01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported total revenues of $1.87 billiona for 2018, up from $1.73 billion in 2017, with site leasing revenue of $1.74 billion and site development revenue of $125.3 million.
Net income fell to $47.5 millionb from $103.7 million, primarily due to foreign currency effects, including an $89.1 million loss on remeasurement of intercompany loans with a Brazilian subsidiary, higher interest expense, and a larger loss from debt extinguishment. Operating income rose to $544.2 million from $458.5 million, and Adjusted EBITDA increased to $1.31 billion from $1.20 billion. The company owned 29,578 towers as of December 31, 2018 (16,263 domestic and 13,315 international), and its site leasing business generated 98.0% of total segment operating profit.
Cash provided by operating activities was $850.6 millionc, and total principal debt was $10.03 billion, against a shareholders' deficit of $3.38 billion. In April 2018 the company secured a new $2.4 billion term loan and in March 2018 issued $640.0 million of Tower Securities, and it repurchased $795.5 million of Class A common stock during the year. Management expects 2019 discretionary cash capital expenditures of $225.0 million to $245.0 million and states that cash on hand, Revolving Credit Facility capacity and operating cash flow will be sufficient to service debt over the next twelve months.
Estimated total debt service for the 12 months ending December 31, 2019 is $1.34 billiond. The company has never paid a dividend on common stock, and as a REIT it expects to use available NOLs to reduce its 2019 REIT distribution requirement.
02—Key points
Key Highlights
- Total revenues of $1.87 billion in 2018, up from $1.73 billion in 2017; site leasing revenue was $1.74 billion
- Operating income rose to $544.2 million from $458.5 million, while net income declined to $47.5 million from $103.7 million
- Adjusted EBITDA increased to $1.31 billion from $1.20 billion
- Portfolio of 29,578 towers at December 31, 2018, with 1.8 average tenants per tower structure
- Total principal debt of $10.03 billion and a shareholders' deficit of $3.38 billion at year-end 2018
- Repurchased $795.5 million of Class A common stock in 2018 and had $204.5 million of authorization remaining
- Customer concentration: AT&T Wireless 24.0%, Sprint 17.9%, T-Mobile 16.4% and Verizon Wireless 14.7% of 2018 total revenues
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Sba Communications kept $0.03.
- Revenue$1.87B100.0%
- Cost of revenue−$468.8M25.1%
- Gross profit$1.40B74.9%
- Operating costs−$852.7M45.7%
- Operating income$544.2M29.2%
- Interest, other & tax−$496.7M26.6%
- Net income$47.5M2.5%
Where FY2018 revenue went
$1.87B- Other operating costs: $710.2M, 38% of revenue
- Interest, other & tax: $496.7M, 27% of revenue
- Cost of revenue: $468.8M, 25% of revenue
- Net income: $47.5M, 2.5% of revenue
- SG&A: $142.5M, 7.6% of revenue
Kept 2.5% as net incomeNet income $47.5M · 2.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $1.87B$1.73B | +8.0% |
| Cost of Revenue | $468.80M$446.31M | +5.0% |
| Gross Profit | $1.40B$1.28B | +9.0% |
| SG&A Expenses | $142.53M$130.70M | +9.1% |
| Operating Expenses | $1.32B$1.27B | +4.1% |
| Operating Income | $544.17M$458.50M | +18.7% |
| Net Income | $47.45M$103.65M | −54.2% |
| EPS (Basic) | $0.41$0.86 | −52.3% |
| EPS (Diluted) | $0.41$0.86 | −52.3% |
| Shares Outstanding (Basic) | 114.91M119.86M | −4.1% |
| Shares Outstanding (Diluted) | 116.52M121.02M | −3.7% |
05—Questions
Frequently Asked Questions
Why did net income decline despite higher operating income?
Net income fell to $47.5 million from $103.7 million mainly because of foreign currency effects, including an $89.1 million loss on remeasurement of U.S. dollar intercompany loans with a Brazilian subsidiary, along with higher interest expense of $376.2 million and a $14.4 million loss from extinguishment of debt.
How concentrated is the customer base?
Four customers accounted for 73.0% of total 2018 revenues when combined (AT&T Wireless 24.0%, Sprint 17.9%, T-Mobile 16.4%, Verizon Wireless 14.7%). In international site leasing, Oi S.A. represented 35.5% of that segment's revenue in 2018.
What are the company's main debt obligations and near-term debt service?
Total principal debt was $10.03 billion at December 31, 2018, including the 2018 Term Loan ($2.39 billion principal), Tower Securities, Senior Notes and a $325.0 million Revolving Credit Facility balance. Estimated debt service for the twelve months ending December 31, 2019 is $1.34 billion.
What is the company's REIT status and dividend policy?
SBAC began operating as a REIT effective January 1, 2016. It has never paid a common dividend, and as a REIT it must distribute at least 90% of REIT taxable income, which it expects to offset largely with $755.4 million of federal NOLs attributable to the REIT, so distributions may be reduced or eliminated until those NOLs are used.
What does the company expect for 2019 capital spending?
For 2019, the company expects non-discretionary cash capital expenditures of $32.0 million to $42.0 million and discretionary cash capital expenditures of $225.0 million to $245.0 million, to be funded from cash on hand, operating cash flow, and borrowings under the Revolving Credit Facility or new financings.
06—Continue