Shares of SBA Communications Corporation (SBAC Quick QuoteSBAC - Free Report) witnessed a 3.35% fall in the after-hours trading session on Apr 29 after it reported first-quarter 2024 results. Adjusted funds from operations (AFFO) per share of $3.29 lagged the Zacks Consensus Estimate of $3.30. Nonetheless, the figure reflects a rise of 5.1% from the prior-year quarter.

Results were affected by lower site development revenues. However, SBAC witnessed an improvement in site leasing revenues, which supported the results to some extent. It continues to benefit from the addition of sites to its portfolio. The company lowered its 2024 outlook.

Quarterly total revenues decreased 2.6% year over year to $657.9 million. The figure also missed the Zacks Consensus Estimate of $670.4 million.

Brendan Cavanagh, president and CEO of the company, said, “Carrier activity throughout our markets remained measured in response to continued macro-economic financial pressures and the high cost of capital, but nonetheless, we continued to see steady network investment across our portfolio. The consumer and competitive pressures to provide high-performing mobile broadband services persist both domestically and internationally, and our customers still have significant 4G and 5G deployment needs. As a result, we anticipate continued solid organic leasing growth for many years.”

Quarter in Detail

Site-leasing revenues increased 1.8% year over year to $628.3 million. Quarterly Site-leasing revenues consisted of domestic site-leasing revenues of $461.5 million and international site-leasing revenues of $166.8 million. The domestic cash site-leasing revenues came in at $456.6 million, growing 2.1% year over year. International cash site leasing revenues came in at $167.6 million, jumping 2.8% year over year.

However, site development revenues decreased 49.2% year over year to $29.6 million.

The site-leasing operating profit was $513.4 million, marking an increase of 3.3% year over year. Moreover, 98.8% of SBAC’s total operating profit in the quarter came from site leasing.

The overall operating income rose 44.3% to $323.4 million.

The adjusted EBITDA totaled $465.4 million, increasing 1.3%, while the adjusted EBITDA margin increased to 71.2% from 68.7% in the prior-year quarter.

Portfolio Activity

In the first quarter, SBAC acquired 11 communication sites for a total cash consideration of $9.2 million. The company also built 76 towers during this period. It owned or operated 39,638 communication sites as of Mar 31, 2024, of which 17,478 were in the United States and its territories and 22,160 internationally.

SBA Communications also spent $13.5 million to purchase land and easements and extend lease terms. Total cash capital expenditure was $77.3 million in the reported quarter, of which $67.3 million represented discretionary and $10 million was non-discretionary.

Subsequent to the quarter end, SBAC purchased or is under contract to buy 271 communication sites for a total consideration of $84.5 million in cash. It expects to complete the acquisition by the end of the third quarter of 2024.

Cash Flow & Liquidity

In the first quarter, SBA Communications generated nearly $294.5 million of net cash from operating activities compared with the year-ago quarter’s $311.2 million.

As of Mar 31, 2024, it had $261.8 million in cash and cash equivalents, short-term restricted cash and short-term investments, up from $247.7 million recorded as of Dec 31, 2023. SBAC ended the quarter with a net debt-to-annualized adjusted EBITDA of 6.5X.

As of Apr 29, 2024, the company had $195 million outstanding under the $2 billion revolving credit facility.

During and subsequent to the first quarter end, SBAC repurchased 0.9 million shares of its Class A common stock for $200 million. After this, it had $204.7 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. The dividend will be paid out on Jun 19 to shareholders of record as of May 23, 2024.

2024 Guidance Lowered

SBAC now expects AFFO per share in the range of $13.09-$13.46, down from the prior guided range of $13.15-$13.51. The Zacks Consensus Estimate for the same is currently pegged at $13.29, which is within the guided range.

Site-leasing revenue are now projected to be $2,517-$2,537 million, revised downwards from $2,529-$2,549 million guided earlier. Site-development revenue guidance remains unchanged between $140 million and $160 million.

Further, the adjusted EBITDA has been decreased from $1,889-$1,909 million to $1,855-$1,875 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

Cousins Properties’ (CUZ Quick QuoteCUZ - Free Report) first-quarter 2024 funds from operations (FFO) per share of 65 cents beat the Zacks Consensus Estimate of 63 cents.

Results reflect better-than-anticipated revenues. Although the company witnessed healthy leasing activity, higher interest expenses acted as a dampener. CUZ also revised its 2024 outlook for FFO per share.

Alexandria Real Estate Equities, Inc. (ARE Quick QuoteARE - Free Report) reported first-quarter 2024 AFFO per share of $2.35, which beat the Zacks Consensus Estimate of $2.31. The reported figure also climbed 7.3% from the year-ago quarter.

Results reflected a rise in revenues, aided by decent leasing activity and rental rate growth. ARE also narrowed its 2024 outlook.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.