Press release

SBA Communications Corporation Reports First Quarter 2021 Results; Updates Full Year 2021 Outlook; and Declares Quarterly Cash Dividend

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SBA Communications Corporation (Nasdaq: SBAC) (“SBA” or the “Company”) today reported results for the quarter ended March 31, 2021.

Highlights of the first quarter include:

  • Net loss of $11.7 million or $(0.11) per share including a $57.0 million loss, net of taxes, on currency-related remeasurement of intercompany loans
  • AFFO per share growth of 16.2% over the year earlier period on a constant currency basis
  • Signed a new global leasing agreement with Verizon subsequent to quarter end
  • Repurchased 0.7 million shares at an average price per share of $258.33

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. The distribution is payable June 15, 2021 to the shareholders of record at the close of business on May 20, 2021.

“We had a strong start to 2021,” commented Jeffrey A. Stoops, President and Chief Executive Officer. “We produced very solid year-over-year growth in AFFO per share while operationally executing at a very high level. We had several notable accomplishments since the start of the year, including the closing of our exciting PG&E acquisition, the completion of the lowest cost unsecured senior notes offering in our history, and the execution of new master agreements with both Verizon Wireless and Dish. Our new agreement with Verizon cements SBA as a key partner to Verizon in the deployment of their new C-Band spectrum for the build out of their nationwide 5G network, while also extending the committed terms under SBA’s existing Verizon lease agreements. With the completion of the C-Band spectrum auction during the first quarter and the stated network plans of our largest customers, we had a very strong first quarter in our services business, while seeing substantial growth in our backlog of both services business and new lease and amendment applications. This increasing activity level has allowed us to increase our 2021 full year services outlook and gives us tremendous confidence in increased organic leasing growth over the next couple of years. We believe the future is very bright, and we are excited to support our customers in the advancement of wireless networks across all of our markets. The favorable operational environment, low cost of capital and opportunistic allocation of capital into both quality new assets and stock repurchases, should allow us to continue to produce material growth in AFFO per share and total shareholder return.”

Operating Results

The table below details select financial results for the three months ended March 31, 2021 and comparisons to the prior year period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

excluding

 

 

Q1 2021

 

Q1 2020

 

$ Change

 

% Change

 

FX (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

($ in millions, except per share amounts)

Site leasing revenue

 

$

505.1

 

$

492.3

 

$

12.8

 

 

2.6%

 

 

5.1%

Site development revenue

 

 

43.6

 

 

24.7

 

 

18.9

 

 

76.6%

 

 

76.6%

Tower cash flow (1)

 

 

411.8

 

 

398.1

 

 

13.7

 

 

3.5%

 

 

5.6%

Net loss

 

 

(11.7)

 

 

(127.1)

 

 

115.4

 

 

90.8%

 

 

80.4%

Earnings per share – diluted

 

 

(0.11)

 

 

(1.14)

 

 

1.03

 

 

90.4%

 

 

86.4%

Adjusted EBITDA (1)

 

 

390.1

 

 

369.9

 

 

20.2

 

 

5.4%

 

 

7.6%

AFFO (1)

 

 

286.3

 

 

259.9

 

 

26.4

 

 

10.2%

 

 

13.3%

AFFO per share (1)

 

 

2.58

 

 

2.28

 

 

0.30

 

 

13.2%

 

 

16.2%

 

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

Total revenues in the first quarter of 2021 were $548.7 million compared to $517.0 million in the year earlier period, an increase of 6.1%. Site leasing revenue in the quarter of $505.1 million was comprised of domestic site leasing revenue of $403.6 million and international site leasing revenue of $101.5 million. Domestic cash site leasing revenue was $402.2 million in the first quarter of 2021 compared to $383.9 million in the year earlier period, an increase of 4.8%. International cash site leasing revenue was $102.3 million in the first quarter of 2021 compared to $106.1 million in the year earlier period, a decrease of 3.6%, or an increase of 8.4% on a constant currency basis. Site development revenues were $43.6 million in the first quarter of 2021 compared to $24.7 million in the year earlier period, an increase of 76.6%.

Site leasing operating profit was $409.7 million, an increase of 3.3% over the year earlier period. Site leasing contributed 97.8% of the Company’s total operating profit in the first quarter of 2021. Domestic site leasing segment operating profit was $338.5 million, an increase of 5.0% over the year earlier period. International site leasing segment operating profit was $71.3 million, a decrease of 3.8% from the year earlier period.

Tower Cash Flow of $411.8 million for the first quarter of 2021 was comprised of Domestic Tower Cash Flow of $339.3 million and International Tower Cash Flow of $72.5 million. Domestic Tower Cash Flow for the quarter increased 4.9% over the prior year period and International Tower Cash Flow decreased 3.0% from the prior year period, or increased 8.3% on a constant currency basis. Tower Cash Flow Margin was 81.6% for the first quarter of 2021, as compared to 81.2% for the year earlier period.

Net loss for the first quarter of 2021 was $11.7 million, or $(0.11) per share, and included a $57.0 million loss, net of taxes, on the currency-related remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries. Net loss for the first quarter of 2020 was $127.1 million, or $(1.14) per share, and included a $152.8 million loss, net of taxes, on the currency-related remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries.

Adjusted EBITDA for the quarter was $390.1 million, a 5.4% increase over the prior year period. Adjusted EBITDA Margin was 71.2% in the first quarter of 2021 and compared to 71.9% in the first quarter of 2020.

Net Cash Interest Expense was $89.5 million in the first quarter of 2021 compared to $95.0 million in the first quarter of 2020, a decrease of 5.8%.

AFFO for the quarter was $286.3 million, a 10.2% increase over the prior year period. AFFO per share for the first quarter of 2021 was $2.58, a 13.2% increase over the prior year period, and 16.2% on a constant currency basis.

Investing Activities

During the first quarter of 2021, SBA acquired 731 communication sites, including wireless tenant licenses on 697 utility transmission structures from the previously announced PG&E transaction, for total cash consideration of $975.5 million. SBA also built 62 towers during the first quarter of 2021. As of March 31, 2021, SBA owned or operated 33,711 communication sites, 17,259 of which are located in the United States and its territories, and 16,452 of which are located internationally. In addition, the Company spent $6.5 million to purchase land and easements and to extend lease terms. Total cash capital expenditures for the first quarter of 2021 were $1.1 billion, consisting of $8.2 million of non-discretionary cash capital expenditures (tower maintenance and general corporate) and $1.1 billion of discretionary cash capital expenditures (new tower builds, tower augmentations, acquisitions, and purchasing land and easements).

Subsequent to the first quarter of 2021, the Company has purchased or agreed to purchase 413 communication sites for an aggregate consideration of $110.2 million in cash. The Company anticipates that the majority of these acquisitions will be consummated by the end of the third quarter of 2021.

Financing Activities and Liquidity

SBA ended the first quarter of 2021 with $12.1 billion of total debt, $8.0 billion of total secured debt, $240.2 million of cash and cash equivalents, short-term restricted cash, and short-term investments, and $11.9 billion of Net Debt. SBA’s Net Debt and Net Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were 7.6x and 5.0x, 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, the Company had $530.0 million outstanding under the $1.25 billion Revolving Credit Facility.

During the first quarter of 2021, the Company repurchased 0.7 million shares of its Class A common stock for $168.9 million at an average price per share of $258.33 under its $1.0 billion stock repurchase plan. Shares repurchased were retired. As of the date of this filing, the Company has $475.1 million of authorization remaining under the plan.

In the first quarter of 2021, the Company declared and paid a cash dividend of $63.4 million.

Outlook

The Company is updating its 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 reflects the previously announced impact of the Verizon agreement and 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 5.60 Brazilian Reais to 1.0 U.S. Dollar, 1.25 Canadian Dollars to 1.0 U.S. Dollar, and 14.90 South African Rand to 1.0 U.S. Dollar throughout the last three quarters of 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change from

 

 

 

 

 

 

 

 

 

 

 

 

February 22, 2021

(in millions, except per share amounts)

 

 

 

 

Full Year 2021

 

 

Outlook (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

Site leasing revenue (1)

 

 

 

 

$

2,065.0

to

$

2,085.0

 

$

33.0

Site development revenue

 

 

 

 

$

155.0

to

$

175.0

 

$

15.0

Total revenues

 

 

 

 

$

2,220.0

to

$

2,260.0

 

$

48.0

Tower Cash Flow (2)

 

 

 

 

$

1,667.0

to

$

1,687.0

 

$

3.0

Adjusted EBITDA (2)

 

 

 

 

$

1,573.0

to

$

1,593.0

 

$

11.0

Net cash interest expense (3)

 

 

 

 

$

358.0

to

$

368.0

 

$

Non-discretionary cash capital expenditures (4)

 

 

 

 

$

36.0

to

$

46.0

 

$

(1.0)

AFFO (2)

 

 

 

 

$

1,131.0

to

$

1,177.0

 

$

14.0

AFFO per share (2) (5)

 

 

 

 

$

10.15

to

$

10.57

 

$

0.155

Discretionary cash capital expenditures (6)

 

 

 

 

$

1,225.0

to

$

1,245.0

 

$

25.0

(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 111.4 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. Amount excludes $77.1 million of cash capital expenditures for acquisitions completed during the fourth quarter of 2020 which were not funded until the first quarter of 2021.

(7) Changes from prior outlook are measured based on the midpoint of outlook ranges provided.

Conference Call Information

SBA Communications Corporation will host a conference call on Monday, April 26, 2021 at 5:00 PM (EDT) to discuss the quarterly results. The call may be accessed as follows:

When: Monday, April 26, 2021 at 5:00 PM (EDT), please dial-in by 4:45 PM

Dial-in Number: (877) 692-8955

Access Code: 5907785

Conference Name: SBA First quarter 2021 results

Replay Available: April 26, 2021 at 11:00 PM to May 10, 2021 at 12:00 AM (TZ: Eastern)

Replay Number: (866) 207-1041 – Access Code: 6037760

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, (ii) the Company’s role in the continued advancement of wireless networks; (iii) the Company’s future capital allocation, including with respect to stock repurchases, acquisition of new assets and its availability of capital for additional investment; (iv) the Company’s financial and operational performance in 2021, including the Company’s revised financial and operational guidance, the assumptions and drivers contributing to its full year guidance, and the ability to deliver material growth in total shareholder return, (v) the timing of closing for currently pending acquisitions, and (vi) 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, including its ability to realize anticipated benefits under the new Verizon agreement; (5) the impact of continued consolidation among wireless service providers in the U.S. and internationally, 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 25, 2021.

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.

 

 

 

 

 

 

 

 

 

For the three months

 

 

ended March 31,

 

 

2021

 

2020

Revenues:

 

 

 

 

Site leasing

 

$

505,103

 

$

492,356

Site development

 

 

43,636

 

 

24,711

Total revenues

 

 

548,739

 

 

517,067

Operating expenses:

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation, accretion, and amortization shown below):

 

 

 

 

 

 

Cost of site leasing

 

 

95,368

 

 

95,799

Cost of site development

 

 

34,406

 

 

19,715

Selling, general, and administrative expenses (1)

 

 

51,601

 

 

49,617

Acquisition and new business initiatives related adjustments and expenses

 

 

5,001

 

 

3,799

Asset impairment and decommission costs

 

 

4,903

 

 

14,355

Depreciation, accretion, and amortization

 

 

183,881

 

 

182,579

Total operating expenses

 

 

375,160

 

 

365,864

Operating income

 

 

173,579

 

 

151,203

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

632

 

 

885

Interest expense

 

 

(90,095)

 

 

(95,851)

Non-cash interest expense

 

 

(11,804)

 

 

(2,406)

Amortization of deferred financing fees

 

 

(4,891)

 

 

(5,139)

Loss from extinguishment of debt, net

 

 

(11,652)

 

 

(16,864)

Other expense, net

 

 

(88,436)

 

 

(226,299)

Total other expense, net

 

 

(206,246)

 

 

(345,674)

Loss before income taxes

 

 

(32,667)

 

 

(194,471)

Benefit for income taxes

 

 

20,922

 

 

66,538

Net loss

 

 

(11,745)

 

 

(127,933)

Net loss attributable to noncontrolling interests

 

 

 

 

875

Net loss attributable to SBA Communications Corporation

 

$

(11,745)

 

$

(127,058)

Net loss per common share attributable to SBA Communications Corporation:

 

 

 

 

 

 

Basic

 

$

(0.11)

 

$

(1.14)

Diluted

 

$

(0.11)

 

$

(1.14)

Weighted average number of common shares

 

 

 

 

 

 

Basic

 

 

109,469

 

 

111,908

Diluted

 

 

109,469

 

 

111,908

 

(1) Includes non-cash compensation of $19,584 and $15,553 for the three months ended March 31, 2021 and 2020, respectively.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2021

 

2020

ASSETS

 

(unaudited)

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,622

 

$

308,560

Restricted cash

 

 

62,926

 

 

31,671

Accounts receivable, net

 

 

86,165

 

 

74,088

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

38,574

 

 

34,796

Prepaid expenses and other current assets

 

 

25,640

 

 

23,875

Total current assets

 

 

389,927

 

 

472,990

Property and equipment, net

 

 

2,608,526

 

 

2,677,326

Intangible assets, net

 

 

2,984,098

 

 

3,156,150

Operating lease right-of-use assets, net

 

 

2,303,070

 

 

2,369,358

PG&E and other right-of-use assets, net

 

 

956,945

 

 

4,202

Other assets

 

 

520,894

 

 

477,992

Total assets

 

$

9,763,460

 

$

9,158,018

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

33,610

 

$

109,969

Accrued expenses

 

 

57,218

 

 

63,031

Current maturities of long-term debt

 

 

24,000

 

 

24,000

Deferred revenue

 

 

174,351

 

 

113,117

Accrued interest

 

 

27,003

 

 

54,350

Current lease liabilities

 

 

231,952

 

 

236,037

Other current liabilities

 

 

12,630

 

 

14,297

Total current liabilities

 

 

560,764

 

 

614,801

Long-term liabilities:

 

 

 

 

 

 

Long-term debt, net

 

 

12,019,757

 

 

11,071,796

Long-term lease liabilities

 

 

2,035,371

 

 

2,094,363

Other long-term liabilities

 

 

179,068

 

 

186,246

Total long-term liabilities

 

 

14,234,196

 

 

13,352,405

Redeemable noncontrolling interests

 

 

13,677

 

 

15,194

Shareholders’ deficit:

 

 

 

 

 

 

Preferred stock – par value $0.01, 30,000 shares authorized, no shares issued or outstanding

 

 

 

 

Common stock – Class A, par value $0.01, 400,000 shares authorized, 109,331 shares and 109,819 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

 

 

1,093

 

 

1,098

Additional paid-in capital

 

 

2,610,472

 

 

2,586,130

Accumulated deficit

 

 

(6,848,313)

 

 

(6,604,028)

Accumulated other comprehensive loss, net

 

 

(808,429)

 

 

(807,582)

Total shareholders’ deficit

 

 

(5,045,177)

 

 

(4,824,382)

Total liabilities, redeemable noncontrolling interests, and shareholders’ deficit

 

$

9,763,460

 

$

9,158,018

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited) (in thousands)

 

 

 

 

 

 

 

 

 

For the three months

 

 

ended March 31,

 

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(11,745)

 

$

(127,933)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, accretion, and amortization

 

 

183,881

 

 

182,579

Loss on remeasurement of U.S. dollar denominated intercompany loans

 

 

86,251

 

 

230,132

Non-cash compensation expense

 

 

20,422

 

 

16,278

Non-cash asset impairment and decommission costs

 

 

4,791

 

 

13,997

Loss from extinguishment of debt

 

 

10,652

 

 

16,864

Deferred income tax benefit

 

 

(26,837)

 

 

(72,204)

Other non-cash items reflected in the Statements of Operations

 

 

17,413

 

 

1,402

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts, net

 

 

(4,523)

 

 

19,712

Prepaid expenses and other assets

 

 

3,517

 

 

(1,643)

Operating lease right-of-use assets, net

 

 

29,865

 

 

30,181

Accounts payable and accrued expenses

 

 

(4,667)

 

 

(4,725)

Accrued interest

 

 

(27,347)

 

 

(18,197)

Long-term lease liabilities

 

 

(26,393)

 

 

(24,712)

Other liabilities

 

 

30,237

 

 

16,011

Net cash provided by operating activities

 

 

285,517

 

 

277,742

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions

 

 

(1,052,676)

 

 

(89,531)

Capital expenditures

 

 

(24,536)

 

 

(39,291)

Other investing activities

 

 

628

 

 

(3,190)

Net cash used in investing activities

 

 

(1,076,584)

 

 

(132,012)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Net borrowings (repayments) under Revolving Credit Facility

 

 

210,000

 

 

(5,000)

Proceeds from issuance of Senior Notes, net of fees

 

 

1,485,670

 

 

988,516

Repayment of Senior Notes

 

 

(757,500)

 

 

(759,143)

Repurchase and retirement of common stock

 

 

(168,923)

 

 

(203,330)

Payment of dividends on common stock

 

 

(63,412)

 

 

(52,201)

Other financing activities

 

 

(4,492)

 

 

(12,177)

Net cash provided by (used in) financing activities

 

 

701,343

 

 

(43,335)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

(10,899)

 

 

(13,900)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

 

(100,623)

 

 

88,495

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:

 

 

 

 

 

 

Beginning of period

 

 

342,808

 

 

141,120

End of period

 

$

242,185

 

$

229,615

 
 

Selected Capital Expenditure Detail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended March 31,

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

(in thousands)

Construction and related costs on new builds

 

$

8,823

 

$

17,031

Augmentation and tower upgrades

 

 

7,560

 

 

13,031

Non-discretionary capital expenditures:

 

 

 

 

 

 

Tower maintenance

 

 

7,313

 

 

8,194

General corporate

 

 

840

 

 

1,035

Total non-discretionary capital expenditures

 

 

8,153

 

 

9,229

Total capital expenditures

 

$

24,536

 

$

39,291

 

Communication Site Portfolio Summary

 

 

 

 

 

 

 

 

 

Domestic

 

International

 

Total

 

 

 

 

 

 

 

Sites owned at December 31, 2020

 

16,546

 

16,377

 

32,923

Sites acquired during the first quarter

 

712

 

19

 

731

Sites built during the first quarter

 

2

 

60

 

62

Sites decommissioned/reclassified during the first quarter

 

(1)

 

(4)

 

(5)

Sites owned at March 31, 2021

 

17,259

 

16,452

 

33,711

 

Segment Operating Profit and Segment Operating Profit Margin

Domestic site leasing and International site leasing are the two segments within our site leasing business. Segment operating profit is a key business metric and one of our two measures of segment profitability. The calculation of Segment operating profit for each of our segments is set forth below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic Site Leasing

 

Int’l Site Leasing

 

Site Development

 

 

For the three months

 

For the three months

 

For the three months

 

 

ended March 31,

 

ended March 31,

 

ended March 31,

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Segment revenue

 

$

403,579

 

$

386,345

 

$

101,524

 

$

106,011

 

$

43,636

 

$

24,711

Segment cost of revenues (excluding depreciation, accretion, and amort.)

 

 

(65,120)

 

 

(63,905)

 

 

(30,248)

 

 

(31,894)

 

 

(34,406)

 

 

(19,715)

Segment operating profit

 

$

338,459

 

$

322,440

 

$

71,276

 

$

74,117

 

$

9,230

 

$

4,996

Segment operating profit margin

 

 

83.9%

 

 

83.5%

 

 

70.2%

 

 

69.9%

 

 

21.2%

 

 

20.2%

 

Non-GAAP Financial Measures

The press release contains non-GAAP financial measures including (i) Cash Site Leasing Revenue; (ii) Tower Cash Flow and Tower Cash Flow Margin; (iii) Adjusted EBITDA, Annualized Adjusted EBITDA, and Adjusted EBITDA Margin; (iv) Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage Ratio (collectively, our “Non-GAAP Debt Measures”); (v) Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), and AFFO per share; and (vi) certain financial metrics after eliminating the impact of changes in foreign currency exchange rates (collectively, our “Constant Currency Measures”).

We have included these non-GAAP financial measures because we believe that they provide investors additional tools in understanding our financial performance and condition.

Specifically, we believe that:

(1) Cash Site Leasing Revenue and Tower Cash Flow are useful indicators of the performance of our site leasing operations;

(2) Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs. In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used in our debt covenant calculations. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance;

(3) FFO, AFFO and AFFO per share, which are metrics used by our public company peers in the communication site industry, provide investors useful indicators of the financial performance of our business and permit investors an additional tool to evaluate the performance of our business against those of our two principal competitors. FFO, AFFO, and AFFO per share are also used to address questions we receive from analysts and investors who routinely assess our operating performance on the basis of these performance measures, which are considered industry standards. We believe that FFO helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion and asset impairment and decommission costs). We believe that AFFO and AFFO per share help investors or other interested parties meaningfully evaluate our financial performance as they include (1) the impact of our capital structure (primarily interest expense on our outstanding debt) and (2) sustaining capital expenditures and exclude the impact of (1) our asset base (primarily depreciation, amortization and accretion and asset impairment and decommission costs) and (2) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods and the non-cash portion of our reported tax provision. GAAP requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. In accordance with GAAP, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. We only use AFFO as a performance measure. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment. We believe our definition of FFO is consistent with how that term is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and that our definition and use of AFFO and AFFO per share is consistent with those reported by the other communication site companies;

(4) Our Non-GAAP Debt Measures provide investors a more complete understanding of our net debt and leverage position as they include the full principal amount of our debt which will be due at maturity and, to the extent that such measures are calculated on Net Debt are net of our cash and cash equivalents, short-term restricted cash, and short-term investments; and

(5) Our Constant Currency Measures provide management and investors the ability to evaluate the performance of the business without the impact of foreign currency exchange rate fluctuations.

In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP Debt Measures are components of the calculations used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and indentures relating to our 2016 Senior Notes, 2020 Senior Notes, and 2021 Senior Notes. These non-GAAP financial measures are not intended to be an alternative to any of the financial measures provided in our results of operations or our balance sheet as determined in accordance with GAAP.

Financial Metrics after Eliminating the Impact of Changes In Foreign Currency Exchange Rates

We eliminate the impact of changes in foreign currency exchange rates for each of the financial metrics listed in the table below by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, and by eliminating the impact of the remeasurement of our intercompany loans. The table below provides the reconciliation of the reported growth rate year-over-year of each of such measures to the growth rate after eliminating the impact of changes in foreign currency exchange rates to such measure.

 

 

 

 

 

 

 

 

 

First quarter

 

 

 

 

 

 

2021 year

 

Foreign

 

Growth excluding

 

 

over year

 

currency

 

foreign

 

 

growth rate

 

impact

 

currency impact

 

 

 

 

 

 

 

Total site leasing revenue

 

2.6

%

 

(2.5

%)

 

5.1

%

Total cash site leasing revenue

 

3.0

%

 

(2.5

%)

 

5.5

%

Int’l cash site leasing revenue

 

(3.6

%)

 

(12.0

%)

 

8.4

%

Total site leasing segment operating profit

 

3.3

%

 

(2.1

%)

 

5.4

%

Int’l site leasing segment operating profit

 

(3.8

%)

 

(11.2

%)

 

7.4

%

Total site leasing tower cash flow

 

3.5

%

 

(2.1

%)

 

5.6

%

Int’l site leasing tower cash flow

 

(3.0

%)

 

(11.3

%)

 

8.3

%

Net loss

 

90.8

%

 

10.4

%

 

80.4

%

Earnings per share – diluted

 

90.4

%

 

4.0

%

 

86.4

%

Adjusted EBITDA

 

5.4

%

 

(2.2

%)

 

7.6

%

AFFO

 

10.2

%

 

(3.1

%)

 

13.3

%

AFFO per share

 

13.2

%

 

(3.0

%)

 

16.2

%

 

Cash Site Leasing Revenue, Tower Cash Flow, and Tower Cash Flow Margin

The table below sets forth the reconciliation of Cash Site Leasing Revenue and Tower Cash Flow to their most comparable GAAP measurement and Tower Cash Flow Margin, which is calculated by dividing Tower Cash Flow by Cash Site Leasing Revenue.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic Site Leasing

 

Int’l Site Leasing

 

Total Site Leasing

 

 

For the three months

 

For the three months

 

For the three months

 

 

ended March 31,

 

ended March 31,

 

ended March 31,

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Site leasing revenue

 

$

403,579

 

$

386,345

 

$

101,524

 

$

106,011

 

$

505,103

 

$

492,356

Non-cash straight-line leasing revenue

 

 

(1,330)

 

 

(2,406)

 

 

754

 

 

65

 

 

(576)

 

 

(2,341)

Cash site leasing revenue

 

 

402,249

 

 

383,939

 

 

102,278

 

 

106,076

 

 

504,527

 

 

490,015

Site leasing cost of revenues (excluding depreciation, accretion, and amortization)

 

 

(65,120)

 

 

(63,905)

 

 

(30,248)

 

 

(31,894)

 

 

(95,368)

 

 

(95,799)

Non-cash straight-line ground lease expense

 

 

2,214

 

 

3,353

 

 

427

 

 

495

 

 

2,641

 

 

3,848

Tower Cash Flow

 

$

339,343

 

$

323,387

 

$

72,457

 

$

74,677

 

$

411,800

 

$

398,064

Tower Cash Flow Margin

 

 

84.4%

 

 

84.2%

 

 

70.8%

 

 

70.4%

 

 

81.6%

 

 

81.2%

 

Forecasted Tower Cash Flow for Full Year 2021

The table below sets forth the reconciliation of forecasted Tower Cash Flow set forth in the Outlook section to its most comparable GAAP measurement for the full year 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

Site leasing revenue

 

 

 

 

$

2,065.0

to

$

2,085.0

Non-cash straight-line leasing revenue

 

 

 

 

 

(28.0)

to

 

(23.0)

Cash site leasing revenue

 

 

 

 

 

2,037.0

to

 

2,062.0

Site leasing cost of revenues (excluding depreciation, accretion, and amortization)

 

 

 

 

 

(375.5)

to

 

(385.5)

Non-cash straight-line ground lease expense

 

 

 

 

 

5.5

to

 

10.5

Tower Cash Flow

 

 

 

 

$

1,667.0

to

$

1,687.0

 

Adjusted EBITDA, Annualized Adjusted EBITDA, and Adjusted EBITDA Margin

The table below sets forth the reconciliation of Adjusted EBITDA to its most comparable GAAP measurement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

 

 

 

 

ended March 31,

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Net loss

 

$

(11,745)

 

$

(127,933)

Non-cash straight-line leasing revenue

 

 

(576)

 

 

(2,341)

Non-cash straight-line ground lease expense

 

 

2,641

 

 

3,848

Non-cash compensation

 

 

20,422

 

 

16,278

Loss from extinguishment of debt, net

 

 

11,652

 

 

16,864

Other expense, net

 

 

88,436

 

 

226,299

Acquisition and new business initiatives related adjustments and expenses

 

 

5,001

 

 

3,799

Asset impairment and decommission costs

 

 

4,903

 

 

14,355

Interest income

 

 

(632)

 

 

(885)

Total interest expense (1)

 

 

106,790

 

 

103,396

Depreciation, accretion, and amortization

 

 

183,881

 

 

182,579

Benefit for taxes (2)

 

 

(20,702)

 

 

(66,311)

Adjusted EBITDA

 

$

390,071

 

$

369,948

Annualized Adjusted EBITDA (3)

 

$

1,560,284

 

$

1,479,792

 

(1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2) For the three months ended March 31, 2021 and 2020, these amounts included $220 and $227, respectively, of franchise and gross receipts taxes reflected in the Statements of Operations in selling, general and administrative expenses.

(3) Annualized Adjusted EBITDA is calculated as Adjusted EBITDA for the most recent quarter multiplied by four.

The calculation of Adjusted EBITDA Margin is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

 

 

 

 

ended March 31,

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Total revenues

 

 

 

 

$

548,739

 

$

517,067

Non-cash straight-line leasing revenue

 

 

 

 

 

(576)

 

 

(2,341)

Total revenues minus non-cash straight-line leasing revenue

 

 

 

 

$

548,163

 

$

514,726

Adjusted EBITDA

 

 

 

 

$

390,071

 

$

369,948

Adjusted EBITDA Margin

 

 

 

 

 

71.2%

 

 

71.9%

 

Forecasted Adjusted EBITDA for Full Year 2021

The table below sets forth the reconciliation of the forecasted Adjusted EBITDA set forth in the Outlook section to its most comparable GAAP measurement for the full year 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

Net income

 

 

 

 

$

214.5

to

$

262.5

Non-cash straight-line leasing revenue

 

 

 

 

 

(28.0)

to

 

(23.0)

Non-cash straight-line ground lease expense

 

 

 

 

 

5.5

to

 

10.5

Non-cash compensation

 

 

 

 

 

76.0

to

 

71.0

Loss from extinguishment of debt, net

 

 

 

 

 

11.0

to

 

12.0

Other expense, net

 

 

 

 

 

95.0

to

 

95.0

Acquisition and new business initiatives related adjustments and expenses

 

 

21.0

to

 

17.0

Asset impairment and decommission costs

 

 

 

 

 

26.5

to

 

21.5

Interest income

 

 

 

 

 

(3.0)

to

 

Total interest expense (1)

 

 

 

 

 

430.0

to

 

418.0

Depreciation, accretion, and amortization

 

 

 

 

 

723.5

to

 

713.5

Provision (benefit) for taxes (2)

 

 

 

 

 

1.0

to

 

(5.0)

Adjusted EBITDA

 

 

 

 

$

1,573.0

to

$

1,593.0

(1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2) Includes projections for franchise taxes and gross receipts taxes which will be reflected in the Statement of Operations in Selling, general, and administrative expenses.

Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)

The table below sets forth the reconciliations of FFO and AFFO to their most comparable GAAP measurement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

 

 

 

 

ended March 31,

(in thousands, except per share amounts)

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

$

(11,745)

 

$

(127,933)

Real estate related depreciation, amortization, and accretion

 

 

 

 

 

182,886

 

 

181,431

Asset impairment and decommission costs

 

 

 

 

 

4,903

 

 

14,355

FFO

 

 

 

 

$

176,044

 

$

67,853

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

Non-cash straight-line leasing revenue

 

 

 

 

 

(576)

 

 

(2,341)

Non-cash straight-line ground lease expense

 

 

 

 

 

2,641

 

 

3,848

Non-cash compensation

 

 

 

 

 

20,422

 

 

16,278

Adjustment for non-cash portion of tax benefit

 

 

 

 

 

(26,837)

 

 

(72,204)

Non-real estate related depreciation, amortization, and accretion

 

 

 

 

 

995

 

 

1,148

Amortization of deferred financing costs and debt discounts and non-cash interest expense

 

 

 

 

 

16,695

 

 

7,545

Loss from extinguishment of debt, net

 

 

 

 

 

11,652

 

 

16,864

Other expense, net

 

 

 

 

 

88,436

 

 

226,299

Acquisition and new business initiatives related adjustments and expenses

 

 

5,001

 

 

3,799

Non-discretionary cash capital expenditures

 

 

 

 

 

(8,153)

 

 

(9,229)

AFFO

 

 

 

 

$

286,320

 

$

259,860

Weighted average number of common shares (1)

 

 

 

 

 

111,118

 

 

113,993

AFFO per share

 

 

 

 

$

2.58

 

$

2.28

(1) For purposes of the AFFO per share calculation, the basic weighted average number of common shares has been adjusted to include the dilutive effect of stock options and restricted stock units.

Forecasted AFFO for the Full Year 2021

The table below sets forth the reconciliation of the forecasted AFFO and AFFO per share set forth in the Outlook section to its most comparable GAAP measurement for the full year 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

 

 

 

Full Year 2021

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

$

214.5

to

$

262.5

Real estate related depreciation, amortization, and accretion

 

 

 

 

 

715.5

to

 

707.5

Asset impairment and decommission costs

 

 

 

 

 

26.5

to

 

21.5

FFO

 

 

 

 

$

956.5

to

$

991.5

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

Non-cash straight-line leasing revenue

 

 

 

 

 

(28.0)

to

 

(23.0)

Non-cash straight-line ground lease expense

 

 

 

 

 

5.5

to

 

10.5

Non-cash compensation

 

 

 

 

 

76.0

to

 

71.0

Adjustment for non-cash portion of tax benefit

 

 

 

 

 

(27.0)

to

$

(27.0)

Non-real estate related depreciation, amortization, and accretion

 

 

 

 

 

8.0

to

 

6.0

Amortization of deferred financing costs and debt discounts and non-cash interest expense

 

 

 

 

 

59.0

to

 

60.0

Loss from extinguishment of debt, net

 

 

 

 

 

11.0

to

 

12.0

Other expense, net

 

 

 

 

 

95.0

to

 

95.0

Acquisition and new business initiatives related adjustments and expenses

 

 

21.0

to

 

17.0

Non-discretionary cash capital expenditures

 

 

 

 

 

(46.0)

to

 

(36.0)

AFFO

 

 

 

 

$

1,131.0

to

$

1,177.0

Weighted average number of common shares (1)

 

 

 

 

 

111.4

to

 

111.4

AFFO per share

 

 

 

 

$

10.15

to

$

10.57

 

(1) Our assumption for weighted average number of common shares does not contemplate any additional repurchases of the Company’s stock during 2021.

Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage Ratio

Net Debt is calculated using the notional principal amount of outstanding debt. Under GAAP policies, the notional principal amount of the Company’s outstanding debt is not necessarily reflected on the face of the Company’s financial statements.

The Net Debt and Leverage calculations are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

2013-2C Tower Securities

 

$

575,000

2014-2C Tower Securities

 

 

620,000

2017-1C Tower Securities

 

 

760,000

2018-1C Tower Securities

 

 

640,000

2019-1C Tower Securities

 

 

1,165,000

2020-1C Tower Securities

 

 

750,000

2020-2C Tower Securities

 

 

600,000

Revolving Credit Facility

 

 

590,000

2018 Term Loan

 

 

2,334,000

Total secured debt

 

 

8,034,000

2016 Senior Notes

 

 

1,100,000

2020 Senior Notes

 

 

1,500,000

2021 Senior Notes

 

 

1,500,000

Total unsecured debt

 

 

4,100,000

Total debt

 

$

12,134,000

Leverage Ratio

 

 

 

Total debt

 

$

12,134,000

Less: Cash and cash equivalents, short-term restricted cash and short-term investments

 

 

(240,228)

Net debt

 

$

11,893,772

Divided by: Annualized Adjusted EBITDA

 

$

1,560,284

Leverage Ratio

 

 

7.6x

Secured Leverage Ratio

 

 

 

Total secured debt

 

$

8,034,000

Less: Cash and cash equivalents, short-term restricted cash and short-term investments

 

 

(240,228)

Net Secured Debt

 

$

7,793,772

Divided by: Annualized Adjusted EBITDA

 

$

1,560,284

Secured Leverage Ratio

 

 

5.0x