SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended September
30, 2021.
Highlights of the third quarter include:
- Net income of $47.8 million or $0.43 per share
- AFFO per share increased 13.9% over the prior year
period
- Total revenue of $589.3 million, a 12.7% growth over the
prior year period
- Issued $1.79 billion of Tower Securities at a blended
interest rate of 2.217% subsequent to quarter end
- Repurchased 1.0 million shares cumulatively in the third
quarter and 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. The distribution is payable
December 16, 2021 to the shareholders of record at the close of
business on November 18, 2021.
“The increased level of US wireless carrier activity we
experienced last quarter continued in the third quarter,” stated
Jeffrey Stoops, President and CEO. “US wireless carrier activity
continued at materially higher levels compared to the beginning of
the year. Domestically, we produced record services revenue,
surpassing our second quarter record, and our leasing and services
backlogs reached new multi-year highs at quarter-end. While we
expect some revenue recognition from third quarter leasing activity
by year-end, contributing to our increased full-year 2021 Outlook,
we anticipate the substantial majority will begin to be recognized
in 2022. Based on our backlogs and conversations with our
customers, we expect elevated domestic leasing activities to
continue through 2022 and perhaps beyond. Internationally, our
leasing results in the third quarter were once again solid and
ahead of plan, as our international markets slowly but steadily
return to pre-pandemic levels of activity. In addition to growth
from increased customer activity and portfolio growth, sound cost
controls, substantial stock repurchases and interest rate savings
through refinancing a material portion of our debt have allowed us
to increase our full-year outlook for AFFO per share and other key
financial metrics. Our balance sheet remains strong, further
strengthened by material refinancing success, and our net debt/
Adjusted EBITDA leverage remains within our target range. The
combination of strong operating results, strong expected demand for
the remainder of the year and excellent capital allocation and
balance sheet management gives us great confidence for the
remainder of 2021 and into 2022. In addition, pending and
anticipated major spectrum auctions in the US and a few of our
larger international markets provide additional optimism for
heightened carrier activity for the foreseeable future.”
Operating Results
The table below details select financial results for the three
months ended September 30, 2021 and comparisons to the prior year
period.
% Change
excluding
Q3 2021
Q3 2020
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
535.5
$
486.8
$
48.7
10.0%
9.4%
Site development revenue
53.8
36.2
17.6
48.8%
48.8%
Tower cash flow (1)
428.1
396.8
31.3
7.9%
7.4%
Net income
47.8
22.6
25.2
111.5%
95.8%
Earnings per share - diluted
0.43
0.20
0.23
115.0%
100.0%
Adjusted EBITDA (1)
407.0
373.3
33.7
9.0%
8.5%
AFFO (1)
302.5
270.1
32.4
12.0%
11.3%
AFFO per share (1)
2.71
2.38
0.33
13.9%
13.4%
(1)
See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the third quarter of 2021 were $589.3 million
compared to $522.9 million in the prior year period, an increase of
12.7%. Site leasing revenue in the third quarter of 2021 of $535.5
million was comprised of domestic site leasing revenue of $426.8
million and international site leasing revenue of $108.7 million.
Domestic cash site leasing revenue in the third quarter of 2021 was
$415.4 million compared to $389.6 million in the prior year period,
an increase of 6.6%. International cash site leasing revenue in the
third quarter of 2021 was $109.8 million compared to $96.5 million
in the prior year period, an increase of 13.7%, or an increase of
10.4% on a constant currency basis. Site development revenues in
the third quarter of 2021 were $53.8 million compared to $36.2
million in the prior year period, an increase of 48.8%.
Site leasing operating profit in the third quarter of 2021 was
$436.8 million, an increase of 10.9% over the prior year period.
Site leasing contributed 97.2% of the Company’s total operating
profit in the third quarter of 2021. Domestic site leasing segment
operating profit in the third quarter of 2021 was $361.5 million,
an increase of 10.6% over the prior year period. International site
leasing segment operating profit in the third quarter of 2021 was
$75.3 million, an increase of 11.9% from the prior year period.
Tower Cash Flow in the third quarter of 2021 of $428.1 million
was comprised of Domestic Tower Cash Flow of $351.4 million and
International Tower Cash Flow of $76.7 million. Domestic Tower Cash
Flow in the third quarter of 2021 increased 7.1% over the prior
year period and International Tower Cash Flow increased 12.0% over
the prior year period, or increased 8.8% on a constant currency
basis. Tower Cash Flow Margin was 81.5% in the third quarter of
2021, as compared to 81.6% for the prior year period.
Net income in the third quarter of 2021 was $47.8 million, or
$0.43 per share, and included a $45.0 million loss, net of taxes,
on the currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net income in the
third quarter of 2020 was $22.6 million, or $0.20 per share, and
included a $25.4 million loss, net of taxes, on the
currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries.
Adjusted EBITDA in the third quarter of 2021 was $407.0 million,
a 9.0% increase over the prior year period. Adjusted EBITDA Margin
in the third quarter of 2021 was 70.3% compared to 71.5% in the
prior year period.
Net Cash Interest Expense in the third quarter of 2021 was $88.3
million compared to $89.0 million in the prior year period, a
decrease of 0.8%.
AFFO in the third quarter of 2021 was $302.5 million, a 12.0%
increase over the prior year period. AFFO per share in the third
quarter of 2021 was $2.71, a 13.9% increase over the prior year
period.
Investing Activities
During the third quarter of 2021, SBA acquired 144 communication
sites for total cash consideration of $57.1 million. SBA also built
87 towers during the third quarter of 2021. As of September 30,
2021, SBA owned or operated 34,072 communication sites, 17,322 of
which are located in the United States and its territories, and
16,750 of which are located internationally. In addition, the
Company spent $11.6 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the third
quarter of 2021 were $92.9 million, consisting of $10.0 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $82.9 million of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
Subsequent to the third quarter of
2021, the Company purchased or is under contract to purchase
approximately 1,700 communication sites for an aggregate
consideration of approximately $231.0 million in cash, including
approximately 1,400 sites and approximately $175.0 million in cash
relating to the previously announced deal to acquire towers from
Airtel Tanzania. The Company anticipates that these acquisitions
will be consummated by the end of the second quarter of 2022 and
that the Airtel Tanzania transaction will close in stages starting
in the fourth quarter of this year.
Financing Activities and
Liquidity
SBA ended the third quarter of 2021 with $11.9 billion of total
debt, $7.8 billion of total secured debt, $252.3 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $11.7 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.2x and 4.7x, respectively.
On October 14, 2021, the Company repaid the entire aggregate
principal amount of the 2013-2C Tower Securities ($575.0 million)
which had an anticipated repayment date of April 11, 2023.
On October 27, 2021, the Company, through an existing trust,
issued $895.0 million of 1.840% Secured Tower Revenue Securities
Series 2021-2C which have an anticipated repayment date of April 9,
2027 and a final maturity date of October 10, 2051 (the “2021-2C
Tower Securities”) and $895.0 million of 2.593% Secured Tower
Revenue Securities Series 2021-3C which have an anticipated
repayment date of October 9, 2031 and a final maturity date of
October 10, 2056 (the “2021-3C Tower Securities”). The aggregate
$1.79 billion of 2021-2C Tower Securities and 2021-3C Tower
Securities have a blended interest rate of 2.217% and a weighted
average life through the anticipated repayment date of 7.8 years.
Net proceeds from this offering were used to repay amounts
outstanding under the Revolving Credit Facility and remaining
proceeds will be used to redeem the entire aggregate principal
amount of the 2016 Senior Notes ($1.1 billion) and to pay all
premiums and costs associated with such redemption.
As of the date of this press release, the Company had no amounts
outstanding under the $1.5 billion Revolving Credit Facility.
During the third quarter of 2021, the Company repurchased 0.4
million shares of its Class A common stock for $150.0 million at an
average price per share of $340.70 under its $1.0 billion stock
repurchase plan. Subsequent to September 30, 2021, the Company
repurchased 0.6 million shares of its Class A common stock for
$200.0 million, at an average price per share of $332.72. Shares
repurchased were retired. After these repurchases, the Company had
$125.1 million of authorization remaining under the plan. On
October 28, 2021, the Company’s Board of Directors authorized a new
$1.0 billion stock repurchase plan, replacing the prior plan
authorized on November 2, 2020. This new plan authorized the
Company to purchase, from time to time, up to $1.0 billion of our
outstanding Class A common stock through open market repurchases in
compliance with Rule 10b-18 under the Exchange Act and/or in
privately negotiated transactions at management’s discretion based
on market and business conditions, applicable legal requirements
and other factors. Shares repurchased will be retired. The new plan
has no time deadline and will continue until otherwise modified or
terminated by the Company’s Board of Directors at any time in its
sole discretion. As of the date of this filing, the Company had the
full $1.0 billion of authorization remaining under the new
plan.
In the third quarter of 2021, the Company declared and paid a
cash dividend of $63.6 million.
Outlook
The Company is updating its full year 2021 Outlook for
anticipated results. The Outlook provided is based on a number of
assumptions that the Company believes are reasonable at the time of
this press release. Information regarding potential risks that
could cause the actual results to differ from these forward-looking
statements is set forth below and in the Company’s filings with the
Securities and Exchange Commission.
The Company’s full year 2021 Outlook 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 additional stock during the remainder of the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.60 Brazilian Reais to 1.0 U.S. Dollar, 1.25
Canadian Dollars to 1.0 U.S. Dollar, and 15.20 South African Rand
to 1.0 U.S. Dollar for the fourth quarter of 2021.
Change from
Change from
August 2, 2021
August 2, 2021
Outlook
(in millions, except per share
amounts)
Full Year 2021
Outlook (7)
Excluding FX
Site leasing revenue (1)
$
2,095.0
to
$
2,105.0
$
10.0
$
13.5
Site development revenue
$
195.0
to
$
205.0
$
10.0
$
10.0
Total revenues
$
2,290.0
to
$
2,310.0
$
20.0
$
23.5
Tower Cash Flow (2)
$
1,686.0
to
$
1,696.0
$
4.0
$
6.0
Adjusted EBITDA (2)
$
1,599.0
to
$
1,609.0
$
8.0
$
10.0
Net cash interest expense (3)
$
349.0
to
$
354.0
$
(4.5
)
$
(4.5
)
Non-discretionary cash capital
expenditures (4)
$
36.0
to
$
42.0
$
(1.0
)
$
(1.5
)
AFFO (2)
$
1,173.0
to
$
1,196.0
$
11.5
$
14.0
AFFO per share (2) (5)
$
10.55
to
$
10.76
$
0.14
$
0.16
Discretionary cash capital expenditures
(6)
$
1,425.0
to
$
1,435.0
$
(30.0
)
$
(29.0
)
(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 111.2 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.
(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, November 1, 2021 at 5:00 PM (EDT) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, November 1, 2021 at 5:00
PM (EDT)
Dial-in Number:
(877) 226-8189
Access Code:
7051615
Conference Name:
SBA Third quarter 2021
results
Replay Available:
November 1, 2021 at 11:00 PM to
November 15, 2021 at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code:
7939805
Internet Access:
www.sbasite.com
Information Concerning Forward-Looking
Statements
This press release and our earnings call include forward-looking
statements, including statements regarding the Company’s
expectations or beliefs regarding (i) customer activity and demand
for the Company’s wireless communications infrastructure during
2021 and thereafter, (ii) the Company’s backlog, the impact of that
backlog on future leasing activity and timing for the Company’s
recognition of revenue from third quarter leasing activity, (iii)
the Company’s future capital allocation and its impact on the
Company’s financial results during 2021 and into 2022, (iv) the
Company’s financial and operational performance in 2021, including
the Company’s increased full year financial and operational
guidance and the assumptions and drivers contributing to its
increased full year guidance, (v) the timing of closing for
currently pending acquisitions, including from Airtel Tanzania,
(vi) pending and anticipated spectrum auctions in the U.S. and
international markets and their impact on future customer activity,
and (vii) foreign exchange rates and their impact on the Company’s
financial and operational guidance.
The Company wishes to caution readers that these forward-looking
statements may be affected by the risks and uncertainties in the
Company’s business as well as other important factors may have
affected and could in the future affect the Company’s actual
results and could cause the Company’s actual results for subsequent
periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. With
respect to the Company’s expectations regarding all of these
statements, including its financial and operational guidance, such
risk factors include, but are not limited to: (1) the ability and
willingness of wireless service providers to maintain or increase
their capital expenditures; (2) the Company’s ability to identify
and acquire sites at prices and upon terms that will provide
accretive portfolio growth; (3) the Company’s ability to accurately
identify and manage any risks associated with its acquired sites,
to effectively integrate such sites into its business and to
achieve the anticipated financial results; (4) the Company’s
ability to secure and retain as many site leasing tenants as
planned at anticipated lease rates, including its ability to
realize anticipated benefits under the new Verizon agreement; (5)
the impact of continued consolidation among wireless service
providers in the U.S. and internationally, including the impact of
the completed T-Mobile and Sprint merger, on the Company’s leasing
revenue; (6) the Company’s ability to successfully manage the risks
associated with international operations, including risks
associated with foreign currency exchange rates; (7) the Company’s
ability to secure and deliver anticipated services business at
contemplated margins; (8) the Company’s ability to maintain
expenses and cash capital expenditures at appropriate levels for
its business while seeking to attain its investment goals; (9) the
Company’s ability to acquire land underneath towers on terms that
are accretive; (10) the economic climate for the wireless
communications industry in general and the wireless communications
infrastructure providers in particular in the United States,
Brazil, South Africa, Tanzania, 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. With respect to the acquisition from Airtel Tanzania,
these factors also include a variety of factors outside of the
Company’s control, including the accuracy of the information
provided to the Company, the health of the Tanzania economy and
wireless communications market, and the willingness of carriers to
invest in their networks in that market. Furthermore, the Company’s
forward-looking statements and its 2021 outlook assumes that the
Company continues to qualify for treatment as a REIT for U.S.
federal income tax purposes and that the Company’s business is
currently operated in a manner that complies with the REIT rules
and that it will be able to continue to comply with and conduct its
business in accordance with such rules. In addition, these
forward-looking statements and the information in this press
release is qualified in its entirety by cautionary statements and
risk factor disclosures contained in the Company’s Securities and
Exchange Commission filings, including the Company’s Annual Report
on Form 10-K filed with the Commission on February 25, 2021.
This press release contains non-GAAP financial measures.
Reconciliation of each of these non-GAAP financial measures and the
other Regulation G information is presented below under “Non-GAAP
Financial Measures.”
This press release will be available on our website at
www.sbasite.com.
About SBA Communications
Corporation
SBA Communications Corporation is a first choice provider and
leading owner and operator of wireless communications
infrastructure in North, Central, and South America and South
Africa. By “Building Better Wireless,” SBA generates revenue from
two primary businesses – site leasing and site development
services. The primary focus of the Company is the leasing of
antenna space on its multi-tenant communication sites to a variety
of wireless service providers under long-term lease contracts. For
more information please visit: www.sbasite.com.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited) (in thousands,
except per share amounts)
For the three months
For the nine months
ended September 30,
ended September 30,
2021
2020
2021
2020
Revenues:
Site leasing
$
535,492
$
486,765
$
1,564,814
$
1,461,523
Site development
53,813
36,175
148,882
85,708
Total revenues
589,305
522,940
1,713,696
1,547,231
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
98,666
92,722
289,510
280,120
Cost of site development
41,357
28,797
116,172
68,417
Selling, general, and administrative
expenses (1)
51,000
48,152
156,546
146,856
Acquisition and new business initiatives
related
adjustments and expenses
5,730
4,124
17,525
12,557
Asset impairment and decommission
costs
9,860
8,506
18,560
29,103
Depreciation, accretion, and
amortization
170,916
180,302
530,266
541,587
Total operating expenses
377,529
362,603
1,128,579
1,078,640
Operating income
211,776
160,337
585,117
468,591
Other income (expense):
Interest income
945
756
2,124
2,340
Interest expense
(89,199
)
(89,791
)
(269,839
)
(281,329
)
Non-cash interest expense
(11,820
)
(8,323
)
(35,436
)
(13,066
)
Amortization of deferred financing
fees
(4,934
)
(4,883
)
(14,690
)
(15,211
)
Loss from extinguishment of debt, net
—
(2,599
)
(13,672
)
(19,463
)
Other expense, net
(69,804
)
(42,262
)
(49,390
)
(300,144
)
Total other expense, net
(174,812
)
(147,102
)
(380,903
)
(626,873
)
Income (loss) before income taxes
36,964
13,235
204,214
(158,282
)
Benefit (provision) for income taxes
10,834
9,441
(15,494
)
76,143
Net income (loss)
47,798
22,676
188,720
(82,139
)
Net (income) loss attributable to
noncontrolling interests
—
(108
)
—
461
Net income (loss) attributable to SBA
Communications
Corporation
$
47,798
$
22,568
$
188,720
$
(81,678
)
Net income (loss) per common share
attributable to SBA
Communications Corporation:
Basic
$
0.44
$
0.20
$
1.72
$
(0.73
)
Diluted
$
0.43
$
0.20
$
1.70
$
(0.73
)
Weighted average number of common
shares
Basic
109,577
111,783
109,487
111,809
Diluted
111,565
113,703
111,329
111,809
(1)
Includes non-cash compensation of $16,589
and $16,606 for the three months ended September 30, 2021 and 2020,
respectively, and $57,249 and $50,291 for the nine months ended
September 30, 2021 and 2020, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
September 30,
December 31,
2021
2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
187,806
$
308,560
Restricted cash
63,736
31,671
Accounts receivable, net
76,076
74,088
Costs and estimated earnings in excess of
billings on uncompleted contracts
40,860
34,796
Prepaid expenses and other current
assets
35,310
23,875
Total current assets
403,788
472,990
Property and equipment, net
2,580,262
2,677,326
Intangible assets, net
2,906,855
3,156,150
Operating lease right-of-use assets,
net
2,297,372
2,369,358
Acquired and other right-of-use assets,
net
965,780
4,202
Other assets
514,025
477,992
Total assets
$
9,668,082
$
9,158,018
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
34,790
$
109,969
Accrued expenses
69,973
63,031
Current maturities of long-term debt
24,000
24,000
Deferred revenue
184,340
113,117
Accrued interest
26,477
54,350
Current lease liabilities
238,706
236,037
Other current liabilities
13,738
14,297
Total current liabilities
592,024
614,801
Long-term liabilities:
Long-term debt, net
11,822,536
11,071,796
Long-term lease liabilities
2,013,097
2,094,363
Other long-term liabilities
183,553
186,246
Total long-term liabilities
14,019,186
13,352,405
Redeemable noncontrolling interests
15,177
15,194
Shareholders' deficit:
Preferred stock - par value $0.01, 30,000
shares authorized, no shares issued or outstanding
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 109,480 shares and
109,819 shares issued and outstanding at
September 30, 2021 and December 31, 2020,
respectively
1,095
1,098
Additional paid-in capital
2,711,934
2,586,130
Accumulated deficit
(6,890,822
)
(6,604,028
)
Accumulated other comprehensive loss,
net
(780,512
)
(807,582
)
Total shareholders' deficit
(4,958,305
)
(4,824,382
)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
9,668,082
$
9,158,018
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended September 30,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
47,798
$
22,676
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
170,916
180,302
Loss on remeasurement of U.S. dollar
denominated intercompany loans
67,626
38,605
Non-cash compensation expense
17,111
17,057
Non-cash asset impairment and decommission
costs
9,502
8,514
Loss from extinguishment of debt
—
2,599
Deferred income tax benefit
(16,913
)
(15,397
)
Other non-cash items reflected in the
Statements of Operations
20,896
18,361
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of
billings on uncompleted contracts, net
(12,953
)
14,145
Prepaid expenses and other assets
(22,995
)
(4,550
)
Operating lease right-of-use assets,
net
29,722
28,911
Accounts payable and accrued expenses
5,312
1,579
Accrued interest
(39,915
)
(16,536
)
Long-term lease liabilities
(29,113
)
(25,371
)
Other liabilities
5,998
19,595
Net cash provided by operating
activities
252,992
290,490
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(57,903
)
(80,864
)
Capital expenditures
(34,976
)
(28,392
)
Net purchases of investments
—
171,759
Other investing activities
(133
)
(1,911
)
Net cash (used in) provided by investing
activities
(93,012
)
60,592
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under Revolving Credit
Facility
(85,000
)
—
Proceeds from issuance of Tower
Securities, net of fees
—
1,336,003
Repayment of Tower Securities
—
(1,200,000
)
Payment of dividends on common stock
(63,563
)
(52,028
)
Proceeds from employee stock
purchase/stock option plans, net of taxes
36,987
12,967
Termination of interest rate swap
—
(176,200
)
Repurchase and retirement of common
stock
(115,421
)
(175,658
)
Other financing activities
(9,785
)
(7,213
)
Net cash used in financing activities
(236,782
)
(262,129
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(7,609
)
(4,618
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(84,411
)
84,335
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
338,810
251,638
End of period
$
254,399
$
335,973
Selected Capital Expenditure
Detail
For the three
For the nine
months ended
months ended
September 30, 2021
September 30, 2021
(in thousands)
Construction and related costs on new
builds
$
16,553
$
39,140
Augmentation and tower upgrades
8,434
22,871
Non-discretionary capital
expenditures:
Tower maintenance
8,952
25,244
General corporate
1,037
3,096
Total non-discretionary capital
expenditures
9,989
28,340
Total capital expenditures
$
34,976
$
90,351
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at June 30, 2021
17,306
16,548
33,854
Sites acquired during the third
quarter
23
121
144
Sites built during the third quarter
—
87
87
Sites decommissioned/reclassified during
the third quarter
(7
)
(6
)
(13
)
Sites owned at September 30, 2021
17,322
16,750
34,072
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 September 30,
ended September 30,
ended September 30,
2021
2020
2021
2020
2021
2020
(in thousands)
Segment revenue
$
426,758
$
390,961
$
108,734
$
95,804
$
53,813
$
36,175
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(65,260
)
(64,228
)
(33,406
)
(28,494
)
(41,357
)
(28,797
)
Segment operating profit
$
361,498
$
326,733
$
75,328
$
67,310
$
12,456
$
7,378
Segment operating profit margin
84.7
%
83.6
%
69.3
%
70.3
%
23.1
%
20.4
%
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 2016 Senior
Notes, 2020 Senior Notes, and 2021 Senior Notes. These non-GAAP
financial measures are not intended to be an alternative to any of
the financial measures provided in our results of operations or our
balance sheet as determined in accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
Third quarter
2021 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
10.0%
0.6%
9.4%
Total cash site leasing revenue
8.0%
0.6%
7.4%
Int'l cash site leasing revenue
13.7%
3.3%
10.4%
Total site leasing segment operating
profit
10.9%
0.6%
10.3%
Int'l site leasing segment operating
profit
11.9%
3.1%
8.8%
Total site leasing tower cash flow
7.9%
0.5%
7.4%
Int'l site leasing tower cash flow
12.0%
3.2%
8.8%
Net income
111.5%
15.7%
95.8%
Earnings per share - diluted
115.0%
15.0%
100.0%
Adjusted EBITDA
9.0%
0.5%
8.5%
AFFO
12.0%
0.7%
11.3%
AFFO per share
13.9%
0.5%
13.4%
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 September 30,
ended September 30,
ended September 30,
2021
2020
2021
2020
2021
2020
(in thousands)
Site leasing revenue
$
426,758
$
390,961
$
108,734
$
95,804
$
535,492
$
486,765
Non-cash straight-line leasing revenue
(11,408
)
(1,343
)
1,016
708
(10,392
)
(635
)
Cash site leasing revenue
415,350
389,618
109,750
96,512
525,100
486,130
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(65,260
)
(64,228
)
(33,406
)
(28,494
)
(98,666
)
(92,722
)
Non-cash straight-line ground lease
expense
1,346
2,888
388
487
1,734
3,375
Tower Cash Flow
$
351,436
$
328,278
$
76,732
$
68,505
$
428,168
$
396,783
Tower Cash Flow Margin
84.6
%
84.3
%
69.9
%
71.0
%
81.5
%
81.6
%
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
$
2,095.0
to
$
2,105.0
Non-cash straight-line leasing revenue
(32.5
)
to
(27.5
)
Cash site leasing revenue
2,062.5
to
2,077.5
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(382.0
)
to
(392.0
)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Tower Cash Flow
$
1,686.0
to
$
1,696.0
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 September 30,
2021
2020
(in thousands)
Net income
$
47,798
$
22,676
Non-cash straight-line leasing revenue
(10,392
)
(635
)
Non-cash straight-line ground lease
expense
1,734
3,375
Non-cash compensation
17,111
17,057
Loss from extinguishment of debt, net
—
2,599
Other expense, net
69,804
42,262
Acquisition and new business initiatives
related adjustments and expenses
5,730
4,124
Asset impairment and decommission
costs
9,860
8,506
Interest income
(945
)
(756
)
Total interest expense (1)
105,953
102,997
Depreciation, accretion, and
amortization
170,916
180,302
Benefit for taxes (2)
(10,605
)
(9,206
)
Adjusted EBITDA
$
406,964
$
373,301
Annualized Adjusted EBITDA (3)
$
1,627,856
$
1,493,204
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
For the three months ended September 30,
2021 and 2020, these amounts included $229 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 September 30,
2021
2020
(in thousands)
Total revenues
$
589,305
$
522,940
Non-cash straight-line leasing revenue
(10,392
)
(635
)
Total revenues minus non-cash
straight-line leasing revenue
$
578,913
$
522,305
Adjusted EBITDA
$
406,964
$
373,301
Adjusted EBITDA Margin
70.3
%
71.5
%
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
$
245.0
to
$
281.0
Non-cash straight-line leasing revenue
(32.5
)
to
(27.5
)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
79.5
to
74.5
Loss from extinguishment of debt, net
39.0
to
40.0
Other expense, net
62.0
to
57.0
Acquisition and new business initiatives
related adjustments and expenses
26.5
to
21.5
Asset impairment and decommission
costs
28.0
to
23.0
Interest income
(4.5
)
to
(1.5
)
Total interest expense (1)
424.5
to
417.5
Depreciation, accretion, and
amortization
699.5
to
689.5
Provision for taxes (2)
26.5
to
23.5
Adjusted EBITDA
$
1,599.0
to
$
1,609.0
(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 September 30,
(in thousands, except per share
amounts)
2021
2020
Net income
$
47,798
$
22,676
Real estate related depreciation,
amortization, and accretion
169,881
179,265
Asset impairment and decommission
costs
9,860
8,506
FFO
$
227,539
$
210,447
Adjustments to FFO:
Non-cash straight-line leasing revenue
(10,392
)
(635
)
Non-cash straight-line ground lease
expense
1,734
3,375
Non-cash compensation
17,111
17,057
Adjustment for non-cash portion of tax
benefit
(16,865
)
(15,397
)
Non-real estate related depreciation,
amortization, and accretion
1,035
1,037
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
16,754
13,206
Loss from extinguishment of debt, net
—
2,599
Other expense, net
69,804
42,262
Acquisition and new business initiatives
related adjustments and expenses
5,730
4,124
Non-discretionary cash capital
expenditures
(9,989
)
(7,989
)
AFFO
$
302,461
$
270,086
Weighted average number of common shares
(1)
111,565
113,703
AFFO per share
$
2.71
$
2.38
(1)
For purposes of the AFFO per share
calculation, the basic weighted average number of common shares has
been adjusted to include the dilutive effect of stock options and
restricted stock units.
Forecasted AFFO for the Full Year
2021
The table below sets forth the reconciliation of the forecasted
AFFO and AFFO per share set forth in the Outlook section to its
most comparable GAAP measurement for the full year 2021:
(in millions, except per share
amounts)
Full Year 2021
Net income
$
245.0
to
$
281.0
Real estate related depreciation,
amortization, and accretion
692.0
to
687.0
Asset impairment and decommission
costs
28.0
to
23.0
FFO
$
965.0
to
$
991.0
Adjustments to FFO:
Non-cash straight-line leasing revenue
(32.5
)
to
(27.5
)
Non-cash straight-line ground lease
expense
5.5
to
10.5
Non-cash compensation
79.5
to
74.5
Adjustment for non-cash portion of tax
provision
(3.0
)
to
(3.0
)
Non-real estate related depreciation,
amortization, and accretion
7.5
to
2.5
Amortization of deferred financing costs
and debt discounts
and non-cash interest expense
65.5
to
65.5
Loss from extinguishment of debt, net
39.0
to
40.0
Other expense, net
62.0
to
57.0
Acquisition and new business initiatives
related adjustments and expenses
26.5
to
21.5
Non-discretionary cash capital
expenditures
(42.0
)
to
(36.0
)
AFFO
$
1,173.0
to
$
1,196.0
Weighted average number of common shares
(1)
111.2
to
111.2
AFFO per share
$
10.55
to
$
10.76
(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:
September 30,
2021
(in thousands)
2013-2C Tower Securities
$
575,000
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
2018 Term Loan
2,322,000
Total secured debt
7,837,000
2016 Senior Notes
1,100,000
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
4,100,000
Total debt
$
11,937,000
Leverage
Ratio
Total debt
$
11,937,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(252,341
)
Net debt
$
11,684,659
Divided by: Annualized Adjusted EBITDA
$
1,627,856
Leverage Ratio
7.2x
Secured Leverage
Ratio
Total secured debt
$
7,837,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(252,341
)
Net Secured Debt
$
7,584,659
Divided by: Annualized Adjusted EBITDA
$
1,627,856
Secured Leverage Ratio
4.7x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211101005874/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
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