SBA(SBAC) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS Presents unaudited consolidated financial statements and condensed notes for SBA Communications Corporation for Q2 2025 and FY 2024 Consolidated Balance Sheets Total assets decreased from $11.4 billion to $10.8 billion, and total liabilities from $16.5 billion to $15.6 billion Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :----------------------------------- | :------------ | :---------------- | :------- | :--------- | | Cash and cash equivalents | $275,275 | $189,841 | $85,434 | 45.0% | | Restricted cash | $20,757 | $1,206,653 | $(1,185,896) | -98.3% | | Total current assets | $523,808 | $1,978,720 | $(1,454,912) | -73.5% | | Property and equipment, net | $3,258,183 | $2,792,084 | $466,099 | 16.7% | | Total assets | $10,766,387 | $11,417,336 | $(650,949) | -5.7% | | Total current liabilities | $1,429,705 | $1,797,936 | $(368,231) | -20.5% | | Long-term debt, net | $11,739,364 | $12,403,825 | $(664,461) | -5.4% | | Total liabilities | $15,640,125 | $16,473,142 | $(833,017) | -5.1% | | Total shareholders' deficit | $(4,938,895) | $(5,109,938) | $171,043 | 3.3% | Consolidated Statements of Operations Total revenues and net income significantly increased for Q2 and H1 2025, driven by site development and other income Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | Change (YoY %) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Total revenues | $698,981 | $660,477 | $38,504 | 5.8% | | Operating income | $334,781 | $354,470 | $(19,689) | -5.6% | | Income before income taxes | $260,753 | $147,115 | $113,638 | 77.2% | | Net income | $225,694 | $159,452 | $66,242 | 41.5% | | Net income attributable to SBAC | $225,794 | $162,830 | $62,964 | 38.7% | | Basic EPS | $2.10 | $1.52 | $0.58 | 38.2% | | Diluted EPS | $2.09 | $1.51 | $0.58 | 38.4% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | Change (YoY %) | | :----------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Total revenues | $1,363,229 | $1,318,339 | $44,890 | 3.4% | | Operating income | $669,690 | $677,828 | $(8,138) | -1.2% | | Income before income taxes | $520,676 | $318,584 | $202,092 | 63.4% | | Net income | $443,598 | $313,994 | $129,604 | 41.3% | | Net income attributable to SBAC | $446,525 | $317,372 | $129,153 | 40.7% | | Basic EPS | $4.15 | $2.94 | $1.21 | 41.2% | | Diluted EPS | $4.14 | $2.93 | $1.21 | 41.3% | Consolidated Statements of Comprehensive Income Comprehensive income significantly increased for Q2 and H1 2025, primarily due to positive foreign currency adjustments Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | Change (YoY %) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net income | $225,694 | $159,452 | $66,242 | 41.5% | | Adjustments related to interest rate swaps | $(11,594) | $(8,237) | $(3,357) | 40.8% | | Foreign currency translation adjustments | $36,577 | $(64,130) | $100,707 | -157.0% | | Comprehensive income | $250,677 | $87,085 | $163,592 | 187.9% | | Comprehensive income attributable to SBAC | $250,863 | $90,787 | $160,076 | 176.3% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | Change (YoY %) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net income | $443,598 | $313,994 | $129,604 | 41.3% | | Adjustments related to interest rate swaps | $(46,454) | $2,630 | $(49,084) | -1866.3% | | Foreign currency translation adjustments | $94,168 | $(89,534) | $183,702 | -205.2% | | Comprehensive income | $491,312 | $227,090 | $264,222 | 116.3% | | Comprehensive income attributable to SBAC | $495,257 | $230,792 | $264,465 | 114.6% | Consolidated Statements of Shareholders' Deficit Shareholders' deficit improved from $(5.1) billion to $(4.9) billion due to net income and foreign currency adjustments Shareholders' Deficit Changes (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Balance, December 31, 2024 (2023) | $(5,109,938) | $(5,170,882) | | Net income attributable to SBAC | $446,525 | $317,372 | | Common stock issued (equity awards) | $24,189 | $3,191 | | Non-cash stock compensation | $38,015 | $41,027 | | Adjustments related to interest rate swaps | $(46,454) | $2,630 | | Repurchase and retirement of common stock | $(130,696) | $(200,019) | | Foreign currency translation adjustments | $95,186 | $(89,210) | | Dividends and dividend equivalents | $(240,752) | $(212,908) | | Adjustment to redemption amount (noncontrolling interests) | $(14,970) | $(7,942) | | Balance, June 30, 2025 (2024) | $(4,938,895) | $(5,316,741) | Consolidated Statements of Cash Flows Cash from operations decreased, while cash used in investing and financing increased, leading to a net decrease in cash Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | Change (YoY %) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net cash provided by operating activities | $669,273 | $720,046 | $(50,773) | -7.1% | | Net cash used in investing activities | $(342,696) | $(206,518) | $(136,178) | 66.0% | | Net cash used in financing activities | $(1,440,413) | $(467,935) | $(972,478) | 207.8% | | Net change in cash, cash equivalents, and restricted cash | $(1,100,134) | $32,198 | $(1,132,332) | -3516.7% | | Cash, cash equivalents, and restricted cash, end of period | $300,523 | $283,144 | $17,379 | 6.1% | | Cash paid for Interest | $211,943 | $193,195 | $18,748 | 9.7% | | Cash paid for Income taxes | $23,213 | $17,214 | $5,999 | 34.8% | Condensed Notes to Consolidated Financial Statements (Unaudited) Provides context to financial statements, detailing accounting policies, fair value, cash, acquisitions, debt, equity, and segment data 1. Basis of Presentation Financial statements adhere to Form 10-Q and U.S. GAAP, relying on management estimates and foreign currency translation impacts - The Company recorded a $30.4 million gain on intercompany loan remeasurement for the three months ended June 30, 2025, compared to a $66.2 million loss in the prior year, and a $66.3 million gain for the six months ended June 30, 2025, versus a $94.7 million loss in the prior year[32] - The aggregate outstanding amount under intercompany loan agreements subject to remeasurement was $1.1 billion as of June 30, 2025[32] - The Company is evaluating new FASB ASUs 2023-09 (Income Tax Disclosures) and 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and 2026, respectively[33][35] 2. Fair Value Measurements Uses Level 3 inputs for fair value measurements, including asset retirement obligations and impairment, with no long-term investment losses Asset Impairment and Decommission Costs (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Asset impairment | $40,575 | $18,491 | $71,041 | $53,043 | | Write-off of decommissioned towers | $3,358 | $7,440 | $5,919 | $11,545 | | Other (tower/equipment decommission costs) | $5,679 | $1,298 | $5,297 | $10,670 | | Total asset impairment and decommission costs | $45,231 | $31,610 | $82,257 | $75,258 | - Short-term investments decreased from $254.5 million at December 31, 2024, to $1.6 million at June 30, 2025. The Company purchased $432.9 million and sold $685.8 million of short-term investments during the six months ended June 30, 2025[40] 3. Cash, Cash Equivalents, and Restricted Cash Total cash and equivalents decreased from $1.4 billion to $300.5 million, mainly due to $1.165 billion debt repayment Cash, Cash Equivalents, and Restricted Cash (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $275,275 | $189,841 | | Securitization escrow accounts | $11,255 | $1,200,025 | | Payment, performance bonds, and other | $9,502 | $6,628 | | Surety bonds and workers compensation | $4,491 | $4,163 | | Total cash, cash equivalents, and restricted cash | $300,523 | $1,400,657 | - The $1.165 billion held in securitization escrow accounts as of December 31, 2024, was used to repay the 2019-1C Tower Securities on January 15, 2025[44] 4. Costs and Estimated Earnings on Uncompleted Contracts Net balance of uncompleted contracts increased from $13.9 million to $44.1 million, with two customers accounting for 97.0% Costs and Estimated Earnings on Uncompleted Contracts (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Costs incurred on uncompleted contracts | $107,684 | $74,474 | | Estimated earnings | $42,450 | $31,514 | | Billings to date | $(106,001) | $(92,082) | | Net balance | $44,133 | $13,906 | | Costs and estimated earnings in excess of billings | $46,811 | $19,198 | | Billings in excess of costs and estimated earnings | $(2,678) | $(5,292) | - At June 30, 2025, the two largest customers accounted for 97.0% of the net costs and estimated earnings in excess of billings on uncompleted contracts[46] 5. Prepaid Expenses and Other Current Assets and Other Assets Prepaid expenses decreased from $417.3 million to $41.1 million, mainly due to reduced investments and loan repayments Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Short-term investments | $1,551 | $254,534 | | Short-term loans receivable | $0 | $115,281 | | Total prepaid expenses and other current assets | $41,075 | $417,333 | Other Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Straight-line rent receivable | $421,860 | $417,572 | | Interest rate swap asset | $10,333 | $50,589 | | Loans receivable | $55,356 | $59,326 | | Total other assets | $641,647 | $657,097 | - A $115.0 million loan to an unconsolidated joint venture was fully repaid on March 21, 2025[47] 6. Acquisitions Acquisition capital expenditures rose to $652.6 million due to 4,673 tower acquisitions, including 4,644 Millicom sites Acquisition Activity (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Acquisitions of towers and related assets | $579,914 | $27,899 | $634,097 | $38,194 | | Land buyouts and other assets | $9,308 | $13,718 | $18,513 | $22,828 | | Total cash acquisition capital expenditures | $589,222 | $41,617 | $652,610 | $61,022 | Acquired Assets (6 Months Ended, in thousands) | Acquired Assets (6 Months Ended) | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Property and equipment, net | $435,294 | $13,398 | | Intangible assets, net | $218,806 | $24,307 | | Operating lease right-of-use assets, net | $66,499 | $9,453 | | Total acquisitions of towers and related assets and liabilities | $634,097 | $38,194 | - During the six months ended June 30, 2025, the Company acquired 4,673 towers and related assets, including 4,644 sites from Millicom International Cellular S.A[49] - Approximately 2,500 sites from the Millicom transaction, valued at $391.0 million, are expected to close by September 1, 2025[51] 7. Property and Equipment, Net Property and equipment, net, increased to $3.26 billion due to acquisitions, with planned sale of 369 Canadian towers for CAD$446.0 million Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Towers and related assets | $6,425,913 | $5,902,092 | | Total property and equipment | $7,601,975 | $7,072,176 | | Less: accumulated depreciation | $(4,343,792) | $(4,280,092) | | Property and equipment, net | $3,258,183 | $2,792,084 | - Depreciation expense was $31.7 million and $26.2 million for the three months ended June 30, 2025 and 2024, respectively, and $59.0 million and $63.6 million for the six months ended June 30, 2025 and 2024, respectively[54] - The Company sold all towers in the Philippines and Colombia for $40.3 million, recognizing an $18.0 million loss. An agreement to sell 369 Canadian towers for CAD$446.0 million is expected to close in Q4 2025[55][56] 8. Intangible Assets, Net Intangible assets, net, increased to $2.58 billion from $2.39 billion, driven by current contract intangibles Intangible Assets, Net (in thousands) | Category | June 30, 2025 (Net Book Value) | December 31, 2024 (Net Book Value) | | :------------------------------------------ | :------------------------------- | :--------------------------------- | | Current contract intangibles | $1,985,030 | $1,825,558 | | Network location intangibles | $594,776 | $563,149 | | Intangible assets, net | $2,579,806 | $2,388,707 | - Amortization expense was $27.1 million and $26.3 million for the three months ended June 30, 2025 and 2024, respectively, and $53.9 million and $53.5 million for the six months ended June 30, 2025 and 2024, respectively[57] 9. Accrued Expenses Accrued expenses slightly increased to $86.1 million from $82.0 million, with shifts in salaries and other liabilities Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Salaries and benefits | $18,091 | $24,996 | | Real estate and property taxes | $9,024 | $7,204 | | Unpaid capital expenditures | $12,117 | $14,581 | | Acquisition related holdbacks | $9,983 | $10,896 | | Other | $36,870 | $24,300 | | Total accrued expenses | $86,085 | $81,977 | 10. Debt Total debt decreased to $11.9 billion from $13.7 billion due to debt repayment, while interest expense increased Debt Principal Balances (in thousands) | Debt Instrument | June 30, 2025 (Principal Balance) | December 31, 2024 (Principal Balance) | | :------------------------------------------ | :-------------------------------- | :---------------------------------- | | Revolving Credit Facility | $80,000 | $0 | | 2024 Term Loan | $2,277,000 | $2,282,750 | | 2019-1C Tower Securities | $0 | $1,165,000 | | Total debt | $11,897,397 | $13,672,750 | | Total long-term debt, net of current maturities | $11,739,364 | $12,403,825 | Interest Expense (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cash Interest | $119,658 | $97,530 | $223,805 | $193,921 | | Non-cash Interest | $1,233 | $7,080 | $9,581 | $15,523 | | Amortization of deferred financing fees | $5,415 | $4,932 | $10,849 | $10,221 | | Total Interest Expense | $126,306 | $109,542 | $244,235 | $219,665 | - The 2019-1C Tower Securities ($1,165.0 million) and 2019-1R Tower Securities ($61.4 million) were fully repaid on January 15, 2025[65][68] 11. Shareholders' Equity A new $1.5 billion share repurchase plan was authorized, with 0.6 million shares repurchased for $130.7 million - A new $1.5 billion share repurchase plan was authorized on April 27, 2025, with $1.45 billion remaining as of the filing date[71] Share Repurchase Summary (in millions, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total number of shares purchased | 0.6 | 0.4 | 0.6 | 0.9 | | Average price per share | $211.63 | $213.30 | $211.63 | $213.85 | | Total purchase price | $130.7 | $93.9 | $130.7 | $200.0 | Cash Dividends Paid (in millions, except per share amounts) | Declaration Date | Record Date | Cash Paid Per Share | Aggregate Amount Paid | | :----------------- | :---------- | :------------------ | :-------------------- | | Feb 23, 2025 | Mar 13, 2025 | $1.11 | $122.3 | | Apr 27, 2025 | May 22, 2025 | $1.11 | $119.4 | | Aug 3, 2025 (Declared) | Aug 21, 2025 | $1.11 | N/A | 12. Stock-Based Compensation Stock option activity shows 518 thousand options exercised for $27.1 million, with 285 thousand RSUs and 66 thousand PSUs granted Stock Option Activity (in thousands, except per share data) | Metric | Number of Shares | Weighted-Average Exercise Price Per Share | | :------------------------------------------ | :--------------- | :---------------------------------------- | | Outstanding at December 31, 2024 | 1,088 | $174.74 | | Exercised | (518) | $161.42 | | Outstanding at June 30, 2025 | 569 | $186.85 | | Exercisable at June 30, 2025 | 553 | $185.01 | | Unvested at June 30, 2025 | 16 | $250.43 | | Total intrinsic value for options exercised | N/A | $27,100 | RSU and PSU Activity (in thousands, except per share data) | Metric | RSUs (Number of Shares) | RSUs (Weighted-Average Grant Date Fair Value per Share) | PSUs (Number of Shares) | PSUs (Weighted-Average Grant Date Fair Value per Share) | | :------------------------------------------ | :---------------------- | :------------------------------------------------------ | :---------------------- | :------------------------------------------------------ | | Outstanding at December 31, 2024 | 393 | $234.50 | 275 | $314.52 | | Granted | 285 | $219.23 | 66 | $237.91 | | Vested | (166) | $247.27 | (137) | $339.43 | | Outstanding at June 30, 2025 | 493 | $221.74 | 206 | $245.29 | 13. Income Taxes REIT status impacts tax rate, with a $55.2 million Brazilian tax deficiency contested, plus $75.6 million in penalties - The Company's REIT status allows a deduction for dividends, reducing U.S. federal corporate income tax on distributed net income[81] - As of December 31, 2024, the Company had approximately $377.9 million in federal net operating losses (NOLs) available to offset REIT taxable income[81] - The Company estimates a reasonably possible loss range of zero to $55.2 million, excluding $75.6 million in penalties and interest, related to an income tax assessment in Brazil for tax years 2017-2019, which it is vigorously contesting[83] 14. Segment Data Site leasing (domestic and international) and site development are primary segments, with site leasing contributing 97.7% of operating profit - Site leasing contributed 97.7% of total segment operating profit for the six months ended June 30, 2025[85] Segment Revenues and Operating Profit (in thousands) | Segment | 3 Months Ended June 30, 2025 (Revenues) | 3 Months Ended June 30, 2024 (Revenues) | 3 Months Ended June 30, 2025 (Operating Profit) | 3 Months Ended June 30, 2024 (Operating Profit) | | :-------------------- | :-------------------------------------- | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Domestic Site Leasing | $469,807 | $463,204 | $400,386 | $397,715 | | International Site Leasing | $161,981 | $163,253 | $112,831 | $114,611 | | Site Development | $67,193 | $34,020 | $13,668 | $6,883 | | Total | $698,981 | $660,477 | $526,885 | $519,209 | | Segment | 6 Months Ended June 30, 2025 (Revenues) | 6 Months Ended June 30, 2024 (Revenues) | 6 Months Ended June 30, 2025 (Operating Profit) | 6 Months Ended June 30, 2024 (Operating Profit) | | :-------------------- | :-------------------------------------- | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Domestic Site Leasing | $930,800 | $924,703 | $793,107 | $793,244 | | International Site Leasing | $317,197 | $330,030 | $220,841 | $232,545 | | Site Development | $115,232 | $63,606 | $23,518 | $13,291 | | Total | $1,363,229 | $1,318,339 | $1,037,466 | $1,039,080 | Long-Lived Assets by Geographic Area (in thousands) | Geographic Area | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Domestic | $5,763,235 | $5,741,882 | | Brazil | $1,839,629 | $1,681,925 | | Guatemala | $577,880 | $50,686 | | Other international | $1,420,187 | $1,307,026 | | Total | $9,600,931 | $8,781,519 | 15. Earnings Per Share Basic and diluted EPS significantly increased for Q2 and H1 2025, reflecting higher net income Earnings Per Share (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to SBAC | $225,794 | $162,830 | $446,525 | $317,372 | | Basic weighted-average shares outstanding | 107,531 | 107,462 | 107,637 | 107,782 | | Diluted weighted-average shares outstanding | 107,797 | 107,679 | 107,968 | 108,148 | | Basic EPS | $2.10 | $1.52 | $4.15 | $2.94 | | Diluted EPS | $2.09 | $1.51 | $4.14 | $2.93 | 16. Redeemable Noncontrolling Interests Redeemable noncontrolling interests increased to $65.2 million from $54.1 million, mainly due to redemption adjustments Redeemable Noncontrolling Interests (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Beginning balance | $54,132 | $35,047 | | Net loss attributable to noncontrolling interests | $(2,927) | $(859) | | Foreign currency translation adjustments | $(1,018) | $618 | | Adjustment to redemption amount | $14,970 | $11,731 | | Ending balance | $65,157 | $54,132 | 17. Derivatives and Hedging Activities Uses interest rate swaps to hedge $2.0 billion variable rate debt at 5.165% and a treasury lock for $620.0 million securities at 4.654% - The Company has interest rate swap agreements on its 2024 Term Loan, swapping $2.0 billion of notional value to a blended all-in fixed rate of 5.165% per annum through April 11, 2028[95] - A treasury lock agreement fixed the three-year treasury rate at 3.3985% for $620.0 million of notional value related to the 2024-2C Tower Securities, resulting in an all-in fixed rate of 4.654% per annum[96] Derivatives Designated as Hedging Instruments (in thousands) | Category | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Interest rate swap agreements (asset position) | $10,333 | $50,589 | | Interest rate swap agreement (liability position) | $12,140 | $0 | | Accumulated other comprehensive loss, net (gain) | $4,400 | $50,900 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes financial condition and operational performance, covering segment results, capital allocation, and liquidity for Q2 and H1 2025 Business Overview SBA Communications is a leading wireless infrastructure owner, with site leasing as its primary business, operating globally - SBA Communications Corporation is a leading independent owner and operator of wireless communications infrastructure, owning 44,065 towers as of June 30, 2025[102] - Site leasing is the primary business line, contributing 97.7% of total segment operating profit for the six months ended June 30, 2025[102][109] - The company sold its towers in the Philippines and Colombia in Q1 2025 and plans to sell its 369 Canadian towers by Q4 2025[102] Site Leasing Site leasing involves long-term contracts with wireless providers, featuring rent escalators and high margins, with expected revenue growth in 2025 - Site leasing contracts typically have initial terms of five to fifteen years with multiple renewal periods and annual rent escalators (fixed, inflation-indexed, or a combination)[104] - Approximately 70% of towers are on owned land, perpetual easements, or leasehold interests extending beyond 20 years, providing stable operating costs[107] - Core site leasing revenue is expected to increase in 2025 due to wireless carriers deploying unused spectrum, the full-year impact of 2024 acquisitions and builds, and new towers expected in 2025[111] Site Development U.S.-based site development offers end-to-end services to wireless providers, complementing site leasing and generating ancillary revenues - Site development services include network pre-design, site audits, location identification, leasing support, zoning approvals, tower and site construction, antenna installation, and radio equipment installation, commissioning, and maintenance[112] - This business line is conducted only in the United States and is complementary to the site leasing business, helping maintain relationships with wireless service providers and capturing ancillary revenues[112] Capital Allocation Strategy Capital allocation prioritizes asset investments, opportunistic stock repurchases, dividends, and debt repayment to enhance shareholder value - Key elements of the capital allocation strategy include portfolio growth through tower acquisitions and new construction, stock repurchases when the share price is below intrinsic value, and cash dividends[115][116][117] - Debt repayments, especially of variable rate debt, are considered an accretive use of excess capital in a high interest rate environment[115] Critical Accounting Policies and Estimates Financial statements rely on management's critical estimates and assumptions, which may materially differ from actual results - Preparation of financial statements requires management to make significant estimates and assumptions affecting reported amounts, including allowance for doubtful accounts, construction contract costs, stock-based compensation, deferred tax assets, fair value of long-lived assets, and useful lives of assets[118][29] Results of Operations Q2 and H1 2025 results show increased revenues and net income, driven by site development and other income, despite higher operating expenses Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Q2 2025 total revenues increased by 5.8% to $699.0 million, with net income up 38.7% to $225.8 million Revenue and Operating Profit Changes (3 Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Constant Currency Change | Constant Currency % Change | | :-------------------------- | :----- | :----- | :----------------------- | :------------------------- | | Domestic site leasing revenues | $469,807 | $463,204 | $6,603 | 1.4% | | International site leasing revenues | $161,981 | $163,253 | $6,551 | 4.0% | | Site development revenues | $67,193 | $34,020 | $33,173 | 97.5% | | Total revenues | $698,981 | $660,477 | $46,327 | 7.0% | | Domestic site leasing operating profit | $400,386 | $397,715 | $2,671 | 0.7% | | International site leasing operating profit | $112,831 | $114,611 | $3,783 | 3.3% | | Site development operating profit | $13,668 | $6,883 | $6,785 | 98.6% | Expense and Income Changes (3 Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Constant Currency Change | Constant Currency % Change | | :------------------------------------------ | :----- | :----- | :----------------------- | :------------------------- | | Selling, general, and administrative expenses | $71,022 | $62,376 | $9,188 | 14.7% | | Asset impairment and decommission costs | $45,231 | $31,610 | $14,087 | 44.6% | | Depreciation, accretion, and amortization | $69,964 | $64,179 | $7,276 | 11.3% | | Total operating income | $334,781 | $354,470 | $(16,656) | -4.7% | | Interest expense | $(119,658) | $(97,530) | $(22,154) | 22.7% | | Other income (expense), net | $44,123 | $(104,859) | $1,329 | -96.4% | | Provision (benefit) for income taxes | $(35,059) | $12,337 | $3,027 | -13.1% | | Net income | $225,694 | $159,452 | $(27,745) | -12.2% | - Other income (expense), net, included a $45.3 million gain on intercompany loan remeasurement in Q2 2025, compared to a $100.9 million loss in Q2 2024[135] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 H1 2025 total revenues increased by 3.4% to $1.36 billion, with net income up 40.7% to $446.5 million Revenue and Operating Profit Changes (6 Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Constant Currency Change | Constant Currency % Change | | :-------------------------- | :----- | :----- | :----------------------- | :------------------------- | | Domestic site leasing revenues | $930,800 | $924,703 | $6,097 | 0.7% | | International site leasing revenues | $317,197 | $330,030 | $11,047 | 3.3% | | Site development revenues | $115,232 | $63,606 | $51,626 | 81.2% | | Total revenues | $1,363,229 | $1,318,339 | $68,770 | 5.2% | | Domestic site leasing operating profit | $793,107 | $793,244 | $(137) | -0.0% | | International site leasing operating profit | $220,841 | $232,545 | $5,382 | 2.3% | | Site development operating profit | $23,518 | $13,291 | $10,227 | 76.9% | Expense and Income Changes (6 Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Constant Currency Change | Constant Currency % Change | | :------------------------------------------ | :----- | :----- | :----------------------- | :------------------------- | | Selling, general, and administrative expenses | $137,241 | $131,074 | $8,074 | 6.2% | | Asset impairment and decommission costs | $82,257 | $75,258 | $9,404 | 12.5% | | Depreciation, accretion, and amortization | $135,012 | $140,929 | $(1,532) | -1.1% | | Total operating income | $669,690 | $677,828 | $137 | 0.0% | | Interest income | $18,935 | $14,360 | $5,056 | 35.2% | | Interest expense | $(223,805) | $(193,921) | $(29,929) | 15.4% | | Other income (expense), net | $76,286 | $(149,511) | $(21,362) | 918.0% | | Provision for income taxes | $(77,078) | $(4,590) | $10,240 | -18.9% | | Net income | $443,598 | $313,994 | $(26,117) | -6.3% | - Other income (expense), net, included a $99.9 million gain on intercompany loan remeasurement and an $18.3 million loss on asset sales (including a $29.1 million non-cash adjustment for currency translation) for the six months ended June 30, 2025[157] Non-GAAP Financial Measures Defines and reconciles Adjusted EBITDA, a non-GAAP measure, used to evaluate operational profitability and industry comparability Adjusted EBITDA Adjusted EBITDA increased by $13.7 million (Q2) and $16.0 million (H1) due to higher site leasing and development profit - Adjusted EBITDA is defined as net income excluding non-cash straight-line leasing revenue/ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income/expenses, acquisition/new business initiatives adjustments, asset impairment/decommission costs, interest income/expenses, depreciation/accretion/amortization, and income taxes[162] Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Constant Currency Change | Constant Currency % Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------------------- | :------------------------- | | Net income | $225,694 | $159,452 | $(27,745) | -12.2% | | Total adjustments | $249,790 | $307,612 | $41,462 | -13.5% | | Adjusted EBITDA | $475,484 | $467,064 | $13,717 | 2.9% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Constant Currency Change | Constant Currency % Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------------------- | :------------------------- | | Net income | $443,598 | $313,994 | $(26,117) | -6.3% | | Total adjustments | $489,176 | $618,481 | $42,118 | -6.8% | | Adjusted EBITDA | $932,774 | $932,475 | $16,001 | 1.7% | Liquidity and Capital Resources Liquidity is from net earnings and cash flow, with a net decrease in cash due to increased investing and financing activities Cash Flow Summary (in thousands) | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Cash provided by operating activities | $669,273 | $720,046 | | Cash used in investing activities | $(342,696) | $(206,518) | | Cash used in financing activities | $(1,440,413) | $(467,935) | | Change in cash, cash equivalents, and restricted cash | $(1,113,836) | $45,593 | | Cash, cash equivalents, and restricted cash, end of period | $300,523 | $283,144 | Operating Activities Cash from operating activities decreased by $50.8 million to $669.3 million, mainly due to working capital changes and higher expenses - The decrease in cash from operating activities was primarily due to increased cash outflows associated with working capital changes, higher interest expense, and increased cash selling, general, and administrative expenses[171] - Partially offsetting the decrease were increases in site development segment operating profit and interest income, and a decrease in tower and equipment decommission costs[171] Investing Activities Cash used in investing activities increased to $342.7 million, driven by tower acquisitions, with $1.255 billion to $1.275 billion in planned 2025 capital expenditures Investing Activities (in thousands) | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Acquisitions of towers and related assets | $(634,097) | $(38,194) | | Purchase of investments | $(434,307) | $(681,208) | | Proceeds from sale of investments | $685,840 | $651,650 | | Repayment (funding) of loan to unconsolidated joint venture | $115,000 | $(5,500) | | Proceeds from sale of assets | $40,469 | $0 | | Net cash used in investing activities | $(342,696) | $(206,518) | - Approximately 2,500 sites from the Millicom transaction, valued at $391.0 million, are expected to close by September 1, 2025[172] - Expected discretionary cash capital expenditures for 2025 range from $1.255 billion to $1.275 billion, in addition to $53.0 million to $63.0 million in non-discretionary expenditures[173] Financing Activities Cash used in financing increased to $1.44 billion, mainly due to $1.165 billion in Tower Securities repayment Financing Activities (in thousands) | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Net borrowings (repayments) under Revolving Credit Facility | $80,000 | $(60,000) | | Repayment of Tower Securities | $(1,165,000) | $0 | | Repurchase and retirement of common stock | $(130,696) | $(200,019) | | Payment of dividends on common stock | $(241,640) | $(213,464) | | Net cash used in financing activities | $(1,440,413) | $(467,935) | - Subsequent to June 30, 2025, the company borrowed $25.0 million and repaid $70.0 million under the Revolving Credit Facility, with $35.0 million outstanding as of the filing date[183] Dividends Paid $1.11 per share cash dividends for Q1 and Q2 2025, totaling $241.7 million, with future dividends subject to Board discretion Cash Dividends Paid (in millions, except per share amounts) | Declaration Date | Record Date | Cash Paid Per Share | Aggregate Amount Paid | | :----------------- | :---------- | :------------------ | :-------------------- | | Feb 23, 2025 | Mar 13, 2025 | $1.11 | $122.3 | | Apr 27, 2025 | May 22, 2025 | $1.11 | $119.4 | | Aug 3, 2025 (Declared) | Aug 21, 2025 | $1.11 | N/A | Registration Statements Has Form S-4 for 1.2 million Class A common stock for acquisitions and an automatic Form S-3ASR, with no recent issuances - Approximately 1.2 million shares of Class A common stock remain under the Form S-4 shelf registration statement for acquisitions[179] - No securities were issued under the automatic shelf registration statement on Form S-3ASR during the six months ended June 30, 2025[180] Debt Instruments and Debt Service Requirements Total debt principal was $11.9 billion, with $7.2 billion in Secured Tower Revenue Securities, and $1.25 billion debt service expected Outstanding Debt Instruments (in millions) | Security | Issue Date | Amount Outstanding | Interest Rate | Anticipated Repayment Date | | :-------------------------- | :--------- | :----------------- | :------------ | :------------------------- | | 2020-1C Tower Securities | Jul. 14, 2020 | $750.0 | 1.884% | Jan. 9, 2026 | | 2020-2C Tower Securities | Jul. 14, 2020 | $600.0 | 2.328% | Jan. 11, 2028 | | 2021-1C Tower Securities | May 14, 2021 | $1,165.0 | 1.631% | Nov. 9, 2026 | | 2021-2C Tower Securities | Oct. 27, 2021 | $895.0 | 1.840% | Apr. 9, 2027 | | 2021-3C Tower Securities | Oct. 27, 2021 | $895.0 | 2.593% | Oct. 9, 2031 | | 2022-1C Tower Securities | Nov. 23, 2022 | $850.0 | 6.599% | Jan. 11, 2028 | | 2024-1C Tower Securities | Oct. 11, 2024 | $1,450.0 | 4.831% | Oct. 9, 2029 | | 2024-2C Tower Securities | Oct. 11, 2024 | $620.0 | 4.654% | Oct. 8, 2027 | | 2020 Senior Notes | Feb. 4, 2020 | $1,500.0 | 3.875% | Feb. 15, 2027 | | 2021 Senior Notes | Jan. 29, 2021 | $1,500.0 | 3.125% | Feb. 1, 2029 | - The company expects its cash on hand, Revolving Credit Facility capacity, and cash flows from operations to be sufficient to service its $1.25 billion debt requirement over the next twelve months[192] Inflation Inflation has not materially impacted operations, but higher interest rates may affect growth and increase refinancing costs - Higher interest rates are expected to impact growth rates and future operating results by potentially reducing wireless service provider capital expenditures and increasing debt refinancing costs[194] - Persistent high inflation could adversely affect future operating results, especially for site leasing revenues governed by long-term contracts with pre-determined pricing, except for contracts in South America and Africa with inflationary index-based escalators[195] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk Exposed to interest rate and foreign currency risks; a 1% rate increase impacts interest by 1.4%, and a 10% BRL move impacts revenues by 1.1% Debt Obligation and Fair Value (in thousands) | Category | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | Fair Value | | :-------------------------- | :--- | :--- | :--- | :--- | :--- | :--------- | :---------- | :--------- | | Revolving Credit Facility | $0 | $0 | $0 | $0 | $80,000 | $0 | $80,000 | $80,000 | | 2024 Term Loan | $17,250 | $23,000 | $23,000 | $23,000 | $23,000 | $2,167,750 | $2,277,000 | $2,288,385 | | 2020-1C Tower Securities | $0 | $750,000 | $0 | $0 | $0 | $0 | $750,000 | $724,995 | | 2021 Senior Notes | $0 | $0 | $0 | $0 | $1,500,000 | $0 | $1,500,000 | $1,417,500 | | Total debt obligation | $17,250 | $1,938,000 | $3,038,000 | $1,473,000 | $3,053,000 | $3,062,750 | $12,582,000 | $11,897,397 | - A hypothetical 1% increase in variable interest rates would increase interest expense by approximately 1.4% for the six months ended June 30, 2025[198] - A hypothetical 10% adverse movement in the Brazilian Real would cause revenues to decline by approximately 1.1% and operating income by 0.6% for the six months ended June 30, 2025[200][201] ITEM 4. Controls and Procedures Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring accurate SEC reporting - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[207] Special Note Regarding Forward-Looking Statements Contains forward-looking statements subject to risks, including industry growth, interest rates, international operations, and regulatory compliance - The report contains forward-looking statements concerning expectations regarding wireless industry growth, tower portfolio expansion, capital allocation strategies, future dividends, and the impact of various market and regulatory factors[203][205] - Key risk factors include macroeconomic influences, wireless service provider consolidation, high interest rates, international operational risks, acquisition integration challenges, and the ability to comply with REIT tax requirements[204][208] PART II – OTHER INFORMATION ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Details Q2 2025 share repurchase activities, including 617,521 shares for $130.7 million under a new $1.5 billion plan Issuer Purchases of Equity Securities Repurchased 617,521 shares for $130.7 million in Q2 2025, under a new $1.5 billion share repurchase plan Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------------- | | 4/1/2025 - 4/30/2025 | 582,746 | $210.87 | 582,746 | $81,843,794 | | 5/1/2025 - 5/31/2025 | — | $— | — | $1,500,000,000 | | 6/1/2025 - 6/30/2025 | 34,775 | $224.32 | 34,775 | $1,492,199,197 | | Total | 617,521 | $211.63 | 617,521 | $1,492,199,197 | - On April 27, 2025, the Board of Directors authorized a new $1.5 billion share repurchase plan, replacing the prior plan. As of the filing date, $1.45 billion of authorization remained[209] ITEM 5. Other Information Confirms no officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 10b5-1 Trading Plans No officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - None of the company's officers or directors adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[210] ITEM 6. Exhibits Lists all Form 10-Q exhibits, including CEO/CFO certifications and XBRL documents - Exhibits include certifications by the CEO and CFO (31.1, 31.2, 32.1, 32.2) and various XBRL taxonomy documents (101.INS, 101.SCH, 101.DEF, 101.CAL, 101.LAB, 101.PRE, 104)[211]