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SBA Communications Corporation Reports Fourth Quarter 2020 Results; Provides Full Year 2021 Outlook; and Declares Quarterly Cash Dividend

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BOCA RATON, Fla.–(BUSINESS WIRE)–SBA Communications Corporation (Nasdaq: SBAC) (“SBA” or the “Company”) today reported results for the quarter ended December 31, 2020.

Highlights of the fourth quarter include:

  • Net income of $105.8 million or $0.94 per share and site leasing revenue of $493.0 million
  • AFFO per share growth of 18.8% over the year earlier period on a constant currency basis
  • Repurchased 2.2 million shares cumulatively in the fourth quarter and subsequent to quarter end
  • Signed a new master lease agreement with Dish subsequent to quarter end

In addition, the Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.58 per share of the Company’s Class A common stock, an increase of approximately 25% over the dividend paid in the fourth quarter. The distribution is payable March 26, 2021 to the shareholders of record at the close of business on March 10, 2021.

“We had a very strong finish to 2020, producing material growth in AFFO per share well ahead of plan,” commented Jeffrey A. Stoops, President and Chief Executive Officer. “The fourth quarter was our strongest of the year in terms of customer activity, and we continued to execute very well notwithstanding the ongoing impact of Covid-19 to varying degrees across all of our markets. I want to express my continued gratitude to our employees, customers and vendors for their extraordinary efforts during these difficult times. With the CBRS and C-Band auctions now a reality in the US, our recently-announced master agreement with Dish, and important spectrum auctions planned for our international markets over the next two years, we believe we are on the cusp of another increase in operational activity and demand for our infrastructure likely to begin in the second half of 2021 and continue for years thereafter. Together with these favorable business prospects, we find ourselves in a low-interest rate environment with a low cost of capital and abundant sources of financing. As a result, we have stayed fully invested and intend to stay fully invested in our business, repurchasing since our last earnings release 1.8 million shares of our stock and just last week closing on our very exciting transaction with PG&E, among other portfolio growth transactions we have consummated. We are extremely confident and excited about our future, so much so that we have just approved an increase to our quarterly dividend of approximately 25%. While a substantial increase, this dividend on an annual basis represents less than 23% of the midpoint of our AFFO in our 2021 Outlook, leaving us substantial capital for additional investment. We believe we will continue to produce material growth in AFFO per share and, including the dividend, total shareholder return.”

Operating Results

The table below details select financial results for the three months ended December 31, 2020 and comparisons to the prior year period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

excluding

 

 

Q4 2020

 

Q4 2019

 

$ Change

 

% Change

 

FX (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

($ in millions, except per share amounts)

Site leasing revenue

 

$

493.0

 

$

481.1

 

$

11.9

 

 

2.5%

 

 

6.1%

Site development revenue

 

 

43.0

 

 

32.6

 

 

10.4

 

 

31.9%

 

 

31.9%

Tower cash flow (1)

 

 

402.2

 

 

387.4

 

 

14.8

 

 

3.8%

 

 

6.9%

Net income

 

 

105.8

 

 

67.4

 

 

38.4

 

 

57.0%

 

 

26.2%

Earnings per share – diluted

 

 

0.94

 

 

0.59

 

 

0.35

 

 

59.3%

 

 

28.9%

Adjusted EBITDA (1)

 

 

380.6

 

 

362.4

 

 

18.2

 

 

5.0%

 

 

8.1%

AFFO (1)

 

 

280.1

 

 

248.8

 

 

31.3

 

 

12.6%

 

 

17.0%

AFFO per share (1)

 

 

2.49

 

 

2.18

 

 

0.31

 

 

14.2%

 

 

18.8%

(1)

See the reconciliations and other disclosures under “Non-GAAP Financial Measures” later in this press release.

Total revenues in the fourth quarter of 2020 were $536.0 million compared to $513.7 million in the year earlier period, an increase of 4.3%. Site leasing revenue in the quarter of $493.0 million was comprised of domestic site leasing revenue of $393.0 million and international site leasing revenue of $100.0 million. Domestic cash site leasing revenue was $391.9 million in the fourth quarter of 2020 compared to $377.7 million in the year earlier period, an increase of 3.8%. International cash site leasing revenue was $100.9 million in the fourth quarter of 2020 compared to $100.4 million in the year earlier period, an increase of 0.5%, or 18.2% on a constant currency basis. Site development revenues were $43.0 million in the fourth quarter of 2020 compared to $32.6 million in the year earlier period, an increase of 31.9%.

Site leasing operating profit was $399.3 million, an increase of 3.4% over the year earlier period. Site leasing contributed 97.9% of the Company’s total operating profit in the fourth quarter of 2020. Domestic site leasing segment operating profit was $328.5 million, an increase of 3.8% over the year earlier period. International site leasing segment operating profit was $70.7 million, an increase of 1.3% over the year earlier period.

Tower Cash Flow of $402.2 million for the fourth quarter of 2020 was comprised of Domestic Tower Cash Flow of $330.1 million and International Tower Cash Flow of $72.1 million. Domestic Tower Cash Flow for the quarter increased 4.0% over the prior year period and International Tower Cash Flow increased 3.0% over the prior year period, or 20.1% on a constant currency basis. Tower Cash Flow Margin was 81.6% for the fourth quarter of 2020, as compared to 81.0% for the year earlier period.

Net income for the fourth quarter of 2020 was $105.8 million, or $0.94 per share, and included a $53.1 million gain, net of taxes, on the currency related remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries. Net income for the fourth quarter of 2019 was $67.4 million, or $0.59 per share, and included a $23.7 million gain, net of taxes, on the currency related remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries.

Adjusted EBITDA for the quarter was $380.6 million, a 5.0% increase over the prior year period. Adjusted EBITDA Margin was 71.0% in the fourth quarter of 2020 and 2019.

Net Cash Interest Expense was $85.9 million in the fourth quarter of 2020 compared to $96.5 million in the fourth quarter of 2019, a decrease of 11.0%.

AFFO for the quarter was $280.1 million, a 12.6% increase over the prior year period. AFFO per share for the fourth quarter of 2020 was $2.49, a 14.2% increase over the prior year period, and 18.8% on a constant currency basis.

Investing Activities

During the fourth quarter of 2020, SBA acquired 104 communication sites for total cash consideration of $133.5 million paid during or subsequent to the end of the quarter. SBA also built 106 towers during the fourth quarter of 2020. As of December 31, 2020, SBA owned or operated 32,923 communication sites, 16,546 of which are located in the United States and its territories, and 16,377 of which are located internationally. In addition, the Company spent $16.4 million to purchase land and easements and to extend lease terms. Total cash capital expenditures for the fourth quarter of 2020 were $104.7 million, consisting of $10.0 million of non-discretionary cash capital expenditures (tower maintenance and general corporate) and $94.7 million of discretionary cash capital expenditures (new tower builds, tower augmentations, acquisitions, and purchasing land and easements).

Subsequent to the fourth quarter of 2020, the Company acquired 25 communication sites for an aggregate consideration of $8.4 million in cash. In addition, on February 16, 2021, the Company closed on the acquisition of wireless tenant licenses on 697 utility transmission structures related to the previously announced PG&E transaction for $954.0 million of cash consideration. The balance of the PG&E transaction is anticipated to close by the end of the third quarter. Furthermore, the Company has agreed to purchase and anticipates closing on 299 additional communication sites for an aggregate amount of $72.7 million. The Company anticipates that the majority of these acquisitions will be consummated by the end of the second quarter of 2021.

Financing Activities and Liquidity

SBA ended the fourth quarter of 2020 with $11.2 billion of total debt, $7.8 billion of total secured debt, $340.9 million of cash and cash equivalents, short-term restricted cash, and short-term investments, and $10.8 billion of Net Debt. SBA’s Net Debt and Net Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were 7.1x and 4.9x, respectively.

On January 29, 2021, the Company issued $1.5 billion of unsecured senior notes due February 1, 2029 (the “2021 Senior Notes”). The 2021 Senior Notes accrue interest at a rate of 3.125% per annum. Interest on the 2021 Senior Notes is due semi-annually on February 1 and August 1 of each year, beginning on August 1, 2021. Net proceeds from this offering were used to fully redeem all of the 4.000% Senior Notes (the “2017 Notes”) and to pay all premiums and costs associated with such redemption, repay the amounts outstanding under the Revolving Credit Facility, and for general corporate purposes.

As of the date of this press release, as a result of the closing of the PG&E transaction, the Company had $630.0 million outstanding under the $1.25 billion Revolving Credit Facility.

During the fourth quarter of 2020, the Company repurchased 1.7 million shares of its Class A common stock for $480.3 million at an average price per share of $290.89 under its $1.0 billion stock repurchase plan. Subsequent to December 31, 2020, the Company repurchased 0.5 million shares of its Class A common stock for $144.0 million, at an average price per share of $262.16. Shares repurchased were retired. As of the date of this filing, the Company has $500.0 million of authorization remaining under the plan.

In the fourth quarter of 2020, the Company declared and paid a cash dividend of $51.5 million.

Outlook

The Company is providing its initial full year 2021 Outlook for anticipated results. The Outlook provided is based on a number of assumptions that the Company believes are reasonable at the time of this press release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in the Company’s filings with the Securities and Exchange Commission.

The Company’s full year 2021 Outlook assumes the acquisitions of only those communication sites under contract and anticipated to close at the time of this press release. The Company may spend additional capital in 2021 on acquiring revenue producing assets not yet identified or under contract, the impact of which is not reflected in the 2021 guidance. The Outlook also does not contemplate any additional repurchases of the Company’s stock during 2021, although the Company may ultimately spend capital to repurchase some of its stock during the year.

The Company’s Outlook assumes an average foreign currency exchange rate of 5.55 Brazilian Reais to 1.0 U.S. Dollar, 1.28 Canadian Dollars to 1.0 U.S. Dollar, and 15.04 South African Rand to 1.0 U.S. Dollar for the full year 2021 outlook. When compared to 2020 actual foreign currency exchange rates, these 2021 foreign currency rate assumptions negatively impacted the 2021 full year Outlook by approximately $14 million for leasing revenue, $10 million for Tower Cash Flow, $10 million for Adjusted EBITDA and $10 million for AFFO.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

 

 

 

Full Year 2021

 

 

 

 

 

 

 

 

 

 

Site leasing revenue (1)

 

 

 

 

$

2,032.0

to

$

2,052.0

Site development revenue

 

 

 

 

$

140.0

to

$

160.0

Total revenues

 

 

 

 

$

2,172.0

to

$

2,212.0

Tower Cash Flow (2)

 

 

 

 

$

1,664.0

to

$

1,684.0

Adjusted EBITDA (2)

 

 

 

 

$

1,562.0

to

$

1,582.0

Net cash interest expense (3)

 

 

 

 

$

358.0

to

$

368.0

Non-discretionary cash capital expenditures (4)

 

 

 

 

$

37.0

to

$

47.0

AFFO (2)

 

 

 

 

$

1,117.0

to

$

1,163.0

AFFO per share (2) (5)

 

 

 

 

$

10.00

to

$

10.41

Discretionary cash capital expenditures (6)

 

 

 

 

$

1,200.0

to

$

1,220.0

(1)

The Company’s Outlook for site leasing revenue includes revenue associated with pass through reimbursable expenses.

(2)

See the reconciliation of this non-GAAP financial measure presented below under “Non-GAAP Financial Measures.”

(3)

Net cash interest expense is defined as interest expense less interest income. Net cash interest expense does not include amortization of deferred financing fees or non-cash interest expense.

(4)

Consists of tower maintenance and general corporate capital expenditures.

(5)

Outlook for AFFO per share is calculated by dividing the Company’s outlook for AFFO by an assumed weighted average number of diluted common shares of 111.7 million. Our Outlook does not include the impact of any potential future repurchases of the Company’s stock during 2021.

(6)

Consists of new tower builds, tower augmentations, communication site acquisitions and ground lease purchases. Does not include expenditures for acquisitions of revenue producing assets not under contract at the date of this press release.

Conference Call Information

SBA Communications Corporation will host a conference call on Monday, February 22, 2021 at 5:00 PM (EDT) to discuss the quarterly results. The call may be accessed as follows:

When:

Monday, February 22, 2021 at 5:00 PM (EDT), please dial-in by 4:45 PM

Dial-in Number:

(877) 692-8955

Access Code:

1527350

Conference Name:

SBA Fourth Quarter Results

Replay Available:

February 22, 2021 at 11:00 PM to March 8, 2021 at 12:00 AM (TZ: Eastern)

Replay Number:

(866) 207-1041 – Access Code: 4810660

Internet Access:

www.sbasite.com

 

Information Concerning Forward-Looking Statements

This press release and our earnings call include forward-looking statements, including statements regarding the Company’s expectations or beliefs regarding (i) customer activity and demand for the Company’s wireless communications infrastructure during 2021 and thereafter and the timing of such activity and demand, (ii) the impact of economic conditions on capital spending, including the continued impact of the COVID-19 pandemic, (iii) the availability and sources of financing; (iv) the Company’s future capital allocation, including with respect to its increased dividend and its availability of capital for additional investment; (v) the Company’s financial and operational performance in 2021, including growth in AFFO per share and total shareholder return, (vi) the Company’s financial and operational guidance for the full year 2021, the assumptions it made and the drivers contributing to its full year guidance, (vii) the timing of closing for currently pending acquisitions, and (viii) foreign exchange rates and their impact on the Company’s financial and operational guidance.

The Company wishes to caution readers that these forward-looking statements may be affected by the risks and uncertainties in the Company’s business as well as other important factors may have affected and could in the future affect the Company’s actual results and could cause the Company’s actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. With respect to the Company’s expectations regarding all of these statements, including its financial and operational guidance, such risk factors include, but are not limited to: (1) the ability and willingness of wireless service providers to maintain or increase their capital expenditures; (2) the Company’s ability to identify and acquire sites at prices and upon terms that will provide accretive portfolio growth; (3) the Company’s ability to accurately identify and manage any risks associated with its acquired sites, to effectively integrate such sites into its business and to achieve the anticipated financial results; (4) the Company’s ability to secure and retain as many site leasing tenants as planned at anticipated lease rates; (5) the impact of continued consolidation among wireless service providers, including the impact of the completed T-Mobile and Sprint merger, on the Company’s leasing revenue; (6) the Company’s ability to successfully manage the risks associated with international operations, including risks associated with foreign currency exchange rates; (7) the Company’s ability to secure and deliver anticipated services business at contemplated margins; (8) the Company’s ability to maintain expenses and cash capital expenditures at appropriate levels for its business while seeking to attain its investment goals; (9) the Company’s ability to acquire land underneath towers on terms that are accretive; (10) the economic climate for the wireless communications industry in general and the wireless communications infrastructure providers in particular in the United States, Brazil, South Africa and in other international markets; (11) the ability of Dish to become and compete as a nationwide carrier; (12) the Company’s ability to obtain future financing at commercially reasonable rates or at all; (13) the ability of the Company to achieve its long-term stock repurchases strategy, which will depend, among other things, on the trading price of the Company’s common stock, which may be positively or negatively impacted by the repurchase program, market and business conditions; (14) the Company’s ability to achieve the new builds targets included in its anticipated annual portfolio growth goals, which will depend, among other things, on obtaining zoning and regulatory approvals, weather, availability of labor and supplies and other factors beyond the Company’s control that could affect the Company’s ability to build additional towers in 2021; (15) the extent and duration of the impact of the COVID-19 crisis on the global economy, on the Company’s business and results of operations, and on foreign currency exchange rates; and (16) the Company’s ability to meet its total portfolio growth, which will depend, in addition to the new build risks, on the availability of sufficient towers for sale to meet our targets, competition from third parties for such acquisitions and our ability to negotiate the terms of, and acquire, these potential tower portfolios on terms that meet our internal return criteria. With respect to its expectations regarding the ability to close pending acquisitions, these factors also include satisfactorily completing due diligence, the amount and quality of due diligence that the Company is able to complete prior to closing of any acquisition and its ability to accurately anticipate the future performance of the acquired towers, the ability to receive required regulatory approval, the ability and willingness of each party to fulfill their respective closing conditions and their contractual obligations and the availability of cash on hand or borrowing capacity under the Revolving Credit Facility to fund the consideration. With respect to the repurchases under the Company’s stock repurchase program, the amount of shares repurchased, if any, and the timing of such repurchases will depend on, among other things, the trading price of the Company’s common stock, which may be positively or negatively impacted by the repurchase program, market and business conditions, the availability of stock, the Company’s financial performance or determinations following the date of this announcement in order to use the Company’s funds for other purposes. Furthermore, the Company’s forward-looking statements and its 2021 outlook assumes that the Company continues to qualify for treatment as a REIT for U.S. federal income tax purposes and that the Company’s business is currently operated in a manner that complies with the REIT rules and that it will be able to continue to comply with and conduct its business in accordance with such rules. In addition, these forward-looking statements and the information in this press release is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K filed with the Commission on February 24, 2020 and Quarterly Report on Form 10-Q filed with the Commission on November 5, 2020.

This press release contains non-GAAP financial measures. Reconciliation of each of these non-GAAP financial measures and the other Regulation G information is presented below under “Non-GAAP Financial Measures.”

This press release will be available on our website at www.sbasite.com.

About SBA Communications Corporation

SBA Communications Corporation is a first choice provider and leading owner and operator of wireless communications infrastructure in North, Central, and South America and South Africa. By “Building Better Wireless,” SBA generates revenue from two primary businesses – site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant communication sites to a variety of wireless service providers under long-term lease contracts. For more information please visit: www.sbasite.com.

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) (in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

For the year

 

 

ended December 31,

 

ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Site leasing

 

$

492,947

 

 

$

481,100

 

 

$

1,954,472

 

 

$

1,860,858

 

Site development

 

 

42,958

 

 

 

32,559

 

 

 

128,666

 

 

 

153,787

 

Total revenues

 

 

535,905

 

 

 

513,659

 

 

 

2,083,138

 

 

 

2,014,645

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation, accretion,

 

 

 

 

 

 

 

 

 

 

 

 

and amortization shown below):

 

 

 

 

 

 

 

 

 

 

 

 

Cost of site leasing

 

 

93,659

 

 

 

94,785

 

 

 

373,778

 

 

 

373,951

 

Cost of site development

 

 

34,333

 

 

 

26,474

 

 

 

102,750

 

 

 

119,080

 

Selling, general, and administrative expenses (1)

 

 

47,412

 

 

 

43,962

 

 

 

194,267

 

 

 

192,717

 

Acquisition and new business initiatives related

 

 

 

 

 

 

 

 

 

 

 

 

adjustments and expenses

 

 

4,024

 

 

 

5,559

 

 

 

16,582

 

 

 

15,228

 

Asset impairment and decommission costs

 

 

10,994

 

 

 

9,472

 

 

 

40,097

 

 

 

33,103

 

Depreciation, accretion, and amortization

 

 

180,383

 

 

 

179,487

 

 

 

721,970

 

 

 

697,078

 

Total operating expenses

 

 

370,805

 

 

 

359,739

 

 

 

1,449,444

 

 

 

1,431,157

 

Operating income

 

 

165,100

 

 

 

153,920

 

 

 

633,694

 

 

 

583,488

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

641

 

 

 

808

 

 

 

2,981

 

 

 

5,500

 

Interest expense

 

 

(86,545

)

 

 

(97,355

)

 

 

(367,874

)

 

 

(390,036

)

Non-cash interest expense

 

 

(11,803

)

 

 

(1,239

)

 

 

(24,870

)

 

 

(3,193

)

Amortization of deferred financing fees

 

 

(4,847

)

 

 

(7,133

)

 

 

(20,058

)

 

 

(22,466

)

Loss from extinguishment of debt, net

 

 

 

 

 

 

 

 

(19,463

)

 

 

(457

)

Other income (expense), net

 

 

77,986

 

 

 

35,349

 

 

 

(222,159

)

 

 

14,053

 

Total other expense, net

 

 

(24,568

)

 

 

(69,570

)

 

 

(651,443

)

 

 

(396,599

)

Income (loss) before income taxes

 

 

140,532

 

 

 

84,350

 

 

 

(17,749

)

 

 

186,889

 

(Provision) benefit for income taxes

 

 

(34,347

)

 

 

(16,794

)

 

 

41,796

 

 

 

(39,605

)

Net income

 

 

106,185

 

 

 

67,556

 

 

 

24,047

 

 

 

147,284

 

Net (income) loss attributable to noncontrolling interests

 

 

(404

)

 

 

(206

)

 

 

57

 

 

 

(293

)

Net income attributable to SBA Communications

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

$

105,781

 

 

$

67,350

 

 

$

24,104

 

 

$

146,991

 

Net income per common share attributable to SBA

 

 

 

 

 

 

 

 

 

 

 

 

Communications Corporation:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96

 

 

$

0.60

 

 

$

0.22

 

 

$

1.30

 

Diluted

 

$

0.94

 

 

$

0.59

 

 

$

0.21

 

 

$

1.28

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

110,707

 

 

 

112,288

 

 

 

111,532

 

 

 

112,809

 

Diluted

 

 

112,538

 

 

 

114,306

 

 

 

113,465

 

 

 

114,693

 

Contacts

Mark DeRussy, CFA

Capital Markets

561-226-9531

Lynne Hopkins

Media Relations

561-226-9431

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