01—Abstract
Summary
Summary of the 10-K filed February 25, 2011. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation, a leading independent owner and operator of wireless communications towers, reported net loss attributable to the company of $194.7 milliona for 2010, compared with $140.9 million in 2009, with total revenues of $626.6 million (up from $555.5 million).
Site leasing generated $535.4 millionb of revenue and 97.5% of total segment operating profit in 2010, and the company owned 9,111 tower sites at December 31, 2010, up from 8,324. Adjusted EBITDA was $387.4 million, compared with $338.5 million in 2009. The company has never paid a dividend and expects continued losses, and it plans to build 390 to 410 new towers and grow its portfolio by 5% to 10% in 2011.
Balance sheet leverage is significant: total principal indebtedness was $3.05 billionc at year-end 2010, against shareholders' equity of $317.1 million, down from $599.9 million a year earlier. During 2010 the company issued $1.23 billion of Secured Tower Revenue Securities (4.254% Series 2010-1 and 5.101% Series 2010-2) and used the proceeds to repay the $938.6 million 2006 CMBS Certificates. Loss from extinguishment of debt was $49.1 million, and cash provided by operating activities was $201.2 million.
Cash and cash equivalents fell to $64.3 milliond from $161.3 million. The filing also highlights customer concentration, with AT&T, Sprint, Verizon Wireless and T-Mobile accounting for 23.9%, 20.4%, 14.8% and 11.6% of 2010 total revenues, respectively. Management expects 2011 non-discretionary capital expenditures of $10.0 million to $14.0 million and discretionary capital expenditures of $230.0 million to $250.0 million, and states that cash on hand and operating cash flow will be sufficient to service debt over the next twelve months.
02—Key points
Key Highlights
- Total revenues rose to $626.6 million in 2010 from $555.5 million in 2009; site leasing revenue was $535.4 million, or 85.4% of total revenues.
- Net loss attributable to SBA Communications widened to $194.7 million ($1.68 per share) in 2010 from $140.9 million ($1.20 per share) in 2009.
- Adjusted EBITDA increased to $387.4 million from $338.5 million, driven primarily by site leasing segment operating profit of $416.3 million.
- Total principal indebtedness reached $3.05 billion at December 31, 2010, versus shareholders' equity of $317.1 million.
- Owned tower sites grew to 9,111 from 8,324, with 712 towers acquired and 124 constructed during 2010.
- Customer concentration is high: AT&T (23.9%), Sprint (20.4%), Verizon Wireless (14.8%) and T-Mobile (11.6%) together accounted for most revenue.
- Planned 2011 growth includes building 390 to 410 new towers and expanding the portfolio by 5% to 10%, with discretionary capital expenditures of $230.0 million to $250.0 million.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2010, Sba Communications lost $0.31.
- Revenue$626.6M100.0%
- Cost of revenue−$199.4M31.8%
- Gross profit$427.2M68.2%
- Operating costs−$352.9M56.3%
- Operating income$74.3M11.9%
- Interest, other & tax−$268.9M42.9%
- Net income−$194.7M31.1%
Where FY2010 revenue went
$626.6M- Other operating costs: $294.7M, 47% of revenue
- Cost of revenue: $199.4M, 32% of revenue
- Operating income: $74.3M, 12% of revenue
- SG&A: $58.2M, 9.3% of revenue
Kept 12% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 25, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $626.62M$555.51M | +12.8% |
| Cost of Revenue | $199.44M$180.54M | +10.5% |
| Gross Profit | $427.18M$374.97M | +13.9% |
| SG&A Expenses | $58.21M$52.78M | +10.3% |
| Operating Expenses | $552.35M$500.56M | +10.3% |
| Operating Income | $74.27M$54.95M | +35.2% |
| Interest Expense | $149.92M$130.85M | +14.6% |
| Net Income | -$194.67M-$140.87M | −38.2% |
| EPS (Basic) | $-1.68$-1.20 | −40.0% |
05—Questions
Frequently Asked Questions
Is SBA Communications profitable?
No. The company reported net losses of $194.4 million in 2010, $141.1 million in 2009 and $67.2 million in 2008, and it expects to continue incurring significant losses. Losses are principally driven by depreciation, accretion and amortization, interest expense, and losses on debt extinguishment.
What drives the company's revenue?
Site leasing is the primary business, generating $535.4 million of 2010 revenue. Tenant leases are generally five-year initial terms with five 5-year renewals at the tenant's option, and they typically carry rent escalators averaging 3% per year. Site development services contributed $91.2 million in 2010.
How leveraged is the company?
Very. Total principal indebtedness was $3.05 billion at December 31, 2010, compared with shareholders' equity of $317.1 million. The company's 2010 Tower Securities, convertible notes, senior notes and a $500.0 million revolving credit facility, of which $20.0 million was outstanding, make up the debt structure.
Does the company pay dividends?
No. The company has never paid a dividend on any class of common stock and expects to retain future earnings to fund development and growth of the business. It did repurchase $107.4 million of Class A common stock in 2010 under a $250.0 million program, with $140.9 million remaining authorized.
What are the main customer risks?
A small number of wireless carriers account for most revenue. The filing notes that carrier consolidation, such as the Verizon Wireless and ALLTEL merger, has led to non-renewal of duplicative tower leases, and that a significant customer loss could materially reduce revenue.
06—Continue