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SBA Communications (SBAC) Q1 Earnings Beat, Raises '19 View

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SBA Communications Corporation (SBAC - Free Report) reported solid first-quarter 2019 financial results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income for the quarter was $26 million or 23 cents per share compared with $31.5 million or 27 cents per share in the year-ago quarter, primarily driven by top-line growth.    

Adjusted funds from operations (AFFO) were $236.1 million or $2.07 per share compared with $218.4 million or $1.85 per share in the year-earlier quarter. The figure beat the Zacks Consensus Estimate by 8 cents.

SBA Communications Corporation Price, Consensus and EPS Surprise

Revenues

Quarterly total revenues increased 7.6% year over year to $493.3 million, surpassing the consensus estimate of $482 million. The top-line growth was supported by strong performance across all areas of business, including healthy results in both leasing and services businesses.

Segmental Performance

Revenues from Site Leasing increased 5% year over year to $452.2 million. Domestic site leasing revenues totaled $362.8 million. Domestic cash site leasing revenues were $361.2 million compared with $338.7 million in the year-ago quarter. International site leasing revenues came in at $89.3 million. International cash site leasing revenues were $88.3 million compared with $86.4 million a year ago. The segment’s operating profit was $359.5 million, which marks an increase of 6.4%. Revenues from Site Development improved 48.1% to $41.1 million. The segment’s operating profit surged 91% to $10 million.

Other Details

Total operating expenses increased to $354 million from $328.3 million. Overall operating income improved to $139.3 million from $130 million in the year-ago quarter. Adjusted EBITDA totaled $345.6 million, up 8.4% on the back of healthy performance in both leasing and services businesses. Adjusted EBITDA margin remained stable year over year at 70.4%.

As of Apr 29, 2019, SBA Communications had $50 million available under the $1.25 billion revolving credit facility. As of the same date, the company had $204.5 million worth of shares remaining under its stock repurchase plan, which was authorized on Feb 16, 2018.

Notable Developments

During the first quarter, the communications tower operator expanded its portfolio, investing incremental capital in new tower builds, tower augmentations, and purchase of land and easements. It purchased 54 communication sites for $36.1 million and built 72 towers during the quarter. As of Mar 31, 2019, the company owned or operated 29,687 communication sites, of which, 16,289 are located in the United States and its territories.

SBA Communications also spent $15.4 million to purchase land and easements, and to extend lease terms. Notably, for the reported quarter total cash capital expenditures were $91.7 million, of which $7.2 million was non-discretionary and $84.5 million represented discretionary. It has agreed to purchase 256 additional sites for an aggregate amount of $123.9 million, and expects to close a majority of them by the end of third-quarter 2019.

Cash Flow & Liquidity

During the first quarter, SBA Communications generated $222.3 million of net cash from operations compared with $178.6 million in the year-ago period. As of Mar 31, 2019, the company had $117.6 million in cash and equivalents with $8,780.6 million of net long-term debt.

2019 View Raised

SBA Communications has updated its outlook for full-year 2019, which assumes an average foreign currency exchange rate of R$3.90 to $1 and C$1.33 to $1. The company currently expects total revenues in the range of $1,943-$1,983 million (up from previous expectation of $1,925-$1,965 million), of which site leasing revenues are expected in the band of $1,823-$1,843 million (up from $1,820-$1,840 million), and site development revenues between $120 million and $140 million (up from $105 million and $125 million).

Adjusted EBITDA is anticipated between $1,379 million and $1,399 million (up from $1,370 million and $1,390 million). While AFFO is expected to be $922-$973 million (up from $910-$965 million), AFFO per share is expected to be between $8.02 and $8.47 (up from $7.95 and $8.44).

Zacks Rank & Stocks to Consider

SBA Communications currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Boston Properties, Inc. (BXP - Free Report) and Cousins Properties Incorporated (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alexandria Real Estate Equities has long-term earnings growth expectation of 4.4%.

Boston Properties has long-term earnings growth expectation of 6.3%.

Cousins Properties has long-term earnings growth expectation of 3.5%.

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