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SBA Communications Corporation (SBAC - Free Report) reported fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $3.37, beating the Zacks Consensus Estimate of $3.32. The figure also reflects a rise of 8% from the prior-year quarter.
SBAC witnessed an improvement in site-leasing revenues during the quarter. It continues to benefit from the addition of sites to its portfolio. However, site development posted lower revenues, which affected the top line to some extent. It also announced an increase in dividends and issued its 2024 outlook.
Quarterly total revenues decreased 1.6% year over year to $675 million. The figure also missed the Zacks Consensus Estimate of $683.8 million.
Brendan Cavanagh, the president and CEO of the company, said, “We had a strong finish to 2023, exceeding our outlook for Site Leasing Revenue, Tower Cash Flow, Adjusted EBITDA and AFFO. While domestic carrier activity was at a low level by historical standards during 2023, a significant percentage of our sites still require 5G-related upgrades, and with the growing success of products such as Fixed Wireless Access, the demand for improved speeds, lower latency and greater network capacity continues to advance. This dynamic bodes well for solid organic leasing growth on our U.S. assets for years to come.”
Quarter in Detail
Site-leasing revenues increased 4.3% year over year to $636.1 million. Quarterly Site-leasing revenues consisted of domestic site-leasing revenues of $466.6 million and international site-leasing revenues of $169.5 million. The domestic cash site-leasing revenues came in at $460.9 million, growing 4% year over year. International cash site leasing revenues came in at $171.4 million, jumping 8.8% year over year.
However, site development revenues decreased 49.1% year over year to $38.9 million.
The site-leasing operating profit was $516.8 million, marking an increase of 4.5% year over year. Moreover, 97.4% of SBAC’s total operating profit in the quarter came from site leasing.
The overall operating income fell 10.6% to $209.7 million.
The adjusted EBITDA totaled $480.7 million, up 4.3%, while the adjusted EBITDA margin increased to 71.6% from 68.1% in the prior-year quarter.
Portfolio Activity
In the fourth quarter, SBAC acquired 23 communication sites for a total cash consideration of $21.3 million. The company also built 138 towers during this period. It owned or operated 39,618 communication sites as of Dec 31, 2023, of which 17,487 were in the United States and its territories and 22,131 internationally.
SBA Communications also spent $17.4 million to purchase land and easements and extend lease terms. Total cash capital expenditure was $99.8 million in the reported quarter, of which $84.9 million represented discretionary and $14.7 million was non-discretionary.
Subsequent to the quarter end, SBAC purchased or is under contract to buy 281 communication sites for a total consideration of $87.8 million in cash. It expects to complete the acquisition by the end of the third quarter of 2024.
Cash Flow & Liquidity
In the fourth quarter, SBA Communications generated nearly $432.6 million of net cash from operating activities compared with the year-ago quarter’s $288.6 million.
As of Dec 31, 2023, it had $247.7 million in cash and cash equivalents, short-term restricted cash and short-term investments, up from $228.9 million recorded as of Sep 30, 2023. SBAC ended the quarter with a net debt-to-annualized adjusted EBITDA of 6.3X.
As of Feb 26, 2023, the company had $70 million outstanding under the $2 billion revolving credit facility.
In October 2023, SBAC repurchased 0.1 million shares of its Class A common stock for $12.7 million. After this, no additional repurchases were made during the fourth quarter and it had $404.7 million of authorization remaining under its $1 billion stock repurchase plan.
Dividend Update
Concurrent with the earnings release, SBAC announced a cash dividend of 98 cents on its Class A common stock, indicating an increase of nearly 15% from the prior quarter. The dividend will be paid out on Mar 28 to shareholders of record as of Mar 14, 2024.
2024 Guidance
SBAC expects AFFO per share in the range of $13.15-$13.51. The Zacks Consensus Estimate for the same is currently pegged at $13.49, which is within the guided range.
Further, the adjusted EBITDA is estimated to be in the band of $1,894-$1,914 million.
Site-leasing revenues are projected to be $2,529-$2,549 million. Site-development revenues are expected to be between $140 million and $160 million.
Lamar Advertising Company (LAMR - Free Report) reported fourth-quarter 2023 AFFO per share of $2.10, which beat the Zacks Consensus Estimate of $1.95. The figure also compared favorably with the prior-year quarter's tally of $1.91.
Results reflect year-over-year growth in LAMR’s top line. However, higher interest expenses during the quarter acted as a dampener.
Iron Mountain Incorporated (IRM - Free Report) reported fourth-quarter AFFO per share of $1.11, beating the Zacks Consensus Estimate of $1.05.
IRM’s results reflect solid performances in the storage and service segments and the data-center business. However, higher interest expenses in the quarter created a headwind. The company issued its outlook for 2024.
Ventas, Inc. (VTR - Free Report) reported a fourth-quarter 2023 normalized funds from operations (FFO) per share of 76 cents, in line with the Zacks Consensus Estimate. The reported figure increased 4.1% from the prior-year quarter’s tally.
Results reflect better-than-anticipated revenues. Also, VTR’s same-store cash NOI increased year over year on strong performance across the portfolio.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
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SBA Communications' (SBAC) Q4 AFFO Beat, Dividend Hiked
SBA Communications Corporation (SBAC - Free Report) reported fourth-quarter 2023 adjusted funds from operations (AFFO) per share of $3.37, beating the Zacks Consensus Estimate of $3.32. The figure also reflects a rise of 8% from the prior-year quarter.
SBAC witnessed an improvement in site-leasing revenues during the quarter. It continues to benefit from the addition of sites to its portfolio. However, site development posted lower revenues, which affected the top line to some extent. It also announced an increase in dividends and issued its 2024 outlook.
Quarterly total revenues decreased 1.6% year over year to $675 million. The figure also missed the Zacks Consensus Estimate of $683.8 million.
Brendan Cavanagh, the president and CEO of the company, said, “We had a strong finish to 2023, exceeding our outlook for Site Leasing Revenue, Tower Cash Flow, Adjusted EBITDA and AFFO. While domestic carrier activity was at a low level by historical standards during 2023, a significant percentage of our sites still require 5G-related upgrades, and with the growing success of products such as Fixed Wireless Access, the demand for improved speeds, lower latency and greater network capacity continues to advance. This dynamic bodes well for solid organic leasing growth on our U.S. assets for years to come.”
Quarter in Detail
Site-leasing revenues increased 4.3% year over year to $636.1 million. Quarterly Site-leasing revenues consisted of domestic site-leasing revenues of $466.6 million and international site-leasing revenues of $169.5 million. The domestic cash site-leasing revenues came in at $460.9 million, growing 4% year over year. International cash site leasing revenues came in at $171.4 million, jumping 8.8% year over year.
However, site development revenues decreased 49.1% year over year to $38.9 million.
The site-leasing operating profit was $516.8 million, marking an increase of 4.5% year over year. Moreover, 97.4% of SBAC’s total operating profit in the quarter came from site leasing.
The overall operating income fell 10.6% to $209.7 million.
The adjusted EBITDA totaled $480.7 million, up 4.3%, while the adjusted EBITDA margin increased to 71.6% from 68.1% in the prior-year quarter.
Portfolio Activity
In the fourth quarter, SBAC acquired 23 communication sites for a total cash consideration of $21.3 million. The company also built 138 towers during this period. It owned or operated 39,618 communication sites as of Dec 31, 2023, of which 17,487 were in the United States and its territories and 22,131 internationally.
SBA Communications also spent $17.4 million to purchase land and easements and extend lease terms. Total cash capital expenditure was $99.8 million in the reported quarter, of which $84.9 million represented discretionary and $14.7 million was non-discretionary.
Subsequent to the quarter end, SBAC purchased or is under contract to buy 281 communication sites for a total consideration of $87.8 million in cash. It expects to complete the acquisition by the end of the third quarter of 2024.
Cash Flow & Liquidity
In the fourth quarter, SBA Communications generated nearly $432.6 million of net cash from operating activities compared with the year-ago quarter’s $288.6 million.
As of Dec 31, 2023, it had $247.7 million in cash and cash equivalents, short-term restricted cash and short-term investments, up from $228.9 million recorded as of Sep 30, 2023. SBAC ended the quarter with a net debt-to-annualized adjusted EBITDA of 6.3X.
As of Feb 26, 2023, the company had $70 million outstanding under the $2 billion revolving credit facility.
In October 2023, SBAC repurchased 0.1 million shares of its Class A common stock for $12.7 million. After this, no additional repurchases were made during the fourth quarter and it had $404.7 million of authorization remaining under its $1 billion stock repurchase plan.
Dividend Update
Concurrent with the earnings release, SBAC announced a cash dividend of 98 cents on its Class A common stock, indicating an increase of nearly 15% from the prior quarter. The dividend will be paid out on Mar 28 to shareholders of record as of Mar 14, 2024.
2024 Guidance
SBAC expects AFFO per share in the range of $13.15-$13.51. The Zacks Consensus Estimate for the same is currently pegged at $13.49, which is within the guided range.
Further, the adjusted EBITDA is estimated to be in the band of $1,894-$1,914 million.
Site-leasing revenues are projected to be $2,529-$2,549 million. Site-development revenues are expected to be between $140 million and $160 million.
The company 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
Lamar Advertising Company (LAMR - Free Report) reported fourth-quarter 2023 AFFO per share of $2.10, which beat the Zacks Consensus Estimate of $1.95. The figure also compared favorably with the prior-year quarter's tally of $1.91.
Results reflect year-over-year growth in LAMR’s top line. However, higher interest expenses during the quarter acted as a dampener.
Iron Mountain Incorporated (IRM - Free Report) reported fourth-quarter AFFO per share of $1.11, beating the Zacks Consensus Estimate of $1.05.
IRM’s results reflect solid performances in the storage and service segments and the data-center business. However, higher interest expenses in the quarter created a headwind. The company issued its outlook for 2024.
Ventas, Inc. (VTR - Free Report) reported a fourth-quarter 2023 normalized funds from operations (FFO) per share of 76 cents, in line with the Zacks Consensus Estimate. The reported figure increased 4.1% from the prior-year quarter’s tally.
Results reflect better-than-anticipated revenues. Also, VTR’s same-store cash NOI increased year over year on strong performance across the portfolio.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.