
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 109,819 shares and
111,775 shares issued and outstanding at
December 31, 2020 and December 31, 2019,
respectively
1,098
1,118
Additional paid-in capital
2,586,130
2,461,335
Accumulated deficit
(6,604,028
)
(5,560,695
)
Accumulated other comprehensive loss,
net
(807,582
)
(568,765
)
Total shareholders' deficit
(4,824,382
)
(3,667,007
)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
9,158,018
$
9,759,941
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended December 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
106,185
$
67,556
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
180,383
179,487
Non-cash asset impairment and decommission
costs
10,826
9,425
Non-cash compensation expense
16,975
12,581
Non-cash interest expense
11,803
1,239
Amortization of deferred financing
fees
4,847
5,025
Gain on remeasurement of U.S. dollar
denominated intercompany loans
(79,559
)
(39,014
)
Deferred income tax expense
29,917
9,947
Other non-cash items reflected in the
Statements of Operations
2,556
795
Changes in operating assets and
liabilities, net of acquisitions:
AR and costs and est. earnings in excess
of billings on uncompleted contracts, net
(10,077
)
1,763
Prepaid expenses and other assets
5,185
209
Operating lease right-of-use assets,
net
21,465
25,147
Accounts payable and accrued expenses
2,420
(3,978
)
Accrued interest
20,466
14,776
Long-term lease liabilities
(25,648
)
(23,487
)
Other liabilities
(54,619
)
3,590
Net cash provided by operating
activities
243,125
265,061
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(71,519
)
(490,256
)
Capital expenditures
(33,195
)
(42,855
)
Other investing activities
11,726
1,019
Net cash used in investing activities
(92,988
)
(532,092
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Revolving Credit
Facility
380,000
490,000
Repurchase and retirement of common
stock
(480,347
)
(199,448
)
Payment of dividends on common stock
(51,490
)
(41,514
)
Other financing activities
(2,930
)
(3,771
)
Net cash (used in) provided by financing
activities
(154,767
)
245,267
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
11,465
4,204
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
6,835
(17,560
)
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
335,973
158,680
End of period
$
342,808
$
141,120
Selected Capital Expenditure
Detail
For the three
For the year
months ended
ended
December 31, 2020
December 31, 2020
(in thousands)
Construction and related costs on new
builds
$
14,610
$
54,736
Augmentation and tower upgrades
8,628
38,340
Non-discretionary capital
expenditures:
Tower maintenance
7,233
29,395
General corporate
2,724
6,095
Total non-discretionary capital
expenditures
9,957
35,490
Total capital expenditures
$
33,195
$
128,566
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at September 30, 2020
16,495
16,229
32,724
Sites acquired during the fourth
quarter
53
51
104
Sites built during the fourth quarter
3
103
106
Sites decommissioned/reclassified during
the fourth quarter
(5
)
(6
)
(11
)
Sites owned at December 31, 2020
16,546
16,377
32,923
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 December 31,
ended December 31,
ended December 31,
2020
2019
2020
2019
2020
2019
(in thousands)
Segment revenue
$
392,987
$
380,386
$
99,960
$
100,714
$
42,958
$
32,559
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(64,448
)
(63,889
)
(29,211
)
(30,896
)
(34,333
)
(26,474
)
Segment operating profit
$
328,539
$
316,497
$
70,749
$
69,818
$
8,625
$
6,085
Segment operating profit margin
83.6
%
83.2
%
70.8
%
69.3
%
20.1
%
18.7
%
Non-GAAP Financial Measures
The press release contains non-GAAP financial measures including
(i) Cash Site Leasing Revenue; (ii) Tower Cash Flow and Tower Cash
Flow Margin; (iii) Adjusted EBITDA, Annualized Adjusted EBITDA, and
Adjusted EBITDA Margin; (iv) Net Debt, Net Secured Debt, Leverage
Ratio, and Secured Leverage Ratio (collectively, our “Non-GAAP Debt
Measures”); (v) Funds from Operations (“FFO”), Adjusted Funds from
Operations (“AFFO”), and AFFO per share; and (vi) certain financial
metrics after eliminating the impact of changes in foreign currency
exchange rates (collectively, our “Constant Currency
Measures”).
We have included these non-GAAP financial measures because we
believe that they provide investors additional tools in
understanding our financial performance and condition.
Specifically, we believe that:
(1) Cash Site Leasing Revenue and Tower Cash Flow are useful
indicators of the performance of our site leasing operations;
(2) Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by excluding the impact of
our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation,
amortization and accretion) from our financial results. Management
also believes Adjusted EBITDA is frequently used by investors or
other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations.
Adjusted EBITDA should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance;
(3) FFO, AFFO and AFFO per share, which are metrics used by our
public company peers in the communication site industry, provide
investors useful indicators of the financial performance of our
business and permit investors an additional tool to evaluate the
performance of our business against those of our two principal
competitors. FFO, AFFO, and AFFO per share are also used to address
questions we receive from analysts and investors who routinely
assess our operating performance on the basis of these performance
measures, which are considered industry standards. We believe that
FFO helps investors or other interested parties meaningfully
evaluate financial performance by excluding the impact of our asset
base (primarily depreciation, amortization and accretion and asset
impairment and decommission costs). We believe that AFFO and AFFO
per share help investors or other interested parties meaningfully
evaluate our financial performance as they include (1) the impact
of our capital structure (primarily interest expense on our
outstanding debt) and (2) sustaining capital expenditures and
exclude the impact of (1) our asset base (primarily depreciation,
amortization and accretion and asset impairment and decommission
costs) and (2) certain non-cash items, including straight-lined
revenues and expenses related to fixed escalations and rent free
periods and the non-cash portion of our reported tax provision.
GAAP requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract. We only
use AFFO as a performance measure. AFFO should be considered only
as a supplement to net income computed in accordance with GAAP as a
measure of our performance and should not be considered as an
alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition
of FFO is consistent with how that term is defined by the National
Association of Real Estate Investment Trusts (“NAREIT”) and that
our definition and use of AFFO and AFFO per share is consistent
with those reported by the other communication site companies;
(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include
the full principal amount of our debt which will be due at maturity
and, to the extent that such measures are calculated on Net Debt
are net of our cash and cash equivalents, short-term restricted
cash, and short-term investments; and
(5) Our Constant Currency Measures provide management and
investors the ability to evaluate the performance of the business
without the impact of foreign currency exchange rate
fluctuations.
In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP
Debt Measures are components of the calculations used by our
lenders to determine compliance with certain covenants under our
Senior Credit Agreement and indentures relating to our 2016 Senior
Notes, 2017 Senior Notes, 2020 Senior Notes, and 2021 Senior Notes.
These non-GAAP financial measures are not intended to be an
alternative to any of the financial measures provided in our
results of operations or our balance sheet as determined in
accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
Fourth quarter
2020 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
2.5%
(3.6%)
6.1%
Total cash site leasing revenue
3.1%
(3.7%)
6.8%
Int'l cash site leasing revenue
0.5%
(17.7%)
18.2%
Total site leasing segment operating
profit
3.4%
(3.0%)
6.4%
Int'l site leasing segment operating
profit
1.3%
(17.0%)
18.3%
Total site leasing tower cash flow
3.8%
(3.1%)
6.9%
Int'l site leasing tower cash flow
3.0%
(17.1%)
20.1%
Net income
57.0%
30.8%
26.2%
Earnings per share - diluted
59.3%
30.4%
28.9%
Adjusted EBITDA
5.0%
(3.1%)
8.1%
AFFO
12.6%
(4.4%)
17.0%
AFFO per share
14.2%
(4.6%)
18.8%
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 December 31,
ended December 31,
ended December 31,
2020
2019
2020
2019
2020
2019
(in thousands)
Site leasing revenue
$
392,987
$
380,386
$
99,960
$
100,714
$
492,947
$
481,100
Non-cash straight-line leasing revenue
(1,046
)
(2,695
)
894
(328
)
(152
)
(3,023
)
Cash site leasing revenue
391,941
377,691
100,854
100,386
492,795
478,077
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(64,448
)
(63,889
)
(29,211
)
(30,896
)
(93,659
)
(94,785
)
Non-cash straight-line ground lease
expense
2,593
3,565
460
499
3,053
4,064
Tower Cash Flow
$
330,086
$
317,367
$
72,103
$
69,989
$
402,189
$
387,356
Tower Cash Flow Margin
84.2
%
84.0
%
71.5
%
69.7
%
81.6
%
81.0
%
Forecasted Tower Cash Flow for Full Year
2021
The table below sets forth the reconciliation of forecasted
Tower Cash Flow set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2021:
Full Year 2021
(in millions)
Site leasing revenue
$
2,032.0
to
$
2,052.0
Non-cash straight-line leasing revenue
(1.5
)
to
3.5
Cash site leasing revenue
2,030.5
to
2,055.5
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(372.0
)
to
(382.0
)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Tower Cash Flow
$
1,664.0
to
$
1,684.0
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 December 31,
2020
2019
(in thousands)
Net income
$
106,185
$
67,556
Non-cash straight-line leasing revenue
(152
)
(3,023
)
Non-cash straight-line ground lease
expense
3,053
4,064
Non-cash compensation
16,975
12,581
Other (income) expense, net
(77,986
)
(35,349
)
Acquisition and new business initiatives
related adjustments and expenses
4,024
5,559
Asset impairment and decommission
costs
10,994
9,472
Interest income
(641
)
(808
)
Total interest expense (1)
103,195
105,727
Depreciation, accretion, and
amortization
180,383
179,487
Provision for taxes (2)
34,566
17,127
Adjusted EBITDA
$
380,596
$
362,393
Annualized Adjusted EBITDA (3)
$
1,522,384
$
1,449,572
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
For the three months ended December 31,
2020 and 2019, these amounts included $219 and $333, 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 December 31,
2020
2019
(in thousands)
Total revenues
$
535,905
$
513,659
Non-cash straight-line leasing revenue
(152
)
(3,023
)
Total revenues minus non-cash
straight-line leasing revenue
$
535,753
$
510,636
Adjusted EBITDA
$
380,596
$
362,393
Adjusted EBITDA Margin
71.0
%
71.0
%
Forecasted Adjusted EBITDA for Full Year
2021
The table below sets forth the reconciliation of the forecasted
Adjusted EBITDA set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2021:
Full Year 2021
(in millions)
Net income
$
159.0
to
$
208.0
Non-cash straight-line leasing revenue
(1.5
)
to
3.5
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
84.0
to
79.0
Loss from extinguishment of debt, net
11.5
to
12.5
Other expense, net
72.0
to
72.0
Acquisition and new business initiatives
related adjustments and expenses
20.0
to
15.0
Asset impairment and decommission
costs
28.0
to
23.0
Interest income
(3.5
)
to
(0.5
)
Total interest expense (1)
432.0
to
420.0
Depreciation, accretion, and
amortization
725.0
to
715.0
Provision for taxes (2)
30.0
to
24.0
Adjusted EBITDA
$
1,562.0
to
$
1,582.0
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
Includes projections for franchise taxes
and gross receipts taxes which will be reflected in the Statement
of Operations in Selling, general, and administrative expenses.
Funds from Operations (“FFO”) and Adjusted
Funds from Operations (“AFFO”)
The table below sets forth the reconciliations of FFO and AFFO
to their most comparable GAAP measurement.
For the three months
ended December 31,
(in thousands, except per share
amounts)
2020
2019
Net income
$
106,185
$
67,556
Real estate related depreciation,
amortization, and accretion
179,394
178,399
Asset impairment and decommission costs
(1)
10,994
9,472
Adjustments for unconsolidated joint
ventures
—
(155
)
FFO
$
296,573
$
255,272
Adjustments to FFO:
Non-cash straight-line leasing revenue
(152
)
(3,023
)
Non-cash straight-line ground lease
expense
3,053
4,064
Non-cash compensation
16,975
12,581
Adjustment for non-cash portion of tax
provision
29,917
9,949
Non-real estate related depreciation,
amortization, and accretion
989
1,088
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
16,650
8,372
Other expense, net
(77,986
)
(35,349
)
Acquisition and new business initiatives
related adjustments and expenses
4,024
5,559
Non-discretionary cash capital
expenditures
(9,957
)
(9,853
)
Adjustments for unconsolidated joint
ventures
—
155
AFFO
$
280,086
$
248,815
Weighted average number of common shares
(2)
112,538
114,306
AFFO per share
$
2.49
$
2.18
(1)
Prior year amounts have been reclassed to
conform to the current year presentation.
(2)
For purposes of the AFFO per share
calculation, the basic weighted average number of common shares has
been adjusted to include the dilutive effect of stock options and
restricted stock units.
Forecasted AFFO for the Full Year
2021
The table below sets forth the reconciliation of the forecasted
AFFO and AFFO per share set forth in the Outlook section to its
most comparable GAAP measurement for the full year 2021:
(in millions, except per share
amounts)
Full Year 2021
Net income
$
159.0
to
$
208.0
Real estate related depreciation,
amortization, and accretion
715.5
to
707.5
Asset impairment and decommission
costs
28.0
to
23.0
FFO
$
902.5
to
$
938.5
Adjustments to FFO:
Non-cash straight-line leasing revenue
(1.5
)
to
3.5
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
84.0
to
79.0
Non-real estate related depreciation,
amortization, and accretion
9.5
to
7.5
Amort. of deferred financing costs and
debt discounts
60.5
to
61.5
Loss from extinguishment of debt, net
11.5
to
12.5
Other expense, net
72.0
to
72.0
Acquisition and new business initiatives
related adjustments and expenses
20.0
to
15.0
Non-discretionary cash capital
expenditures
(47.0
)
to
(37.0
)
AFFO
$
1,117.0
to
$
1,163.0
Weighted average number of common shares
(1)
111.7
to
111.7
AFFO per share
$
10.00
to
$
10.41
(1)
Our assumption for weighted average number of common shares does
not contemplate any additional repurchases of the Company’s stock
during 2021.
Net Debt, Net Secured Debt, Leverage
Ratio, and Secured Leverage Ratio
Net Debt is calculated using the notional principal amount of
outstanding debt. Under GAAP policies, the notional principal
amount of the Company's outstanding debt is not necessarily
reflected on the face of the Company's financial statements.
The Net Debt and Leverage calculations are as follows:
December 31,
2020
(in thousands)
2013-2C Tower Securities
$
575,000
2014-2C Tower Securities
620,000
2017-1C Tower Securities
760,000
2018-1C Tower Securities
640,000
2019-1C Tower Securities
1,165,000
2020-1C Tower Securities
750,000
2020-2C Tower Securities
600,000
Revolving Credit Facility
380,000
2018 Term Loan
2,340,000
Total secured debt
7,830,000
2016 Senior Notes
1,100,000
2017 Senior Notes
750,000
2020 Senior Notes
1,500,000
Total unsecured debt
3,350,000
Total debt
$
11,180,000
Leverage
Ratio
Total debt
$
11,180,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(340,908)
Net debt
$
10,839,092
Divided by: Annualized Adjusted EBITDA
$
1,522,384
Leverage Ratio
7.1x
Secured Leverage
Ratio
Total secured debt
$
7,830,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(340,908)
Net Secured Debt
$
7,489,092
Divided by: Annualized Adjusted EBITDA
$
1,522,384
Secured Leverage Ratio
4.9x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210222005868/en/
Mark DeRussy, CFA Capital Markets 561-226-9531 Lynne Hopkins
Media Relations 561-226-9431
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