01—Abstract
Summary
Summary of the 10-K filed March 1, 2023. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported total revenues of $2,633,454 thousanda for 2022, up from $2,308,834 thousand in 2021, with net income of $459,799 thousand compared with $237,624 thousand a year earlier.
Site leasing generated 96.2% of total segment operating profit in 2022. Adjusted EBITDA, a non-GAAP measure, was $1,768,977 thousandb versus $1,606,279 thousand in 2021. The company owned 39,311 towers at December 31, 2022, 17,416 domestic and 21,895 international, with an average of 1.9 tenants per tower structure.
Its largest customers were T-Mobile (36.4% of 2022 total revenues), AT&T Wireless (19.6%) and Verizon Wireless (14.5%). The balance sheet carries substantial leverage. Total principal amount of indebtedness was $12,952,000 thousandc at December 31, 2022, and shareholders' deficit was $(5,276,315) thousand.
Cash provided by operating activities was $1,285,700 thousandd. Cash used in investing activities was $1,393,654 thousand, including $489,888 thousand for tower acquisitions, and the company repurchased $431,666 thousand of common stock and paid $306,766 thousand in dividends during 2022. For 2023, the company expects discretionary cash capital expenditures of $283.0 million to $303.0 million and non-discretionary cash capital expenditures of $53.0 million to $63.0 million.
Key risks flagged in the filing include customer consolidation, with churn from the T-Mobile and Sprint merger expected to total $140.0 million to $190.0 million of cash site leasing revenue through 2028, and rising interest rates. Variable-rate debt of about $3.0 billion, or 23.3% of total indebtedness, is exposed to rate increases, and the 2018 Term Loan must be transitioned away from LIBOR before June 30, 2023. The company also faces a Brazilian tax assessment with a reasonably possible loss range of zero to $89.7 million above amounts accrued.
02—Key points
Key Highlights
- Total revenues rose to $2,633,454 thousand in 2022 from $2,308,834 thousand in 2021, and net income increased to $459,799 thousand from $237,624 thousand.
- Adjusted EBITDA reached $1,768,977 thousand in 2022 versus $1,606,279 thousand in 2021; the company describes it as a non-GAAP measure.
- Site leasing contributed 96.2% of total segment operating profit in 2022, and the portfolio comprised 39,311 towers with an average of 1.9 tenants per tower structure.
- Customer concentration is significant: T-Mobile accounted for 36.4%, AT&T Wireless 19.6% and Verizon Wireless 14.5% of 2022 total revenues.
- Total principal indebtedness was $12,952,000 thousand at December 31, 2022, with a shareholders' deficit of $(5,276,315) thousand; variable-rate debt was about $3.0 billion, or 23.3% of total indebtedness.
- Capital returns in 2022 included $431,666 thousand of share repurchases and $306,766 thousand of dividends paid, and a quarterly dividend of $0.85 per share was declared for March 2023 payment.
- Churn from the T-Mobile and Sprint consolidation is expected to total $140.0 million to $190.0 million of cash site leasing revenue through 2028.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Sba Communications kept $0.18.
- Revenue$2.63B100.0%
- Cost of revenue−$668.6M25.4%
- Gross profit$1.96B74.6%
- Operating costs−$1.04B39.5%
- Operating income$925.4M35.1%
- Interest, other & tax−$464.0M17.6%
- Net income$461.4M17.5%
Where FY2022 revenue went
$2.63B- Other operating costs: $777.5M, 30% of revenue
- Cost of revenue: $668.6M, 25% of revenue
- Interest, other & tax: $464.0M, 18% of revenue
- Net income: $461.4M, 18% of revenue
- SG&A: $261.9M, 9.9% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed March 1, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.63B$2.31B | +14.1% |
| Cost of Revenue | $668.65M$545.48M | +22.6% |
| Gross Profit | $1.96B$1.76B | +11.4% |
| SG&A Expenses | $261.85M$220.03M | +19.0% |
| Operating Expenses | $1.71B$1.53B | +11.9% |
| Operating Income | $925.41M$782.50M | +18.3% |
| Net Income | $461.43M$237.62M | +94.2% |
| EPS (Basic) | $4.27$2.17 | +96.8% |
| EPS (Diluted) | $4.22$2.14 | +97.2% |
| Shares Outstanding (Basic) | 107.96M109.33M | −1.3% |
| Shares Outstanding (Diluted) | 109.39M111.18M | −1.6% |
05—Questions
Frequently Asked Questions
How much did SBAC's revenue and net income grow in 2022?
Total revenues were $2,633,454 thousand in 2022 compared with $2,308,834 thousand in 2021, and net income was $459,799 thousand compared with $237,624 thousand. The filing attributes the revenue increase mainly to domestic and international site leasing growth and higher site development revenue.
What drives SBAC's business and how concentrated is its customer base?
Site leasing, which leases antenna space on multi-tenant towers to wireless service providers, generated 96.2% of total segment operating profit in 2022. The company relies on a small number of customers: T-Mobile, AT&T Wireless and Verizon Wireless made up 36.4%, 19.6% and 14.5% of 2022 total revenues, respectively.
What are the main debt and interest rate risks?
Total principal indebtedness was $12,952,000 thousand at December 31, 2022. About $3.0 billion of variable-rate debt, or 23.3% of total indebtedness, is exposed to rising rates. The 2018 Term Loan carries an interest rate swap fixing $1.95 billion of notional value, and the filing states that the term loan must transition from LIBOR before June 30, 2023.
What did management say about 2023 capital spending and customer churn?
For 2023, the company expects non-discretionary cash capital expenditures of $53.0 million to $63.0 million and discretionary cash capital expenditures of $283.0 million to $303.0 million. It also expects churn from the T-Mobile and Sprint consolidation to total $140.0 million to $190.0 million of cash site leasing revenue through 2028.
What are the notable tax and legal exposures?
The filing describes a Brazilian tax assessment related to purchase accounting adjustments for tax years 2016 through 2019, which the company is appealing. The estimated range of reasonably possible losses in excess of amounts accrued is zero to $89.7 million, excluding penalties and interest of $79.5 million. The company states that it is involved in ordinary-course legal proceedings not expected to have a material adverse effect.
06—Continue