SBA(SBAC) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2025, including balance sheets, statements of operations, comprehensive income, shareholders' deficit, and cash flows, with total revenues of $664.2 million and net income of $217.9 million Consolidated Balance Sheets The company's total assets decreased to $10.44 billion as of March 31, 2025, from $11.42 billion at year-end 2024, primarily due to reduced restricted cash, while total liabilities also decreased to $14.01 billion from $14.68 billion, mainly from long-term debt reduction, improving the total shareholders' deficit from $(5.11) billion to $(4.97) billion Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $933,316 | $1,978,720 | | Total Assets | $10,442,917 | $11,417,336 | | Total Current Liabilities | $1,343,016 | $1,797,936 | | Total Long-term Debt, net | $11,654,372 | $12,403,825 | | Total Liabilities | $14,008,000 | $14,675,206 | | Total Shareholders' Deficit | $(4,970,703) | $(5,109,938) | Consolidated Statements of Operations For the first quarter of 2025, total revenues slightly increased to $664.2 million from $657.9 million year-over-year, with net income attributable to the company significantly rising to $220.7 million, or $2.04 per diluted share, compared to $154.5 million, or $1.42 per diluted share, in the prior-year period, largely driven by higher 'Other income (expense), net' Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $664,248 | $657,862 | | Site Leasing Revenue | $616,209 | $628,276 | | Site Development Revenue | $48,039 | $29,586 | | Operating Income | $334,910 | $323,358 | | Net Income Attributable to SBA | $220,732 | $154,543 | | Diluted EPS | $2.04 | $1.42 | Consolidated Statements of Cash Flows Net cash provided by operating activities was $301.2 million for Q1 2025, a slight increase from $294.5 million YoY, while investing activities provided $238.3 million in cash, a significant shift from an $85.3 million use of cash, driven by proceeds from asset sales, and financing activities used $1.28 billion, primarily for Tower Securities repayment Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $301,175 | $294,453 | | Net cash provided by (used in) investing activities | $238,266 | $(85,310) | | Net cash used in financing activities | $(1,282,135) | $(191,412) | | Net Change in Cash, Cash Equivalents, and Restricted Cash | $(736,551) | $13,386 | Condensed Notes to Consolidated Financial Statements The notes detail accounting policies, fair value measurements, acquisitions, debt structure, shareholder equity, segment performance, and derivatives, highlighting the acquisition of 344 towers, repayment of $1.165 billion in Tower Securities, and authorization of a new $1.5 billion share repurchase plan - The company sold all of its towers in the Philippines and Colombia during the first quarter of 2025, recording a loss of $18.2 million on the sale[51] - During Q1 2025, the company acquired 344 towers, including 321 sites from the Millicom transaction. Approximately 6,700 sites related to the Millicom deal remain under contract for about $925.0 million[46][47] - On January 15, 2025, the company repaid the $1.165 billion aggregate principal amount of the 2019-1C Tower Securities[55][63] - On April 27, 2025, the Board authorized a new $1.5 billion share repurchase plan, replacing the prior plan. The company paid a cash dividend of $1.11 per share in Q1 2025[66][69] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, business segments, and financial condition, noting that site leasing contributed 98.1% of segment operating profit, total revenues grew 3.4% on a constant currency basis driven by a 62.4% increase in site development revenue, and Adjusted EBITDA decreased slightly to $457.3 million but increased 0.5% on a constant currency basis, alongside details on liquidity, capital resources, and debt obligations Business and Operations SBA is a leading independent owner and operator of wireless communications infrastructure, primarily focused on site leasing, which generated 98.1% of total segment operating profit, while also providing ancillary site development services, and exited operations in the Philippines and Colombia during Q1 2025 - The site leasing business is the company's primary business line, contributing 98.1% of total segment operating profit for Q1 2025[96] - As of March 31, 2025, the company owned 39,709 towers across the United States, South America, Central America, Canada, and Africa[96] - Approximately 72% of tower structures are on land owned by the company, under perpetual easements, or on land with leasehold interests extending beyond 20 years[100] Results of Operations Total revenues for Q1 2025 were $664.2 million, a 3.4% increase on a constant currency basis compared to Q1 2024, driven by a 62.4% increase in site development revenue, while operating income rose to $334.9 million from $323.4 million YoY, and net income increased to $217.9 million from $154.5 million Revenue and Operating Profit by Segment - Q1 2025 vs Q1 2024 (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Constant Currency % Change | | :--- | :--- | :--- | :--- | | Domestic site leasing | $460,994 | $461,499 | (0.1%) | | International site leasing | $155,215 | $166,777 | 2.7% | | Site development | $48,039 | $29,586 | 62.4% | | Total | $664,248 | $657,862 | 3.4% | | Segment | Q1 2025 Operating Profit | Q1 2024 Operating Profit | Constant Currency % Change | | Domestic site leasing | $392,722 | $395,529 | (0.7%) | | International site leasing | $108,009 | $117,934 | 1.4% | | Site development | $9,851 | $6,408 | 53.7% | - Selling, general, and administrative (SG&A) expenses decreased by $2.5 million, primarily due to lower non-cash compensation expense[119] - Other income (expense), net, was a net income of $32.2 million, compared to a net expense of $44.7 million in the prior year, mainly due to a $54.6 million gain on the remeasurement of U.S. dollar denominated intercompany loans[126][129] Non-GAAP Financial Measures The company uses Adjusted EBITDA, a non-GAAP measure, to evaluate operational profitability, reporting $457.3 million for Q1 2025, an $8.1 million decrease from Q1 2024, though it increased by $2.3 million (0.5%) on a constant currency basis, attributed to growth in international and site development operating profits offset by higher cash SG&A and lower domestic site leasing profit Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $217,906 | $154,543 | | Adjustments (Non-cash items, interest, taxes, etc.) | $239,385 | $310,869 | | Adjusted EBITDA | $457,291 | $465,412 | - Adjusted EBITDA decreased by $8.1 million year-over-year. On a constant currency basis, it increased by $2.3 million, or 0.5%[137] Liquidity and Capital Resources The company generated $301.2 million in cash from operations in Q1 2025 and expects to fund its 2025 capital expenditures, including up to $1.275 billion in discretionary spending, from cash on hand, operating cash flow, and borrowings, with key financing activities including repaying $1.165 billion of Tower Securities, authorizing a new $1.5 billion stock repurchase plan, and paying a quarterly dividend of $1.11 per share - For 2025, the company expects non-discretionary cash capital expenditures of $53.0 million to $63.0 million and discretionary cash capital expenditures of $1,255.0 million to $1,275.0 million[144] - Financing activities in Q1 2025 included the repayment of $1.165 billion of Tower Securities and payment of $122.3 million in dividends[145][147] - A new $1.5 billion stock repurchase plan was authorized on April 27, 2025, replacing the prior plan[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk from variable-rate debt and future refinancing needs, and foreign currency exchange rate risk from international operations, particularly in Brazil, where a hypothetical 1% increase in variable interest rates would increase interest expense by approximately 1.4%, and a 10% adverse change in the Brazilian Real exchange rate would decrease revenues by about 1.2% - The primary market risks are interest rate risk on variable-rate debt and refinancing, and foreign currency risk from international operations[167][169] - A hypothetical 1% increase in variable interest rates would increase interest expense by approximately 1.4% for the quarter[168] - A hypothetical 10% adverse movement in the Brazilian Real exchange rate would cause revenues to decline by approximately 1.2%[170] - A 10% change in exchange rates affecting unsettled intercompany debt could result in an unrealized gain or loss of approximately $111.8 million[172] Item 4. Controls and Procedures Based on an evaluation conducted by the principal executive officer and principal financial officer, the company concluded that its disclosure controls and procedures were effective as of March 31, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[177] PART II – OTHER INFORMATION Item 5. Other Information This section discloses that during the first quarter of 2025, none of the company's officers or directors adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2025[178] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002, as well as XBRL data files - The exhibits filed with the report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and various XBRL documents[180] SIGNATURES The report is formally signed and authorized by the company's Chief Executive Officer, Brendan T. Cavanagh, and Chief Financial Officer, Marc Montagner, on May 1, 2025 - The report was signed on May 1, 2025, by Brendan T. Cavanagh (Chief Executive Officer) and Marc Montagner (Chief Financial Officer)[183]