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SBA Communications (SBAC) Beats on Q2 AFFO, Ups '21 Guidance

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SBA Communications Corporation (SBAC - Free Report) delivered solid second-quarter 2021 results, wherein adjusted funds from operations (AFFO) and the top line increased year over year and surpassed the Zacks Consensus Estimate as well.

The AFFO per share of $2.64 for the second quarter topped the Zacks Consensus Estimate of $2.59. Further, the reported figure is 15.3% higher than the prior-year quarter’s $2.29.

Results highlight robust operating performance in both its site-leasing and development business. The company continues to benefit from the addition of sites to its portfolio. In addition to that, cost-control measures and interest-rate savings supported the company to raise the full-year outlook.

Quarterly total revenues increased 13.5% year over year to $575.5 million and outpaced the consensus estimate of $561.3 million.

In May, the company, through an existing trust, issued $1.165 billion of Tower Securities at an interest rate of 1.63%.

Quarter in Detail

Site-leasing revenues were up 8.6% year over year to $524.1 million. This consisted of domestic site-leasing revenues of $418.8 million and international site-leasing revenues of $105.3 million. Domestic cash site-leasing revenues came in at $408.3 million, while international cash site-leasing revenues were $106.3 million. Site-leasing operating profit summed $428.8 million, marking an increase of 9.7%, year over year.

Site-development revenues increased significantly to $51.4 million from the prior-year quarter’s $24.8 million.

Overall operating income improved to $199.8 million from the year-ago quarter’s $350.2 million.

Adjusted EBITDA totaled $400.2 million, up 8.5% year over year, while adjusted EBITDA margin declined to 70.7% from the year-ago figure of 72.8%.

During the June-end quarter, the company acquired 57 communication sites for cash consideration of $67 million. It also built 98 towers during this period. The company owned or operated 33,854 communication sites as of Jun 30, 2021. Of these, 17,306 sites are located in the United States and its territories, and 16,548 internationally.

SBA Communications also spent $11.8 million to purchase land and easements, and extend lease terms. Markedly, total cash capital expenditure was $108 million in the reported quarter, of which $10.2 million was non-discretionary and $97.8 million represented discretionary.

Cash Flow & Liquidity

In the second quarter, SBA Communications generated $352.8 million of net cash from operations compared with the year-ago quarter’s $314.7 million. As of Jun 30, 2021, it had $273.8 million in cash and equivalents, with $11.7 billion of net debt.

Further, it paid out a cash dividend of $63.5 million in second-quarter 2021.

Outlook

SBA Communications has hiked the guidance for 2021 and expects AFFO per share of $10.32-$10.72 for the year. The Zacks Consensus Estimate for the same is pegged at $10.51.

Site-leasing revenues are projected at $2,080-$2,100 million, and site-development revenues are expected to be between $180 million and $200 million. Moreover, adjusted EBITDA is predicted to lie between $1,586 million and $1,606 million.

Dividend Update

On Aug 2, SBA Communications announced a quarterly cash dividend of 58 cents on its Class A common stock. The dividend will be paid out on Sep 23 to shareholders of record as of the close of business on Aug 26, 2021.

SBA Communications currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Lamar Advertising Company (LAMR - Free Report) , OUTFRONT Media Inc. (OUT - Free Report) and Iron Mountain Incorporated (IRM - Free Report) . All three companies are slated to report second-quarter earnings on Aug 5.

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.