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As Of Filer Filing For·On·As Docs:Size 4/29/22 Sba Communications Corp. 10-Q 3/31/22 93:16M |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.33M
2: EX-31.1 Certification -- §302 - SOA'02 HTML 32K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 31K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 28K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 28K
11: R1 Document And Entity Information HTML 78K
12: R2 Consolidated Balance Sheets HTML 140K
13: R3 Consolidated Balance Sheets (Parenthetical) HTML 43K
14: R4 Consolidated Statements of Operations HTML 138K
15: R5 Consolidated Statements of Operations HTML 27K
(Parenthetical)
16: R6 Consolidated Statements of Comprehensive Income HTML 54K
(Loss)
17: R7 Consolidated Statements of Shareholders' Deficit HTML 78K
18: R8 Consolidated Statements of Cash Flows HTML 139K
19: R9 Basis of Presentation HTML 35K
20: R10 Fair Value Measurements HTML 70K
21: R11 Cash, Cash Equivalents, and Restricted Cash HTML 81K
22: R12 Costs and Estimated Earnings on Uncompleted HTML 100K
Contracts
23: R13 Prepaid Expenses and Other Current Assets and HTML 113K
Other Assets
24: R14 Acquisitions HTML 74K
25: R15 Property and Equipment, Net HTML 76K
26: R16 Intangible Assets, Net HTML 108K
27: R17 Accrued Expenses HTML 68K
28: R18 Debt HTML 453K
29: R19 Shareholders' Equity HTML 122K
30: R20 Stock-Based Compensation HTML 223K
31: R21 Income Taxes HTML 32K
32: R22 Segment Data HTML 382K
33: R23 Earnings Per Share HTML 86K
34: R24 Redeemable Noncontrolling Interests HTML 73K
35: R25 Derivatives and Hedging Activities HTML 72K
36: R26 Basis of Presentation (Policy) HTML 38K
37: R27 Fair Value Measurements (Tables) HTML 59K
38: R28 Cash, Cash Equivalents, and Restricted Cash HTML 76K
(Tables)
39: R29 Costs and Estimated Earnings on Uncompleted HTML 95K
Contracts (Tables)
40: R30 Prepaid Expenses and Other Current Assets and HTML 113K
Other Assets (Tables)
41: R31 Acquisitions (Tables) HTML 68K
42: R32 Property and Equipment, Net (Tables) HTML 74K
43: R33 Intangible Assets, Net (Tables) HTML 107K
44: R34 Accrued Expenses (Tables) HTML 67K
45: R35 Debt (Tables) HTML 442K
46: R36 Shareholders' Equity (Tables) HTML 115K
47: R37 Stock-Based Compensation (Tables) HTML 222K
48: R38 Segment Data (Tables) HTML 376K
49: R39 Earnings Per Share (Tables) HTML 81K
50: R40 Redeemable Noncontrolling Interests (Tables) HTML 69K
51: R41 Derivatives and Hedging Activities (Tables) HTML 63K
52: R42 Basis of Presentation (Narrative) (Details) HTML 34K
53: R43 Fair Value Measurements (Narrative) (Details) HTML 42K
54: R44 Fair Value Measurements (Summary of Asset HTML 33K
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55: R45 Cash, Cash Equivalents, and Restricted Cash HTML 34K
(Narrative) (Details)
56: R46 Cash, Cash Equivalents, and Restricted Cash HTML 48K
(Schedule of Cash, Cash Equivalents and Restricted
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57: R47 Costs and Estimated Earnings on Uncompleted HTML 34K
Contracts (Narrative) (Details)
58: R48 Costs and Estimated Earnings on Uncompleted HTML 32K
Contracts (Summary of Costs and Estimated Earnings
on Uncompleted Contracts) (Details)
59: R49 Costs and Estimated Earnings on Uncompleted HTML 32K
Contracts (Costs and Estimated Earnings on
Uncompleted Contracts Accompanying Consolidated
Balance Sheets) (Details)
60: R50 Prepaid Expenses and Other Current Assets and HTML 35K
Other Assets (Schedule of Prepaid Expense and
Other Current Assets) (Details)
61: R51 Prepaid Expenses and Other Current Assets and HTML 43K
Other Assets (Schedule of Other Assets) (Details)
62: R52 Acquisitions (Narrative) (Details) HTML 55K
63: R53 Acquisitions (Schedule of Acquisition Capital HTML 51K
Expenditures) (Details)
64: R54 Property and Equipment, Net (Narrative) (Details) HTML 29K
65: R55 Property and Equipment, Net (Property and HTML 43K
Equipment, Net (Including Assets Held Under
Capital Leases)) (Details)
66: R56 Intangible Assets, Net (Narrative) (Details) HTML 27K
67: R57 Intangible Assets, Net (Gross and Net Carrying HTML 38K
Amounts for each Major Class of Intangible Assets)
(Details)
68: R58 Accrued Expenses (Schedule of Accrued Expenses) HTML 38K
(Details)
69: R59 Debt (Revolving Credit Facility under the Senior HTML 46K
Credit Agreement) (Narrative) (Details)
70: R60 Debt (Term Loan under the Senior Credit Agreement) HTML 33K
(Narrative) (Details)
71: R61 Debt (Schedule of Principal Values, Fair Values, HTML 80K
and Carrying Values of Debt) (Details)
72: R62 Debt (Schedule of Cash and Non-Cash Interest HTML 89K
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73: R63 Shareholders' Equity (Narrative) (Details) HTML 35K
74: R64 Shareholders' Equity (Summary of Share HTML 32K
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75: R65 Shareholders' Equity (Schedule of Dividends Paid HTML 40K
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76: R66 Stock-Based Compensation (Narrative) (Details) HTML 32K
77: R67 Stock-Based Compensation (Schedule of Assumptions HTML 35K
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(Details)
78: R68 Stock-Based Compensation (Summary of Stock Option HTML 69K
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79: R69 Stock-Based Compensation (Summary of Restricted HTML 56K
Stock Unit and Performance Based Restricted Stock
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80: R70 Income Taxes (Narrative) (Details) HTML 27K
81: R71 Segment Data (Narrative) (Details) HTML 46K
82: R72 Segment Data (Schedule of Segment Reporting HTML 103K
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83: R73 Earnings Per Share (Narrative) (Details) HTML 34K
84: R74 Earnings Per Share (Weighted-Average Shares of HTML 60K
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85: R75 Redeemable Noncontrolling Interests (Narrative) HTML 28K
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86: R76 Redeemable Noncontrolling Interests (Components of HTML 43K
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87: R77 Derivatives and Hedging Activities (Narrative) HTML 55K
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88: R78 Derivatives and Hedging Activities (Schedule of HTML 40K
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| sbac-20220331x10q |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-Q
i xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended i March 31, 2022
OR
i ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: i 001-16853
i SBA COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
|
|
i Florida | i 65-0716501 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
|
|
i 8051 Congress Avenue |
|
i Boca Raton, i Florida | i 33487 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code ( i 561) i 995-7670
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
i Class A Common Stock, $0.01 par value per share | i SBAC | The i NASDAQ Stock Market LLC |
|
| (NASDAQ Global Select Market) |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes x No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes x No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
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|
|
i Large Accelerated Filer | x | Accelerated Filer | ¨ |
|
|
|
|
Non-Accelerated Filer | ¨ | Smaller Reporting Company | i ¨ |
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|
|
|
|
| Emerging Growth Company | i ¨ |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ i No x
Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: i 107,829,051 shares of Class A common stock as of April 19, 2022.
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except par values)
|
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|
|
| March 31, |
| |||
|
| 2022 |
| 2021 | ||
ASSETS |
| (unaudited) |
|
|
| |
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | i 263,569 |
| $ | i 367,278 |
Restricted cash |
|
| i 69,781 |
|
| i 65,561 |
Accounts receivable, net |
|
| i 121,583 |
|
| i 101,950 |
Costs and estimated earnings in excess of billings on uncompleted contracts |
|
| i 48,028 |
|
| i 48,844 |
Prepaid expenses and other current assets |
|
| i 36,462 |
|
| i 30,813 |
Total current assets |
|
| i 539,423 |
|
| i 614,446 |
Property and equipment, net |
|
| i 2,674,679 |
|
| i 2,575,487 |
Intangible assets, net |
|
| i 2,909,789 |
|
| i 2,803,247 |
Operating lease right-of-use assets, net |
|
| i 2,362,287 |
|
| i 2,268,470 |
Acquired and other right-of-use assets, net |
|
| i 1,017,508 |
|
| i 964,405 |
Other assets |
|
| i 638,414 |
|
| i 575,644 |
Total assets |
| $ | i 10,142,100 |
| $ | i 9,801,699 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, |
|
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|
AND SHAREHOLDERS' DEFICIT |
|
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|
|
Current Liabilities: |
|
|
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|
|
|
Accounts payable |
| $ | i 40,583 |
| $ | i 34,066 |
Accrued expenses |
|
| i 80,628 |
|
| i 68,070 |
Current maturities of long-term debt |
|
| i 662,264 |
|
| i 24,000 |
Deferred revenue |
|
| i 195,553 |
|
| i 184,380 |
Accrued interest |
|
| i 23,710 |
|
| i 49,096 |
Current lease liabilities |
|
| i 254,448 |
|
| i 238,497 |
Other current liabilities |
|
| i 21,367 |
|
| i 18,222 |
Total current liabilities |
|
| i 1,278,553 |
|
| i 616,331 |
Long-term liabilities: |
|
|
|
|
|
|
Long-term debt, net |
|
| i 11,969,068 |
|
| i 12,278,694 |
Long-term lease liabilities |
|
| i 2,050,790 |
|
| i 1,981,353 |
Other long-term liabilities |
|
| i 232,799 |
|
| i 191,475 |
Total long-term liabilities |
|
| i 14,252,657 |
|
| i 14,451,522 |
Redeemable noncontrolling interests |
|
| i 36,037 |
|
| i 17,250 |
Shareholders' deficit: |
|
|
|
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|
|
Preferred stock - par value $ i i 0.01 / , i i 30,000 / shares authorized, i i i i no / / / shares issued or outstanding |
|
| — |
|
| — |
Common stock - Class A, par value $ i i 0.01 / , i i 400,000 / shares authorized, i i 107,806 / shares and |
|
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i i 108,956 / shares issued and outstanding at March 31, 2022 and December 31, 2021, |
|
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|
|
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|
respectively |
|
| i 1,078 |
|
| i 1,089 |
Additional paid-in capital |
|
| i 2,688,835 |
|
| i 2,681,347 |
Accumulated deficit |
|
| ( i 7,523,696) |
|
| ( i 7,203,531) |
Accumulated other comprehensive loss, net |
|
| ( i 591,364) |
|
| ( i 762,309) |
Total shareholders' deficit |
|
| ( i 5,425,147) |
|
| ( i 5,283,404) |
Total liabilities, redeemable noncontrolling interests, and shareholders' deficit |
| $ | i 10,142,100 |
| $ | i 9,801,699 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share amounts)
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|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
Revenues: |
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|
|
| ||
Site leasing |
| $ | i 559,432 |
| $ | i 505,103 |
Site development |
|
| i 60,338 |
|
| i 43,636 |
Total revenues |
|
| i 619,770 |
|
| i 548,739 |
Operating expenses: |
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|
Cost of revenues (exclusive of depreciation, accretion, |
|
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and amortization shown below): |
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Cost of site leasing |
|
| i 107,155 |
|
| i 95,368 |
Cost of site development |
|
| i 45,773 |
|
| i 34,406 |
Selling, general, and administrative expenses (1) |
|
| i 62,124 |
|
| i 51,601 |
Acquisition and new business initiatives related |
|
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|
|
adjustments and expenses |
|
| i 5,104 |
|
| i 5,001 |
Asset impairment and decommission costs |
|
| i 8,512 |
|
| i 4,903 |
Depreciation, accretion, and amortization |
|
| i 174,323 |
|
| i 183,881 |
Total operating expenses |
|
| i 402,991 |
|
| i 375,160 |
Operating income |
|
| i 216,779 |
|
| i 173,579 |
Other income (expense): |
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|
|
|
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|
Interest income |
|
| i 2,502 |
|
| i 632 |
Interest expense |
|
| ( i 82,252) |
|
| ( i 90,095) |
Non-cash interest expense |
|
| ( i 11,526) |
|
| ( i 11,804) |
Amortization of deferred financing fees |
|
| ( i 4,881) |
|
| ( i 4,891) |
Loss from extinguishment of debt, net |
|
| — |
|
| ( i 11,652) |
Other income (expense), net |
|
| i 108,161 |
|
| ( i 88,436) |
Total other income (expense), net |
|
| i 12,004 |
|
| ( i 206,246) |
Income (loss) before income taxes |
|
| i 228,783 |
|
| ( i 32,667) |
(Provision) benefit for income taxes |
|
| ( i 40,477) |
|
| i 20,922 |
Net income (loss) |
|
| i 188,306 |
|
| ( i 11,745) |
Net loss attributable to noncontrolling interests |
|
| i 317 |
|
| — |
Net income (loss) attributable to SBA Communications |
|
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Corporation |
| $ | i 188,623 |
| $ | ( i 11,745) |
Net income (loss) per common share attributable to SBA |
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Communications Corporation: |
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Basic |
| $ | i 1.75 |
| $ | ( i 0.11) |
Diluted |
| $ | i 1.72 |
| $ | ( i 0.11) |
Weighted average number of common shares |
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Basic |
|
| i 108,086 |
|
| i 109,469 |
Diluted |
|
| i 109,544 |
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| i 109,469 |
(1)Includes non-cash compensation expense of $ i 24,116 and $ i 19,584 for the three months ended March 31, 2022 and 2021, respectively.
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited) (in thousands)
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| For the three months | ||||
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| ended March 31, | ||||
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| 2022 |
| 2021 | ||
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Net income (loss) |
| $ | i 188,306 |
| $ | ( i 11,745) |
Adjustments related to interest rate swaps |
|
| i 85,322 |
|
| i 42,787 |
Foreign currency translation adjustments |
|
| i 85,506 |
|
| ( i 43,634) |
Comprehensive income (loss) |
|
| i 359,134 |
|
| ( i 12,592) |
Comprehensive loss attributable to noncontrolling interests |
|
| i 434 |
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| — |
Comprehensive income (loss) attributable to SBA |
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Communications Corporation |
| $ | i 359,568 |
| $ | ( i 12,592) |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(unaudited) (in thousands)
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| Accumulated |
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| Class A |
| Additional |
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| Other |
| Total | ||||||
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| Common Stock |
| Paid-In |
| Accumulated |
| Comprehensive |
| Shareholders' | |||||||
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| Shares |
| Amount |
| Capital |
| Deficit |
| Loss |
| Deficit | |||||
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BALANCE, December 31, 2021 |
| i 108,956 |
| $ | i 1,089 |
| $ | i 2,681,347 |
| $ | ( i 7,203,531) |
| $ | ( i 762,309) |
| $ | ( i 5,283,404) |
Net income attributable to SBA |
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Communications Corporation |
| — |
|
| — |
|
| — |
|
| i 188,623 |
|
| — |
|
| i 188,623 |
Common stock issued in connection with equity |
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awards and stock purchase plans, offset |
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by the impact of net share settlements |
| i 150 |
|
| i 2 |
|
| i 1,566 |
|
| — |
|
| — |
|
| i 1,568 |
Non-cash stock compensation |
| — |
|
| — |
|
| i 25,143 |
|
| — |
|
| — |
|
| i 25,143 |
Adjustments related to interest rate swaps |
| — |
|
| — |
|
| — |
|
| — |
|
| i 85,322 |
|
| i 85,322 |
Repurchase and retirement of common stock |
| ( i 1,300) |
|
| ( i 13) |
|
| — |
|
| ( i 431,654) |
|
| — |
|
| ( i 431,667) |
Foreign currency translation adjustments |
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attributable to SBA Communications |
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Corporation |
| — |
|
| — |
|
| — |
|
| — |
|
| i 85,623 |
|
| i 85,623 |
Dividends and dividend equivalents |
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on common stock |
| — |
|
| — |
|
| — |
|
| ( i 77,134) |
|
| — |
|
| ( i 77,134) |
Adjustment to redemption amount related to |
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noncontrolling interests |
| — |
|
| — |
|
| ( i 19,221) |
|
| — |
|
| — |
|
| ( i 19,221) |
BALANCE, March 31, 2022 |
| i 107,806 |
| $ | i 1,078 |
| $ | i 2,688,835 |
| $ | ( i 7,523,696) |
| $ | ( i 591,364) |
| $ | ( i 5,425,147) |
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| Accumulated |
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| |
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| Class A |
| Additional |
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| Other |
| Total | ||||||
|
| Common Stock |
| Paid-In |
| Accumulated |
| Comprehensive |
| Shareholders' | |||||||
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| Shares |
| Amount |
| Capital |
| Deficit |
| Loss |
| Deficit | |||||
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BALANCE, December 31, 2020 |
| i 109,819 |
| $ | i 1,098 |
| $ | i 2,586,130 |
| $ | ( i 6,604,028) |
| $ | ( i 807,582) |
| $ | ( i 4,824,382) |
Net loss attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation |
| — |
|
| — |
|
| — |
|
| ( i 11,745) |
|
| — |
|
| ( i 11,745) |
Common stock issued in connection with equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards and stock purchase plans, offset |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by the impact of net share settlements |
| i 166 |
|
| i 2 |
|
| i 2,013 |
|
| — |
|
| — |
|
| i 2,015 |
Non-cash stock compensation |
| — |
|
| — |
|
| i 20,812 |
|
| — |
|
| — |
|
| i 20,812 |
Adjustments related to interest rate swaps |
| — |
|
| — |
|
| — |
|
| — |
|
| i 42,787 |
|
| i 42,787 |
Repurchase and retirement of common stock |
| ( i 654) |
|
| ( i 7) |
|
| — |
|
| ( i 168,916) |
|
| — |
|
| ( i 168,923) |
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to SBA Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
| — |
|
| — |
|
| — |
|
| — |
|
| ( i 43,634) |
|
| ( i 43,634) |
Dividends and dividend equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on common stock |
| — |
|
| — |
|
| — |
|
| ( i 63,624) |
|
| — |
|
| ( i 63,624) |
Adjustment to redemption amount related to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests |
| — |
|
| — |
|
| i 1,517 |
|
| — |
|
| — |
|
| i 1,517 |
BALANCE, March 31, 2021 |
| i 109,331 |
| $ | i 1,093 |
| $ | i 2,610,472 |
| $ | ( i 6,848,313) |
| $ | ( i 808,429) |
| $ | ( i 5,045,177) |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended March 31, | ||||
|
| 2022 |
| 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income (loss) |
| $ | i 188,306 |
| $ | ( i 11,745) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation, accretion, and amortization |
|
| i 174,323 |
|
| i 183,881 |
(Gain) loss on remeasurement of U.S. denominated intercompany loans |
|
| ( i 109,644) |
|
| i 86,251 |
Non-cash compensation expense |
|
| i 24,747 |
|
| i 20,422 |
Non-cash asset impairment and decommission costs |
|
| i 8,366 |
|
| i 4,791 |
Loss from extinguishment of debt, net |
|
| — |
|
| i 10,652 |
Deferred income tax provision (benefit) |
|
| i 34,262 |
|
| ( i 26,837) |
Other non-cash items reflected in the Statements of Operations |
|
| i 16,896 |
|
| i 17,413 |
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts receivable and costs and estimated earnings in excess of |
|
|
|
|
|
|
billings on uncompleted contracts, net |
|
| ( i 9,812) |
|
| ( i 4,523) |
Prepaid expenses and other assets |
|
| ( i 2,201) |
|
| i 3,517 |
Operating lease right-of-use assets, net |
|
| i 33,682 |
|
| i 29,865 |
Accounts payable and accrued expenses |
|
| ( i 7,002) |
|
| ( i 4,667) |
Accrued interest |
|
| ( i 25,384) |
|
| ( i 27,347) |
Long-term lease liabilities |
|
| ( i 31,038) |
|
| ( i 26,393) |
Other liabilities |
|
| ( i 3,019) |
|
| i 30,218 |
Net cash provided by operating activities |
|
| i 292,482 |
|
| i 285,498 |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisitions |
|
| ( i 215,181) |
|
| ( i 1,052,676) |
Capital expenditures |
|
| ( i 38,008) |
|
| ( i 24,536) |
Purchase of investments |
|
| ( i 30,393) |
|
| ( i 755,013) |
Proceeds from sale of investments |
|
| i 30,214 |
|
| i 755,000 |
Other investing activities |
|
| ( i 2,513) |
|
| i 641 |
Net cash used in investing activities |
|
| ( i 255,881) |
|
| ( i 1,076,584) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Borrowings under Revolving Credit Facility |
|
| i 330,000 |
|
| i 710,000 |
Repayments under Revolving Credit Facility |
|
| — |
|
| ( i 500,000) |
Proceeds from issuance of Senior Notes, net of fees |
|
| — |
|
| i 1,485,670 |
Repayment of Senior Notes |
|
| — |
|
| ( i 757,500) |
Repurchase and retirement of common stock |
|
| ( i 431,667) |
|
| ( i 168,923) |
Payment of dividends on common stock |
|
| ( i 76,873) |
|
| ( i 63,412) |
Proceeds from employee stock purchase/stock option plans |
|
| i 10,836 |
|
| i 10,838 |
Payments related to taxes on stock options and restricted stock units |
|
| ( i 9,228) |
|
| ( i 8,823) |
Other financing activities |
|
| i 25,182 |
|
| ( i 6,507) |
Net cash (used in) provided by financing activities |
|
| ( i 151,750) |
|
| i 701,343 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
| i 15,961 |
|
| ( i 10,880) |
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
| ( i 99,188) |
|
| ( i 100,623) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: |
|
|
|
|
|
|
Beginning of period |
|
| i 435,626 |
|
| i 342,808 |
End of period |
| $ | i 336,438 |
| $ | i 242,185 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
Interest |
| $ | i 107,594 |
| $ | i 118,430 |
Income taxes |
| $ | i 5,696 |
| $ | i 6,387 |
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH ACTIVITIES: |
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
| $ | i 41,038 |
| $ | i 11,890 |
Operating lease modifications and reassessments |
| $ | i 12,445 |
| $ | i 6,181 |
Right-of-use assets obtained in exchange for new finance lease liabilities |
| $ | i 674 |
| $ | i 1,033 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
i 1.BASIS OF PRESENTATION
i The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.
i Foreign Currency Translation
All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end exchange rates, while revenues and expenses are translated at monthly average exchange rates during the period. Unrealized translation gains and losses are reported as foreign currency translation adjustments through Accumulated other comprehensive loss, net in the Consolidated Statement of Shareholders’ Deficit.
For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities of such subsidiaries, which are not denominated in U.S. dollars, are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Remeasurement gains and losses are reported as other income (expense), net in the Consolidated Statements of Operations.
i Intercompany Loans Subject to Remeasurement
In accordance with Accounting Standards Codification (ASC) 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future. The Company recorded a $ i 72.9 million gain and a $ i 57.0 million loss, net of taxes, on the remeasurement of intercompany loans for the three months ended March 31, 2022 and 2021, respectively, due to changes in foreign exchange rates. During the three months ended March 31, 2022, the Company repaid $ i 36.5 million of the intercompany loans. As of March 31, 2022 and December 31, 2021, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $ i 870.3 million and $ i 872.9 million, respectively. Subsequent to March 31, 2022, the Company repaid $ i 64.9 million of the intercompany loan.
i 2.FAIR VALUE MEASUREMENTS
Items Measured at Fair Value on a Recurring Basis— The Company’s asset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Other long-term liabilities in the Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model.
Refer to Note 16 for discussion of the Company’s redeemable non-controlling interests.
Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived and intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including, but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived and intangible assets is calculated using a discounted cash flow model.
Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs (in thousands):
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
| |
Asset impairment (1) |
| $ | i 7,790 |
| $ | i 3,156 |
Write-off of carrying value of decommissioned towers |
|
| i 590 |
|
| i 1,327 |
Other (including third party decommission costs) |
|
| i 132 |
|
| i 420 |
Total asset impairment and decommission costs |
| $ | i 8,512 |
| $ | i 4,903 |
(1)Represents impairment charges resulting from the Company’s regular analysis of whether the anticipated future discounted cash flows from certain towers are sufficient to recover the carrying value of the investment in those towers.
/The Company’s long-term investments were $ i 45.6 million and $ i 47.9 million as of March 31, 2022 and December 31, 2021, respectively, and are recorded in Other assets on the Consolidated Balance Sheets. Some of these investments provide for the Company to increase their investment in the future through call options exercisable by the Company and put options exercisable by the investee. These put and call options are recorded at fair market value. The estimation of the fair value of the investment involves the use of Level 3 inputs. The Company evaluates these investments for indicators of impairment. The Company considers impairment indicators such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. If indicators exist and the fair value of the investment is below the carrying amount, the investment could be impaired.
Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the shorter maturity of these instruments. The Company’s estimate of its short-term investments is based primarily upon Level 1 reported market values. As of March 31, 2022 and December 31, 2021, the Company had $ i i 0.8 / million of short-term investments. For the three months ended March 31, 2022, the Company purchased and sold $ i i 30.2 / million of short-term investments. For the three months ended March 31, 2021, the Company purchased and sold $ i i 755.0 / million of short-term investments.
The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate was set for the Revolving Credit Facility ( i 112.5 to i 150.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.
For discussion of the Company’s derivatives and hedging activities, refer to Note 17.
i 3.CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
The cash, cash equivalents, and restricted cash balances on the Consolidated Statements of Cash Flows consist of the following:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of |
|
| ||
|
|
|
| Included on Balance Sheet | ||||
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
| ||||
Cash and cash equivalents |
| $ | i 263,569 |
| $ | i 367,278 |
| Cash and cash equivalents |
Securitization escrow accounts |
|
| i 68,983 |
|
| i 64,764 |
| Restricted cash - current asset |
Payment and performance bonds |
|
| i 798 |
|
| i 797 |
| Restricted cash - current asset |
Surety bonds and workers compensation |
|
| i 3,088 |
|
| i 2,787 |
| Other assets - noncurrent |
Total cash, cash equivalents, and restricted cash |
| $ | i 336,438 |
| $ | i 435,626 |
|
|
Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is
subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted cash on the Company’s Consolidated Balance Sheets.
Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily related to the Company’s tower removal obligations. As of March 31, 2022 and December 31, 2021, the Company had $ i 42.4 million and $ i 42.3 million in surety and payment and performance bonds, respectively, for which i i no / collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of March 31, 2022 and December 31, 2021, the Company had pledged $ i i 2.3 / million as collateral related to its workers’ compensation policy.
i 4.COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The Company’s costs and estimated earnings on uncompleted contracts are comprised of the following:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
|
| ||||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Costs incurred on uncompleted contracts |
| $ | i 81,293 |
| $ | i 75,967 |
Estimated earnings |
|
| i 31,476 |
|
| i 28,851 |
Billings to date |
|
| ( i 72,420) |
|
| ( i 61,628) |
|
| $ | i 40,349 |
| $ | i 43,190 |
These amounts are included in the Consolidated Balance Sheets under the following captions:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
|
| ||||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
| $ | i 48,028 |
| $ | i 48,844 |
Billings in excess of costs and estimated earnings on |
|
|
|
|
|
|
uncompleted contracts (included in Other current liabilities) |
|
| ( i 7,679) |
|
| ( i 5,654) |
|
| $ | i 40,349 |
| $ | i 43,190 |
At March 31, 2022 and December 31, 2021, the i i eight / largest customers comprised i 98.2% and i 98.8%, respectively, of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings.
i 5.PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS
The Company’s prepaid expenses and other current assets are comprised of the following:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
|
| ||||
|
|
|
|
|
|
|
|
|
| (in thousands) | |||
Prepaid real estate taxes |
| $ | i 3,517 |
| $ | i 3,331 |
Prepaid taxes |
|
| i 10,093 |
|
| i 11,096 |
Other current assets |
|
| i 22,852 |
|
| i 16,386 |
Total prepaid expenses and other current assets |
| $ | i 36,462 |
| $ | i 30,813 |
The Company’s other assets are comprised of the following:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
|
| ||||
|
|
|
|
|
|
|
|
|
| (in thousands) | |||
Straight-line rent receivable |
| $ | i 362,370 |
| $ | i 348,519 |
Interest rate swap asset (1) |
|
| i 134,425 |
|
| i 60,324 |
Loans receivable |
|
| i 40,063 |
|
| i 37,376 |
Deferred lease costs, net |
|
| i 6,379 |
|
| i 6,345 |
Deferred tax asset - long term |
|
| i 20,296 |
|
| i 51,918 |
Long-term investments |
|
| i 45,617 |
|
| i 47,889 |
Other |
|
| i 29,264 |
|
| i 23,273 |
Total other assets |
| $ | i 638,414 |
| $ | i 575,644 |
(1)Refer to Note 17 for more information on the Company’s interest rate swaps.
i 6.ACQUISITIONS
The following table summarizes the Company’s acquisition activity:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of towers and related intangible assets (1) |
| $ | i 207,863 |
| $ | i 101,630 |
Acquisition of right-of-use assets (2) |
|
| — |
|
| i 945,915 |
Land buyouts and other assets (3) |
|
| i 7,318 |
|
| i 5,131 |
Total cash acquisition capital expenditures |
| $ | i 215,181 |
| $ | i 1,052,676 |
(1)During the three months ended March 31, 2022, the Company closed on i 1,445 sites under the previously announced deal with Airtel Tanzania for $ i 176.1 million. Legal title was fully transferred at closing for i 963 of the towers. The remaining i 482 towers are pending post-closing site level documentation and due diligence and were initially accounted for as acquired and other right-of-use assets, net on the consolidated balance sheet until transfer of title for these towers is completed, which the Company anticipates to be in tranches through the end of the second quarter of 2023. Upon legal transfer, these assets will be reclassified to tower related assets. During this period of time, the Company has all the economic rights and obligations related to these towers.
(2)During the three months ended March 31, 2021, the Company acquired the exclusive right to lease and operate i 697 utility transmission structures, which included existing wireless tenant licenses from PG&E for $ i 954.0 million. The difference between the purchase price and the cash acquisition amount is due to working capital adjustments. The Company accounted for the payment with respect to these sites as a right-of-use asset, which is recorded in Acquired and other right of use assets, net on its Consolidated Balance Sheets. The payments associated with the right of use of these structures has been fully funded and will be recognized over i 70 years.
(3)In addition, the Company paid $ i 3.8 million and $ i 2.8 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended March 31, 2022 and 2021, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.
During the three months ended March 31, 2022, the Company acquired i 1,807 towers and related assets and liabilities consisting of $ i 74.9 million of property and equipment, net $ i 83.2 million of intangible assets, net, $ i 36.3 million of operating lease right-of-use assets, net, $ i 58.3 million of acquired and other right-of-use assets, net, and $ i 44.9 million of other net liabilities assumed. All acquisitions in the three months ended March 31, 2022 were accounted for as asset acquisitions.
Subsequent to March 31, 2022, the Company purchased, or is under contract to purchase, i 358 communication sites and one data center for an aggregate consideration of $ i 177.1 million in cash.
The maximum potential obligation related to contingent consideration for acquisitions were $ i 11.4 million and $ i 11.6 million as of March 31, 2022 and December 31, 2021, respectively. No such amounts are recorded on the Company’s Consolidated Balance Sheet.
i 7.PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
|
| ||||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Towers and related components (1) |
| $ | i 5,492,277 |
| $ | i 5,323,803 |
Construction-in-process (2) |
|
| i 54,487 |
|
| i 47,565 |
Furniture, equipment, and vehicles |
|
| i 61,981 |
|
| i 59,939 |
Land, buildings, and improvements |
|
| i 856,639 |
|
| i 848,051 |
Total property and equipment |
|
| i 6,465,384 |
|
| i 6,279,358 |
Less: accumulated depreciation |
|
| ( i 3,790,705) |
|
| ( i 3,703,871) |
Property and equipment, net |
| $ | i 2,674,679 |
| $ | i 2,575,487 |
(1)Includes amounts related to our data centers.
(2)Construction-in-process represents costs incurred related to towers and other assets that are under development and will be used in the Company’s site leasing operations.
/Depreciation expense was $ i 68.1 million and $ i 71.5 million for the three months ended March 31, 2022 and 2021, respectively. At March 31, 2022 and December 31, 2021, unpaid capital expenditures that are included in accounts payable and accrued expenses were $ i 9.2 million and $ i 7.3 million, respectively.
i 8.INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
i
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|
| As of March 31, 2022 |
| As of December 31, 2021 | ||||||||||||||
|
| Gross carrying |
| Accumulated |
| Net book |
| Gross carrying |
| Accumulated |
| Net book | ||||||
|
| amount |
| amortization |
| value |
| amount |
| amortization |
| value | ||||||
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| (in thousands) | ||||||||||||||||
Current contract intangibles |
| $ | i 5,113,444 |
| $ | ( i 2,881,988) |
| $ | i 2,231,456 |
| $ | i 4,890,427 |
| $ | ( i 2,749,594) |
| $ | i 2,140,833 |
Network location intangibles |
|
| i 1,836,202 |
|
| ( i 1,157,869) |
|
| i 678,333 |
|
| i 1,783,640 |
|
| ( i 1,121,226) |
|
| i 662,414 |
Intangible assets, net |
| $ | i 6,949,646 |
| $ | ( i 4,039,857) |
| $ | i 2,909,789 |
| $ | i 6,674,067 |
| $ | ( i 3,870,820) |
| $ | i 2,803,247 |
All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $ i 100.6 million and $ i 109.8 million for the three months ended March 31, 2022 and 2021, respectively.
i 9.ACCRUED EXPENSES
The Company’s accrued expenses are comprised of the following:
i
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| As of |
| As of | ||
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| ||||
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|
| (in thousands) | ||||
Salaries and benefits |
| $ | i 14,421 |
| $ | i 24,962 |
Real estate and property taxes |
|
| i 8,843 |
|
| i 8,336 |
Unpaid capital expenditures |
|
| i 9,176 |
|
| i 7,295 |
Holdbacks |
|
| i 18,234 |
|
| i 957 |
Other |
|
| i 29,954 |
|
| i 26,520 |
Total accrued expenses |
| $ | i 80,628 |
| $ | i 68,070 |
i
10.DEBT
The principal values, fair values, and carrying values of debt consist of the following (in thousands):
i
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| As of |
| As of | ||||||||||||||
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| ||||||||||||||||
|
| Maturity Date |
| Principal |
| Fair Value |
| Carrying |
| Principal |
| Fair Value |
| Carrying | ||||||
Revolving Credit Facility |
|
| $ | i 680,000 |
| $ | i 680,000 |
| $ | i 680,000 |
| $ | i 350,000 |
| $ | i 350,000 |
| $ | i 350,000 | |
2018 Term Loan |
|
|
| i 2,310,000 |
|
| i 2,275,350 |
|
| i 2,299,522 |
|
| i 2,316,000 |
|
| i 2,289,945 |
|
| i 2,304,697 | |
2014-2C Tower Securities (1) |
|
|
| i 620,000 |
|
| i 622,065 |
|
| i 617,343 |
|
| i 620,000 |
|
| i 641,793 |
|
| i 617,095 | |
2018-1C Tower Securities (1) |
|
|
| i 640,000 |
|
| i 640,960 |
|
| i 638,264 |
|
| i 640,000 |
|
| i 650,163 |
|
| i 637,812 | |
2019-1C Tower Securities (1) |
|
|
| i 1,165,000 |
|
| i 1,137,529 |
|
| i 1,158,043 |
|
| i 1,165,000 |
|
| i 1,174,728 |
|
| i 1,157,446 | |
2020-1C Tower Securities (1) |
|
|
| i 750,000 |
|
| i 715,215 |
|
| i 744,406 |
|
| i 750,000 |
|
| i 746,498 |
|
| i 744,052 | |
2020-2C Tower Securities (1) |
|
|
| i 600,000 |
|
| i 575,178 |
|
| i 594,975 |
|
| i 600,000 |
|
| i 605,268 |
|
| i 594,774 | |
2021-1C Tower Securities (1) |
|
|
| i 1,165,000 |
|
| i 1,087,283 |
|
| i 1,154,213 |
|
| i 1,165,000 |
|
| i 1,144,846 |
|
| i 1,153,700 | |
2021-2C Tower Securities (1) |
|
|
| i 895,000 |
|
| i 835,053 |
|
| i 886,383 |
|
| i 895,000 |
|
| i 883,213 |
|
| i 886,116 | |
2021-3C Tower Securities (1) |
|
|
| i 895,000 |
|
| i 841,944 |
|
| i 886,045 |
|
| i 895,000 |
|
| i 902,446 |
|
| i 885,976 | |
2020 Senior Notes |
|
|
| i 1,500,000 |
|
| i 1,462,320 |
|
| i 1,484,876 |
|
| i 1,500,000 |
|
| i 1,550,790 |
|
| i 1,484,178 | |
2021 Senior Notes |
|
|
| i 1,500,000 |
|
| i 1,358,955 |
|
| i 1,487,262 |
|
| i 1,500,000 |
|
| i 1,446,975 |
|
| i 1,486,848 | |
Total debt |
|
|
| $ | i 12,720,000 |
| $ | i 12,231,852 |
| $ | i 12,631,332 |
| $ | i 12,396,000 |
| $ | i 12,386,665 |
| $ | i 12,302,694 |
Less: current maturities of long-term debt |
|
|
|
|
| ( i 662,264) |
|
|
|
|
|
|
|
| ( i 24,000) | |||||
Total long-term debt, net of current maturities |
|
|
|
| $ | i 11,969,068 |
|
|
|
|
|
|
| $ | i 12,278,694 | |||||
(1)The maturity date represents the anticipated repayment date for each issuance.
/
The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:
i
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|
|
| Interest |
| For the three months ended March 31, | ||||||||||
|
| Rates as of |
| 2022 |
| 2021 | ||||||||
|
| March 31, |
| Cash |
| Non-cash |
| Cash |
| Non-cash | ||||
|
| 2022 |
| Interest |
| Interest |
| Interest |
| Interest | ||||
|
|
|
|
|
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|
|
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|
|
|
|
| (in thousands) | ||||||||||
Revolving Credit Facility |
| i 1.619% |
| $ | i 2,279 |
| $ | — |
| $ | i 2,148 |
| $ | — |
2018 Term Loan (1) |
| i 1.926% |
|
| i 10,910 |
|
| i 11,438 |
|
| i 10,997 |
|
| i 11,434 |
2013-2C Tower Securities |
| i 3.722% |
|
| — |
|
| — |
|
| i 5,396 |
|
| — |
2014-2C Tower Securities |
| i 3.869% |
|
| i 6,046 |
|
| — |
|
| i 6,046 |
|
| — |
2017-1C Tower Securities |
| i 3.168% |
|
| — |
|
| — |
|
| i 6,085 |
|
| — |
2018-1C Tower Securities |
| i 3.448% |
|
| i 5,570 |
|
| — |
|
| i 5,570 |
|
| — |
2019-1C Tower Securities |
| i 2.836% |
|
| i 8,357 |
|
| — |
|
| i 8,357 |
|
| — |
2020-1C Tower Securities |
| i 1.884% |
|
| i 3,598 |
|
| — |
|
| i 3,598 |
|
| — |
2020-2C Tower Securities |
| i 2.328% |
|
| i 3,540 |
|
| — |
|
| i 3,540 |
|
| — |
2021-1C Tower Securities |
| i 1.631% |
|
| i 4,846 |
|
| — |
|
| — |
|
| — |
2021-2C Tower Securities |
| i 1.840% |
|
| i 4,196 |
|
| — |
|
| — |
|
| — |
2021-3C Tower Securities |
| i 2.593% |
|
| i 5,873 |
|
| — |
|
| — |
|
| — |
2016 Senior Notes |
| i 4.875% |
|
| — |
|
| — |
|
| i 13,406 |
|
| i 286 |
2017 Senior Notes |
| i 4.000% |
|
| — |
|
| — |
|
| i 2,333 |
|
| — |
2020 Senior Notes |
| i 3.875% |
|
| i 14,531 |
|
| i 88 |
|
| i 14,531 |
|
| i 84 |
2021 Senior Notes |
| i 3.125% |
|
| i 11,719 |
|
| — |
|
| i 8,073 |
|
| — |
Other |
|
|
|
| i 787 |
|
| — |
|
| i 15 |
|
| — |
Total |
|
|
| $ | i 82,252 |
| $ | i 11,526 |
| $ | i 90,095 |
| $ | i 11,804 |
(1)The 2018 Term Loan has a blended rate of i 1.926%, which includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $ i 1.95 billion of notional value accruing interest at one month LIBOR plus i 175 basis points for a fixed rate of i 1.874% per annum through the maturity date of the 2018 Term Loan. Excluding the impact of the interest rate swap, the 2018 Term Loan was accruing interest at i 2.210% as of March 31, 2022. Refer to Note 17 for more information on the Company’s interest rate swap.
Revolving Credit Facility under the Senior Credit Agreement
During the three months ended March 31, 2022, the Company borrowed $ i 330.0 million of the outstanding balance under the Revolving Credit Facility. As of March 31, 2022, there was $ i 680.0 million outstanding under the Revolving Credit Facility accruing interest at i 1.619%. In addition, SBA Senior Finance II LLC, the Company’s wholly owned subsidiary (“SBA Senior Finance II”), was required to pay a commitment fee of i 0.15% per annum on the amount of the unused commitment. Subsequent to March 31, 2022, the Company received a i 0.05% reduction in the applicable spread and a i 0.01% reduction in the commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2021. As of March 31, 2022, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
Subsequent to March 31, 2022, the Company repaid an additional $ i 110.0 million under the Revolving Credit Facility, and as of the date of this filing, $ i 570.0 million was outstanding.
Term Loan under the Senior Credit Agreement
During the three months ended March 31, 2022, the Company repaid an aggregate of $ i 6.0 million of principal on the 2018 Term Loan. As of March 31, 2022, the 2018 Term Loan had a principal balance of $ i 2.3 billion.
Secured Tower Revenue Securities
As of March 31, 2022, the entities that are borrowers on the mortgage loan (the “Borrowers”) met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of the Borrowers.
i 11.SHAREHOLDERS’ EQUITY
Common Stock Equivalents
The Company has outstanding stock options, time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) which were considered in the Company’s diluted earnings per share calculation (see Note 15).
Stock Repurchases
The Company’s Board of Directors authorizes the Company to purchase, from time to time, outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements, and other factors. Once authorized, the repurchase plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. Shares repurchased are retired. On October 28, 2021, the Company’s Board of Directors authorized a new $ i 1.0 billion stock repurchase plan, replacing the prior plan authorized on November 2, 2020, which had a remaining authorization of $ i 125.1 million. As of the date of this filing, the Company had $ i 504.7 million of authorization remaining under the new plan.
i The following is a summary of the Company’s share repurchases:
|
|
|
|
|
|
|
|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
Total number of shares purchased (in millions) (1) |
|
| i 1.3 |
|
| i 0.7 |
Average price paid per share (1) |
| $ | i 332.00 |
| $ | i 258.33 |
Total price paid (in millions) (1) |
| $ | i 431.6 |
| $ | i 168.9 |
(1)Amounts reflected are based on the trade date and could differ from the Consolidated Statements of Cash Flows which reflects share repurchases based on the settlement date.
Dividends
iFor the three months ended March 31, 2022, the Company paid the following cash dividends:
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|
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|
|
|
|
|
|
|
|
|
| Payable to Shareholders |
|
|
|
|
|
|
|
| of Record at the Close |
| Cash Paid |
| Aggregate Amount |
|
|
Date Declared |
| of Business on |
| Per Share |
| Paid |
| Date Paid |
|
|
|
|
|
|
|
|
|
|
| $ i 0.71 |
| $ i 76.9 million |
|
Dividends paid in 2022 were ordinary taxable dividends.
Subsequent to March 31, 2022, the Company declared the following cash dividends:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| Payable to Shareholders |
| Cash to |
|
|
|
| of Record at the Close |
| be Paid |
|
|
Date Declared |
| of Business on |
| Per Share |
| Date to be Paid |
|
|
|
|
|
|
|
|
| $ i 0.71 |
|
i 12.STOCK-BASED COMPENSATION
Stock Options
The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:
i
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| For the three |
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| months ended |
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| |
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|
Risk free interest rate |
|
|
|
|
|
|
|
| i 2.53% |
Dividend yield |
|
|
|
|
|
|
|
| i 0.9% |
Expected volatility |
|
|
|
|
|
|
|
| i 27% |
Expected lives |
|
|
|
|
|
|
|
| i 4.3 years |
There were i no options granted during the three months ended March 31, 2021.
The following table summarizes the Company’s activities with respect to its stock option plans for the three months ended March 31, 2022 as follows (dollars and shares in thousands, except for per share data):
i
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|
|
| Weighted- |
| Weighted-Average |
|
|
| |
|
|
|
| Average |
| Remaining |
|
|
| |
|
| Number |
| Exercise Price |
| Contractual |
| Aggregate | ||
|
| of Shares |
| Per Share |
| Life (in years) |
| Intrinsic Value | ||
Outstanding at December 31, 2021 |
| i 1,899 |
| $ | i 157.76 |
|
|
|
|
|
Granted |
| i 10 |
| $ | i 328.99 |
|
|
|
|
|
Exercised |
| ( i 59) |
| $ | i 143.16 |
|
|
|
|
|
Forfeited/canceled |
| ( i 1) |
| $ | i 174.28 |
|
|
|
|
|
Outstanding at March 31, 2022 |
| i 1,849 |
| $ | i 159.13 |
| i 3.1 |
| $ | i 341,859 |
Exercisable at March 31, 2022 |
| i 1,572 |
| $ | i 153.68 |
| i 3.0 |
| $ | i 299,265 |
Unvested at March 31, 2022 |
| i 277 |
| $ | i 190.14 |
| i 4.2 |
| $ | i 42,594 |
The weighted-average per share fair value of options granted during the three months ended March 31, 2022 was $ i 82.28. The total intrinsic value for options exercised during the three months ended March 31, 2022 was $ i 11.0 million.
Restricted Stock Units and Performance-Based Restricted Stock Units
The following table summarizes the Company’s RSU and PSU activity for the three months ended March 31, 2022:
i
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|
|
| RSUs |
| PSUs (1) | ||||||
|
|
|
| Weighted-Average |
|
|
| Weighted-Average | ||
|
| Number of |
| Grant Date Fair |
| Number of |
| Grant Date Fair | ||
|
| Shares |
| Value per Share |
| Shares |
| Value per Share | ||
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
|
Outstanding at December 31, 2021 |
| i 243 |
| $ | i 230.20 |
| i 298 |
| $ | i 304.46 |
Granted |
| i 93 |
| $ | i 330.78 |
| i 139 |
| $ | i 391.19 |
Vested |
| ( i 110) |
| $ | i 217.29 |
| — |
| $ | — |
Forfeited/canceled |
| ( i 2) |
| $ | i 254.31 |
| ( i 1) |
| $ | i 290.89 |
Outstanding at March 31, 2022 |
| i 224 |
| $ | i 278.16 |
| i 436 |
| $ | i 332.18 |
/
(1)PSUs represent the target number of shares granted that are issuable at the end of the i three year performance period. Fair value for a portion of the PSUs was calculated using a Monte Carlo simulation model.
i 13.INCOME TAXES
The primary reasons for the difference between the Company’s effective tax rate and the U.S. statutory rate are the Company’s REIT election and the Company’s full valuation allowance on the net deferred tax assets of the U.S. taxable REIT subsidiary (“TRS”). The TRS has concluded that it is more likely than not that its deferred tax assets will not be realized and has recorded a full valuation allowance. A foreign tax provision is recognized because certain foreign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.
The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $ i 654.7 million as of December 31, 2021, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized.
i 14.SEGMENT DATA
The Company operates principally in i two business segments: site leasing and site development. The Company’s site leasing business includes i two reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region.
Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.
i
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|
|
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|
|
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|
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|
|
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|
|
| Domestic Site |
| Int'l Site |
| Site |
|
|
|
| |||||
|
| Leasing |
| Leasing (4) |
| Development |
| Other |
| Total | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2022 |
| (in thousands) | |||||||||||||
Revenues |
| $ | i 432,986 |
| $ | i 126,446 |
| $ | i 60,338 |
| $ | — |
| $ | i 619,770 |
Cost of revenues (1) |
|
| i 65,804 |
|
| i 41,351 |
|
| i 45,773 |
|
| — |
|
| i 152,928 |
Operating profit |
|
| i 367,182 |
|
| i 85,095 |
|
| i 14,565 |
|
| — |
|
| i 466,842 |
Selling, general, and administrative expenses |
|
| i 23,373 |
|
| i 15,494 |
|
| i 5,522 |
|
| i 17,735 |
|
| i 62,124 |
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
| i 3,599 |
|
| i 1,505 |
|
| — |
|
| — |
|
| i 5,104 |
Asset impairment and decommission costs |
|
| i 5,483 |
|
| i 3,029 |
|
| — |
|
| — |
|
| i 8,512 |
Depreciation, amortization and accretion |
|
| i 123,133 |
|
| i 48,881 |
|
| i 588 |
|
| i 1,721 |
|
| i 174,323 |
Operating income (loss) |
|
| i 211,594 |
|
| i 16,186 |
|
| i 8,455 |
|
| ( i 19,456) |
|
| i 216,779 |
Other expense (principally interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense and other expense) |
|
|
|
|
|
|
|
|
|
|
| i 12,004 |
|
| i 12,004 |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| i 228,783 |
Cash capital expenditures (2) |
|
| i 39,545 |
|
| i 211,771 |
|
| i 966 |
|
| i 1,581 |
|
| i 253,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
| $ | i 403,579 |
| $ | i 101,524 |
| $ | i 43,636 |
| $ | — |
| $ | i 548,739 |
Cost of revenues (1) |
|
| i 65,120 |
|
| i 30,248 |
|
| i 34,406 |
|
| — |
|
| i 129,774 |
Operating profit |
|
| i 338,459 |
|
| i 71,276 |
|
| i 9,230 |
|
| — |
|
| i 418,965 |
Selling, general, and administrative expenses |
|
| i 28,056 |
|
| i 7,760 |
|
| i 5,789 |
|
| i 9,996 |
|
| i 51,601 |
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
| i 3,332 |
|
| i 1,669 |
|
| — |
|
| — |
|
| i 5,001 |
Asset impairment and decommission costs |
|
| i 3,871 |
|
| i 1,032 |
|
| — |
|
| — |
|
| i 4,903 |
Depreciation, amortization and accretion |
|
| i 137,054 |
|
| i 43,121 |
|
| i 2,082 |
|
| i 1,624 |
|
| i 183,881 |
Operating income (loss) |
|
| i 166,146 |
|
| i 17,694 |
|
| i 1,359 |
|
| ( i 11,620) |
|
| i 173,579 |
Other expense (principally interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense and other expense) |
|
|
|
|
|
|
|
|
|
|
| ( i 206,246) |
|
| ( i 206,246) |
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( i 32,667) |
Cash capital expenditures (2) |
|
| i 1,059,678 |
|
| i 16,947 |
|
| i 870 |
|
| i 750 |
|
| i 1,078,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic Site |
| Int'l Site |
| Site |
|
|
|
| |||||
|
| Leasing |
| Leasing (4) |
| Development |
| Other (3) |
| Total | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
| (in thousands) | |||||||||||||
As of March 31, 2022 |
| $ | i 6,522,827 |
| $ | i 3,222,276 |
| $ | i 100,594 |
| $ | i 296,403 |
| $ | i 10,142,100 |
As of December 31, 2021 |
| $ | i 6,628,156 |
| $ | i 2,870,503 |
| $ | i 87,410 |
| $ | i 215,630 |
| $ | i 9,801,699 |
(1)Excludes depreciation, amortization, and accretion.
(2)Includes cash paid for capital expenditures, acquisitions, and right-of-use assets.
(3)Assets in Other consist primarily of general corporate assets and short-term investments.
(4)For the three months ended March 31, 2022 and 2021, site leasing revenue in Brazil was $ i 65.2 million and $ i 55.4 million, respectively. Other than Brazil, no foreign country represented a material amount of the Company’s total revenues in any of the periods presented. Total long-lived assets in Brazil were $ i 1.0 billion and $ i 0.9 billion as of March 31, 2022 and December 31, 2021, respectively.
i 15.EARNINGS PER SHARE
Basic earnings per share was computed by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested RSUs, PSUs, and shares issuable upon exercise of stock options as determined under the “Treasury Stock” method.
The following table sets forth basic and diluted net income (loss) per common share attributable to common shareholders for the three months ended March 31, 2022 and 2021 (in thousands, except per share data):
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
Numerator: |
|
|
|
|
|
|
Net income (loss) attributable to SBA |
|
|
|
|
|
|
Communications Corporation |
| $ | i 188,623 |
| $ | ( i 11,745) |
Denominator: |
|
|
|
|
|
|
Basic weighted-average shares outstanding |
|
| i 108,086 |
|
| i 109,469 |
Dilutive impact of stock options, RSUs, and PSUs |
|
| i 1,458 |
|
| — |
Diluted weighted-average shares outstanding |
|
| i 109,544 |
|
| i 109,469 |
Net income (loss) per common share attributable to SBA |
|
|
|
|
|
|
Communications Corporation: |
|
|
|
|
|
|
Basic |
| $ | i 1.75 |
| $ | ( i 0.11) |
Diluted |
| $ | i 1.72 |
| $ | ( i 0.11) |
For the three months ended March 31, 2022, the diluted weighted-average number of common shares outstanding excluded an immaterial number of shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive. For the three months ended March 31, 2021, all potential common stock equivalents, including i 3.1 million shares underlying stock options outstanding, i 0.3 million shares underlying RSUs outstanding, and i 0.3 million shares underlying PSUs outstanding, were excluded as the effect would be anti-dilutive.
i 16. REDEEMABLE NONCONTROLLING INTERESTS
In June 2021, the Company entered into a joint venture agreement with a non-affiliated partner for the purpose of acquiring towers in Tanzania from Airtel Tanzania PLC which closed on January 4, 2022 (see Note 6). Effective June 2021, the Company consolidated the results of the joint venture into its financial statements. The agreement contains both a put option exercisable by the noncontrolling interest holder and a call option exercisable by the Company for the remaining minority interest based on a formulaic approach. As the put option is outside of the Company’s control, the estimated redemption value of the minority interest is presented as a redeemable noncontrolling interest outside of permanent equity on the Consolidated Balance Sheets. As of March 31, 2022, the redemption amount of the noncontrolling interest was $ i 36.0 million.
The Company allocates income and losses to the noncontrolling interest holder based on the applicable membership interest percentage. At each reporting period, the redeemable noncontrolling interest is recognized at the greater of (1) the initial carrying amount of the noncontrolling interest as adjusted for accumulated income or loss attributable to the noncontrolling interest holder, or (2) the redemption value as of the balance sheet date. Adjustments to the carrying amount of redeemable noncontrolling interest are charged against retained earnings (or additional paid-in capital if there are no retained earnings).
The components of redeemable noncontrolling interests as of March 31, 2022 are as follows (in thousands):
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| |||
|
| 2022 |
| 2021 | ||
|
|
|
|
| ||
Beginning balance |
| $ | i 17,250 |
| $ | i 15,194 |
Net loss attributable to noncontrolling interests |
|
| ( i 317) |
|
| — |
Foreign currency translation adjustments |
|
| ( i 117) |
|
| — |
Purchase of noncontrolling interests |
|
| — |
|
| ( i 18,000) |
Contribution from joint venture partner |
|
| — |
|
| i 17,250 |
Adjustment to redemption amount |
|
| i 19,221 |
|
| i 2,806 |
Ending balance |
| $ | i 36,037 |
| $ | i 17,250 |
i 17.DERIVATIVES AND HEDGING ACTIVITIES
The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. On August 4, 2020, the Company, through its wholly owned subsidiary, SBA Senior Finance II, terminated an existing $ i 1.95 billion cash flow hedge on a portion of its 2018 Term Loan in exchange for a payment of $ i 176.2 million. On the same date, the Company entered into an interest rate swap for $ i 1.95 billion of notional value
accruing interest at one month LIBOR plus i 175 basis points for a fixed rate of i 1.874% per annum through the maturity date of the 2018 Term Loan. The Company designated this interest rate swap as a cash flow hedge as it is expected to be highly effective at offsetting changes in cash flows of the LIBOR based component interest payments of its 2018 Term Loan. As of March 31, 2022, the hedge remains highly effective; therefore, subsequent changes in the fair value are recorded in Accumulated other comprehensive loss, net. As of March 31, 2022 and December 31, 2021, the interest rate swap had a fair value of $ i 134.4 million and $ i 60.3 million, respectively, and was recorded in Other assets on the Consolidated Balance Sheets.
On August 4, 2020, the Company also terminated its existing interest rate swaps, which were previously de-designated as cash flow hedges. There was i no cash transferred in connection with the termination of these swaps. The Company reclassifies the fair value of its interest rate swaps recorded in Accumulated other comprehensive loss, net on their de-designation date to non-cash interest expense on the Consolidated Statements of Operations over their respective remaining term end dates, which range from i 2023 to i 2025.
Accumulated other comprehensive loss, net includes an aggregate $ i 37.5 million gain and a $ i 47.8 million loss as of March 31, 2022 and December 31, 2021, respectively.
The Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform.
The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows with the exception of the termination of interest rate swaps, which are recorded in Net cash used in financing activities.
The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three months ended March 31, 2022 and 2021.
i
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months | ||||
|
| ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
| ||
Cash Flow Hedge - Interest Rate Swap Agreement |
| (in thousands) | ||||
Change in fair value recorded in Accumulated other comprehensive loss, net |
| $ | i 74,101 |
| $ | i 31,566 |
|
|
|
|
|
|
|
Derivatives Not Designated as Hedges - Interest Rate Swap Agreements |
|
|
|
|
|
|
Amount reclassified from Accumulated other comprehensive |
|
|
|
|
|
|
loss, net into Non-cash interest expense |
| $ | i 11,221 |
| $ | i 11,221 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a leading independent owner and operator of wireless communications infrastructure, including tower structures, rooftops, and other structures that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations are in the United States and its territories. In addition, we own and operate towers in South America, Central America, Canada, South Africa, the Philippines, and Tanzania. Our primary business line is our site leasing business, which contributed 96.9% of our total segment operating profit for the three months ended March 31, 2022. In our site leasing business, we (1) lease space to wireless service providers and other customers on assets that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of March 31, 2022, we owned 36,017 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers. Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks.
Site Leasing
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, South America, Central America, Canada, South Africa, the Philippines, and Tanzania. As of March 31, 2022, no U.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and no U.S. state or territory accounted for more than 10% of our total revenues for the three months ended March 31, 2022. In addition, as of March 31, 2022, approximately 30% of our total towers are located in Brazil and no other international markets (each country is considered a market) represented more than 4% of our total towers. We derive site leasing revenues primarily from wireless service
provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, DISH Wireless, Tigo, and TIM. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual site.
In the United States and our international markets, our tenant leases are generally for an initial term of five years to 15 years with multiple renewal periods at the option of the tenant. In the United States, Canada, and in our Central American markets, tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. In our South American markets, South Africa, and the Philippines, tenant leases typically escalate annually in accordance with an inflationary index. In Tanzania, tenant leases typically escalate using a combination of fixed and inflation adjusted escalators. Site leases in our South American markets typically provide for a fixed rental amount and a pass-through charge for the underlying rent related to ground leases and other property interests. In South Africa, our site leases contain pass through charges related to utilities and, in Tanzania, our site leases include components related to utilities and fuel. The utility and fuel portion of our Tanzanian site leases adjust periodically in accordance with changes in fuel and electricity prices. In certain markets such as Brazil, tenant leases are typically governed by master lease agreements, which provide for the material terms and conditions that will govern the terms of the use of the site.
Cost of site leasing revenue primarily consists of:
·Cash and non-cash rental expense on ground leases and other underlying property interests;
·Property taxes;
·Site maintenance and monitoring costs (exclusive of employee related costs);
·Utilities;
·Property insurance;
·Fuel (in those international markets that do not have an available electric grid at our tower sites); and
·Lease initial direct cost amortization.
In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years or more with multiple renewal periods, which are at our option. In the United States, Canada, our Central American markets, and the Philippines, ground leases and other property interests provide for fixed rent escalators which typically average 2-3% annually, and in our South American markets and South Africa, ground leases adjust in accordance with an inflationary index. As of March 31, 2022, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing.
In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases and other property interests, tenant leases, and tower-related expenses are paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. In Brazil, Canada, Chile, South Africa, and the Philippines, significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in local currency. In Colombia, Argentina, Peru, and Tanzania, our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars.
As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements included in this quarterly report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended | ||||
Segment operating profit as a percentage of |
| March 31, | ||||
|
|
|
|
|
|
|
total operating profit |
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
Domestic site leasing |
|
| 78.7% |
|
| 80.8% |
International site leasing |
|
| 18.2% |
|
| 17.0% |
Total site leasing |
|
| 96.9% |
|
| 97.8% |
We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology. We believe that over the
long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements.
During the remainder of 2022, we expect organic site leasing revenue in both our domestic and international segments to increase over 2021 levels due in part to wireless carriers deploying unused spectrum. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment. Furthermore, because our towers are strategically positioned, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology.
Site Development
Our site development business, which is conducted in the United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locations. Site development revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas on existing infrastructure; (4) support in leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for all site development operations.
For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements in this quarterly report.
Capital Allocation Strategy
Our capital allocation strategy is aimed at increasing shareholder value through investment in quality assets that meet our return criteria, stock repurchases when we believe our stock price is below its intrinsic value, and by returning cash generated by our operations in the form of cash dividends. While the addition of a cash dividend to our capital allocation strategy in 2019 has provided us with a new tool to return value to our shareholders, we continue to believe that our priority is to make investments focused on increasing Adjusted Funds From Operations per share. Key elements of our capital allocation strategy include:
Portfolio Growth. We intend to continue to grow our asset portfolio, domestically and internationally, primarily through tower acquisitions and the construction of new towers that meet our internal return on invested capital criteria.
Stock Repurchase Program. We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share.
Dividend. Cash dividends are an additional component of our strategy of returning value to shareholders. We do not expect our dividend to require any changes in our leverage and believe that, due to our low dividend payout ratio, we can continue to focus on building and buying quality assets and opportunistically buying back our stock. While the timing and amount of future dividends will be subject to approval by our Board of Directors, we believe that our future cash flow generation will permit us to grow our cash dividend in the future.
Critical Accounting Policies and Estimates
We have identified the policies and significant estimation processes listed below and in our Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 2 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021. Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant.
RESULTS OF OPERATIONS
This report presents our financial results and other financial metrics on a GAAP basis and with respect to our international and consolidated results after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of realized and unrealized gains and losses on our intercompany loans.
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 432,986 |
| $ | 403,579 |
| $ | — |
| $ | 29,407 |
|
| 7.3% |
International site leasing |
|
| 126,446 |
|
| 101,524 |
|
| 2,268 |
|
| 22,654 |
|
| 22.3% |
Site development |
|
| 60,338 |
|
| 43,636 |
|
| — |
|
| 16,702 |
|
| 38.3% |
Total |
| $ | 619,770 |
| $ | 548,739 |
| $ | 2,268 |
| $ | 68,763 |
|
| 12.5% |
Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 65,804 |
| $ | 65,120 |
| $ | — |
| $ | 684 |
|
| 1.1% |
International site leasing |
|
| 41,351 |
|
| 30,248 |
|
| 785 |
|
| 10,318 |
|
| 34.1% |
Site development |
|
| 45,773 |
|
| 34,406 |
|
| — |
|
| 11,367 |
|
| 33.0% |
Total |
| $ | 152,928 |
| $ | 129,774 |
| $ | 785 |
| $ | 22,369 |
|
| 17.2% |
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 367,182 |
| $ | 338,459 |
| $ | — |
| $ | 28,723 |
|
| 8.5% |
International site leasing |
|
| 85,095 |
|
| 71,276 |
|
| 1,483 |
|
| 12,336 |
|
| 17.3% |
Site development |
|
| 14,565 |
|
| 9,230 |
|
| — |
|
| 5,335 |
|
| 57.8% |
Revenues
Domestic site leasing revenues increased $29.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to (1) revenues from 824 towers acquired (including wireless tenant licenses on 713 utility transmission structures from the PG&E transaction) and towers built since January 1, 2021 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.
International site leasing revenues increased $24.9 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $22.7 million. These changes were primarily due to (1) revenues from 1,974 towers acquired (including 1,445 towers under the deal with Airtel Tanzania) and 412 towers built since January 1, 2021 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals. Site leasing revenue in Brazil represented 11.7% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue.
Site development revenues increased $16.7 million for the three months ended March 31, 2022, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.
Operating Profit
Domestic site leasing segment operating profit increased $28.7 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $13.8 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $12.3 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
Site development segment operating profit increased $5.3 million for the three months ended March 31, 2022, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.
Selling, General, and Administrative Expenses:
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| For the three months ended |
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| Constant | |||||
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| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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| ||||||||||
Domestic site leasing |
| $ | 23,373 |
| $ | 28,056 |
| $ | — |
| $ | (4,683) |
|
| (16.7%) |
International site leasing |
|
| 15,494 |
|
| 7,760 |
|
| (144) |
|
| 7,878 |
|
| 101.5% |
Total site leasing |
| $ | 38,867 |
| $ | 35,816 |
| $ | (144) |
| $ | 3,195 |
|
| 8.9% |
Site development |
|
| 5,522 |
|
| 5,789 |
|
| — |
|
| (267) |
|
| (4.6%) |
Other |
|
| 17,735 |
|
| 9,996 |
|
| — |
|
| 7,739 |
|
| 77.4% |
Total |
| $ | 62,124 |
| $ | 51,601 |
| $ | (144) |
| $ | 10,667 |
|
| 20.7% |
Selling, general, and administrative expenses increased $10.5 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses increased $10.7 million. These changes were primarily as a result of an increase in non-cash compensation, personnel, and other support related costs due in part to our entry into new markets.
The decrease in Domestic site leasing and corresponding increases in International site leasing and Other selling, general, and administrative expenses are primarily due to changes in our internal cost allocations.
Asset Impairment and Decommission Costs:
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| |
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| For the three months ended |
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| Constant | |||||
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| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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| ||||||||||
Domestic site leasing |
| $ | 5,483 |
| $ | 3,871 |
| $ | — |
| $ | 1,612 |
|
| 41.6% |
International site leasing |
|
| 3,029 |
|
| 1,032 |
|
| 80 |
|
| 1,917 |
|
| 185.8% |
Total |
| $ | 8,512 |
| $ | 4,903 |
| $ | 80 |
| $ | 3,529 |
|
| 72.0% |
Asset impairment and decommission costs increased $3.6 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs increased $3.5 million. These changes were primarily as a result of an increase in impairment charges resulting from our regular analysis of whether the anticipated future discounted cash flows from certain towers are sufficient to recover the carrying value of the investment in those towers, partially offset by a decrease in costs related to sites decommissioned in the first quarter of 2022 compared to the prior year period.
Depreciation, Accretion, and Amortization Expense:
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| For the three months ended |
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| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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| ||||||||||
Domestic site leasing |
| $ | 123,133 |
| $ | 137,054 |
| $ | — |
| $ | (13,921) |
|
| (10.2%) |
International site leasing |
|
| 48,881 |
|
| 43,121 |
|
| 839 |
|
| 4,921 |
|
| 11.4% |
Total site leasing |
| $ | 172,014 |
| $ | 180,175 |
| $ | 839 |
| $ | (9,000) |
|
| (5.0%) |
Site development |
|
| 588 |
|
| 2,082 |
|
| — |
|
| (1,494) |
|
| (71.8%) |
Other |
|
| 1,721 |
|
| 1,624 |
|
| — |
|
| 97 |
|
| 6.0% |
Total |
| $ | 174,323 |
| $ | 183,881 |
| $ | 839 |
| $ | (10,397) |
|
| (5.7%) |
Depreciation, accretion, and amortization expense decreased $9.6 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense decreased $10.4 million. These changes were primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since January 1, 2021.
Operating Income (Expense):
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| For the three months ended |
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| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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|
| ||||||||||
Domestic site leasing |
| $ | 211,594 |
| $ | 166,146 |
| $ | — |
| $ | 45,448 |
|
| 27.4% |
International site leasing |
|
| 16,186 |
|
| 17,694 |
|
| 696 |
|
| (2,204) |
|
| (12.5%) |
Total site leasing |
| $ | 227,780 |
| $ | 183,840 |
| $ | 696 |
| $ | 43,244 |
|
| 23.5% |
Site development |
|
| 8,455 |
|
| 1,359 |
|
| — |
|
| 7,096 |
|
| 522.1% |
Other |
|
| (19,456) |
|
| (11,620) |
|
| — |
|
| (7,836) |
|
| 67.4% |
Total |
| $ | 216,779 |
| $ | 173,579 |
| $ | 696 |
| $ | 42,504 |
|
| 24.5% |
Domestic site leasing operating income increased $45.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit, decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.
International site leasing operating income decreased $1.5 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, international site leasing operating income decreased $2.2 million. These changes were primarily due to increases in selling, general, and administrative expenses, depreciation, accretion, and amortization expense, and asset impairment and decommission costs, partially offset by higher segment operating profit.
Site development operating income increased $7.1 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH Wireless.
Other Income (Expense):
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| For the three months ended |
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| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
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| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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| ||||||||||
Interest income |
| $ | 2,502 |
| $ | 632 |
| $ | 75 |
| $ | 1,795 |
|
| 284.0% |
Interest expense |
|
| (82,252) |
|
| (90,095) |
|
| — |
|
| 7,843 |
|
| (8.7%) |
Non-cash interest expense |
|
| (11,526) |
|
| (11,804) |
|
| — |
|
| 278 |
|
| (2.4%) |
Amortization of deferred financing fees |
|
| (4,881) |
|
| (4,891) |
|
| — |
|
| 10 |
|
| (0.2%) |
Loss from extinguishment of debt, net |
|
| — |
|
| (11,652) |
|
| — |
|
| 11,652 |
|
| (100.0%) |
Other income (expense), net |
|
| 108,161 |
|
| (88,436) |
|
| 196,397 |
|
| 200 |
|
| (10.8%) |
Total |
| $ | 12,004 |
| $ | (206,246) |
| $ | 196,472 |
| $ | 21,778 |
|
| (18.2%) |
Interest income increased $1.9 million for the three months ended March 31, 2022, as compared to the prior year. This change was primarily due to a higher amount of interest-bearing deposits held in Brazil and higher effective interest rates on those deposits as compared to the prior year.
Interest expense decreased $7.8 million for the three months ended March 31, 2022, as compared to the prior year. This change was primarily due to a lower weighted average interest rate, partially offset by a higher average principal amount of cash-interest bearing debt outstanding.
Loss from extinguishment of debt was $11.7 million for the three months ended March 31, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of unamortized financing fees related to the repayment of the 2017 Senior Notes in February 2021.
Other expense, net includes a $109.6 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the three months ended March 31, 2022, while the prior year period included a $86.3 million loss.
(Provision) Benefit for Income Taxes:
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| For the three months ended |
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|
|
|
|
|
| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
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| (in thousands) |
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| ||||||||||
(Provision) benefit for income taxes |
| $ | (40,477) |
| $ | 20,922 |
| $ | (69,026) |
| $ | 7,627 |
|
| (90.5%) |
Provision for income taxes increased $61.4 million for the three months ended March 31, 2022, as compared to the prior year primarily due to fluctuations in foreign currency exchange rates, partially offset by a decrease in deferred foreign taxes.
Net Income (Loss):
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|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
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| (in thousands) |
|
|
| ||||||||||
Net income (loss) |
| $ | 188,306 |
| $ | (11,745) |
| $ | 128,142 |
| $ | 71,909 |
|
| 158.0% |
Net income increased $200.1 million for the three months ended March 31, 2022, as compared to the prior year. On a constant currency basis, net income increased $71.9 million. These changes were primarily due to an increase in operating income and decreases in loss from extinguishment of debt and cash interest expense, partially offset by an increase in provision for income taxes.
This report contains information regarding Adjusted EBITDA, a non-GAAP measure. We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure. As discussed above, this report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans.
We define Adjusted EBITDA as net income excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition and new business initiatives related adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and amortization, and income taxes.
We believe that 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 to 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 by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to the 2020 Senior Notes and 2021 Senior Notes. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
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| For the three months ended |
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|
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|
|
| Constant | |||||
|
| March 31, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2022 |
| 2021 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
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|
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| (in thousands) |
|
|
| ||||||||||
Net income (loss) |
| $ | 188,306 |
| $ | (11,745) |
| $ | 128,142 |
| $ | 71,909 |
|
| 158.0% |
Non-cash straight-line leasing revenue |
|
| (8,001) |
|
| (576) |
|
| 50 |
|
| (7,475) |
|
| 1,297.7% |
Non-cash straight-line ground lease expense |
|
| 1,053 |
|
| 2,641 |
|
| (5) |
|
| (1,583) |
|
| (59.9%) |
Non-cash compensation |
|
| 24,747 |
|
| 20,422 |
|
| 54 |
|
| 4,271 |
|
| 20.9% |
Loss from extinguishment of debt, net |
|
| — |
|
| 11,652 |
|
| — |
|
| (11,652) |
|
| (100.0%) |
Other (income) expense, net |
|
| (108,161) |
|
| 88,436 |
|
| (196,397) |
|
| (200) |
|
| (10.8%) |
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
| 5,104 |
|
| 5,001 |
|
| 12 |
|
| 91 |
|
| 1.8% |
Asset impairment and decommission costs |
|
| 8,512 |
|
| 4,903 |
|
| 80 |
|
| 3,529 |
|
| 72.0% |
Interest income |
|
| (2,502) |
|
| (632) |
|
| (75) |
|
| (1,795) |
|
| 284.0% |
Interest expense (1) |
|
| 98,659 |
|
| 106,790 |
|
| — |
|
| (8,131) |
|
| (7.6%) |
Depreciation, accretion, and amortization |
|
| 174,323 |
|
| 183,881 |
|
| 839 |
|
| (10,397) |
|
| (5.7%) |
Provision (benefit) for income taxes (2) |
|
| 41,711 |
|
| (20,702) |
|
| 69,026 |
|
| (6,613) |
|
| (76.5%) |
Adjusted EBITDA |
| $ | 423,751 |
| $ | 390,071 |
| $ | 1,726 |
| $ | 31,954 |
|
| 8.2% |
(1)Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
(2)Provision (benefit) for taxes includes $1,234 and $220 of franchise taxes for the three months ended March 31, 2022 and 2021, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.
Adjusted EBITDA increased $33.7 million for the three months ended March 31, 2022, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $32.0 million. These changes were primarily due to an increase in segment operating profit, partially offset by an increase in cash selling, general, and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
SBA Communications Corporation (“SBAC”) is a holding company with no business operations of its own. SBAC’s only significant asset is 100% of the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.
A summary of our cash flows is as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
| For the three months ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Cash provided by operating activities |
| $ | 292,482 |
| $ | 285,498 |
Cash used in investing activities |
|
| (255,881) |
|
| (1,076,584) |
Cash (used in) provided by financing activities |
|
| (151,750) |
|
| 701,343 |
Change in cash, cash equivalents, and restricted cash |
|
| (115,149) |
|
| (89,743) |
Effect of exchange rate changes on cash, cash equiv., and restricted cash |
|
| 15,961 |
|
| (10,880) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
| 435,626 |
|
| 342,808 |
Cash, cash equivalents, and restricted cash, end of period |
| $ | 336,438 |
| $ | 242,185 |
Operating Activities
Cash provided by operating activities was $292.5 million for the three months ended March 31, 2022 as compared to $285.5 million for the three months ended March 31, 2021. The increase was primarily due to an increase in operating profit, partially offset by an increase in cash outflows associated with working capital changes.
Investing Activities
A detail of our cash capital expenditures is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended March 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Acquisitions of towers and related intangible assets (1) |
| $ | (207,863) |
| $ | (101,630) |
Acquisition of right-of-use assets (2) |
|
| — |
|
| (945,915) |
Land buyouts and other assets (3) |
|
| (7,318) |
|
| (5,131) |
Construction and related costs |
|
| (16,477) |
|
| (8,823) |
Augmentation and tower upgrades |
|
| (9,274) |
|
| (7,560) |
Tower maintenance |
|
| (9,327) |
|
| (7,313) |
General corporate |
|
| (2,930) |
|
| (840) |
Other investing activities |
|
| (2,692) |
|
| 628 |
Net cash used in investing activities |
| $ | (255,881) |
| $ | (1,076,584) |
(1)During the three months ended March 31, 2022, we closed on 1,445 sites under the previously announced deal with Airtel Tanzania for $176.1 million. Legal title was fully transferred at closing for 963 of the towers. The remaining 482 towers are pending post-closing site level documentation and due diligence and were initially accounted for as acquired and other right-of-use assets, net on the consolidated balance sheet until transfer of title for these towers is completed, which we anticipate to be in tranches through the end of the second quarter of 2023. Upon legal transfer, these assets will be reclassified to tower related assets. During this period of time, we have all the economic rights and obligations related to these towers.
(2)During the three months ended March 31, 2021, we acquired the exclusive right to lease and operate 697 utility transmission structures, which included existing wireless tenant licenses from PG&E for $954.0 million. The difference between the purchase price and the cash acquisition amount is due to working capital adjustments.
(3)Excludes $3.8 million and $2.8 million spent to extend ground lease terms for the three months ended March 31, 2022 and 2021, respectively.
Subsequent to March 31, 2022, we purchased, or are under contract to purchase, 358 communication sites and one data center for an aggregate consideration of $177.1 million in cash.
For 2022, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $47.0 million to $57.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $615.0 million to $635.0 million. We expect to fund these cash capital expenditures from, among other sources, cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings. The exact amount of our future cash
capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.
Financing Activities
A detail of our financing activities is as follows:
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| For the three months ended March 31, | ||||
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| 2022 |
| 2021 | ||
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|
|
| (in thousands) | ||||
Net borrowings under Revolving Credit Facility (1) |
| $ | 330,000 |
| $ | 210,000 |
Proceeds from issuance of Senior Notes, net of fees (1) |
|
| — |
|
| 1,485,670 |
Repayment of Senior Notes (1) |
|
| — |
|
| (757,500) |
Repurchase and retirement of common stock (2) |
|
| (431,667) |
|
| (168,923) |
Payment of dividends on common stock |
|
| (76,873) |
|
| (63,412) |
Proceeds from employee stock purchase/stock option plans, net of taxes |
|
| 1,608 |
|
| 2,015 |
Other financing activities |
|
| 25,182 |
|
| (6,507) |
Net cash (used in) provided by financing activities |
| $ | (151,750) |
| $ | 701,343 |
(1)For additional information regarding our debt instruments and financings, refer to “Debt Instruments and Debt Service Requirements” below.
(2)For additional information, refer to Item 2. Issuer Purchases of Equity Securities.
Dividends
For the three months ended March 31, 2022, we paid the following cash dividends:
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| Payable to Shareholders |
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| of Record at the Close |
| Cash Paid |
| Aggregate Amount |
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Date Declared |
| of Business on |
| Per Share |
| Paid |
| Date Paid |
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| $0.71 |
| $76.9 million |
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Dividends paid in 2022 were ordinary taxable dividends.
Subsequent to March 31, 2022, we declared the following cash dividends:
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| Payable to Shareholders |
| Cash to |
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| of Record at the Close |
| be Paid |
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Date Declared |
| of Business on |
| Per Share |
| Date to be Paid |
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| $0.71 |
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The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and retaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value. The actual amount, timing, and frequency of future dividends will be at the sole discretion of our Board of Directors and will be declared based upon various factors, many of which are beyond our control.
Registration Statements
We have on file with the Securities and Exchange Commission (the “Commission”) a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets. During the three months ended March 31, 2022, we did not issue any shares of Class A common stock under this registration statement. As of March 31, 2022, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.
We have on file with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR, which enables us to issue shares of our Class A common stock, preferred stock, debt securities, warrants, or depositary shares
as well as units that include any of these securities. We will file a prospectus supplement containing the amount and type of securities each time we issue securities under our automatic shelf registration statement on Form S-3ASR. No securities were issued under this registration statement through the date of this filing.
Debt Instruments and Debt Service Requirements
Revolving Credit Facility under the Senior Credit Agreement
The Revolving Credit Facility consists of a revolving loan under which up to $1.5 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II LLC, our wholly owned subsidiary (“SBA Senior Finance II”) is required to pay a commitment fee of between 0.15% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, July 7, 2026. Furthermore, the Revolving Credit Facility provides mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate and incorporates sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how the Company performs against those targets. Borrowings under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period. Subsequent to March 31, 2022, the Company received a 0.05% reduction in the applicable spread and a 0.01% reduction in the commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2021.
During the three months ended March 31, 2022, we borrowed $330.0 million of the outstanding balance under the Revolving Credit Facility. As of March 31, 2022, there was $680.0 million outstanding under the Revolving Credit Facility accruing interest at 1.619%. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.15% per annum on the amount of the unused commitment. As of March 31, 2022, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.
Term Loan under the Senior Credit Agreement
2018 Term Loan
On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II, obtained a term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement. The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025. The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 75 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 175 basis points (with a zero Eurodollar Rate floor). The 2018 Term Loan was issued at 99.75% of par value. As of March 31, 2022, the 2018 Term Loan was accruing interest at 2.210% per annum.
On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.
During the three months ended March 31, 2022, we repaid an aggregate of $6.0 million of principal on the 2018 Term Loan. As of March 31, 2022, the 2018 Term Loan had a principal balance of $2.3 billion.
Secured Tower Revenue Securities
Tower Revenue Securities Terms
As of March 31, 2022, we, through the Trust, had issued and outstanding an aggregate of $6.7 billion of Secured Tower Revenue Securities (“Tower Securities”). The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security. The mortgage loan will be paid from the operating cash flows from the aggregate 9,903 tower sites owned by the Borrowers as of March 31, 2022. The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the tower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing. For each calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.
The table below sets forth the material terms of our outstanding Tower Securities as of the date of this filing:
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Security |
| Issue Date |
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| Amount Outstanding |
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| Interest Rate |
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| Anticipated Repayment Date |
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| Final Maturity Date |
2014-2C Tower Securities |
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| $620.0 million |
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| 3.869% |
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|
| Oct. 8, 2049 | ||
2018-1C Tower Securities |
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| $640.0 million |
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| 3.448% |
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|
|
| Mar. 9, 2048 | ||
2019-1C Tower Securities |
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|
| $1.165 billion |
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| 2.836% |
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|
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| Jan. 12, 2050 | ||
2020-1C Tower Securities |
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|
| $750.0 million |
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| 1.884% |
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|
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| Jul. 11, 2050 | ||
2020-2C Tower Securities |
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| $600.0 million |
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| 2.328% |
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|
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| Jul. 9, 2052 | ||
2021-1C Tower Securities |
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|
| $1.165 billion |
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| 1.631% |
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| May 9, 2051 | ||
2021-2C Tower Securities |
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| $895.0 million |
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| 1.840% |
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| Oct. 10, 2051 | ||
2021-3C Tower Securities |
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| $895.0 million |
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| 2.593% |
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| Oct. 10, 2056 |
Risk Retention Tower Securities
In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Exchange Act, SBA Guarantor, LLC, a wholly owned subsidiary, purchased (1) $33.7 million of Secured Tower Revenue Securities Series 2018-1R (the “2018-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.949% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2018-1C Tower Securities, (2) $61.4 million of Secured Tower Revenue Securities Series 2019-1R (the “2019-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.213% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2019-1C Tower Securities, (3) $71.1 million of Secured Tower Revenue Securities Series 2020-2R (the “2020-2R Tower Securities”) issued by the Trust with a fixed interest rate of 4.336% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2020-2C Tower Securities, (4) $61.4 million of Secured Tower Revenue Securities Series 2021-1R (the “2021-1R Tower Securities”) issued by the Trust with a fixed interest rate of 3.625% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-1C Tower Securities, and (5) $94.3 million of Secured Tower Revenue Securities Series 2021-3R (the “2021-3R Tower Securities”) issued by the Trust with a fixed interest rate of 4.090% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-3C Tower Securities. Principal and interest payments made on the 2018-1R Tower Securities, 2019-1R Tower Securities, 2020-2R Tower Securities, 2021-1R Tower Securities, and 2021-3R Tower Securities eliminate in consolidation.
As of March 31, 2022, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.
Senior Notes
The table below sets forth the material terms of our outstanding senior notes as of March 31, 2022:
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Senior Notes |
| Issue Date |
| Amount Outstanding |
| Interest Rate Coupon |
| Maturity Date |
| Interest Due Dates |
| Optional Redemption Date |
2020 Senior Notes |
|
| $1.5 billion |
| 3.875% |
|
| Feb. 15 & Aug. 15 |
| |||
2021 Senior Notes |
|
| $1.5 billion |
| 3.125% |
|
| Feb. 1 & Aug. 1 |
|
Each of our senior notes is subject to redemption, at our option, in whole or in part on or after the date set forth above. We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.
Debt Service
As of March 31, 2022, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.
The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of March 31, 2022 and the interest rates accruing on those amounts on such date (in thousands):
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Revolving Credit Facility (1) |
| $ | 12,237 |
2018 Term Loan (2) |
|
| 68,497 |
2014-2C Tower Securities |
|
| 24,185 |
2018-1C Tower Securities |
|
| 662,270 |
2019-1C Tower Securities |
|
| 33,409 |
2020-1C Tower Securities |
|
| 14,368 |
2020-2C Tower Securities |
|
| 14,159 |
2021-1C Tower Securities |
|
| 19,371 |
2021-2C Tower Securities |
|
| 16,752 |
2021-3C Tower Securities |
|
| 23,491 |
2020 Senior Notes |
|
| 58,125 |
2021 Senior Notes |
|
| 46,875 |
Total debt service for the next 12 months |
| $ | 993,739 |
(1)As of March 31, 2022, $680.0 million was outstanding under the Revolving Credit Facility. Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.
(2)Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks that are inherent in our financial instruments. These instruments arise from transactions entered into in the normal course of business.
The following table presents the future principal payment obligations and fair values associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of March 31, 2022:
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| 2022 |
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| Thereafter |
| Total |
| Fair Value | ||||||||
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| (in thousands) | ||||||||||||||||||||||
Revolving Credit Facility |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 680,000 |
| $ | — |
| $ | 680,000 |
| $ | 680,000 |
2018 Term Loan |
|
| 18,000 |
|
| 24,000 |
|
| 24,000 |
|
| 2,244,000 |
|
| — |
|
| — |
|
| 2,310,000 |
|
| 2,275,350 |
2014-2C Tower Securities (1) |
|
| — |
|
| — |
|
| 620,000 |
|
| — |
|
| — |
|
| — |
|
| 620,000 |
|
| 622,065 |
2018-1C Tower Securities (1) |
|
| — |
|
| 640,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 640,000 |
|
| 640,960 |
2019-1C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| 1,165,000 |
|
| — |
|
| — |
|
| 1,165,000 |
|
| 1,137,529 |
2020-1C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 750,000 |
|
| — |
|
| 750,000 |
|
| 715,215 |
2020-2C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 600,000 |
|
| 600,000 |
|
| 575,178 |
2021-1C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,165,000 |
|
| — |
|
| 1,165,000 |
|
| 1,087,283 |
2021-2C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 895,000 |
|
| 895,000 |
|
| 835,053 |
2021-3C Tower Securities (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 895,000 |
|
| 895,000 |
|
| 841,944 |
2020 Senior Notes |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,500,000 |
|
| 1,500,000 |
|
| 1,462,320 |
2021 Senior Notes |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,500,000 |
|
| 1,500,000 |
|
| 1,358,955 |
Total debt obligation |
| $ | 18,000 |
| $ | 664,000 |
| $ | 644,000 |
| $ | 3,409,000 |
| $ | 2,595,000 |
| $ | 5,390,000 |
| $ | 12,720,000 |
| $ | 12,231,852 |
(1)For information on the anticipated repayment date and final maturity date for each tower security, refer to “Debt Instruments and Debt Service Requirements” above.
Our current primary market risk exposure is (1) interest rate risk relating to our ability to refinance our debt at commercially reasonable rates, if at all, and (2) interest rate risk relating to the impact of interest rate movements on the variable portion of our 2018 Term Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest rate risk on our outstanding debt through our large percentage of fixed rate debt, including interest rate swaps. On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan. While we cannot predict our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis. The IBA ceased the publication of USD LIBOR for the 1 week and 2 month tenors on December 31, 2021 and will cease all other tenors on June 30, 2023. The discontinuation of LIBOR during 2023 and the replacement with an alternative reference rate may adversely impact interest rates and our interest expense could increase. On July 7, 2021, we amended our Revolving Credit Facility to provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate.
We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil, Canada, Chile, Peru, Argentina, Colombia, South Africa, the Philippines, Tanzania, and to a lesser extent, our markets in Central America. In each of these countries, we pay most of our selling, general, and administrative expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in Brazil, Canada, Chile, South Africa, and the Philippines, we receive significantly all of our revenue and pay significantly all of our operating expenses in local currency. In Colombia, Argentina, Peru, and Tanzania, we receive our revenue and pay our operating expenses in a mix of local currency and U.S. dollars. All transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period, and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive income (loss). For the three months ended March 31, 2022, approximately 16.2% of our revenues and approximately 20.4% of our total operating expenses were denominated in foreign currencies.
We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Real from the quoted foreign currency exchange rates at March 31, 2022. As of March 31, 2022, the analysis indicated that such an adverse movement would have caused our revenues and operating income to decline by approximately 1.0% and 0.6%, respectively, for the three months ended March 31, 2022.
As of March 31, 2022, we had intercompany debt, which is denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As settlement of this debt is anticipated or planned in the foreseeable future, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A change of 10% in the underlying exchange rates of our unsettled intercompany debt at March 31, 2022 would have resulted in approximately $75.4 million of unrealized gains or losses that would have been included in Other income (expense), net in our Consolidated Statements of Operations for the three months ended March 31, 2022.
Special Note Regarding Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:
·our expectations on the future growth and financial health of the wireless industry and the industry participants, the drivers of such growth, the demand for our towers, the future capital investments of our customers (including with respect to the roll-out of 5G), future spectrum auctions, the trends developing in our industry, and competitive factors;
·our ability to capture and capitalize on industry growth and the impact of such growth on our financial and operational results;
·our expectations regarding consolidation of wireless service providers and the impact of such consolidation on our financial and operational results;
·our intent to grow our tower portfolio domestically and internationally and expand through acquisitions, new builds, and organic lease up on existing towers;
·our belief that over the long-term, site leasing revenues will continue to grow as wireless service providers increase their use of our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements;
·our expectation regarding site leasing revenue growth, on an organic basis, in our domestic and international segments, and the drivers of such growth;
·our focus on our site leasing business and belief that our site leasing business is characterized by stable and long-term recurring revenues, reduced exposure to changes in customer spending, predictable operating costs, and minimal non-discretionary capital expenditures;
·our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to maintain these towers will be minimal;
·our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and executing monetary amendments;
·our expectations regarding churn rates, including with respect to legacy Sprint leases and Oi leases;
·our belief that DISH Wireless will become a nationwide carrier, and its expectations regarding the capital expenditures necessary to deploy its network;
·our expectations regarding timing for closing of pending acquisitions;
·our election to be subject to tax as a REIT and our intent to continue to operate as a REIT;
·our belief that our business is currently operated in a manner that complies with the REIT rules and our intent to continue to do so;
·our plans regarding our distribution policy, and the amount and timing of, and source of funds for, any such distributions;
·our expectations regarding the use of NOLs to reduce REIT taxable income;
·our expectations regarding our capital allocation strategy, including future allocation decisions among portfolio growth, stock repurchases and dividends, the impact of our election to be taxed as a REIT on that strategy, and our goal of increasing our Adjusted Funds From Operations per share;
·our expectations regarding dividends and our ability to grow our dividend in the future and the drivers of such growth;
·our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including expenditures required for new builds and to maintain, improve, and modify our towers, ground lease purchases, and general corporate expenditures, and the source of funds for these expenditures;
·our expectations regarding the timing for closing of refinancing transactions;
·our expectations regarding our business strategies, including our strategy for securing rights to the land underlying our towers, and the impact of such strategies on our financial and operational results;
·our intended use of our liquidity;
·our intent to maintain our target leverage levels, including in light of our dividend;
·our expectations regarding our debt service in 2022 and our belief that our cash on hand, capacity under our Revolving Credit Facility, and our cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months; and
·our expectations and estimates regarding certain tax and accounting matters, including the impact on our financial statements.
These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
·the impact of consolidation among wireless service providers, including the impact of T-Mobile and Sprint;
·the ability of DISH Wireless to become and compete as a nationwide carrier;
·our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures;
·our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems, and land ownership;
·our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to satisfactorily complete due diligence on acquired towers, the amount and quality of due diligence that we are able to complete prior to closing of any acquisition, our ability to accurately anticipate the future performance of the acquired towers, our ability to receive required regulatory approval, the ability and willingness of each party to fulfill their respective closing conditions and their contractual obligations, and, once acquired, our ability to effectively integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the acquired towers;
·the health of the South African and Tanzanian economies and wireless communications market, and the willingness of carriers to invest in their networks in that market;
·developments in the wireless communications industry in general, and for wireless communications infrastructure providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to expend capital to fund network expansion or enhancements;
·our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to new tenants on our towers, and retain current leases on towers;
·our ability to secure and deliver anticipated services business at contemplated margins;
·our ability to build new towers, including our ability to identify and acquire land that would be attractive for our customers and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that arise in connection with the building of new towers;
·competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow us to maintain our long-term target leverage ratios while achieving our expected portfolio growth levels;
·our capital allocation decisions and the impact on our ability to achieve our expected tower portfolio growth levels;
·our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on terms that are accretive;
·our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth;
·the impact of rising interest rates on our results of operations and our ability to refinance our existing indebtedness at commercially reasonable rates or at all;
·the extent and duration of the impact of the COVID-19 pandemic on the global economy, on our business and results of operations, and on foreign currency exchange rates;
·our ability to successfully estimate the impact of regulatory and litigation matters;
·natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage;
·a decrease in demand for our towers;
·the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business less desirable to existing or potential tenants;
·our ability to qualify for treatment as a REIT for U.S. federal income tax purposes and to comply with and conduct our business in accordance with such rules;
·our ability to utilize available NOLs to reduce REIT taxable income; and
·our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company of adopting certain accounting pronouncements and the availability of sufficient NOLs to offset future REIT taxable income.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In order to ensure that the information we must disclose in our filings with the Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) as of March 31, 2022. Based on such evaluation, such officers have concluded that, as of March 31, 2022, our disclosure controls and procedures were effective.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table presents information related to our repurchases of Class A common stock during the first quarter of 2022:
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| Total |
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| Total Number of Shares |
| Approximate Dollar Value | ||
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| Number |
| Average |
| Purchased as Part of |
| of Shares that May Yet Be | ||
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| of Shares |
| Price Paid |
| Publicly Announced |
| Purchased Under the | ||
Period |
| Purchased |
| Per Share |
| Plans or Programs (1) |
| Plans or Programs | ||
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1/1/2022 - 1/31/2022 |
| 953,846 |
| $ | 335.48 |
| 953,846 |
| $ | 616,370,815 |
2/1/2022 - 2/28/2022 |
| 92,799 |
| $ | 323.30 |
| 92,799 |
| $ | 586,368,504 |
3/1/2021 - 3/31/2021 |
| 253,468 |
| $ | 322.10 |
| 253,468 |
| $ | 504,726,849 |
Total |
| 1,300,113 |
| $ | 332.00 |
| 1,300,113 |
| $ | 504,726,849 |
(1)Our Board of Directors authorizes us to purchase, from time to time, outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements, and other factors. Once authorized, the repurchase plan has no time deadline and will continue until otherwise modified or terminated by our Board of Directors at any time in its sole discretion. As of the date of this filing, we had $504.7 million remaining under the current authorized share repurchase plan.
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Exhibit No. | Description of Exhibits |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
104 | Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| SBA COMMUNICATIONS CORPORATION |
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| Chief Executive Officer |
| (Duly Authorized Officer) |
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| Chief Financial Officer |
| (Principal Financial Officer) |
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 10/9/31 | ||||
| 2/1/29 | ||||
| 1/11/28 | ||||
| 4/9/27 | ||||
| 2/15/27 | ||||
| 11/9/26 | ||||
| 7/7/26 | ||||
| 1/9/26 | ||||
| 4/11/25 | ||||
| 1/12/25 | ||||
| 10/8/24 | ||||
| 2/1/24 | ||||
| 6/30/23 | ||||
| 3/9/23 | ||||
| 2/15/23 | ||||
| 12/31/22 | ||||
| 6/14/22 | ||||
| 5/19/22 | ||||
| Filed on: | 4/29/22 | 4 | ||
| 4/24/22 | ||||
| 4/19/22 | ||||
| For Period end: | 3/31/22 | |||
| 3/25/22 | ||||
| 3/10/22 | 4 | |||
| 2/27/22 | ||||
| 1/4/22 | ||||
| 12/31/21 | 10-K, 5 | |||
| 10/28/21 | ||||
| 10/27/21 | 8-K | |||
| 7/7/21 | 8-K | |||
| 5/14/21 | 8-K | |||
| 3/31/21 | 10-Q | |||
| 1/29/21 | 8-K | |||
| 1/1/21 | ||||
| 12/31/20 | 10-K, 5 | |||
| 11/2/20 | 8-K | |||
| 8/4/20 | ||||
| 7/14/20 | 8-K | |||
| 2/4/20 | 8-K | |||
| 9/13/19 | 8-K | |||
| 4/11/18 | 8-K | |||
| 3/9/18 | 8-K | |||
| 12/31/16 | 10-K, 5 | |||
| 10/15/14 | 8-K | |||
| List all Filings | ||||