Provides Full Year 2020 Outlook; and
Declares Quarterly Cash Dividend
SBA Communications Corporation (Nasdaq: SBAC) ("SBA" or the
"Company") today reported results for the quarter ended December
31, 2019.
Highlights of the fourth quarter include:
- Net income of $67.4 million or $0.59 per share and site
leasing revenue of $481.1 million
- AFFO per share growth of 10.0% over the year earlier period
on a constant currency basis
- Tower Cash Flow and Adjusted EBITDA margins of 81.0% and
71.0%, respectively
- Portfolio growth of 9.6% for the year, including 1,499 sites
added during the quarter
- Issued $1.0 billion of unsecured senior notes at 3.875% per
annum subsequent to the quarter
- Repurchased 0.9 million shares
In addition, the Company announced today that its Board of
Directors has declared a quarterly cash dividend of $0.465 per
share of the Company’s Class A common stock, an increase of 25.7%
over the dividend paid in the fourth quarter. The distribution is
payable March 26, 2020 to the shareholders of record at the close
of business on March 10, 2020.
“We are very pleased with our finish to 2019 and our positioning
for 2020 and beyond,” commented Jeffrey A. Stoops, President and
Chief Executive Officer. “Notwithstanding the pronounced industry
slowdown in the U.S. that began in August resulting from the legal
challenges to the T-Mobile acquisition of Sprint, we finished the
year very well, producing material growth in AFFO per share ahead
of plan. For the first time, we exceeded $2 billion in revenue in a
year. In the fourth quarter, we continued to execute very well
operationally, repurchased almost 1 million shares of our stock at
very attractive prices, repriced over 20% of our debt to lower
interest rates and added approximately 1,500 sites to our
portfolio, bringing total portfolio growth for the year to over 9%.
We did all of this while staying at the low end of our target
leverage range and maintaining excellent liquidity. Our
international markets continued to perform very well, particularly
Brazil and South Africa, our two largest international markets, on
a constant currency basis.”
“With the recent developments regarding the T-Mobile/Sprint
transaction, the ability for Dish to become the 4th nationwide
carrier now clear, the CBRS and C-Band auctions planned for later
this year, and important spectrum auctions planned for our
international markets over the next two years, we believe we are on
the cusp of a material increase in operational activity and demand
for our infrastructure likely to begin in the second half of 2020
and continue for years thereafter. We are extremely confident and
excited about our future, so much so that we have just approved an
increase to our quarterly dividend of over 25%. While a substantial
increase, this dividend on an annual basis represents only
approximately 20% of our AFFO in our 2020 Outlook, leaving us
substantial capital for additional investment. We believe we will
continue to produce material growth in AFFO per share and now, with
the dividend, total shareholder return.”
Operating Results
The table below details select financial results for the three
months ended December 31, 2019 and comparisons to the prior year
period.
% Change
excluding
Q4 2019
Q4 2018
$ Change
% Change
FX (1)
Consolidated
($ in millions, except per
share amounts)
Site leasing revenue
$
481.1
$
444.7
$
36.4
8.2%
9.3%
Site development revenue
32.6
39.1
(6.5)
(16.7%)
(16.7%)
Tower cash flow (1)
387.4
354.2
33.2
9.4%
10.3%
Net income
67.4
57.2
10.2
17.8%
7.0%
Earnings per share - diluted
0.59
0.50
0.09
18.0%
8.3%
Adjusted EBITDA (1)
362.4
339.3
23.1
6.8%
7.7%
AFFO (1)
248.8
229.9
18.9
8.2%
9.5%
AFFO per share (1)
2.18
2.00
0.18
9.0%
10.0%
(1)
See the reconciliations and other
disclosures under “Non-GAAP Financial Measures” later in this press
release.
Total revenues in the fourth quarter of 2019 were $513.7 million
compared to $483.8 million in the year earlier period, an increase
of 6.2%. Site leasing revenue in the quarter of $481.1 million was
comprised of domestic site leasing revenue of $380.4 million and
international site leasing revenue of $100.7 million. Domestic cash
site leasing revenue was $377.7 million in the fourth quarter of
2019 compared to $356.4 million in the year earlier period, an
increase of 6.0%. International cash site leasing revenue was
$100.4 million in the fourth quarter of 2019 compared to $85.4
million in the year earlier period, an increase of 17.6%, or 23.4%
excluding the impact of changes in foreign currency exchange
rates.
Site leasing operating profit was $386.3 million, an increase of
10.0% over the year earlier period. Site leasing contributed 98.5%
of the Company’s total operating profit in the fourth quarter of
2019. Domestic site leasing segment operating profit was $316.5
million, an increase of 8.5% over the year earlier period.
International site leasing segment operating profit was $69.8
million, an increase of 17.3% over the year earlier period.
Tower Cash Flow for the fourth quarter of 2019 of $387.4 million
was comprised of Domestic Tower Cash Flow of $317.4 million and
International Tower Cash Flow of $70.0 million. Domestic Tower Cash
Flow for the quarter increased 7.4% over the prior year period and
International Tower Cash Flow increased 19.1% over the prior year
period. Tower Cash Flow Margin was 81.0% for the fourth quarter of
2019, as compared to 80.2% for the year earlier period.
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, while net income for
the fourth quarter of 2018 was $57.2 million, or $0.50 per share,
and included a $15.9 million gain, net of taxes, on the currency
related remeasurement of U.S. dollar denominated intercompany loans
with a Brazilian subsidiary.
Adjusted EBITDA for the quarter was $362.4 million, a 6.8%
increase over the prior year period. Adjusted EBITDA Margin was
71.0% in the fourth quarter of 2019 compared to 70.5% in the fourth
quarter of 2018.
Net Cash Interest Expense was $96.5 million in the fourth
quarter of 2019 compared to $96.2 million in the fourth quarter of
2018, an increase of 0.3%.
AFFO for the quarter was $248.8 million, an 8.2% increase over
the prior year period. AFFO per share for the fourth quarter of
2019 was $2.18, a 9.0% increase over the prior year period.
Investing Activities
During the fourth quarter of 2019, SBA acquired 1,336
communication sites for total cash consideration of $471.7 million.
These acquired sites include 1,313 sites purchased from Grupo Torre
Sur in Brazil on December 6, 2019 for total cash consideration of
$460 million. SBA also built 170 towers during the fourth quarter
of 2019. As of December 31, 2019, SBA owned or operated 32,403
communication sites, 16,401 of which are located in the United
States and its territories, and 16,002 of which are located
internationally. In addition, the Company spent $13.7 million to
purchase land and easements and to extend lease terms. Total cash
capital expenditures for the fourth quarter of 2019 were $533.1
million, consisting of $9.9 million of non-discretionary cash
capital expenditures (tower maintenance and general corporate) and
$523.2 million of discretionary cash capital expenditures (new
tower builds, tower augmentations, acquisitions, and purchasing
land and easements).
Subsequent to the fourth quarter of
2019, the Company acquired 11 communication sites for an aggregate
consideration of $11.9 million in cash. In addition, the Company
has agreed to purchase and anticipates closing on 166 additional
communication sites for an aggregate amount of $97.8 million. The
Company anticipates that the majority of these acquisitions will be
consummated by the end of the second quarter of 2020.
Financing Activities and
Liquidity
SBA ended the fourth quarter of 2019 with $10.4 billion of total
debt, $7.8 billion of total secured debt, $139.1 million of cash
and cash equivalents, short-term restricted cash, and short-term
investments, and $10.3 billion of Net Debt. SBA’s Net Debt and Net
Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were
7.1x and 5.3x, respectively.
During the fourth quarter of 2019, the Company repurchased 0.9
million shares of its Class A common stock for $200.0 million, at
an average price per share of $232.77 under its $1.0 billion stock
repurchase plan. All shares repurchased were retired. As of the
date of this filing, the Company has $624.3 million of
authorization remaining under the plan.
In the fourth quarter of 2019, the Company declared and paid a
cash dividend of $41.5 million.
On November 19, 2019, the Company repriced its $2.4 billion
senior secured term loan from a Eurodollar Rate plus 200 basis
points to a Eurodollar Rate plus 175 basis points, reducing the
Company’s Net Cash Interest Expense by approximately $5.9 million
annually.
On December 3, 2019, the Company, through its wholly owned
subsidiary, SBA Senior Finance II LLC, entered into a series of
interest rate swaps on a portion of its 2018 Term Loan, effectively
replacing both existing interest rate swaps. As a result, the
Company has swapped $1.95 billion of notional value accruing
interest at one month LIBOR plus 175 basis points for a fixed rate
of 3.78% per annum through the maturity date of the existing term
loan.
On February 4, 2020, the Company issued $1.0 billion of
unsecured senior notes due February 15, 2027 (the “2020 Senior
Notes”). The 2020 Senior Notes accrue interest at a rate of 3.875%
per annum. Interest on the 2020 Senior Notes is due semi-annually
on February 15 and August 15 of each year, beginning on August 15,
2020. Net proceeds from this offering were used to redeem all of
the outstanding principal amount of the 4.875% Senior Notes due
2022, and repay a portion of the amount outstanding under the
Revolving Credit Facility. As of the date of this press release,
the Company had $175.0 million outstanding under the $1.25 billion
Revolving Credit Facility.
Outlook
The Company is providing its initial full year 2020 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 2020 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 2020 on acquiring revenue producing assets
not yet identified or under contract, the impact of which is not
reflected in the 2020 guidance. The Outlook also does not
contemplate any additional repurchases of the Company’s stock
during 2020, 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 4.36 Brazilian Reais to 1.0 U.S. Dollar, 1.33
Canadian Dollars to 1.0 U.S. Dollar, and 15.0 South African Rand to
1.0 U.S. Dollar for the full year 2020 outlook. When compared to
2019 actual foreign currency exchange rates, these 2020 foreign
currency rate assumptions negatively impacted the 2020 full year
Outlook by approximately $29 million for leasing revenue, $19
million for Tower Cash Flow, $18 million for Adjusted EBITDA and
$18 million for AFFO.
(in millions, except per share
amounts)
Full Year 2020
Site leasing revenue (1)
$
1,973.0
to
$
1,993.0
Site development revenue
$
130.0
to
$
150.0
Total revenues
$
2,103.0
to
$
2,143.0
Tower Cash Flow (2)
$
1,597.0
to
$
1,617.0
Adjusted EBITDA (2)
$
1,495.0
to
$
1,515.0
Net cash interest expense (3)
$
369.0
to
$
379.0
Non-discretionary cash capital
expenditures (4)
$
37.0
to
$
47.0
AFFO (2)
$
1,041.0
to
$
1,087.0
AFFO per share (2) (5)
$
9.07
to
$
9.47
Discretionary cash capital expenditures
(6)
$
240.0
to
$
260.0
(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 114.8 million. Our
Outlook does not include the impact of any potential future
repurchases of the Company’s stock during 2020.
(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
Thursday, February 20, 2020 at 5:00 PM (EST) to discuss the
quarterly results. The call may be accessed as follows:
When: Thursday, February 20, 2020 at 5:00 PM (EST) Dial-in
Number: (844) 291-6360 Access Code: 1730799 Conference Name: SBA
fourth quarter results Replay Available: February 20, 2020 at 11:00
PM to March 6, 2020 at 12:00 AM (TZ: Eastern) Replay Number: (866)
207-1041 – Access Code: 6891459 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) the increase in operational
activity and demand for the Company’s infrastructure, and the
timing, magnitude and drivers of that increase, (ii) the potential
T-Mobile/Sprint transaction and the emergence of Dish as a
nationwide carrier, (iii) the Company’s future capital allocation,
including with respect to its increased dividend, (iv) the
Company’s financial and operational performance in 2020, including
growth in AFFO per share and total shareholder return, (v) the
Company’s financial and operational guidance for the full year
2020, the assumptions it made and the drivers contributing to its
full year guidance, (vi) the timing of closing for currently
pending acquisitions, and (vii) 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 potential 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 2020;
and (15) 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 2020 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 28, 2019.
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,
2019
2018
2019
2018
Revenues:
Site leasing
$
481,100
$
444,748
$
1,860,858
$
1,740,434
Site development
32,559
39,101
153,787
125,261
Total revenues
513,659
483,849
2,014,645
1,865,695
Operating expenses:
Cost of revenues (exclusive of
depreciation, accretion,
and amortization shown below):
Cost of site leasing
94,785
93,497
373,951
372,296
Cost of site development
26,474
28,806
119,080
96,499
Selling, general, and administrative
expenses (1)
43,962
35,626
192,717
142,526
Acquisition and new business initiatives
related
adjustments and expenses
5,559
1,789
15,228
10,961
Asset impairment and decommission
costs
9,472
4,356
33,103
27,134
Depreciation, accretion, and
amortization
179,487
169,454
697,078
672,113
Total operating expenses
359,739
333,528
1,431,157
1,321,529
Operating income
153,920
150,321
583,488
544,166
Other income (expense):
Interest income
808
1,760
5,500
6,731
Interest expense
(97,355)
(97,939)
(390,036)
(376,217)
Non-cash interest expense
(1,239)
(638)
(3,193)
(2,640)
Amortization of deferred financing
fees
(7,133)
(5,024)
(22,466)
(20,289)
Loss from extinguishment of debt, net
—
—
(457)
(14,443)
Other income (expense), net
35,349
24,550
14,053
(85,624)
Total other expense, net
(69,570)
(77,291)
(396,599)
(492,482)
Income before income taxes
84,350
73,030
186,889
51,684
Provision for income taxes
(16,794)
(15,878)
(39,605)
(4,233)
Net income
67,556
57,152
147,284
47,451
Net (income) attributable to
noncontrolling interests
(206)
—
(293)
—
Net income attributable to SBA
Communications
Corporation
$
67,350
$
57,152
$
146,991
$
47,451
Net income per common share attributable
to SBA
Communications Corporation:
Basic
$
0.60
$
0.50
$
1.30
$
0.41
Diluted
$
0.59
$
0.50
$
1.28
$
0.41
Weighted average number of common
shares
Basic
112,288
113,517
112,809
114,909
Diluted
114,306
115,010
114,693
116,515
(1)
Includes non-cash compensation of $12,163
and $9,957 for the three months ended December 31, 2019 and 2018,
and $71,180 and $41,145 for the twelve months ended December 31,
2019 and 2018, respectively.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
values)
December 31,
December 31,
2019
2018
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
108,309
$
143,444
Restricted cash
30,243
32,464
Accounts receivable, net
132,125
111,035
Costs and estimated earnings in excess of
billings on uncompleted contracts
26,313
23,785
Prepaid expenses and other current assets
(1)
37,281
63,126
Total current assets
334,271
373,854
Property and equipment, net (1)
2,794,602
2,786,355
Intangible assets, net
3,626,773
3,331,465
Right-of-use assets, net (1)
2,572,217
—
Other assets (1)
432,078
722,033
Total assets
$
9,759,941
$
7,213,707
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
$
31,846
$
34,308
Accrued expenses
67,618
63,665
Current maturities of long-term debt
522,090
941,728
Deferred revenue
113,507
108,054
Accrued interest
49,269
48,722
Current lease liabilities (1)
247,015
—
Other current liabilities (1)
16,948
9,802
Total current liabilities
1,048,293
1,206,279
Long-term liabilities:
Long-term debt, net
9,812,335
8,996,825
Long-term lease liabilities (1)
2,279,400
—
Other long-term liabilities (1)
270,868
387,426
Total long-term liabilities
12,362,603
9,384,251
Redeemable noncontrolling interests
16,052
—
Shareholders' deficit:
Preferred stock-par value $0.01, 30,000
shares authorized, no shares issued or outst.
—
—
Common stock - Class A, par value $0.01,
400,000 shares authorized, 111,775
shares and 112,433 shares issued and
outstanding at December 31, 2019
and December 31, 2018, respectively
1,118
1,124
Additional paid-in capital
2,461,335
2,270,326
Accumulated deficit
(5,560,695)
(5,136,368)
Accumulated other comprehensive loss
(568,765)
(511,905)
Total shareholders' deficit
(3,667,007)
(3,376,823)
Total liabilities, redeemable
noncontrolling interests, and shareholders' deficit
$
9,759,941
$
7,213,707
(1) On January 1, 2019, the Company adopted ASU 2016-02 which
requires lessees to recognize a right-of-use asset and a lease
liability.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(unaudited) (in
thousands)
For the three months
ended December 31,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
67,556
$
57,152
Adjust. to reconcile net income to net
cash provided by operating activities:
Depreciation, accretion, and
amortization
179,487
169,454
Non-cash asset impairment and decommission
costs
9,425
4,046
Non-cash compensation expense
12,581
10,187
Deferred income tax provision
9,947
12,638
Gain on remeasurement of U.S. dollar
denominated intercompany loans
(39,014)
(24,037)
Other non-cash items reflected in the
Statements of Operations
7,059
4,254
Changes in operating assets and
liabilities, net of acquisitions:
AR and costs and est. earnings in excess
of billings on uncompleted contracts, net
1,763
(24,772)
Prepaid expenses and other assets
209
(9,979)
Operating lease right-of-use assets,
net
25,147
—
Accounts payable and accrued expenses
(3,978)
(248)
Accrued interest
14,776
14,536
Long-term lease liabilities
(23,487)
—
Other liabilities
3,590
13,244
Net cash provided by operating
activities
265,061
226,475
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(490,256)
(47,994)
Capital expenditures
(42,855)
(44,846)
Other investing activities
1,019
(5,190)
Net cash used in investing activities
(532,092)
(98,030)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Revolving Credit
Facility
490,000
205,000
Repurchase and retirement of common
stock
(199,448)
(342,042)
Proceeds from employee stock
purchase/stock option plans
3,293
26,202
Repayment of Term Loans
(6,000)
(6,000)
Payment of dividends on common stock
(41,514)
—
Other financing activities
(1,064)
(508)
Net cash provided by (used in) financing
activities
245,267
(117,348)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
4,204
3,879
NET CHANGE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(17,560)
14,976
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
Beginning of period
158,680
163,324
End of period
$
141,120
$
178,300
Selected Capital Expenditure
Detail
For the three
For the year
months ended
ended
December 31, 2019
December 31, 2019
(in thousands)
Construction and related costs on new
builds
$
16,788
$
56,979
Augmentation and tower upgrades
16,214
62,785
Non-discretionary capital
expenditures:
Tower maintenance
7,568
29,048
General corporate
2,285
5,424
Total non-discretionary capital
expenditures
9,853
34,472
Total capital expenditures
$
42,855
$
154,236
Communication Site Portfolio
Summary
Domestic
International
Total
Sites owned at September 30, 2019
16,385
14,519
30,904
Sites acquired during the fourth
quarter
13
1,323
1,336
Sites built during the fourth quarter
7
163
170
Sites decommissioned during the fourth
quarter
(4)
(3)
(7)
Sites owned at December 31, 2019
16,401
16,002
32,403
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 December 31,
ended December 31,
ended December 31,
2019
2018
2019
2018
2019
2018
(in thousands)
Segment revenue
$
380,386
$
358,203
$
100,714
$
86,545
$
32,559
$
39,101
Segment cost of revenues (excluding
depreciation, accretion, and amort.)
(63,889)
(66,498)
(30,896)
(26,999)
(26,474)
(28,806)
Segment operating profit
$
316,497
$
291,705
$
69,818
$
59,546
$
6,085
$
10,295
Segment operating profit margin
83.2%
81.4%
69.3%
68.8%
18.7%
26.3%
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). 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 (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, 2017 Senior Notes, and 2020 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.
Fourth quarter
2019 year
Foreign
Growth excluding
over year
currency
foreign
growth rate
impact
currency impact
Total site leasing revenue
8.2%
(1.1%)
9.3%
Total cash site leasing revenue
8.2%
(1.1%)
9.3%
Int'l cash site leasing revenue
17.6%
(5.8%)
23.4%
Total site leasing segment operating
profit
10.0%
(0.9%)
10.9%
Int'l site leasing segment operating
profit
17.2%
(5.6%)
22.8%
Total site leasing tower cash flow
9.4%
(0.9%)
10.3%
Int'l site leasing tower cash flow
19.1%
(5.6%)
24.7%
Net income
17.8%
10.8%
7.0%
Earnings per share - diluted
18.0%
9.7%
8.3%
Adjusted EBITDA
6.8%
(0.9%)
7.7%
AFFO
8.2%
(1.3%)
9.5%
AFFO per share
9.0%
(1.0%)
10.0%
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 December 31,
ended December 31,
ended December 31,
2019
2018
2019
2018
2019
2018
(in thousands)
Site leasing revenue
$
380,386
$
358,203
$
100,714
$
86,545
$
481,100
$
444,748
Non-cash straight-line leasing revenue
(2,695)
(1,782)
(328)
(1,171)
(3,023)
(2,953)
Cash site leasing revenue
377,691
356,421
100,386
85,374
478,077
441,795
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(63,889)
(66,498)
(30,896)
(26,999)
(94,785)
(93,497)
Non-cash straight-line ground lease
expense
3,565
5,513
499
371
4,064
5,884
Tower Cash Flow
$
317,367
$
295,436
$
69,989
$
58,746
$
387,356
$
354,182
Tower Cash Flow Margin
84.0%
82.9%
69.7%
68.8%
81.0%
80.2%
Forecasted Tower Cash Flow for Full Year
2020
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 2020:
Full Year 2020
(in millions)
Site leasing revenue
$
1,973.0
to
$
1,993.0
Non-cash straight-line leasing revenue
(5.0)
to
—
Cash site leasing revenue
1,968.0
to
1,993.0
Site leasing cost of revenues
(excluding
depreciation, accretion, and
amortization)
(381.0)
to
(391.0)
Non-cash straight-line ground lease
expense
10.0
to
15.0
Tower Cash Flow
$
1,597.0
to
$
1,617.0
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 December 31,
2019
2018
(in thousands)
Net income
$
67,556
$
57,152
Non-cash straight-line leasing revenue
(3,023)
(2,953)
Non-cash straight-line ground lease
expense
4,064
5,884
Non-cash compensation
12,581
10,187
Other (income) expense, net
(35,349)
(24,550)
Acquisition and new business initiatives
related adjustments and expenses
5,559
1,789
Asset impairment and decommission
costs
9,472
4,356
Interest income
(808)
(1,760)
Total interest expense (1)
105,727
103,601
Depreciation, accretion, and
amortization
179,487
169,454
Provision for taxes (2)
17,127
16,105
Adjusted EBITDA
$
362,393
$
339,265
Annualized Adjusted EBITDA (3)
$
1,449,572
$
1,357,060
(1)
Total interest expense includes interest
expense, non-cash interest expense, and amortization of deferred
financing fees.
(2)
For the three months ended December 31,
2019 and 2018, these amounts included $333 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 December 31,
2019
2018
(in thousands)
Total revenues
$
513,659
$
483,849
Non-cash straight-line leasing revenue
(3,023)
(2,953)
Total revenues minus non-cash
straight-line leasing revenue
$
510,636
$
480,896
Adjusted EBITDA
$
362,393
$
339,265
Adjusted EBITDA Margin
71.0%
70.5%
Forecasted Adjusted EBITDA for Full Year
2020
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 2020:
Full Year 2020
(in millions)
Net income
$
203.0
to
$
251.0
Non-cash straight-line leasing revenue
(5.0)
to
—
Non-cash straight-line ground lease
expense
10.0
to
15.0
Non-cash compensation
71.0
to
66.0
Loss from extinguishment of debt, net
1.0
to
2.0
Acquisition and new business initiatives
related adjustments and expenses
17.0
to
13.0
Asset impairment and decommission
costs
37.0
to
32.0
Interest income
(5.0)
to
(2.0)
Total interest expense (1)
412.0
to
400.0
Depreciation, accretion, and
amortization
726.0
to
716.0
Provision for taxes (2)
28.0
to
22.0
Adjusted EBITDA
$
1,495.0
to
$
1,515.0
(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 December 31,
(in thousands, except per share
amounts)
2019
2018
Net income
$
67,556
$
57,152
Real estate related depreciation,
amortization, and accretion
178,399
168,646
Adjustments for unconsolidated joint
ventures
(155)
(263)
FFO
$
245,800
$
225,535
Adjustments to FFO:
Non-cash straight-line leasing revenue
(3,023)
(2,953)
Non-cash straight-line ground lease
expense
4,064
5,884
Non-cash compensation
12,581
10,187
Adjustment for non-cash portion of tax
provision
9,949
12,638
Non-real estate related depreciation,
amortization, and accretion
1,088
808
Amortization of deferred financing costs
and debt discounts
8,372
5,662
Other (income) expense, net
(35,349)
(24,550)
Acquisition and new business initiatives
related adjustments and expenses
5,559
1,789
Asset impairment and decommission
costs
9,472
4,356
Non-discretionary cash capital
expenditures
(9,853)
(9,928)
Adjustments for unconsolidated joint
ventures
155
513
AFFO
$
248,815
$
229,941
Weighted average number of common shares
(1)
114,306
115,010
AFFO per share
$
2.18
$
2.00
(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
2020
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 2020:
(in millions, except per share
amounts)
Full Year 2020
Net income
$
203.0
to
$
251.0
Real estate related depreciation,
amortization, and accretion
717.0
to
709.0
FFO
$
920.0
to
$
960.0
Adjustments to FFO:
Non-cash straight-line leasing revenue
(5.0)
to
—
Non-cash straight-line ground lease
expense
10.0
to
15.0
Non-cash compensation
71.0
to
66.0
Non-real estate related depreciation,
amortization, and accretion
9.0
to
7.0
Amort. of deferred financing costs and
debt discounts
28.0
to
29.0
Loss from extinguishment of debt, net
1.0
to
2.0
Acquisition and new business initiatives
related adjustments and expenses
17.0
to
13.0
Asset impairment and decommission
costs
37.0
to
32.0
Non-discretionary cash capital
expenditures
(47.0)
to
(37.0)
AFFO
$
1,041.0
to
$
1,087.0
Weighted average number of common shares
(1)
114.8
to
114.8
AFFO per share
$
9.07
to
$
9.47
(1)
Our assumption for weighted average number
of common shares does not contemplate any additional repurchases of
the Company’s stock during 2020.
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:
December 31,
2019
(in thousands)
2013-2C Tower Securities
$
575,000
2014-2C Tower Securities
620,000
2015-1C Tower Securities
500,000
2016-1C Tower Securities
700,000
2017-1C Tower Securities
760,000
2018-1C Tower Securities
640,000
2019-1C Tower Securities
1,165,000
Revolving Credit Facility
490,000
2018 Term Loan
2,364,000
Total secured debt
7,814,000
2014 Senior Notes
750,000
2016 Senior Notes
1,100,000
2017 Senior Notes
750,000
Total unsecured debt
2,600,000
Total debt
$
10,414,000
Leverage
Ratio
Total debt
$
10,414,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(139,086)
Net debt
$
10,274,914
Divided by: Annualized Adjusted EBITDA
$
1,449,572
Leverage Ratio
7.1x
Secured Leverage
Ratio
Total secured debt
$
7,814,000
Less: Cash and cash equivalents,
short-term restricted cash and short-term investments
(139,086)
Net Secured Debt
$
7,674,914
Divided by: Annualized Adjusted EBITDA
$
1,449,572
Secured Leverage Ratio
5.3x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200220005804/en/
Mark DeRussy, CFA Capital Markets 561-226-9531
Lynne Hopkins Media Relations 561-226-9431
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