01—Abstract
Summary
Summary of the 10-K filed March 30, 2000. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation's 10-K for fiscal 1999 describes a company transitioning from site development services toward owning and leasing wireless communications towers.
As of December 31, 1999, the company owned or controlled 1,163 towers, had letters of intent or definitive agreements to acquire 94 more, and had non-binding mandates to build over 335 additional towers. Total revenues rose to $86.99 milliona in 1999 from $59.10 million in 1998, with site leasing revenue growing to $26.42 million from $12.40 million, while site development consulting revenue declined to $17.96 million from $27.45 million, and the company expects that consulting revenue to keep declining. The company remained unprofitable, with a 1999 net loss of $34.59 million (net loss available to common shareholders of $33.86 million, or $(1.77) per share), driven largely by depreciation and amortization of $16.56 million and non-cash amortization of original issue discount and debt issuance costs of $22.06 million.
Adjusted EBITDA was $9.58 millionb, compared with $(2.38) million in 1998. Net cash used in investing activities was $208.87 million, primarily for tower acquisitions and capital expenditures, and cash capital expenditures for 1999 were $208.9 million. The company estimated 2000 cash capital expenditures of at least $200.0 million to $250.0 million.
Financing was a central theme. Total indebtedness was $320.77 millionc at year-end 1999 against stockholders' equity of $48.58 million, and the company completed an IPO in June 1999 and a follow-on offering in February 2000 with net proceeds of approximately $229.3 million.
Management stated that cash flow, offering proceeds and senior credit facility borrowings would fund planned capital expenditures through the middle of 2001, after which additional equity or debt financing may be needed. Major customers were concentrated, with Sprint PCS and BellSouth among the largest site development customers, and PageNet a significant site leasing customer.
02—Key points
Key Highlights
- Site leasing revenue rose to $26.42 million in 1999 from $12.40 million in 1998, while total revenues increased to $86.99 million from $59.10 million.
- Site development consulting revenue fell to $17.96 million in 1999 from $27.45 million in 1998, and management expects this segment to keep declining.
- Net loss widened to $34.59 million in 1999 from $19.90 million in 1998, mainly due to depreciation, amortization and non-cash interest accretion.
- Adjusted EBITDA improved to $9.58 million in 1999 from $(2.38) million in 1998.
- The company owned or controlled 1,163 towers at December 31, 1999, with letters of intent or definitive agreements to acquire 94 more and non-binding mandates to build over 335 additional towers.
- Total indebtedness was $320.77 million at year-end 1999, against stockholders' equity of $48.58 million.
- A February 2000 follow-on offering raised net proceeds of approximately $229.3 million, used in part to repay $68.0 million of revolving credit loans, and management expects funding to last through the middle of 2001 before additional financing may be needed.
03—Questions
Frequently Asked Questions
How did SBA Communications' revenue and profitability change in 1999?
Total revenues increased to $86.99 million in 1999 from $59.10 million in 1998, driven by site leasing growth and the April 1999 acquisition of Com-Net, which expanded site development construction revenue. The company still posted a net loss of $34.59 million in 1999, compared with a net loss of $19.90 million in 1998. Management attributed losses principally to significant depreciation, amortization and interest expense.
Why is the site development consulting business declining?
The filing states that demand for site acquisition and zoning services from PCS licensees decreased, and that wireless carriers increasingly outsource site infrastructure through build-to-suit programs, where the tower owner provides these services. Consulting revenue fell 34.6% to $18.0 million in 1999, and the company expects revenues and gross profit from this segment to continue to decline.
How is SBA Communications funding its tower build-out and acquisitions?
Cash capital expenditures were $208.9 million in 1999, and the company estimated $200.0 million to $250.0 million for 2000. Funding sources cited include the February 2000 follow-on offering (net proceeds of approximately $229.3 million), cash flow from operations and borrowings under its senior credit facility, which totaled $132.0 million outstanding at December 31, 1999. The company said these sources should suffice through the middle of 2001, after which it may need additional equity or debt financing.
How concentrated is SBA Communications' customer base?
The filing states that five largest customers accounted for approximately 48.3% of site development services revenues in 1999, down from 91.4% in 1998. Sprint PCS represented 20.8% of site development revenues in 1999, and PageNet represented 16.5% of site leasing revenue in 1999. The company also noted that customers can generally terminate site development assignments at any time without penalty.
What are the main debt-related risks for investors?
Total indebtedness was $320.77 million at December 31, 1999, and the 12% senior discount notes of $269.0 million accrete until March 1, 2003, after which annual cash interest of approximately $32.3 million will be required. The senior credit facility is secured by substantially all of the subsidiaries' assets and contains financial covenants, and the company stated that its earnings have been insufficient to cover fixed charges and are expected to remain so for the foreseeable future.
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