01—Abstract
Summary
Summary of the 10-K filed February 28, 2024. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation (SBAC) reported 2023 total revenues of $2.71 billiona, up from $2.63 billion in 2022, with site leasing revenue of $2.52 billion and site development revenue of $194.6 million.
Site leasing generated 97.4% of total segment operating profit in 2023. Net income attributable to SBA Communications Corporation was $501.8 millionb, compared with $461.4 million in 2022, and Adjusted EBITDA was $1.89 billion, up 6.9% on a constant currency basis from $1.77 billion. The company owned 39,618 towers at year-end 2023, including 17,487 domestic and 22,131 international sites, and averaged 1.9 tenants per tower.
Domestic site leasing revenue grew 3.9% on a constant currency basis, while international site leasing grew 19.6%, and site development revenue fell 34.4% as carrier activity declined. Leverage remains high. Total principal debt was $12.39 billionc at December 31, 2023, down from $12.95 billion, and the shareholders' deficit was $5.17 billion.
Cash provided by operating activities was $1.54 billiond. The company repurchased $100.0 million of stock and paid $370.0 million in dividends during 2023. Subsequent to year-end, it refinanced its 2018 Term Loan with a new $2.3 billion Term Loan maturing in 2031, raised its revolving credit facility commitments to $2.0 billion, and declared a quarterly dividend of $0.98 per share.
The filing notes that churn from the T-Mobile/Sprint consolidation is expected to total $125.0 million to $150.0 million of cash site leasing revenue from 2024 through 2028, and that Oi S.A.'s judicial recovery in Brazil creates uncertainty around revenue and land rights for 2,113 towers. Leadership changed effective December 31, 2023, when Brendan T.
Cavanagh became President and Chief Executive Officer and Marc Montagner became Chief Financial Officer. The company also stated that it is reviewing the useful lives of its towers and intangible assets and expects to conclude that review in the first quarter of 2024, which could extend asset lives and materially change future depreciation and amortization.
02—Key points
Key Highlights
- Total revenues were $2.71 billion in 2023, up from $2.63 billion in 2022, driven by domestic site leasing ($1.85 billion) and international site leasing ($670.4 million).
- Net income attributable to SBA Communications Corporation was $501.8 million in 2023, compared with $461.4 million in 2022; diluted EPS was $4.61 versus $4.22.
- Adjusted EBITDA was $1.89 billion in 2023, up from $1.77 billion in 2022.
- Total principal debt was $12.39 billion at December 31, 2023, and the shareholders' deficit was $5.17 billion.
- Customer concentration is high: T-Mobile (32.5%), AT&T Wireless (19.5%) and Verizon Wireless (14.6%) accounted for 66.6% of 2023 total revenues combined as stated in the filing's percentages.
- Post-year-end, the 2018 Term Loan was refinanced with a $2.3 billion Term Loan due 2031, and the revolving credit facility commitments were increased to $2.0 billion.
- The company expects T-Mobile/Sprint churn of $125.0 million to $150.0 million of cash site leasing revenue from 2024 through 2028, and is reviewing tower asset useful lives, with conclusions expected in the first quarter of 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Sba Communications kept $0.19.
- Revenue$2.71B100.0%
- Cost of revenue−$612.6M22.6%
- Gross profit$2.10B77.4%
- Operating costs−$1.18B43.3%
- Operating income$923.7M34.1%
- Interest, other & tax−$421.8M15.6%
- Net income$501.8M18.5%
Where FY2023 revenue went
$2.71B- Other operating costs: $907.4M, 33% of revenue
- Cost of revenue: $612.6M, 23% of revenue
- Net income: $501.8M, 19% of revenue
- Interest, other & tax: $421.8M, 16% of revenue
- SG&A: $267.9M, 9.9% of revenue
Kept 19% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 28, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.71B$2.63B | +3.0% |
| Cost of Revenue | $612.62M$668.65M | −8.4% |
| Gross Profit | $2.10B$1.96B | +6.8% |
| SG&A Expenses | $267.94M$261.85M | +2.3% |
| Operating Expenses | $1.79B$1.71B | +4.7% |
| Operating Income | $923.66M$925.41M | −0.2% |
| Net Income | $501.81M$461.43M | +8.8% |
| EPS (Basic) | $4.64$4.27 | +8.7% |
| EPS (Diluted) | $4.61$4.22 | +9.2% |
| Shares Outstanding (Basic) | 108.20M107.96M | +0.2% |
| Shares Outstanding (Diluted) | 108.91M109.39M | −0.4% |
05—Questions
Frequently Asked Questions
How did SBAC's revenue and profitability trend in 2023?
Total revenues rose to $2.71 billion from $2.63 billion. Operating income was $923.7 million, roughly flat versus $925.4 million in 2022, because higher asset impairment and decommission costs of $169.4 million offset segment growth. Net income attributable to the company rose to $501.8 million from $461.4 million, and Adjusted EBITDA increased to $1.89 billion from $1.77 billion.
What is the company's debt position and how is it changing?
Total principal debt was $12.39 billion at December 31, 2023, down from $12.95 billion a year earlier. Subsequent to year-end, the company replaced its 2018 Term Loan with a $2.3 billion Term Loan maturing January 25, 2031 and increased revolving credit commitments to $2.0 billion. The filing states that cash on hand, revolver capacity and operating cash flow are expected to be sufficient to service debt over the next twelve months.
What are the main risks to tenant revenue?
The filing highlights customer consolidation, most notably the T-Mobile/Sprint merger, which is expected to cause churn of $125.0 million to $150.0 million of cash site leasing revenue from 2024 through 2028. Oi S.A.'s second judicial recovery in Brazil affects 2,113 towers and roughly $24 million of annual wireline revenue. Customer concentration and higher interest rates reducing carriers' capital spending are also cited as risks.
What is the company's capital return policy?
SBAC paid $0.85 per share in quarterly dividends in each quarter of 2023, totaling $369.96 million in cash dividends paid. It repurchased $100.0 million of stock during 2023, leaving $404.7 million remaining under its repurchase authorization. After year-end, the Board declared a $0.98 per share dividend payable March 28, 2024.
Are there accounting changes that could affect future earnings?
Yes. The company is reviewing the remaining estimated useful lives of its towers and intangible assets with the help of an independent consultant and expects to conclude in the first quarter of 2024. Preliminary information suggests asset lives may be extended, which would decrease depreciation and amortization prospectively, and the company says the change could be material to future results.
06—Continue