SBA(SBAC) - 2021 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements and accompanying notes for the three and nine months ended September 30, 2021 and 2020 Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Assets | $9,668,082 | $9,158,018 | | Cash and cash equivalents | $187,806 | $308,560 | | Total current assets | $403,788 | $472,990 | | Long-term debt, net | $11,822,536 | $11,071,796 | | Total liabilities | $14,611,210 | $13,967,206 | | Total shareholders' deficit | ($4,958,305) | ($4,824,382) | Consolidated Statements of Operations Highlights (Unaudited) | Metric (in thousands, except per share) | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $589,305 | $522,940 | $1,713,696 | $1,547,231 | | Site leasing revenue | $535,492 | $486,765 | $1,564,814 | $1,461,523 | | Site development revenue | $53,813 | $36,175 | $148,882 | $85,708 | | Operating Income | $211,776 | $160,337 | $585,117 | $468,591 | | Net Income (Loss) | $47,798 | $22,676 | $188,720 | ($82,139) | | Diluted EPS | $0.43 | $0.20 | $1.70 | ($0.73) | Consolidated Statements of Cash Flows Highlights (Unaudited, Nine Months Ended Sep 30) | Cash Flow Item (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $891,330 | $882,908 | | Net cash used in investing activities | ($1,277,822) | ($353,378) | | Net cash provided by (used in) financing activities | $308,612 | ($314,250) | | Net Change in Cash, Cash Equivalents, and Restricted Cash | ($88,409) | $194,853 | Note 6. Acquisitions Details significant acquisition activities in 2021, including nearly $1.2 billion in capital expenditures and the acquisition of 710 utility transmission structures Acquisition Activity (in thousands) | Category | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Acquisitions of towers and related intangible assets | $217,140 | $121,319 | | Acquisition of right-of-use assets | $948,392 | $0 | | Land buyouts and other assets | $22,222 | $78,580 | | Total cash acquisition capital expenditures | $1,187,754 | $199,899 | - During the first nine months of 2021, the company acquired the exclusive right to lease and operate 710 utility transmission structures from PG&E for $969.9 million, which was accounted for as a right-of-use asset[46] - Subsequent to September 30, 2021, the company purchased or is under contract to purchase approximately 1,700 communication sites for an aggregate of $231.0 million, including about 1,400 sites from Airtel Tanzania for $175.0 million[48] Note 10. Debt Outlines the company's $11.9 billion total debt as of September 30, 2021, and significant debt market activities during the period Debt Principal Balance as of September 30, 2021 (in thousands) | Debt Instrument | Principal Balance | | :--- | :--- | | 2018 Term Loan | $2,322,000 | | Tower Securities (various series) | $5,515,000 | | Senior Notes (various series) | $4,100,000 | | Total Debt | $11,937,000 | - On July 7, 2021, the company amended its Revolving Credit Facility, increasing commitments from $1.25 billion to $1.5 billion and extending the maturity to July 7, 2026[59] - In January 2021, the company issued $1.5 billion of 3.125% 2021 Senior Notes due 2029, with proceeds used to redeem the 2017 Senior Notes and repay amounts under the Revolving Credit Facility[72][74] - Subsequent to the quarter end, on October 27, 2021, the company issued $1.79 billion of new Tower Securities (2021-2C and 2021-3C) and used proceeds to repay the Revolving Credit Facility and redeem the 2016 Senior Notes[67][68] Note 11. Shareholders' Equity Reports changes in shareholders' equity, including $318.9 million in stock repurchases and $190.4 million in dividend payments during the first nine months of 2021 Share Repurchases | Period | Total Shares Purchased (millions) | Average Price Paid per Share | Total Price Paid (millions) | | :--- | :--- | :--- | :--- | | Q3 2021 | 0.4 | $340.70 | $150.0 | | Nine Months 2021 | 1.1 | $291.48 | $318.9 | - On October 28, 2021, the Board of Directors authorized a new $1.0 billion stock repurchase plan, replacing the prior plan[79] - The company paid three cash dividends of $0.58 per share during the first nine months of 2021, totaling approximately $190.4 million[80] Note 14. Segment Data Describes the company's two business segments, with site leasing accounting for the vast majority of revenues and operating profit in the first nine months of 2021 Segment Performance for Nine Months Ended Sep 30, 2021 (in thousands) | Segment | Revenues | Operating Profit | | :--- | :--- | :--- | | Domestic Site Leasing | $1,249,291 | $1,054,836 | | International Site Leasing | $315,523 | $220,468 | | Site Development | $148,882 | $32,710 | - For the nine months ended September 30, 2021, site leasing revenue in Brazil was $174.5 million, with no other foreign country representing a material amount of total revenues[93] Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses the company's financial performance, business segments, capital allocation strategy, and liquidity - The company's primary business is site leasing, which contributed 97.5% of total segment operating profit for the nine months ended September 30, 2021[105][111] - The capital allocation strategy focuses on increasing shareholder value through portfolio growth, stock repurchases when the stock is believed to be below intrinsic value, and cash dividends[114][115][116] - The company has experienced minimal impact to its business or results of operations from the COVID-19 pandemic but continues to monitor developments[117] Results of Operations Compares financial results for Q3 and the nine months ended September 30, 2021 and 2020, highlighting revenue and profit growth across segments Q3 2021 vs. Q3 2020 Revenue and Operating Profit (in thousands) | Segment | Q3 2021 Revenue | Q3 2020 Revenue | % Change | Q3 2021 Operating Profit | Q3 2020 Operating Profit | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Domestic site leasing | $426,758 | $390,961 | 9.2% | $361,498 | $326,733 | 10.6% | | International site leasing | $108,734 | $95,804 | 13.5% | $75,328 | $67,310 | 11.9% | | Site development | $53,813 | $36,175 | 48.8% | $12,456 | $7,378 | 68.8% | Nine Months 2021 vs. Nine Months 2020 Revenue and Operating Profit (in thousands) | Segment | Nine Months 2021 Revenue | Nine Months 2020 Revenue | % Change | Nine Months 2021 Operating Profit | Nine Months 2020 Operating Profit | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Domestic site leasing | $1,249,291 | $1,165,322 | 7.2% | $1,054,836 | $973,096 | 8.4% | | International site leasing | $315,523 | $296,201 | 6.5% | $220,468 | $208,307 | 5.8% | | Site development | $148,882 | $85,708 | 73.7% | $32,710 | $17,291 | 89.2% | - Site development revenue and operating profit increased significantly in both the three and nine-month periods due to increased carrier activity, primarily from T-Mobile and DISH[126][129][145] Non-GAAP Financial Measures Explains the use of Adjusted EBITDA as a key non-GAAP performance measure, which increased to $407.0 million in Q3 2021 and $1.20 billion for the nine months Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $47,798 | $22,676 | $188,720 | ($82,139) | | Adjustments | $359,166 | $350,625 | $1,008,494 | $1,201,325 | | Adjusted EBITDA | $406,964 | $373,301 | $1,197,214 | $1,119,186 | - Adjusted EBITDA is defined as net income excluding items such as non-cash straight-line leasing revenue/expense, non-cash compensation, debt extinguishment losses, interest, taxes, and D&A, used by management to evaluate economic productivity and allocate resources[167][168] Liquidity and Capital Resources Details the company's liquidity sources, significant investing activities of $1.28 billion, and financing activities, confirming sufficient liquidity for the next twelve months Cash Capital Expenditures (Nine Months Ended Sep 30, in thousands) | Category | 2021 | 2020 | | :--- | :--- | :--- | | Acquisitions of towers and related intangible assets | ($217,140) | ($121,319) | | Acquisition of right-of-use assets | ($948,392) | $0 | | Land buyouts and other assets | ($22,222) | ($78,580) | | Construction and related costs | ($39,182) | ($40,126) | | Augmentation and tower upgrades | ($22,886) | ($29,712) | | Total Cash Used in Investing Activities | ($1,277,822) | ($353,378) | Financing Activities (Nine Months Ended Sep 30, in thousands) | Category | 2021 | 2020 | | :--- | :--- | :--- | | Net Debt Issuance/(Repayments) | $730,449 | ($483,618) | | Repurchase and retirement of common stock | ($284,343) | ($378,988) | | Payment of dividends on common stock | ($190,456) | ($156,199) | | Net Cash Provided By (Used In) Financing | $308,612 | ($314,250) | - The company estimates its total debt service requirement for the next twelve months to be approximately $379.1 million, based on debt outstanding as of September 30, 2021[206] Quantitative and Qualitative Disclosures About Market Risk Identifies interest rate risk and foreign currency exchange rate risk as primary market exposures, along with their management strategies - Primary market risks are interest rate risk related to debt refinancing and variable-rate debt, and foreign currency exchange rate risk from international operations[212][213] - Interest rate risk is managed through a large percentage of fixed-rate debt and interest rate swaps, with an interest rate swap hedging $1.95 billion of the variable-rate 2018 Term Loan[212] - For the nine months ended September 30, 2021, approximately 13.5% of revenues were denominated in foreign currencies, where a hypothetical 10% adverse movement in the Brazilian Real would have caused revenues to decline by approximately 0.9%[213][214] Controls and Procedures Confirms the effectiveness of the company's disclosure controls and procedures as evaluated by the CEO and CFO as of September 30, 2021 - The company's principal executive officer and principal financial officer evaluated the disclosure controls and procedures and concluded they were effective as of September 30, 2021[220] PART II – OTHER INFORMATION Unregistered Sales of Equity Securities and Use of Proceeds Provides details on the company's repurchase of 440,274 Class A common shares during Q3 2021 at an average price of $340.70 per share Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2021 | 0 | N/A | | August 2021 | 158,055 | $347.27 | | September 2021 | 282,219 | $337.02 | | Total | 440,274 | $340.70 | Exhibits Lists the exhibits filed with the Form 10-Q report, including CEO/CFO certifications and XBRL files - The exhibits filed with this report include: * CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906 * XBRL Instance Document and related taxonomy files[222] Signatures - The report was duly signed on November 5, 2021, by Jeffrey A. Stoops, Chief Executive Officer, and Brendan T. Cavanagh, Chief Financial Officer[225]