SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended December
31, 2021.
Highlights of the fourth quarter include:
- Net income of $48.9 million or $0.44 per share
- AFFO per share increased 13.3% over the prior year period on
a constant currency basis
- Total revenue of $595.3 million, an 11.1% growth over the
prior year period
- Repurchased 1.8 million shares cumulatively in the fourth
quarter and subsequent to quarter end
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.71 per share
of the Company’s Class A Common Stock, an increase of approximately
22% over the dividend paid in the fourth quarter. The distribution
is payable March 25, 2022 to the shareholders of record at the
close of business on March 10, 2022.
“We had a very solid finish to 2021, producing record results on
a number of metrics and positioning us for a strong 2022,”
commented Jeffrey A. Stoops, President and Chief Executive Officer.
“The US market was and remains particularly strong, with our
largest US customers all disclosing robust capital expenditure
plans for 2022. Domestic activity so far in 2022 has been strong,
and leasing and services backlogs are at or near all-time highs. We
believe domestic activity will remain strong into 2023 and perhaps
beyond, given the size and scope of our customers’ 5G deployment
plans. International results were strong as well in the fourth
quarter, and gross leasing demand is expected to remain strong
internationally, particularly in light of the recent 5G spectrum
auction in Brazil and the upcoming 5G spectrum auction in South
Africa. In addition, since our last earnings release we have
commenced operations in Tanzania, through the acquisition of sites
from Airtel, and in the Philippines, where we have commenced
greenfield build operations. Both new markets are expected to grow
favorably in the years to come. In the last 12 months we have
executed material portfolio growth, stock repurchases and favorable
refinancings. Since February 1, 2021, we have grown our site
portfolio by over 8%. All of these favorable conditions and results
allowed us to increase AFFO per share by double-digit percentages
in the fourth quarter and for the full 2021 fiscal year over
comparable prior periods. Our balance sheet remains in great shape,
ending the year with the lowest average weighted cost of debt and
the highest cash interest coverage ratio ever. 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 22%. While a substantial increase, this dividend on
an annual basis represents less than 25% of our AFFO in our 2022
Outlook, leaving us substantial capital for additional investment
in portfolio growth and stock repurchases. We believe we will
produce material growth in AFFO per share and, including the
dividend, offer our shareholders very favorable prospects for
additional value creation.”
Operating Results
The table below details select financial results for the three
months ended December 31, 2021 and comparisons to the prior year
period.
% Change
excluding
Q4 2021
Q4 2020
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
539.4
$
493.0
$
46.4
9.4%
9.8%
Site development revenue
55.9
43.0
12.9
30.0%
30.0%
Tower cash flow (1)
434.1
402.2
31.9
7.9%
8.3%
Net income
48.9
105.8
(56.9
)
(53.8%)
26.2%
Earnings per share - diluted
0.44
0.94
(0.50
)
(53.2%)
27.7%
Adjusted EBITDA (1)
409.1
380.6
28.5
7.5%
7.8%
AFFO (1)
310.8
280.1
30.7
11.0%
11.4%
AFFO per share (1)
2.81
2.49
0.32
12.9%
13.3%
(1)
See the reconciliations and other disclosures under “Non-GAAP
Financial Measures” later in this press release.
Total revenues in the fourth quarter of 2021 were $595.3 million
compared to $536.0 million in the prior year period, an increase of
11.1%. Site leasing revenue in the fourth quarter of 2021 of $539.4
million was comprised of domestic site leasing revenue of $432.2
million and international site leasing revenue of $107.2 million.
Domestic cash site leasing revenue in the fourth quarter of 2021
was $421.7 million compared to $391.9 million in the prior year
period, an increase of 7.6%. International cash site leasing
revenue in the fourth quarter of 2021 was $108.1 million compared
to $100.9 million in the prior year period, an increase of 7.2%, or
an increase of 9.3% on a constant currency basis. Site development
revenues in the fourth quarter of 2021 were $55.9 million compared
to $43.0 million in the prior year period, an increase of
30.0%.
Site leasing operating profit in the fourth quarter of 2021 was
$442.4 million, an increase of 10.8% over the prior year period.
Site leasing contributed 97.1% of the Company’s total operating
profit in the fourth quarter of 2021. Domestic site leasing segment
operating profit in the fourth quarter of 2021 was $367.9 million,
an increase of 12.0% over the prior year period. International site
leasing segment operating profit in the fourth quarter of 2021 was
$74.5 million, an increase of 5.3% from the prior year period.
Tower Cash Flow in the fourth quarter of 2021 of $434.1 million
was comprised of Domestic Tower Cash Flow of $358.4 million and
International Tower Cash Flow of $75.7 million. Domestic Tower Cash
Flow in the fourth quarter of 2021 increased 8.6% over the prior
year period and International Tower Cash Flow increased 5.0% over
the prior year period, or increased 7.0% on a constant currency
basis. Tower Cash Flow Margin was 81.9% in the fourth quarter of
2021, as compared to 81.6% for the prior year period.
Net income in the fourth quarter of 2021 was $48.9 million, or
$0.44 per share, and included a $15.9 million loss, net of taxes,
on the currency-related remeasurement of U.S. dollar denominated
intercompany loans with foreign subsidiaries. Net income in 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.
Adjusted EBITDA in the fourth quarter of 2021 was $409.1
million, a 7.5% increase over the prior year period. Adjusted
EBITDA Margin in the fourth quarter of 2021 was 69.8% compared to
71.0% in the prior year period.
Net Cash Interest Expense in the fourth quarter of 2021 was
$81.8 million compared to $85.9 million in the prior year period, a
decrease of 4.8%.
AFFO in the fourth quarter of 2021 was $310.8 million, an 11.0%
increase over the prior year period. AFFO per share in the fourth
quarter of 2021 was $2.81, a 12.9% increase over the prior year
period, or 13.3% on a constant currency basis.
Investing Activities
During the fourth quarter of 2021, SBA acquired 59 communication
sites for total cash consideration of $38.4 million. SBA also built
88 towers during the fourth quarter of 2021. As of December 31,
2021, SBA owned or operated 34,177 communication sites, 17,356 of
which are located in the United States and its territories and
16,821 of which are located internationally. In addition, the
Company spent $13.6 million to purchase land and easements and to
extend lease terms. Total cash capital expenditures for the fourth
quarter of 2021 were $113.2 million, consisting of $11.1 million of
non-discretionary cash capital expenditures (tower maintenance and
general corporate) and $102.1 million of discretionary cash capital
expenditures (new tower builds, tower augmentations, acquisitions,
and purchasing land and easements).
On January 4, 2022, the Company
closed on 1,445 sites under the previously announced deal with
Airtel Tanzania for $176.1 million. Additionally, subsequent to the
fourth quarter of 2021, the Company purchased or is under contract
to purchase 371 communication sites for an aggregate consideration
of $137.1 million in cash. The Company anticipates that these
acquisitions will be consummated by the end of the third quarter of
2022.
Financing Activities and
Liquidity
SBA ended the fourth quarter of 2021 with $12.4 billion of total
debt, $9.4 billion of total secured debt, $433.6 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $12.0 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.3x and 5.5x, respectively.
During the fourth quarter, the Company, through an existing
trust, issued $1.79 billion of Tower Securities that have a blended
interest rate of 2.217% and a weighted average life through the
anticipated repayment date of 7.8 years. In addition, the Company
repaid, at par, the entire aggregate principal amount of the
2013-2C Tower Securities, which had an anticipated repayment date
of April 11, 2023 and redeemed the entire aggregate $1.1 billon
principal amount of the 2016 4.875% Senior Notes, as well as paid
all premiums and costs associated with such redemption.
As of the date of this press release, the Company had $560.0
million outstanding under the $1.5 billion Revolving Credit
Facility.
During the fourth quarter of 2021, the Company repurchased 0.8
million shares of its Class A common stock for $263.6 million at an
average price per share of $335.26 under its $1.0 billion stock
repurchase plan. Subsequent to December 31, 2021, the Company
repurchased 1.0 million shares of its Class A common stock for
$350.0 million, at an average price per share of $334.40. After
these repurchases, the Company had $586.4 million of authorization
remaining under the plan. Since January 1, 2021, the Company has
repurchased 2.9 million shares of its Class A common stock for
$932.5 million at an average price per share of $318.59. Shares
repurchased were retired.
In the fourth quarter of 2021, the Company declared and paid a
cash dividend of $63.1 million.
Outlook
The Company is providing its initial full year 2022 Outlook for
anticipated results. The Outlook provided is based on a number of
assumptions that the Company believes are reasonable at the time of
this press release. Information regarding potential risks that
could cause the actual results to differ from these forward-looking
statements is set forth below and in the Company’s filings with the
Securities and Exchange Commission.
The Company’s full year 2022 Outlook assumes the acquisitions of
only those communication sites under contract and anticipated to
close at the time of this press release. The Company may spend
additional capital in 2022 on acquiring revenue producing assets
not yet identified or under contract, the impact of which is not
reflected in the 2022 guidance. The Outlook also does not
contemplate any additional repurchases of the Company’s stock
during 2022, although the Company may ultimately spend capital to
repurchase additional stock during the remainder of the year.
The Company’s Outlook assumes an average foreign currency
exchange rate of 5.45 Brazilian Reais to 1.0 U.S. Dollar, 1.27
Canadian Dollars to 1.0 U.S. Dollar, 2,300.00 Tanzanian shillings
to 1.0 U.S. Dollar, and 15.60 South African Rand to 1.0 U.S. Dollar
for the full year 2022 outlook. When compared to 2021 actual
foreign currency exchange rates, these 2022 foreign currency rate
assumptions negatively impacted the 2022 full year Outlook by
approximately $6.7 million for leasing revenue, $4.6 million for
Tower Cash Flow, $3.9 million for Adjusted EBITDA, and $3.5 million
for AFFO.
(in millions, except per share
amounts)
Full Year 2022
Site leasing revenue (1)
$
2,235.0
to
$
2,255.0
Site development revenue
$
193.0
to
$
213.0
Total revenues
$
2,428.0
to
$
2,468.0
Tower Cash Flow (2)
$
1,779.0
to
$
1,799.0
Adjusted EBITDA (2)
$
1,673.0
to
$
1,693.0
Net cash interest expense (3)
$
320.0
to
$
325.0
Non-discretionary cash capital
expenditures (4)
$
45.0
to
$
55.0
AFFO (2)
$
1,263.0
to
$
1,303.0
AFFO per share (2) (5)
$
11.48
to
$
11.85
Discretionary cash capital expenditures
(6)
$
525.0
to
$
545.0
(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 110.0 million. Our
Outlook does not include the impact of any potential future
repurchases of the Company’s stock during 2022.
(6)
Consists of new tower builds, tower
augmentations, communication site acquisitions and ground lease
purchases. Does not include expenditures for acquisitions of
revenue producing assets not under contract at the date of this
press release.
Conference Call Information
SBA Communications Corporation will host a conference call on
Monday, February 28, 2022 at 5:00 PM (EST) to discuss the quarterly
results. The call may be accessed as follows:
When:
Monday, February 28, 2022 at 5:00 PM
(EST)
Dial-in Number:
(844) 867-6169
Access Code:
1653120
Conference Name:
SBA Fourth quarter 2021 results
Replay Available:
February 28, 2022 at 11:00 PM to March 14,
2022 at 12:00 AM (TZ: Eastern)
Replay Number:
(866) 207-1041 – Access Code: 7027116
Internet Access:
www.sbasite.com
Information Concerning Forward-Looking
Statements
This press release and our earnings call include forward-looking
statements, including statements regarding the Company’s
expectations or beliefs regarding (i) customer activity and demand
for the Company’s wireless communications infrastructure during
2022 and thereafter, both domestically and internationally, and the
impact of customer 5G deployment and recent and upcoming spectrum
auctions on such demand (ii) the capital expenditure plans of the
Company’s customers in 2022, (iii) the Company’s leasing and
services backlogs and the impact of that backlog on future customer
activity, (iv) the Company’s future capital allocation and its
impact on the Company’s financial results in 2022, (v) growth in
the Company’s international markets, including in its new markets
of Tanzania and the Philippines, (vi) the Company’s financial and
operational performance in 2022, the assumptions it made and the
drivers contributing to its full year guidance, (vii) the timing of
closing for currently pending acquisitions, (viii) the Company’s
ability to produce material growth in AFFO per share and
shareholder value, including through its increased quarterly
dividend, and (ix) foreign exchange rates and their impact on the
Company’s financial and operational guidance.
The Company wishes to caution readers that these forward-looking
statements may be affected by the risks and uncertainties in the
Company’s business as well as other important factors may have
affected and could in the future affect the Company’s actual
results and could cause the Company’s actual results for subsequent
periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. With
respect to the Company’s expectations regarding all of these
statements, including its financial and operational guidance, such
risk factors include, but are not limited to: (1) the ability and
willingness of wireless service providers to maintain or increase
their capital expenditures; (2) the Company’s ability to identify
and acquire sites at prices and upon terms that will provide
accretive portfolio growth; (3) the Company’s ability to accurately
identify and manage any risks associated with its acquired sites,
to effectively integrate such sites into its business and to
achieve the anticipated financial results; (4) the Company’s
ability to secure and retain as many site leasing tenants as
planned at anticipated lease rates; (5) the impact of continued
consolidation among wireless service providers in the U.S. and
internationally, including the impact of the completed T-Mobile and
Sprint merger, on the Company’s leasing revenue; (6) the Company’s
ability to successfully manage the risks associated with
international operations, including risks associated with foreign
currency exchange rates; (7) the Company’s ability to secure and
deliver anticipated services business at contemplated margins; (8)
the Company’s ability to maintain expenses and cash capital
expenditures at appropriate levels for its business while seeking
to attain its investment goals; (9) the Company’s ability to
acquire land underneath towers on terms that are accretive; (10)
the economic climate for the wireless communications industry in
general and the wireless communications infrastructure providers in
particular in the United States, Brazil, South Africa, Tanzania,
and in other international markets; (11) the ability of Dish to
compete as a nationwide carrier; (12) the Company’s ability to
obtain future financing at commercially reasonable rates or at all;
(13) the ability of the Company to achieve its long-term stock
repurchases strategy, which will depend, among other things, on the
trading price of the Company’s common stock, which may be
positively or negatively impacted by the repurchase program, market
and business conditions; (14) the Company’s ability to achieve the
new builds targets included in its anticipated annual portfolio
growth goals, which will depend, among other things, on obtaining
zoning and regulatory approvals, weather, availability of labor and
supplies and other factors beyond the Company’s control that could
affect the Company’s ability to build additional towers in 2022;
(15) the extent and duration of the impact of the COVID-19 pandemic
on the global economy, on the Company’s business and results of
operations, and on foreign currency exchange rates; and (16) the
Company’s ability to meet its total portfolio growth, which will
depend, in addition to the new build risks, on the availability of
sufficient towers for sale to meet our targets, competition from
third parties for such acquisitions and our ability to negotiate
the terms of, and acquire, these potential tower portfolios on
terms that meet our internal return criteria. With respect to its
expectations regarding the ability to close pending acquisitions,
these factors also include satisfactorily completing due diligence,
the amount and quality of due diligence that the Company is able to
complete prior to closing of any acquisition and its ability to
accurately anticipate the future performance of the acquired
towers, the ability to receive required regulatory approval, the
ability and willingness of each party to fulfill their respective
closing conditions and their contractual obligations and the
availability of cash on hand or borrowing capacity under the
Revolving Credit Facility to fund the consideration. With respect
to the repurchases under the Company’s stock repurchase program,
the amount of shares repurchased, if any, and the timing of such
repurchases will depend on, among other things, the trading price
of the Company’s common stock, which may be positively or
negatively impacted by the repurchase program, market and business
conditions, the availability of stock, the Company’s financial
performance or determinations following the date of this
announcement in order to use the Company’s funds for other
purposes. With respect to the recent acquisition of towers in
Tanzania and greenfield build operations in the Philippines, these
factors also include a variety of factors outside of the Company’s
control, including the accuracy of the information provided to the
Company, the health of the Tanzanian and Philippine economies and
wireless communications markets, and the willingness of carriers to
invest in their networks in those markets. Furthermore, the
Company’s forward-looking statements and its 2022 outlook assumes
that the Company continues to qualify for treatment as a REIT for
U.S. federal income tax purposes and that the Company’s business is
currently operated in a manner that complies with the REIT rules
and that it will be able to continue to comply with and conduct its
business in accordance with such rules. In addition, these
forward-looking statements and the information in this press
release is qualified in its entirety by cautionary statements and
risk factor disclosures contained in the Company’s Securities and
Exchange Commission filings, including the Company’s Annual Report
on Form 10-K filed with the Commission on 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, South Africa,
the Philippines, and Tanzania. By “Building Better Wireless,” SBA
generates revenue from two primary businesses – site leasing and
site development services. The primary focus of the Company is the
leasing of antenna space on its multi-tenant communication sites to
a variety of wireless service providers under long-term lease
contracts. For more information please visit: www.sbasite.com.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited) (in thousands,
except per share amounts)
For the three months
For the year
ended December 31,
ended December 31,
2021
2020
2021
2020
Revenues:
Site leasing
$
539,396
$
492,947
$
2,104,087
$
1,954,472
Site development
55,866
42,958
204,747
128,666
Total revenues
595,262
535,905
2,308,834
2,083,138
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion, and amortization shown below):
Cost of site leasing
97,008
93,659
386,391
373,778
Cost of site development
42,921
34,333
159,093
102,750
Selling, general, and administrative
expenses (1)
63,483
47,412
220,029
194,267
Acquisition and new business initiatives
related
adjustments and expenses
10,095
4,024
27,621
16,582
Asset impairment and decommission
costs
14,484
10,994
33,044
40,097
Depreciation, accretion, and
amortization
169,895
180,383
700,161
721,970
Total operating expenses
397,886
370,805
1,526,339
1,449,444
Operating income
197,376
165,100
782,495
633,694
Other income (expense):
Interest income
1,324
641
3,448
2,981
Interest expense
(83,081
)
(86,545
)
(352,919
)
(367,874
)
Non-cash interest expense
(11,651
)
(11,803
)
(47,085
)
(24,870
)
Amortization of deferred financing
fees
(4,899
)
(4,847
)
(19,589
)
(20,058
)
Loss from extinguishment of debt, net
(25,829
)
—
(39,502
)
(19,463
)
Other (expense) income, net
(24,892
)
77,986
(74,284
)
(222,159
)
Total other expense, net
(149,028
)
(24,568
)
(529,931
)
(651,443
)
Income (loss) before income taxes
48,348
140,532
252,564
(17,749
)
Benefit (provision) for income taxes
554
(34,347
)
(14,940
)
41,796
Net income
48,902
106,185
237,624
24,047
Net (income) loss attributable to
noncontrolling interests
—
(404
)
—
57
Net income attributable to SBA
Communications Corporation
$
48,902
$
105,781
$
237,624
$
24,104
Net income per common share attributable
to SBA Communications Corporation:
Basic
$
0.45
$
0.96
$
2.17
$
0.22
Diluted
$
0.44
$
0.94
$
2.14
$
0.21
Weighted average number of common
shares
Basic
108,855
110,707
109,328
111,532
Diluted
110,727
112,538
111,177
113,465
(1)
Includes non-cash compensation of $24,670
and $16,525 for the three months ended December 31, 2021 and 2020,
respectively, and $81,919 and $66,816 for the year ended December
31, 2021 and 2020, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
December 31,
December 31,
2021
2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
367,278
$
308,560
Restricted cash
65,561
31,671
Accounts receivable, net
101,950
74,088
Costs and estimated earnings in excess of
billings on uncompleted contracts
48,844
34,796
Prepaid expenses and other current
assets
30,813
23,875
Total current assets
614,446
472,990
Property and equipment, net
2,575,487
2,677,326
Intangible assets, net
2,803,247
3,156,150
Operating lease right-of-use assets,
net
2,268,470
2,369,358
Acquired and other right-of-use assets,
net
964,405
4,202
Other assets
575,644
477,992
Total assets
$
9,801,699
$
9,158,018
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS, AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
34,066
$
109,969
Accrued expenses
68,070
63,031
Current maturities of long-term debt
24,000
24,000
Deferred revenue
184,380
113,117
Accrued interest
49,096
54,350
Current lease liabilities
238,497
236,037
Other current liabilities
18,222
14,297
Total current liabilities
616,331
614,801
Long-term liabilities:
Long-term debt, net
12,278,694
11,071,796
Long-term lease liabilities
1,981,353
2,094,363
Other long-term liabilities
191,475
186,246
Total long-term liabilities
14,451,522
13,352,405
Redeemable noncontrolling interests
17,250
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, 108,956 shares and 109,819 shares issued
and outstanding at December 31, 2021 and December 31, 2020,
respectively
1,089
1,098
Additional paid-in capital
2,681,347
2,586,130
Accumulated deficit
(7,203,531
)
(6,604,028
)
Accumulated other comprehensive loss,
net
(762,309
)
(807,582
)
Total shareholders' deficit
(5,283,404
)
(4,824,382
)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
9,801,699
$
9,158,018
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended December 31,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
48,902
$
106,185
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
169,895
180,383
Loss (gain) on remeasurement of U.S.
dollar denominated intercompany loans
23,703
(79,559
)
Non-cash compensation expense
25,227
16,975
Non-cash interest expense
11,651
11,803
Non-cash asset impairment and decommission
costs
13,855
10,826
Loss from extinguishment of debt
24,046
—
Deferred income tax (benefit)
provision
(5,799
)
29,917
Other non-cash items reflected in the
Statements of Operations
6,181
7,403
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable and costs and
estimated earnings in excess of billings on uncompleted contracts,
net
(31,866
)
(10,077
)
Prepaid expenses and other assets
(2,654
)
5,185
Operating lease right-of-use assets,
net
27,604
21,465
Accounts payable and accrued expenses
(3,684
)
2,420
Accrued interest
22,619
20,466
Long-term lease liabilities
(29,407
)
(25,648
)
Other liabilities
(1,707
)
(54,619
)
Net cash provided by operating
activities
298,566
243,125
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(69,950
)
(71,519
)
Capital expenditures
(43,287
)
(33,195
)
Other investing activities
(32,201
)
11,726
Net cash used in investing activities
(145,438
)
(92,988
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Revolving Credit
Facility
350,000
380,000
Repayment of Senior Notes
(1,113,409
)
—
Proceeds from issuance of Tower
Securities, net of fees
1,771,568
(108
)
Repayment of Tower Securities
(575,000
)
—
Payment of dividends on common stock
(63,124
)
(51,490
)
Proceeds from employee stock
purchase/stock option plans
13,536
3,779
Payments related to taxes on net
settlement of stock options and restricted stock units
(62,879
)
(13
)
Repurchase and retirement of common
stock
(298,235
)
(480,347
)
Other financing activities
8,195
(6,588
)
Net cash provided by (used in) financing
activities
30,652
(154,767
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(2,553
)
11,465
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
181,227
6,835
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
254,399
335,973
End of period
$
435,626
$
342,808
Selected Capital Expenditure
Detail
For the three
For the year
months ended
ended
December 31, 2021
December 31, 2021
(in thousands)
Construction and related costs on new
builds
$
22,020
$
61,202
Augmentation and tower upgrades
10,217
33,103
Non-discretionary capital
expenditures:
Tower maintenance
9,298
34,541
General corporate
1,752
4,848
Total non-discretionary capital
expenditures
11,050
39,389
Total capital expenditures
$
43,287
$
133,694
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at September 30, 2021
17,322
16,750
34,072
Sites acquired during the fourth
quarter
32
27
59
Sites built during the fourth quarter
5
83
88
Sites decommissioned/reclassified during
the fourth quarter
(3
)
(39
)
(42
)
Sites owned at December 31, 2021
17,356
16,821
34,177
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,
2021
2020
2021
2020
2021
2020
(in thousands)
Segment revenue
$
432,205
$
392,987
$
107,191
$
99,960
$
55,866
$
42,958
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(64,285
)
(64,448
)
(32,723
)
(29,211
)
(42,921
)
(34,333
)
Segment operating profit
$
367,920
$
328,539
$
74,468
$
70,749
$
12,945
$
8,625
Segment operating profit margin
85.1
%
83.6
%
69.5
%
70.8
%
23.2
%
20.1
%
Non-GAAP Financial Measures
The press release contains non-GAAP financial measures including
(i) Cash Site Leasing Revenue, Tower Cash Flow, and Tower Cash Flow
Margin; (ii) Adjusted EBITDA, Annualized Adjusted EBITDA, and
Adjusted EBITDA Margin; (iii) Funds from Operations (“FFO”),
Adjusted Funds from Operations (“AFFO”), and AFFO per share; (iv)
Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage
Ratio (collectively, our “Non-GAAP Debt Measures”); and (v) certain
financial metrics after eliminating the impact of changes in
foreign currency exchange rates (collectively, our “Constant
Currency Measures”).
We have included these non-GAAP financial measures because we
believe that they provide investors additional tools in
understanding our financial performance and condition.
Specifically, we believe that:
(1) Cash Site Leasing Revenue and Tower Cash Flow are useful
indicators of the performance of our site leasing operations;
(2) Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. Adjusted EBITDA is
the primary measure used by management (1) to evaluate the economic
productivity of our operations and (2) for purposes of making
decisions about allocating resources to, and assessing the
performance of, our operations. Management believes that Adjusted
EBITDA helps investors or other interested parties meaningfully
evaluate and compare the results of our operations (1) from period
to period and (2) to our competitors, by excluding the impact of
our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation,
amortization and accretion) from our financial results. Management
also believes Adjusted EBITDA is frequently used by investors or
other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations.
Adjusted EBITDA should be considered only as a supplement to net
income computed in accordance with GAAP as a measure of our
performance;
(3) FFO, AFFO and AFFO per share, which are metrics used by our
public company peers in the communication site industry, provide
investors useful indicators of the financial performance of our
business and permit investors an additional tool to evaluate the
performance of our business against those of our two principal
competitors. FFO, AFFO, and AFFO per share are also used to address
questions we receive from analysts and investors who routinely
assess our operating performance on the basis of these performance
measures, which are considered industry standards. We believe that
FFO helps investors or other interested parties meaningfully
evaluate financial performance by excluding the impact of our asset
base (primarily depreciation, amortization and accretion and asset
impairment and decommission costs). We believe that AFFO and AFFO
per share help investors or other interested parties meaningfully
evaluate our financial performance as they include (1) the impact
of our capital structure (primarily interest expense on our
outstanding debt) and (2) sustaining capital expenditures and
exclude the impact of (1) our asset base (primarily depreciation,
amortization and accretion and asset impairment and decommission
costs) and (2) certain non-cash items, including straight-lined
revenues and expenses related to fixed escalations and rent free
periods and the non-cash portion of our reported tax provision.
GAAP requires rental revenues and expenses related to leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. In accordance with
GAAP, if payment terms call for fixed escalations, or rent free
periods, the revenue or expense is recognized on a straight-lined
basis over the fixed, non-cancelable term of the contract. We only
use AFFO as a performance measure. AFFO should be considered only
as a supplement to net income computed in accordance with GAAP as a
measure of our performance and should not be considered as an
alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition
of FFO is consistent with how that term is defined by the National
Association of Real Estate Investment Trusts (“NAREIT”) and that
our definition and use of AFFO and AFFO per share is consistent
with those reported by the other communication site companies;
(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include
the full principal amount of our debt which will be due at maturity
and, to the extent that such measures are calculated on Net Debt
are net of our cash and cash equivalents, short-term restricted
cash, and short-term investments; and
(5) Our Constant Currency Measures provide management and
investors the ability to evaluate the performance of the business
without the impact of foreign currency exchange rate
fluctuations.
In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP
Debt Measures are components of the calculations used by our
lenders to determine compliance with certain covenants under our
Senior Credit Agreement and indentures relating to our 2020 Senior
Notes and 2021 Senior Notes. These non-GAAP financial measures are
not intended to be an alternative to any of the financial measures
provided in our results of operations or our balance sheet as
determined in accordance with GAAP.
Financial Metrics after Eliminating the
Impact of Changes In Foreign Currency Exchange Rates
We eliminate the impact of changes in foreign currency exchange
rates for each of the financial metrics listed in the table below
by dividing the current period’s financial results by the average
monthly exchange rates of the prior year period, and by eliminating
the impact of the remeasurement of our intercompany loans. The
table below provides the reconciliation of the reported growth rate
year-over-year of each of such measures to the growth rate after
eliminating the impact of changes in foreign currency exchange
rates to such measure.
Fourth quarter
2021 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
9.4%
(0.4%)
9.8%
Total cash site leasing revenue
7.5%
(0.4%)
7.9%
Int'l cash site leasing revenue
7.2%
(2.1%)
9.3%
Total site leasing segment operating
profit
10.8%
(0.3%)
11.1%
Int'l site leasing segment operating
profit
5.3%
(1.9%)
7.2%
Total site leasing tower cash flow
7.9%
(0.4%)
8.3%
Int'l site leasing tower cash flow
5.0%
(2.0%)
7.0%
Net income
(53.8%)
(80.0%)
26.2%
Earnings per share - diluted
(53.2%)
(80.9%)
27.7%
Adjusted EBITDA
7.5%
(0.3%)
7.8%
AFFO
11.0%
(0.4%)
11.4%
AFFO per share
12.9%
(0.4%)
13.3%
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,
2021
2020
2021
2020
2021
2020
(in thousands)
Site leasing revenue
$
432,205
$
392,987
$
107,191
$
99,960
$
539,396
$
492,947
Non-cash straight-line leasing revenue
(10,525
)
(1,046
)
895
894
(9,630
)
(152
)
Cash site leasing revenue
421,680
391,941
108,086
100,854
529,766
492,795
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(64,285
)
(64,448
)
(32,723
)
(29,211
)
(97,008
)
(93,659
)
Non-cash straight-line ground lease
expense
1,023
2,593
360
460
1,383
3,053
Tower Cash Flow
$
358,418
$
330,086
$
75,723
$
72,103
$
434,141
$
402,189
Tower Cash Flow Margin
85.0
%
84.2
%
70.1
%
71.5
%
81.9
%
81.6
%
Forecasted Tower Cash Flow for Full Year
2022
The table below sets forth the reconciliation of forecasted
Tower Cash Flow set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2022:
Full Year 2022
(in millions)
Site leasing revenue
$
2,235.0
to
$
2,255.0
Non-cash straight-line leasing revenue
(31.5
)
to
(26.5
)
Cash site leasing revenue
2,203.5
to
2,228.5
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(424.5
)
to
(434.5
)
Non-cash straight-line ground lease
expense
—
to
5.0
Tower Cash Flow
$
1,779.0
to
$
1,799.0
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,
2021
2020
(in thousands)
Net income
$
48,902
$
106,185
Non-cash straight-line leasing revenue
(9,630
)
(152
)
Non-cash straight-line ground lease
expense
1,383
3,053
Non-cash compensation
25,227
16,975
Loss from extinguishment of debt, net
25,829
—
Other expense (income), net
24,892
(77,986
)
Acquisition and new business initiatives
related adjustments and expenses
10,095
4,024
Asset impairment and decommission
costs
14,484
10,994
Interest income
(1,324
)
(641
)
Total interest expense (1)
99,631
103,195
Depreciation, accretion, and
amortization
169,895
180,383
(Benefit) provision for taxes (2)
(331
)
34,566
Adjusted EBITDA
$
409,053
$
380,596
Annualized Adjusted EBITDA (3)
$
1,636,212
$
1,522,384
(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, 2021 and 2020, these
amounts included $223 and $219, 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,
2021
2020
(in thousands)
Total revenues
$
595,262
$
535,905
Non-cash straight-line leasing revenue
(9,630
)
(152
)
Total revenues minus non-cash
straight-line leasing revenue
$
585,632
$
535,753
Adjusted EBITDA
$
409,053
$
380,596
Adjusted EBITDA Margin
69.8
%
71.0
%
Forecasted Adjusted EBITDA for Full Year
2022
The table below sets forth the reconciliation of the forecasted
Adjusted EBITDA set forth in the Outlook section to its most
comparable GAAP measurement for the full year 2022:
Full Year 2022
(in millions)
Net income
$
445.5
to
$
490.5
Non-cash straight-line leasing revenue
(31.5
)
to
(26.5
)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
83.0
to
78.0
Other expense, net
31.5
to
31.5
Acquisition and new business initiatives
related adjustments and expenses
24.0
to
19.0
Asset impairment and decommission
costs
28.5
to
23.5
Interest income
(10.5
)
to
(7.5
)
Total interest expense (1)
401.0
to
393.0
Depreciation, accretion, and
amortization
671.5
to
661.5
Provision for taxes (2)
30.0
to
25.0
Adjusted EBITDA
$
1,673.0
to
$
1,693.0
(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 December 31,
(in thousands, except per share
amounts)
2021
2020
Net income
$
48,902
$
106,185
Real estate related depreciation,
amortization, and accretion
168,870
179,394
Asset impairment and decommission
costs
14,484
10,994
FFO
$
232,256
$
296,573
Adjustments to FFO:
Non-cash straight-line leasing revenue
(9,630
)
(152
)
Non-cash straight-line ground lease
expense
1,383
3,053
Non-cash compensation
25,227
16,975
Adjustment for non-cash portion of tax
(benefit) provision
(5,799
)
29,917
Non-real estate related depreciation,
amortization, and accretion
1,025
989
Amortization of deferred financing costs
and debt discounts and non-cash interest expense
16,550
16,650
Loss from extinguishment of debt, net
25,829
—
Other expense (income), net
24,892
(77,986
)
Acquisition and new business initiatives
related adjustments and expenses
10,095
4,024
Non-discretionary cash capital
expenditures
(11,050
)
(9,957
)
AFFO
$
310,778
$
280,086
Weighted average number of common shares
(1)
110,727
112,538
AFFO per share
$
2.81
$
2.49
(1)
For purposes of the AFFO per share calculation, the basic
weighted average number of common shares has been adjusted to
include the dilutive effect of stock options and restricted stock
units.
Forecasted AFFO for the Full Year
2022
The table below sets forth the reconciliation of the forecasted
AFFO and AFFO per share set forth in the Outlook section to its
most comparable GAAP measurement for the full year 2022:
(in millions, except per share
amounts)
Full Year 2022
Net income
$
445.5
to
$
490.5
Real estate related depreciation,
amortization, and accretion
661.0
to
656.0
Asset impairment and decommission
costs
28.5
to
23.5
FFO
$
1,135.0
to
$
1,170.0
Adjustments to FFO:
Non-cash straight-line leasing revenue
(31.5
)
to
(26.5
)
Non-cash straight-line ground lease
expense
—
to
5.0
Non-cash compensation
83.0
to
78.0
Non-real estate related depreciation,
amortization, and accretion
10.5
to
5.5
Amortization of deferred financing costs
and debt discounts and non-cash interest expense
65.5
to
65.5
Other expense, net
31.5
to
31.5
Acquisition and new business initiatives
related adjustments and expenses
24.0
to
19.0
Non-discretionary cash capital
expenditures
(55.0
)
to
(45.0
)
AFFO
$
1,263.0
to
$
1,303.0
Weighted average number of common shares
(1)
110.0
to
110.0
AFFO per share
$
11.48
to
$
11.85
(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.
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,
2021
(in thousands)
2014-2C Tower Securities
$
620,000
2018-1C Tower Securities
640,000
2019-1C Tower Securities
1,165,000
2020-1C Tower Securities
750,000
2020-2C Tower Securities
600,000
2021-1C Tower Securities
1,165,000
2021-2C Tower Securities
895,000
2021-3C Tower Securities
895,000
Revolving Credit Facility
350,000
2018 Term Loan
2,316,000
Total secured debt
9,396,000
2020 Senior Notes
1,500,000
2021 Senior Notes
1,500,000
Total unsecured debt
3,000,000
Total debt
$
12,396,000
Leverage
Ratio
Total debt
$
12,396,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(433,617
)
Net debt
$
11,962,383
Divided by: Annualized Adjusted EBITDA
$
1,636,212
Leverage Ratio
7.3x
Secured Leverage
Ratio
Total secured debt
$
9,396,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(433,617
)
Net Secured Debt
$
8,962,383
Divided by: Annualized Adjusted EBITDA
$
1,636,212
Secured Leverage Ratio
5.5x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220228005995/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
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