SBA(SBAC) - 2024 Q2 - Quarterly Results

Financial and Operational Highlights 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] 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] Operating Results 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] - Adjusted EBITDA Margin improved to 71.3% in Q2 2024 from 70.3% in the prior year period[4] Revenue Analysis 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] Profitability Analysis 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] Capital Allocation SBA focused on strategic investments in new sites and towers, alongside dividend payments, while maintaining a stable leverage ratio Investing Activities 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] - Total cash capital expenditures for Q2 2024 were $91.6 million[39] - Subsequent to Q2, the company is under contract to purchase 106 communication sites for $49.3 million, expected to close by year-end[15] Financing Activities and Liquidity 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] - No share repurchases occurred in Q2. In April 2024 (Q1 reporting period), the company repurchased 0.4 million shares for $93.9 million[16] 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 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][77] - 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] Financial Statements Consolidated Statements of Operations 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 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 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 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 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 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 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 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 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 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 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][43] - 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]