SBA Communications' (SBAC) Q3 FFO & Revenues Beat, View Up

SBA Communications Corporation’s SBAC third-quarter 2022 adjusted funds from operations (AFFO) per share of $3.10 outpaced the Zacks Consensus Estimate of $3.04. This reflects a rise of 14.4% from the prior-year quarter’s $2.71.

SBAC witnessed an improvement in site-leasing and site-development businesses, which aided the top line. It continues to benefit from the addition of sites to its portfolio. It also raised its 2022 outlook.

Quarterly total revenues increased 14.6% year over year to $675.6 million, outpacing the Zacks Consensus Estimate of $652.8 million.

Per Jeffrey Stoops, president and CEO of the company, “Our results evidence the high levels of wireless deployment across our markets, driven mostly by 5G domestically and 4G in our international markets. Wireless carrier activity was, and remains, robust across most of our markets. We believe activity will remain strong into 2023 and perhaps beyond, given the size and scope of our customers’ 5G deployment plans.”

On Oct 11, 2022, SBAC closed the previously announced acquisition of 2,632 sites from Grupo TorreSur in Brazil for around $725 million in cash.

Subsequent to the quarter end, SBAC purchased or is under contract to buy 34 communication sites for a total consideration of $28.5 million in cash. It expects to complete the acquisition by the end of first-quarter 2023.

Quarter in Detail

Site-leasing revenues were up 9.7% year over year to $587.3 million. This consisted of domestic site-leasing revenues of $449.6 million and international site-leasing revenues of $137.7 million. The domestic cash site-leasing revenues were $437.2 million, growing 5.3% year over year. International cash site leasing revenues were $138.4 million, rising 26.1%.

Site-development revenues increased 64.1% year over year to $88.3 million.

The site-leasing operating profit summed $475.3 million, marking a year-over-year increase of 8.8%. Moreover, 95.4% of SBAC’s total operating profit in the quarter came from site leasing.

The overall operating income rose 14.7% from the prior-year quarter to $242.9 million.

The adjusted EBITDA totaled $446.8 million, up 9.8% year over year, while the adjusted EBITDA margin declined to 67.3% from 70.3% in the prior-year quarter.

Portfolio Activity

In the September quarter, SBAC acquired 131 communication sites for total cash consideration of $54.9 million. It also built 113 towers during this period. The company owned or operated 36,519 communication sites as of Sep 30, 2022, of which 17,401 were in the United States and its territories and 19,118 internationally.

SBA Communications also spent $9.1 million to purchase land and easements and extend lease terms. Total cash capital expenditure was $122.5 million in the reported quarter, of which $12.6 million was non-discretionary and $109.9 million represented discretionary.

Cash Flow & Liquidity

In the third quarter, SBA Communications generated $332.5 million of net cash from operating activities compared with the year-ago quarter’s $253.1 million.

As of Sep 30, 2022, it had $201.2 million in cash and cash equivalents, up from $183.1 million recorded at the end of the June quarter. SBAC ended the quarter with net debt-to-annualized adjusted EBITDA of 6.8X, improving from 7.0X as of Jun 30, 2022.

As of Oct 31, 2022, the company had $995 million outstanding under the $1.5 billion revolving credit facility.

During the third quarter of 2022, SBAC did not repurchase any shares of its Class A common stock. As of Oct 31, 2022, it had $504.7 million of authorization remaining under its approved repurchase plan.

Raised 2022 Outlook

SBA Communications raised its guidance for 2022.

It expects AFFO per share of $12.12-$12.34, up from prior guidance of $11.87-$12.24. The Zacks Consensus Estimate for the same is currently pegged at $12.14, which lies in the guided range.

Site-leasing revenues are now projected to be $2,325- $2,335 million, up from the prior estimated range of $2,297-$2,317 million. Site-development revenues are expected to lie between $291 million and $301 million, up from $260 million and $280 million. The adjusted EBITDA is estimated to be in the band of $1,763-$1,773 million, up from $1,731-$1,751 million.

Dividend Update

Concurrently, SBA Communications announced a quarterly cash dividend of 71 cents on its Class A common stock. The dividend will be paid out on Dec 15 to shareholders on record as of the close of business on Nov 17, 2022.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SBA Communications Corporation Price, Consensus and EPS Surprise

SBA Communications Corporation price-consensus-eps-surprise-chart | SBA Communications Corporation Quote

Performance of Other REITs

American Tower Corporation AMT reported third-quarter 2022 consolidated adjusted FFO (AFFO) per share of $2.45 and AFFO attributable to AMT common stockholders per share of $2.36, down 3.2% and 5.2% year over year, respectively. The Zacks Consensus Estimate was pegged at $2.42.

Results reflect improving revenues across its Property segment. American Tower also recorded decent year-over-year organic tenant billings growth of 2.6% and total tenant billings growth of 3.9%.

Crown Castle Inc. CCI reported third-quarter 2022 AFFO per share of $1.85, beating the Zacks Consensus Estimate of $1.83. Reported AFFO per share compared favorably with the year-ago period’s $1.77.

The rise in site-rental revenues amid elevated tower space demand aided CCI’s year-over-year top-line growth. It also announced a hike in its quarterly cash dividend payment.

Boston Properties Inc.’s BXP third-quarter 2022 FFO per share of $1.91 outpaced the Zacks Consensus Estimate of $1.87. The figure increased 10.4% year over year.

BXP’s quarterly results reflect healthy leasing activity alongside year-over-year growth in the top line. It also carried out strategic acquisitions, redevelopments and dispositions during the quarter. The company revised its 2022 outlook for FFO.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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