01—Abstract
Summary
Summary of the 10-K filed March 1, 2017. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported total revenues of $1.63 billiona for 2016, essentially flat compared with $1.64 billion in 2015, with site leasing revenue of $1.54 billion (up from $1.48 billion) and site development revenue declining to $95.1 million from $157.8 million.
Site leasing generated 98.7% of total segment operating profit in 2016. Net income was $76.2 millionb, compared with a net loss of $175.7 million in 2015, and Adjusted EBITDA was $1.11 billion. The company owned 26,197 towers at December 31, 2016, of which 15,922 were domestic and 10,275 international, and it averaged 1.8 tenants per tower structure.
The filing describes SBAC's intention to qualify as a REIT beginning with its taxable year ending December 31, 2016, and the merger with its predecessor effective January 13, 2017. Key risks highlighted include carrier consolidation, a heavy debt load (total principal of $8.875 billionc against a shareholders' deficit of $1.996 billion), customer concentration (AT&T Wireless, T-Mobile, Sprint and Verizon Wireless), and the June 2016 judicial reorganization petition filed by Oi S.A., which led to a $16.5 million bad debt provision. Subsequent to year end, the board authorized a new $1.0 billion stock repurchase plan, and the company repriced its term loans on January 20, 2017.
02—Key points
Key Highlights
- Site leasing contributed 98.7% of total segment operating profit in 2016, and total revenues were $1.63 billion, roughly flat year over year.
- Net income of $76.2 million in 2016 compared with a net loss of $175.7 million in 2015; Adjusted EBITDA was $1.11 billion.
- Total principal debt of $8.875 billion at December 31, 2016 against a shareholders' deficit of $1.996 billion.
- Customer concentration is significant: AT&T Wireless (25.7%), T-Mobile (17.0%), Sprint (16.1%) and Verizon Wireless (15.2%) accounted for at least 10% of 2016 revenues each.
- Oi S.A., the largest Brazilian customer, filed for judicial reorganization on June 20, 2016, leading to a $16.5 million bad debt provision.
- The company is converting to a REIT, with a $1.0 billion stock repurchase authorization approved January 12, 2017 and $1.1 billion of federal NOLs attributable to the REIT.
- 2016 cash capital expenditures totaled $416.8 million, and cash provided by operating activities was $742.5 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Sba Communications kept $0.05.
- Revenue$1.63B100.0%
- Cost of revenue−$420.9M25.8%
- Gross profit$1.21B74.2%
- Operating costs−$824.9M50.5%
- Operating income$387.3M23.7%
- Interest, other & tax−$311.1M19.0%
- Net income$76.2M4.7%
Where FY2016 revenue went
$1.63B- Other operating costs: $681.6M, 42% of revenue
- Cost of revenue: $420.9M, 26% of revenue
- Interest, other & tax: $311.1M, 19% of revenue
- Net income: $76.2M, 4.7% of revenue
- SG&A: $143.3M, 8.8% of revenue
Kept 4.7% as net incomeNet income $76.2M · 4.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 1, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $1.63B$1.64B | −0.3% |
| Cost of Revenue | $420.90M$444.40M | −5.3% |
| Gross Profit | $1.21B$1.19B | +1.5% |
| SG&A Expenses | $143.35M$114.95M | +24.7% |
| Operating Expenses | $1.25B$1.33B | −6.0% |
| Operating Income | $387.31M$312.46M | +24.0% |
| Net Income | $76.24M-$175.66M | +143.4% |
| EPS (Basic) | $0.61$-1.37 | +144.5% |
| EPS (Diluted) | $0.61$-1.37 | +144.5% |
| Shares Outstanding (Basic) | 124.45M127.79M | −2.6% |
| Shares Outstanding (Diluted) | 125.14M127.79M | −2.1% |
05—Questions
Frequently Asked Questions
How much revenue did SBAC generate from its tower business in 2016?
Site leasing revenue was $1.54 billion in 2016, up from $1.48 billion in 2015, while site development revenue fell to $95.1 million from $157.8 million.
What is the company's debt position?
Total principal debt was $8.875 billion at December 31, 2016, compared with $8.555 billion a year earlier, and the shareholders' deficit was $1.996 billion.
What does the REIT conversion mean for the company?
SBAC intends to be taxed as a REIT beginning with its taxable year ending December 31, 2016, which requires distributing at least 90% of REIT taxable income after NOLs. The company says it expects to use its approximately $1.1 billion of federal NOLs to offset REIT taxable income, so it may not initially make distributions.
What are the main risks to tenant revenue?
The filing cites carrier consolidation leading to non-renewed leases, customer concentration among the four largest wireless carriers, and the Oi S.A. reorganization in Brazil, as well as currency exposure from its international operations.
Is the company returning capital to shareholders?
In 2016 SBAC repurchased 5.3 million Class A shares for $545.7 million. On January 12, 2017, the board authorized a new plan of up to $1.0 billion, and the company stated it has never paid a dividend on any class of common stock.
06—Continue