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SBA Communications (SBAC) Beats Q1 FFO Estimates, Ups 2022 View

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SBA Communications Corporation’s (SBAC - Free Report) first-quarter adjusted funds from operations (AFFO) per share of $2.96 surpassed the Zacks Consensus Estimate of $2.88. This reflects a rise of 14.7% from the prior-year quarter’s $2.58.

Results reflect robust operating performance in site-leasing and development businesses, both on the domestic and international front. The company continues to benefit from the addition of sites to its portfolio.

Quarterly total revenues increased 12.9% year over year to $619.7 million, outpacing the Zacks Consensus Estimate of $603.88 million.

Quarter in Detail

Site-leasing revenues were up 10.8% year over year to $559.4 million. This consisted of domestic site-leasing revenues of $433 million and international site-leasing revenues of $126.4 million. The domestic cash site-leasing revenues were $423.5 million, growing 5.3% year over year. International cash site leasing revenues were $127.9 million, rising 25.1%.

Site-development revenues increased 38.3% year over year to $60.3 million.

The site-leasing operating profit summed $452.3 million, marking a year-over-year increase of 10.4%. The overall operating income rose 24.9% from the prior year’s quarter to $216.8 million.

The adjusted EBITDA totaled $423.8 million, up 8.6% year over year, while the adjusted EBITDA margin declined to 69.3% from 71.2%.

In the March quarter, SBAC acquired 1,807 communication sites for total cash consideration of $215.4 million, which included 1,445 sites under the previously announced deal with Airtel Tanzania for $176.1 million. It also built 86 towers during this period. The company owned or operated 36,017 communication sites as of Mar 31, 2022, of which 17,363 were in the United States and 18,654 internationally.

SBA Communications also spent $8.7 million to purchase land and easements and extend lease terms. Total cash capital expenditure was $253.2 million in the reported quarter, of which $12.3 million was non-discretionary and $240.9 million represented discretionary.

Cash Flow & Liquidity

In the first quarter, SBA Communications generated $324.5 million of net cash from operating activities compared with the year-ago quarter’s $285.5 million.

As of Mar 31, 2022, it had $263.6 million in cash and cash equivalents, down 28.2% from the December quarter. SBAC’s net debt stands at $12.4 billion. From the beginning of 2022 through Apr 25, the company had $590.0 million outstanding under the $1.5 billion revolving credit facility.

During the first quarter of 2022, SBAC repurchased 1.3 million shares of its class A common stock at an average price per share of $332.00 under its $1.0 billion stock repurchase plan.

Further, the company paid out a cash dividend of $76.9 million in the quarter.

Updated Outlook

SBA Communications provided updated guidance for 2022. It now expects AFFO per share of $11.72-$12.09, up from prior guidance of $11.48-$11.85. The Zacks Consensus Estimate for the same is pegged at $11.76.

Site-leasing revenues are now projected at $2,273-$2,293 million, up from the previous outlook of $2,235-$2,255 million while site-development revenues are now expected to lie between $220 million and $240 million, revised upward from $193 million to $213 million. Adjusted EBITDA is now predicted to be between $1,704 million and $1,724 million, up from the prior outlook of $1,673 million to $1,693 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 Jun 14 to shareholders on record as of the close of business on May 19.
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.

 

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Equinix (EQIX - Free Report) and Duke Realty slated to report on Apr 27. Cousins Properties (CUZ - Free Report) is scheduled to report on Apr 28.

The Zacks Consensus Estimate for Equinix’s first-quarter 2022 FFO per share is pegged at $7.19, suggesting an increase of 3% from the prior-year period’s reported figure. EQIX currently has a Zacks Rank of 3.

The Zacks Consensus Estimate for Duke Realty’s first-quarter 2022 FFO per share is pegged at 44 cents, implying an increase of 12.8% from the year-earlier quarter’s reported figure. DRE currently carries a Zacks Rank #3.

The Zacks Consensus Estimate for Cousins Properties’ first-quarter 2022 FFO per share is pegged at 67 cents, implying a decrease of 2.9% from the year-earlier quarter’s reported figure. CUZ currently carries a Zacks Rank #3.  

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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