SBA Communications Corporation (NASDAQ:SBAC) Q2 2024 Earnings Call Transcript July 29, 2024 5:00 PM ET Company Participants Mark DeRussy - VP of Finance Brendan Cavanagh - CEO Marc Montagner - CFO Conference Call Participants David Barden - Bank of America Simon Flannery - Morgan Stanley Jim Schneider - Goldman Sachs Michael Elias - TD Cowen Richard Choe - JPMorgan Ric Prentiss - Raymond James Jon Atkin - RBC Michael Rollins - Citi Nick Del Deo - MoffettNathanson Brandon Nispel - KeyBanc Matt Niknam - Deuts ...

The reported revenue represents a surprise of -0.61% over the Zacks Consensus Estimate of $664.54 million. With the consensus EPS estimate being $3.28, the EPS surprise was +0.30%. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Sites owned - International: 22,283 versus 22,335 estimated by three analysts on average. Sites owned - To ...

Over the last four quarters, the company has surpassed consensus FFO estimates three times. SBA Communications shares have lost about 15.4% since the beginning of the year versus the S&P 500's gain of 14.5%. There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's FFO outlook. Not only does this include current consensus FFO expectations for the coming quarter(s), but also how these expectations have changed lately. It will be interesting ...

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) SBA Communications achieved solid Q2 2024 results with strong AFFO per share and a balanced capital allocation strategy - The President and CEO highlighted solid financial results in line with expectations, a pick-up in international leasing activity, and a continued balanced approach to capital allocation, including portfolio expansion, stock repurchases, dividends, and debt reduction[83](index=83&type=chunk) Q2 2024 Key Metrics | Metric | Value | | :--- | :--- | | Net Income | $159.5 million | | Diluted EPS | $1.51 | | AFFO per share | $3.29 | | Net Debt to Annualized Adjusted EBITDA | 6.4x | - The Board of Directors declared a quarterly cash dividend of **$0.98 per share**, payable on September 18, 2024, to shareholders of record on August 22, 2024[11](index=11&type=chunk) [Operating Results](index=2&type=section&id=Operating%20Results) Total revenues declined due to a significant drop in site development, while site leasing remained stable, impacting net income and Adjusted EBITDA Q2 2024 vs. Q2 2023 Operating Results (in millions, except per share) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $660.5 | $678.5 | (2.7%) | | Site leasing revenue | $626.5 | $626.1 | 0.1% | | Site development revenue | $34.0 | $52.4 | (35.0%) | | Net income | $159.5 | $202.0 | (21.0%) | | Adjusted EBITDA | $467.1 | $471.7 | (1.0%) | | AFFO | $354.3 | $352.7 | 0.4% | | AFFO per share | $3.29 | $3.24 | 1.5% | - Net income for Q2 2024 included a **$66.2 million** loss from currency remeasurement of intercompany loans, compared to a **$27.8 million** gain in Q2 2023, explaining the significant year-over-year decrease[4](index=4&type=chunk) - Adjusted EBITDA Margin improved to **71.3%** in Q2 2024 from **70.3%** in the prior year period[4](index=4&type=chunk) [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Site leasing revenue remained stable, with domestic growth offsetting international declines, while site development revenue significantly decreased Q2 2024 Revenue Breakdown (in millions) | Revenue Stream | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Domestic Site Leasing | $463.2 | $456.8 | 1.2% | | International Site Leasing | $163.3 | $169.4 | (3.6%) | | **Total Site Leasing** | **$626.5** | **$626.1** | **0.1%** | | Site Development | $34.0 | $52.4 | (35.0%) | - Domestic cash site leasing revenue increased **1.6%** YoY, while international cash site leasing revenue increased **1.3%** on a constant currency basis[37](index=37&type=chunk) [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Site leasing operating profit and Tower Cash Flow remained nearly flat, with domestic growth offsetting international declines Q2 2024 Profitability Metrics (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Site leasing operating profit | $512.3 | $511.3 (est.) | 0.2% | | Tower Cash Flow | $503.9 | $503.5 | 0.1% | | AFFO | $354.3 | $352.7 | 0.4% | - Domestic Tower Cash Flow increased **0.8%** YoY, while International Tower Cash Flow decreased **2.4%** (or increased **1.5%** on a constant currency basis)[76](index=76&type=chunk) [Capital Allocation](index=3&type=section&id=Capital%20Allocation) SBA focused on strategic investments in new sites and towers, alongside dividend payments, while maintaining a stable leverage ratio [Investing Activities](index=3&type=section&id=Investing%20Activities) The company expanded its portfolio through strategic acquisitions and new tower builds, incurring significant capital expenditures - Acquired **117 communication sites** for **$26.5 million** and built **100 new towers** in Q2 2024[39](index=39&type=chunk) - Total cash capital expenditures for Q2 2024 were **$91.6 million**[39](index=39&type=chunk) - Subsequent to Q2, the company is under contract to purchase **106 communication sites** for **$49.3 million**, expected to close by year-end[15](index=15&type=chunk) [Financing Activities and Liquidity](index=3&type=section&id=Financing%20Activities%20and%20Liquidity) Financing activities included significant dividend payments and share repurchases, with total debt and leverage ratios remaining stable - Declared and paid a cash dividend of **$105.3 million** in Q2 2024[7](index=7&type=chunk) - No share repurchases occurred in Q2. In April 2024 (Q1 reporting period), the company repurchased **0.4 million** shares for **$93.9 million**[16](index=16&type=chunk) Debt and Liquidity at Q2 2024 End | Metric | Value | | :--- | :--- | | Total Debt | $12.4 billion | | Net Debt | $12.0 billion | | Net Debt to Annualized Adj. EBITDA | 6.4x | | Net Secured Debt to Annualized Adj. EBITDA | 4.8x | | Revolver Outstanding | $30.0 million | [Full Year 2024 Outlook](index=3&type=section&id=Outlook) The company updated its full-year 2024 outlook, revising projections for total revenues, Adjusted EBITDA, and AFFO per share Updated Full Year 2024 Outlook (Midpoint) | Metric | New Outlook (in millions) | Change from April Outlook (in millions) | | :--- | :--- | :--- | | Site leasing revenue | $2,517.0 | $(10.0) | | Total revenues | $2,657.0 | $(20.0) | | Tower Cash Flow | $2,039.0 | $(12.0) | | Adjusted EBITDA | $1,886.0 | $(13.0) | | AFFO | $1,430.0 | $(5.0) | | AFFO per share | $13.25 | $(0.03) | - The outlook is based on several assumptions, including average foreign currency exchange rates (e.g., **5.65 BRL/USD**, **1.38 CAD/USD**) and the refinancing of the **$620.0 million** 2014-2C Tower Securities at an assumed **6.000%** fixed rate[42](index=42&type=chunk)[77](index=77&type=chunk) - The outlook does not contemplate additional share repurchases or new debt financings beyond what is specified, nor does it include acquisitions not yet under contract[8](index=8&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) [Consolidated Statements of Operations](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated statement of operations details Q2 2024 revenues, operating income, net income, and diluted earnings per share Q2 2024 vs Q2 2023 Income Statement (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total revenues | $660,477 | $678,500 | | Operating income | $354,470 | $241,227 | | Net income | $159,452 | $201,970 | | Diluted EPS | $1.51 | $1.87 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet shows total assets and liabilities as of June 30, 2024, resulting in a total shareholders' deficit Balance Sheet Summary (in thousands) | Line Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $460,006 | $484,267 | | Total assets | $9,786,178 | $10,178,441 | | Total current liabilities | $2,459,565 | $1,363,259 | | Total long-term debt, net | $10,473,739 | $11,681,170 | | Total liabilities | $15,062,102 | $15,314,276 | | Total shareholders' deficit | $(5,316,741) | $(5,170,882) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash flow statements detail net cash from operating, investing, and financing activities, resulting in a net increase in cash for the period Q2 2024 vs Q2 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $425,593 | $486,933 | | Net cash used in investing activities | $(121,208) | $(111,585) | | Net cash used in financing activities | $(276,523) | $(314,160) | | **Net change in cash** | **$18,812** | **$62,327** | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles non-GAAP financial measures, including Tower Cash Flow, Adjusted EBITDA, FFO, and AFFO, for enhanced operational insight [Communication Site Portfolio Summary](index=10&type=section&id=Communication%20Site%20Portfolio%20Summary) The communication site portfolio summary details the total number of sites owned or operated, including acquisitions, builds, and decommissioned sites Q2 2024 Site Portfolio Changes | Description | Domestic | International | Total | | :--- | :--- | :--- | :--- | | Sites at March 31, 2024 | 17,478 | 22,160 | 39,638 | | Acquired | 11 | 106 | 117 | | Built | 5 | 95 | 100 | | Decommissioned/Sold | (33) | (78) | (111) | | **Sites at June 30, 2024** | **17,461** | **22,283** | **39,744** | [Financial Metrics after Eliminating the Impact of Changes In Foreign Currency Exchange Rates](index=12&type=section&id=Financial%20Metrics%20after%20Eliminating%20the%20Impact%20of%20Changes%20In%20Foreign%20Currency%20Exchange%20Rates) This section analyzes financial metrics by eliminating foreign currency exchange rate impacts to show underlying growth rates Q2 2024 YoY Growth vs. Constant Currency Growth | Metric | Reported Growth | Foreign Currency Impact | Growth Ex-FX | | :--- | :--- | :--- | :--- | | Total site leasing revenue | 0.1% | (1.1%) | 1.2% | | Adjusted EBITDA | (1.0%) | (0.9%) | (0.1%) | | AFFO | 0.4% | (1.1%) | 1.5% | | AFFO per share | 1.5% | (1.3%) | 2.8% | [Reconciliation of Tower Cash Flow](index=12&type=section&id=Reconciliation%20of%20Tower%20Cash%20Flow) This section reconciles site leasing revenue to Tower Cash Flow, providing the Q2 2024 figure and full-year outlook Q2 2024 Tower Cash Flow Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Site leasing revenue | $626,457 | | Non-cash straight-line leasing revenue | $(5,466) | | **Cash site leasing revenue** | **$620,991** | | Site leasing cost of revenues | $(114,131) | | Non-cash straight-line ground lease expense | $(2,988) | | **Tower Cash Flow** | **$503,872** | [Reconciliation of Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) This section reconciles net income to Adjusted EBITDA for Q2 2024, including key adjustments and the full-year forecast Q2 2024 Adjusted EBITDA Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $159,452 | | Adjustments (Interest, Taxes, D&A, etc.) | $307,612 | | **Adjusted EBITDA** | **$467,064** | [Reconciliation of FFO and AFFO](index=15&type=section&id=Reconciliation%20of%20FFO%20and%20AFFO) This section reconciles net income to FFO and AFFO for Q2 2024, providing per-share figures and the full-year outlook Q2 2024 FFO and AFFO Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $159,452 | | Real estate depreciation & amortization | $62,213 | | Asset impairment and decommission costs | $31,610 | | **FFO** | **$253,275** | | Other Adjustments | $101,052 | | **AFFO** | **$354,327** | [Net Debt and Leverage Ratio](index=17&type=section&id=Net%20Debt%20and%20Leverage%20Ratio) This section details the calculation of Net Debt and leverage ratios, including Net Debt to Annualized Adjusted EBITDA, as of June 30, 2024 Leverage Ratio Calculation at June 30, 2024 (in thousands) | Line Item | Amount | | :--- | :--- | | Total debt | $12,354,250 | | Less: Cash and cash equivalents, etc. | $(309,382) | | **Net debt** | **$12,044,868** | | Divided by: Annualized Adjusted EBITDA | $1,868,256 | | **Leverage Ratio** | **6.4x** | [Other Information](index=4&type=section&id=Other%20Information) This section provides details on the Q2 2024 earnings conference call and outlines key forward-looking statement disclaimers and risks - A conference call to discuss Q2 2024 results was scheduled for Monday, July 29, 2024, at 5:00 PM (EDT)[19](index=19&type=chunk)[43](index=43&type=chunk) - The report includes forward-looking statements and cautions readers about risks such as macroeconomic conditions (interest rates, inflation), wireless provider capital expenditures, consolidation among carriers, and foreign currency exchange rate risks[44](index=44&type=chunk)

Analysts on Wall Street project that SBA Communications (SBAC) will announce quarterly earnings of $3.28 per share in its forthcoming report, representing an increase of 1.2% year over year. Revenues are projected to reach $664.54 million, declining 2.1% from the same quarter last year. The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over t ...

Results reflected a fall in net revenues on a year-over-year basis. Higher interest expense on debt obligations and lower contributions from adjusted EBITDA were undermining factors. In the last reported quarter, this Boca Raton, FL-based communications tower REIT reported AFFO per share of $3.29, missing the Zacks Consensus Estimates by a cent. Results were affected by lower site development revenues. However, SBAC witnessed an improvement in site leasing revenues, which supported the results to some exten ...

Core Viewpoint - SBA Communications is well-positioned to benefit from the high capital spending of wireless carriers for network expansion, particularly with the ongoing deployment of 5G networks, despite concerns regarding customer concentration and high interest rates [1]. Group 1: Growth Drivers - The advancement in mobile technology, including 4G and 5G networks, along with the rise of bandwidth-intensive applications, has led to increased mobile data usage globally, prompting wireless service providers to expand their networks [2]. - SBA Communications has a stable site-leasing business model, generating most of its revenues from long-term tower leases with built-in rent escalators, ensuring steady revenue over time [3]. - The company is experiencing robust site-leasing revenue growth as wireless service providers continue to lease additional antenna space on its towers due to increased network usage and coverage requirements [4]. - SBA Communications is expanding its portfolio into select international markets with high growth potential, having acquired 11 communication sites and built 76 towers in Q1 2024 [5]. Group 2: Financial Position - As of the end of Q1 2024, SBA Communications had $261.8 million in cash and cash equivalents, with $195 million outstanding under its $2.0 billion revolving credit facility [7]. - The company's cash flow growth is projected at 13.13%, significantly outperforming the industry average of -5.32%, indicating strong financial flexibility for long-term growth opportunities [8]. Group 3: Challenges - The company faces high customer concentration, with T-Mobile, AT&T, and Verizon accounting for 38.8%, 29.5%, and 20% of its domestic site-leasing revenues, respectively, which poses a risk to its top line if any of these customers are lost [9]. - SBA Communications has a highly leveraged balance sheet, with total debt of $12.4 billion and a net debt to annualized adjusted EBITDA leverage of 6.5X, which may elevate financial obligations and borrowing costs in a high interest rate environment [11]. - Analysts have shown bearish sentiment towards the company, with the Zacks Consensus Estimate for its 2024 funds from operations per share declining to $13.22 [12].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 8051 Congress Avenue Boca Raton, Florida 33487 (Address of principal executive offices) (Zip Code) Florida 65-0716501 For the transition period from __________ to __________ Commissi ...

SBA Communications Corporation. (NASDAQ:SBAC) Q1 2024 Earnings Conference Call April 29, 2024 5:00 PM ET Company Participants Mark DeRussy - VP of Finance Marc Montagner - CFO Brendan Cavanagh - President & CEO Conference Call Participants Michael Rollins - Citigroup Jonathan Atkin - RBC Capital Markets Michael Elias - TD Cowen Simon Flannery - Morgan Stanley Ric Prentiss - Raymond James. Nick Del Deo - MoffettNathanson Batya Levi - UBS Richard Choe - JPMorgan Matthew Niknam - Deutsche Bank Eric Luebchow - ...

Exhibit 99.1 FOR IMMEDIATE RELEASE SBA Communications Corporation Reports First Quarter 2024 Results; Updates Full Year 2024 Outlook; and Declares Quarterly Cash Dividend Boca Raton, Florida, April 29, 2024 (BUSINESS NEWSWIRE) — SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the "Company") today reported results for the quarter ended March 31, 2024. Highlights of the first quarter include: In addition, the Company announced today that its Board of Directors has declared a quarterly cash dividend of ...