01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation reported total revenues of $2.01 billiona for 2019, up from $1.87 billion in 2018, and net income attributable to the company of $147.0 million, compared with $47.5 million a year earlier.
Site leasing is the core business, contributing 97.7% of total segment operating profit for 2019. The company owned 32,403 towers at December 31, 2019, of which 16,401 were domestic and 16,002 were international. Adjusted EBITDA rose to $1.41 billionb from $1.31 billion, and cash provided by operating activities reached $970.0 million, up from $850.6 million.
The balance sheet remains highly leveraged. Total principal debt was $10.41 billionc at year-end 2019, and total shareholders' deficit was $(3.67) billion. Management is returning cash to shareholders through a dividend that was initiated in 2019 (quarterly cash dividends of $0.37 per share were paid in 2019, and $0.465 per share was declared on February 20, 2020) and through share repurchases, which totaled $470.3 million for 2019 at an average price of $231.87 per share.
The board had $624.3 milliond of repurchase authorization remaining as of the filing date. Customer concentration is significant: AT&T Wireless (23.8%), T-Mobile (18.2%), Sprint (16.9%) and Verizon Wireless (14.0%) together accounted for the majority of total revenues in 2019.
The filing highlights the proposed T-Mobile/Sprint merger, which is expected to close in 2020 and could lead to non-renewal of overlapping leases. For 2020, the company guided to discretionary cash capital expenditures of $240.0 million to $260.0 million and non-discretionary capital expenditures of $37.0 million to $47.0 million.
02—Key points
Key Highlights
- Total revenues rose to $2,014.6 million in 2019 from $1,865.7 million in 2018, with domestic site leasing revenue of $1,487.1 million and international site leasing revenue of $373.8 million.
- Net income attributable to SBA Communications Corporation was $147.0 million in 2019 versus $47.5 million in 2018; adjusted EBITDA was $1,410.6 million versus $1,305.1 million.
- Cash provided by operating activities was $970.0 million in 2019, compared with $850.6 million in 2018.
- Total principal amount of indebtedness was $10.41 billion at December 31, 2019, against a shareholders' deficit of $(3.67) billion; variable rate debt was about $2.9 billion, or 27.4% of total indebtedness.
- Capital returns increased in 2019: $470.3 million in share repurchases (2.0 million shares) and $83.4 million in common dividends paid, with $624.3 million of repurchase authorization remaining.
- Customer concentration remains high, with AT&T Wireless at 23.8%, T-Mobile at 18.2%, Sprint at 16.9% and Verizon Wireless at 14.0% of 2019 total revenues; the pending T-Mobile/Sprint merger is expected to close in 2020.
- Backlog of signed but not yet commenced site leasing agreements totaled 643 leases contractually providing approximately $21.8 million of annual revenue at December 31, 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Sba Communications kept $0.07.
- Revenue$2.01B100.0%
- Cost of revenue−$493.0M24.5%
- Gross profit$1.52B75.5%
- Operating costs−$938.1M46.6%
- Operating income$583.5M29.0%
- Interest, other & tax−$436.5M21.7%
- Net income$147.0M7.3%
Where FY2019 revenue went
$2.01B- Other operating costs: $745.4M, 37% of revenue
- Cost of revenue: $493.0M, 24% of revenue
- Interest, other & tax: $436.5M, 22% of revenue
- Net income: $147.0M, 7.3% of revenue
- SG&A: $192.7M, 9.6% of revenue
Kept 7.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.01B$1.87B | +8.0% |
| Cost of Revenue | $493.03M$468.80M | +5.2% |
| Gross Profit | $1.52B$1.40B | +8.9% |
| SG&A Expenses | $192.72M$142.53M | +35.2% |
| Operating Expenses | $1.43B$1.32B | +8.3% |
| Operating Income | $583.49M$544.17M | +7.2% |
| Net Income | $146.99M$47.45M | +209.8% |
| EPS (Basic) | $1.30$0.41 | +217.1% |
| EPS (Diluted) | $1.28$0.41 | +212.2% |
| Shares Outstanding (Basic) | 112.81M114.91M | −1.8% |
| Shares Outstanding (Diluted) | 114.69M116.52M | −1.6% |
05—Questions
Frequently Asked Questions
How much did SBA Communications grow its revenue and profitability in 2019?
Total revenues were $2,014.6 million in 2019 compared with $1,865.7 million in 2018. Net income attributable to SBA Communications Corporation was $147.0 million, up from $47.5 million, and adjusted EBITDA increased to $1,410.6 million from $1,305.1 million. The filing attributes the increase in adjusted EBITDA mainly to higher segment operating profit, partly offset by higher selling, general and administrative expenses.
What is the company's exposure to international markets and currency fluctuations?
International operations generated approximately 18.6% of consolidated revenues in 2019. Brazil represented 12.2% of total site leasing revenue. About 20.1% of total cash site leasing revenue came from international operations, of which 14.2% was in non-U.S. dollar currencies. The Brazilian Real weakened 7.9% on average versus the prior year, and the company recorded a $9.0 million gain, net of taxes, on remeasurement of intercompany loans for 2019.
What are the main risks to tower leasing revenue identified in the filing?
The filing cites consolidation among wireless carriers, particularly the proposed T-Mobile/Sprint merger, which could lead to non-renewal of overlapping tower leases. Other risks include dependence on a small number of large customers, the Oi bankruptcy reorganization in Brazil, interest rate exposure on floating rate debt, and the REIT distribution requirements. The company also notes that the Brazilian land underlying 2,113 towers is subject to a concession expiring in 2025.
What are the company's capital expenditure and dividend plans for 2020?
For 2020, the company expects non-discretionary cash capital expenditures for tower maintenance and general corporate purposes of $37.0 million to $47.0 million, and discretionary cash capital expenditures of $240.0 million to $260.0 million, which it expects to fund from cash on hand, operating cash flow and borrowings. On February 20, 2020, the board declared a cash dividend of $0.465 per share payable March 26, 2020. Future dividends are at the sole discretion of the board.
06—Continue