SBA(US:SBAC)2024-05-06 19:33PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the three months ended March 31, 2024, compared to the same period in 2023, including a significant reduction in depreciation and amortization expense due to a change in the estimated useful lives of towers Consolidated Statements of Operations | Metric | Three months ended March 31, 2024 (in millions) | Three months ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Total revenues | $657.862 | $675.516 | | Site leasing revenue | $628.276 | $617.268 | | Site development revenue | $29.586 | $58.248 | | Operating income | $323.358 | $224.141 | | Net income | $154.543 | $100.554 | | Diluted EPS | $1.42 | $0.93 | Consolidated Balance Sheets | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Total current assets | $447.596 | $484.267 | | Property and equipment, net | $2,709.681 | $2,711.719 | | Total assets | $9,995.266 | $10,178.441 | | Total current liabilities | $2,413.289 | $1,363.259 | | Long-term debt, net | $10,550.553 | $11,681.170 | | Total liabilities | $15,181.509 | $15,314.276 | | Total shareholders' deficit | ($5,222.820) | ($5,170.882) | Consolidated Statements of Cash Flows | Cash Flow Activity | Three months ended March 31, 2024 (in millions) | Three months ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $294.453 | $311.168 | | Net cash used in investing activities | ($85.310) | ($146.761) | | Net cash used in financing activities | ($191.412) | ($160.728) | | Net change in cash, cash equivalents, and restricted cash | $13.386 | $3.899 | - Effective January 1, 2024, the company revised the estimated useful lives of its towers and certain related intangible assets from 15 years to 30 years, which prospectively reduced depreciation and amortization expense by approximately $102.7 million for the first quarter of 2024, resulting in an after-tax increase to net income of $93.0 million, or $0.86 per diluted share28 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, highlighting the stability of the site leasing business versus a significant decline in the site development segment, covering revenue and profit trends, capital allocation, liquidity, and debt obligations Business Overview and Strategy The company's core business is site leasing, complemented by site development, with a capital allocation strategy focused on growth, stock repurchases, and dividends - The company's primary business is site leasing, which contributed 98.8% of total segment operating profit for Q1 2024, involving leasing antenna space on its 39,638 towers to wireless service providers under long-term contracts101108 - The site development business, conducted only in the U.S., is complementary to site leasing and includes services like network design, site construction, and antenna installation for wireless service providers111 - The capital allocation strategy prioritizes portfolio growth through acquisitions and new tower construction, followed by stock repurchases when the stock is believed to be undervalued, and returning cash to shareholders via dividends112113114 Results of Operations This section details revenue and operating profit trends across domestic and international site leasing and site development segments, highlighting the impact of accounting changes Segment Revenue Analysis | Segment | Revenue Q1 2024 (in millions) | Revenue Q1 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Domestic site leasing | $461.499 | $454.833 | 1.5% | | International site leasing | $166.777 | $162.435 | 2.7% | | Site development | $29.586 | $58.248 | (49.2%) | | Total | $657.862 | $675.516 | (2.6%) | Segment Operating Profit Analysis | Segment | Operating Profit Q1 2024 (in millions) | Operating Profit Q1 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Domestic site leasing | $395.529 | $385.083 | 2.7% | | International site leasing | $117.934 | $112.066 | 5.2% | | Site development | $6.408 | $14.063 | (54.4%) | - Site development revenues and operating profit decreased significantly by 49.2% and 54.4% respectively, due to reduced activity from major carriers like T-Mobile, DISH Wireless, and Verizon Wireless123126 - Depreciation, accretion, and amortization expense decreased by $105.7 million (58.1%) year-over-year, primarily due to the change in the estimated useful lives of towers from 15 to 30 years, which significantly boosted operating income130 Non-GAAP Financial Measures This section presents non-GAAP financial metrics, primarily focusing on Adjusted EBITDA and its drivers Adjusted EBITDA Reconciliation | Metric (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $154.543 | $100.554 | | Adjustments | $310.869 | $358.786 | | Adjusted EBITDA | $465.412 | $459.340 | - Adjusted EBITDA increased by $6.1 million (1.3%) to $465.4 million in Q1 2024 compared to the prior year period, with a constant currency increase of $4.1 million (0.9%), driven by higher site leasing operating profit, offset by lower site development profit and higher cash SG&A expenses145 Liquidity and Capital Resources This section analyzes the company's cash flow, debt management, and capital allocation activities, including share repurchases and dividends - Cash provided by operating activities decreased to $294.5 million in Q1 2024 from $311.2 million in Q1 2023, mainly due to working capital timing and lower site development profit148149 - In January 2024, the company amended its Senior Credit Agreement to issue a new $2.3 billion 2024 Term Loan (maturing 2031) to retire its 2018 Term Loan, and also increased its Revolving Credit Facility commitment to $2.0 billion159160 - During Q1 2024, the company repurchased 495,260 shares of common stock for $106.1 million and paid cash dividends of $108.1 million ($0.98 per share)154156193 - The company projects total debt service requirements of approximately $2.18 billion for the twelve months ending March 31, 2025, which includes the maturity of the $620.0 million 2014-2C Tower Securities and the $1.165 billion 2019-1C Tower Securities175 Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's primary market risk exposures, which are interest rate risk and foreign currency exchange rate risk, and how they are managed - The primary market risk is interest rate risk related to its variable-rate 2024 Term Loan and Revolving Credit Facility, where a hypothetical 1% increase in variable interest rates would have increased Q1 2024 interest expense by approximately 4.7%181182 - The company is exposed to foreign currency risk, with 22.3% of revenues and 29.7% of operating expenses in Q1 2024 denominated in foreign currencies, where a hypothetical 10% adverse movement in the Brazilian Real would have decreased Q1 2024 revenues by 1.3%183184 - The company has significant risk related to intercompany debt denominated in currencies other than the functional currency of the subsidiary, where a 10% change in the underlying exchange rates would have resulted in approximately $125.5 million of unrealized gains or losses recorded in net income for Q1 2024185 Controls and Procedures This section confirms the company's adherence to internal control standards, with the principal executive and financial officers concluding the effectiveness of disclosure controls and procedures - The company's CEO and CFO evaluated the effectiveness of disclosure controls and procedures and concluded that they were effective as of March 31, 2024190192 PART II – OTHER INFORMATION Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase activities and remaining authorization under its repurchase plan Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2024 | — | N/A | | Feb 2024 | — | N/A | | Mar 2024 | 495,260 | $214.33 | | Total Q1 2024 | 495,260 | $214.33 | - Under the $1.0 billion stock repurchase plan authorized in October 2021, the company had $204.7 million of authorization remaining as of the filing date193 Other Information This section discloses information regarding trading plans established by the company's officers and directors - During the first quarter of 2024, none of the company's officers or directors adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement194 Exhibits This section lists all exhibits filed as part of the quarterly report, including required certifications and interactive data files - The exhibits filed with this report include certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as well as XBRL interactive data files195