01—Abstract
Summary
Summary of the 8-K filed October 28, 2024. Cited figures are marked; the original filing is the authoritative source.
SBA Communications Corporation reported third-quarter 2024 results for the quarter ended September 30, 2024, with net income of $255.9 milliona, or $2.40 per share, compared with $85.4 million, or $0.80 per share, in the prior-year quarter.
The results included a $16.2 millionb after-tax gain on currency-related remeasurement of intercompany loans. Total revenues were $667.6 million versus $682.5 million, site leasing revenue was $625.7 million, and Adjusted EBITDA was $472.6 million, with AFFO per share of $3.32 compared with $3.34. The company also raised its full year 2024 outlook across all key metrics, including total revenues of $2.66 billion to $2.68 billion and AFFO per share of $13.20 to $13.45, and declared a quarterly cash dividend of $0.98 per share.
The company agreed to purchase over 7,000 communication sites in Central America from Millicom International Cellular S.A. for approximately $975.0 millionc in cash, with closing expected sometime in 2025. The sites are expected to produce approximately $129.0 million of revenues and $89.0 million of tower cash flow in their first full year after closing, and Millicom will sign 15-year master lease agreements to lease back space on the acquired sites. The filing also describes a seven-year exclusivity right to build up to 2,500 build-to-suit sites in Central America for Millicom.
On the balance sheet, the company reported $12.4 billiond of total debt, $12.1 billion of Net Debt, and leverage of 6.4x Net Debt to Annualized Adjusted EBITDA (4.8x on a secured basis). During the quarter it issued $2.07 billion of Tower Securities at a blended effective rate of 4.778%, repriced its Term Loan B by 25 basis points, and entered into a forward-starting swap that, together with a November 2023 swap, effectively fixes one-month Term SOFR at a blended 3.415% from March 31, 2025 to April 11, 2028. No shares were repurchased in the quarter, and $204.7 million of repurchase authorization remained.
02—Key points
Key Highlights
- Net income of $255.9 million, or $2.40 per diluted share, versus $85.4 million, or $0.80 per share, in Q3 2023; the result includes a $16.2 million after-tax currency remeasurement gain.
- Site leasing revenue of $625.7 million (down 1.8% reported, up 0.3% excluding FX) and Adjusted EBITDA of $472.6 million (down 2.0% reported, down 0.2% excluding FX).
- AFFO per share of $3.32 versus $3.34 a year earlier, a 0.6% decrease reported and a 1.8% increase excluding FX.
- Full year 2024 outlook raised across key metrics, with total revenues now $2,660.0 million to $2,680.0 million and AFFO per share now $13.20 to $13.45.
- Agreement to acquire over 7,000 Central American sites from Millicom for approximately $975.0 million in cash, expected to close in 2025, with 15-year leasebacks and a seven-year right to build up to 2,500 build-to-suit sites.
- Issued $2.07 billion of Tower Securities at a blended effective rate of 4.778%; Net Debt leverage of 6.4x and secured leverage of 4.8x at September 30, 2024.
- Quarterly cash dividend of $0.98 per Class A share, payable December 12, 2024 to holders of record on November 14, 2024.
03—Questions
Frequently Asked Questions
What drove the large increase in net income compared with the prior year quarter?
Net income rose to $255.9 million from $85.4 million. The filing states that the prior-year quarter included a $31.2 million after-tax loss on currency-related remeasurement of intercompany loans, while the current quarter included a $16.2 million after-tax gain on the same type of remeasurement. Operating income also increased to $375.6 million from $248.6 million, largely reflecting lower depreciation, accretion, and amortization of $63.5 million versus $180.7 million.
How large is the Millicom acquisition and what will SBA receive?
SBA agreed to buy over 7,000 communication sites in Guatemala, Honduras, Panama, El Salvador, and Nicaragua for approximately $975.0 million in cash. The sites are expected to produce about $129.0 million of revenues and $89.0 million of tower cash flow in their first full year after closing. Millicom will lease back space on the sites under 15-year master lease agreements, and its roughly 1,500 existing site leases with SBA will be extended for a new 15-year term. The transaction is expected to close sometime in 2025.
Has SBA changed its 2024 guidance?
Yes. The company raised its full year 2024 outlook for all key financial metrics. Examples include total revenues of $2,660.0 million to $2,680.0 million, Adjusted EBITDA of $1,890.0 million to $1,900.0 million, and AFFO per share of $13.20 to $13.45. The filing states the changes from the July 29, 2024 outlook, including an $8.0 million increase in site leasing revenue at the midpoint, and that the outlook excludes stock repurchases, new debt financings, and sites not yet under contract.
How is the balance sheet positioned after the quarter's financing activity?
At September 30, 2024, SBA reported $12.4 billion of total debt, $9.4 billion of total secured debt, and $12.1 billion of Net Debt, with Net Debt leverage of 6.4x Annualized Adjusted EBITDA and secured leverage of 4.8x. The company issued $2.07 billion of Tower Securities in October 2024 at a blended effective rate of 4.778%, with proceeds used to repay the 2014-2C and portions of the 2019-1C and 2019-1R Tower Securities. The $2.0 billion Revolving Credit Facility had no amount outstanding as of the press release date.
What is the dividend and share repurchase status?
SBA declared a quarterly cash dividend of $0.98 per share of Class A Common Stock, payable December 12, 2024 to shareholders of record at the close of business on November 14, 2024. The company did not repurchase any shares in the third quarter of 2024, and as of the filing date it had $204.7 million of authorization remaining under its repurchase plan. The outlook does not assume any additional repurchases in 2024.
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