01—Abstract
Summary
Summary of the 10-K filed February 25, 2021. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported full-year 2020 total revenues of $2.08 billiona, up from $2.01 billion in 2019, with site leasing generating 98.4% of total segment operating profit.
The company owned 32,923 towers at December 31, 2020 (16,546 domestic and 16,377 international, with 30% of global sites in Brazil), and averaged 1.8 tenants per tower. T-Mobile, AT&T Wireless and Verizon Wireless accounted for 34.5%, 24.1% and 14.1% of total 2020 revenues, respectively. Net income fell to $24.0 millionb from $147.3 million, mainly due to a $220.4 million loss on remeasurement of U.S. dollar intercompany loans and higher non-cash interest expense.
Adjusted EBITDA, a non-GAAP measure, rose 9.0% to $1.49 billionc. The balance sheet carries significant leverage: total principal indebtedness was $11.18 billion at year-end 2020 versus $10.41 billion a year earlier, and shareholders' deficit widened to $(4.82) billion. Cash provided by operating activities rose to $1.13 billion.
The company repurchased $859.3 milliond of stock in 2020 and paid $207.7 million in dividends, and it declared a $0.58 per share dividend in February 2021. Subsequent to year-end, it closed the first tranche of the PG&E transaction for $954.0 million in cash and issued $1.5 billion of 3.125% Senior Notes due 2029.
Management expects 2021 discretionary cash capital expenditures of $1,200.0 million to $1,220.0 million. Key risks flagged in the filing include wireless carrier consolidation (T-Mobile and Sprint merged in 2020, with lease non-renewals already beginning), the Oi restructuring in Brazil, foreign currency exposure, LIBOR transition, and REIT distribution requirements.
02—Key points
Key Highlights
- Total revenues of $2.08 billion for 2020, up from $2.01 billion in 2019; site leasing revenue was $1.95 billion.
- Net income of $24.0 million in 2020, down from $147.3 million, largely due to a $220.4 million loss on remeasurement of intercompany loans and higher non-cash interest expense.
- Adjusted EBITDA of $1.49 billion, up 9.0% from $1.41 billion, per the company's non-GAAP reconciliation.
- Portfolio of 32,923 towers at December 31, 2020, with an average of 1.8 tenants per tower structure and 98.4% of segment operating profit from site leasing.
- Customer concentration: T-Mobile 34.5%, AT&T Wireless 24.1% and Verizon Wireless 14.1% of 2020 total revenues; the T-Mobile/Sprint merger is causing lease non-renewals.
- Total principal indebtedness of $11.18 billion at December 31, 2020, against a shareholders' deficit of $(4.82) billion; cash from operations was $1.13 billion.
- Capital returns of $859.3 million in share repurchases and $207.7 million in dividends paid in 2020, with a $0.58 per share dividend declared in February 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Sba Communications kept $0.01.
- Revenue$2.08B100.0%
- Cost of revenue−$476.5M22.9%
- Gross profit$1.61B77.1%
- Operating costs−$972.9M46.7%
- Operating income$633.7M30.4%
- Interest, other & tax−$609.6M29.3%
- Net income$24.1M1.2%
Where FY2020 revenue went
$2.08B- Other operating costs: $778.6M, 37% of revenue
- Interest, other & tax: $609.6M, 29% of revenue
- Cost of revenue: $476.5M, 23% of revenue
- Net income: $24.1M, 1.2% of revenue
- SG&A: $194.3M, 9.3% of revenue
Kept 1.2% as net incomeNet income $24.1M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 25, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $2.08B$2.01B | +3.4% |
| Cost of Revenue | $476.53M$493.03M | −3.3% |
| Gross Profit | $1.61B$1.52B | +5.6% |
| SG&A Expenses | $194.27M$192.72M | +0.8% |
| Operating Expenses | $1.45B$1.43B | +1.3% |
| Operating Income | $633.69M$583.49M | +8.6% |
| Net Income | $24.10M$146.99M | −83.6% |
| EPS (Basic) | $0.22$1.30 | −83.1% |
| EPS (Diluted) | $0.21$1.28 | −83.6% |
| Shares Outstanding (Basic) | 111.53M112.81M | −1.1% |
| Shares Outstanding (Diluted) | 113.47M114.69M | −1.1% |
05—Questions
Frequently Asked Questions
How did SBAC's profitability change in 2020?
Net income fell to $24.0 million from $147.3 million in 2019. The filing attributes the decline mainly to fluctuations in foreign exchange, including a $220.4 million loss on remeasurement of U.S. dollar intercompany loans with foreign subsidiaries, plus higher non-cash interest expense and a larger loss from extinguishment of debt. Operating income rose to $633.7 million from $583.5 million.
How concentrated is SBAC's revenue base?
The company depends on a small number of customers. T-Mobile represented 34.5% of 2020 total revenues, AT&T Wireless 24.1% and Verizon Wireless 14.1%. In international site leasing, Oi S.A. (28.7%), Telefonica (18.1%) and Claro (14.5%) were the largest customers. The filing notes that the Oi tower assets are being sold to other Brazilian carriers, which may lead to some lease non-renewals.
What is SBAC's debt and leverage position?
Total principal indebtedness was $11.18 billion at December 31, 2020, up from $10.41 billion. The shareholders' deficit was $(4.82) billion. The Senior Credit Agreement requires a Consolidated Net Debt to Annualized Borrower EBITDA ratio not exceeding 6.5 times. In January 2021, the company issued $1.5 billion of 3.125% Senior Notes due 2029, used partly to redeem the 2017 Senior Notes.
What are SBAC's expected capital needs for 2021?
The company expects non-discretionary cash capital expenditures of $37.0 million to $47.0 million and discretionary cash capital expenditures of $1,200.0 million to $1,220.0 million in 2021, to be funded from cash on hand, operating cash flow and borrowings under the Revolving Credit Facility or new financings. The February 2021 PG&E transaction closing alone involved $954.0 million of cash consideration.
How is SBAC returning capital to shareholders?
In 2020, the company repurchased $859.3 million of stock and paid $207.7 million in dividends. It declared quarterly dividends of $0.465 per share through 2020 and, in February 2021, declared a $0.58 per share dividend payable March 26, 2021. As of the filing date, $500.0 million remained under the $1.0 billion stock repurchase plan authorized November 2, 2020. The company is a REIT and must distribute at least 90% of its REIT taxable income, though it can use net operating losses to offset that requirement.
06—Continue