SBA Communications Corporation
CEO : Mr. Jeffrey A. Stoops
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 15.3% YoY | 64.0% | 113.3% | 2023-02-21 |
Brendan Cavanagh says,
Financial Performance in Q4 2022
- Total GAAP site leasing revenues for the fourth quarter were $609.6 million and cash site leasing revenues were $600.5 million
- Same-tower recurring cash leasing revenue growth for the fourth quarter was 5.1% net over the fourth quarter of 2021
- Domestic same-tower recurring cash leasing revenue growth over the fourth quarter of last year was 8.5% on a gross basis and 5% on a net basis
- Tower cash flow for the fourth quarter was $485.9 million
- Adjusted EBITDA in the fourth quarter was $460.7 million
2023 Outlook
- Expect continued year-over-year growth across the leasing business
- Forecast significant revenue growth contributions from non-organic additions, primarily due to having the assets acquired from GTS in Brazil in their results for a full year in 2023
- Includes increased impacts from customer churn in 2023, mainly in connection with the anticipated Sprint-related decommissioning, some of which they had previously expected in 2022
- Outlook for Services business reflects the year-over-year decline in revenues and adjusted EBITDA contribution but starts ahead of where their 2022 outlook started
- Outlook for net cash interest expense and for AFFO does not contemplate any further financing activity in 2023
Acquisitions and Investments
- Meaningfully expanded their portfolio acquiring 2,642 communication sites for total cash consideration of $736.7 million, which included 2,632 sites acquired from Grupo TorreSur in Brazil for approximately $725 million
- Purchased or are under agreement to purchase 31 sites all in their existing markets for an aggregate price of $23.2 million
- Spent an aggregate of $15.9 million to buy land and easements and to extend ground lease terms, and at the end of the year, they owned or controlled for more than 20 years the land underneath approximately 70% of their towers
Jeff Stoops says,
Strong operational year
- Beat midpoint of full-year revenue guidance by almost 8% and AFFO per share by 5%.
- Grew tower portfolio by over 15%, including entering into a new market in Tanzania.
- Had a very strong year for lease-up, including one of the best ever internationally.
- Services business had its best year ever, beating midpoint of original outlook for services revenue by 46%.
Domestic and international leasing activity
- Domestic same tower leasing revenue growth was the highest of the year in Q4.
- Expect contribution to revenue growth from domestic leases and amendments to be good in 2023.
- International leasing activity was ahead of internal expectations and led by strong contributions from Brazil, South Africa, and Tanzania.
- Lease-up in Brazil for the year was well ahead of internal expectations.
Balance sheet and financial position
- Completed a new 5-year ABS offering to address the nearing maturity date.
- Good access to additional debt capital but will be very thoughtful this year when considering issuing incremental debt in the current rate environment.
- Net debt to annualized adjusted EBITDA leverage ratio of 6.9x, below target range.
- Increase of nearly 20% in quarterly dividend, still representing only approximately 27% of projected AFFO in 2023 outlook.
- S&P increased corporate rating to BB+, only one notch below investment grade.
Succession planning
- Brendan T. Cavanagh appointed as the next CEO, succeeding current CEO Jeffrey A. Stoops.
- Stoops retiring at a time when SBA’s financial help and prospects are extremely strong.
Q & A sessions,
Repurchase and Acquisitions
- The revolver has a guaranteed return of 6% to pay back, which leads to a 16x acquisition or stock repurchase.
- The company is financially-driven and will pick the right time to do stock repurchases and acquisitions against the right cost of debt capital.
- The company thinks that the interest rates will come down over time, and they will wait for the time when they can access incremental debt at more accretive prices.
Leasing and 5G Deployment
- The company thinks that there is a lot of work left to be done on their assets domestically and internationally to deploy 5G, and multiple years are needed for this.
- The pace of deployment will depend on carriers’ willingness to spend money.
- The company expects to have a strong 2023, where the first half is weighted more heavily than the back half.
Build-to-Suits
- The company is pushing their build-to-suits business line both in the U.S. and internationally and is financially-driven in the investments made in this area.
- Not every build-to-suit is deemed appropriate return on capital.
International Escalations and Discretionary CapEx
- The dollar amount of international escalations is flat, but the CPI rates are assumed to come down year-over-year in Brazil, the largest international market for the company.
- The timing of the lower escalation has an impact, and some of the higher escalations of 2022 carry over into 2023.
- The discretionary CapEx includes assumptions around new builds, data center upgrades, some DAS networks invested in, and contracted M&A.
No bad stock 