SBA Communications Corp. (NASDAQ:SBAC) Q1 2018 Earnings Conference Call Transcript

Apr 30, 2018 • 05:00 pm ET

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SBA Communications Corp. (NASDAQ:SBAC) Q1 2018 Earnings Conference Call Transcript

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Presentation
Executive
Brendan Cavanagh

a very healthy level of new lease and amendment signings over the balance of the year. International operational leasing activity was also solid in the first quarter, with positive contributions from all of our markets, and Brazil in particular.

During the first quarter, 84.6% of cash site leasing revenue was denominated in US dollars. The majority of non-US dollar-denominated revenue was from Brazil, with Brazil representing 13.9% of all cash site leasing revenues during the quarter and 10% of cash site leasing revenue excluding revenues from pass-through expenses.

With regard to first quarter churn, we continue to see churn from leases with Metro/Leap and Clearwire, consistent with our expectations. As of March 31, we have approximately $17 million of annual recurring run rate revenue from leases with Metro/Leap and Clearwire that we ultimately expect to turn off over the next two to three years. Domestic churn in the first quarter from all other tenants on an annual same-tower basis was 70- basis points.

Tower cash flow for the first quarter was $339 million. We continue to have success managing the direct costs associated with our towers, allowing us to continue to produce industry-leading operating margin. Domestic tower cash flow margin was 82.6% in the quarter. International tower cash flow margin was 68.4% and 90.3%, excluding the impact of pass-through reimbursable expenses.

Adjusted EBITDA in the first quarter was $318.8 million. Our adjusted EBITDA results in the quarter were due to solid results from both our leasing and services businesses. Services revenues in the first quarter were $27.8 million, up 7.8% over the first quarter of 2017. Cash SG&A for the quarter was a little better than expectations due in part to delays on the timing of certain international headcount additions as well as the timing of certain other expenses expected to be incurred later in the year. Cash SG&A continues to remain very low as a percentage of total revenue and speaks to the efficiency of our operations.

Adjusted EBITDA margin was 70.4% in the quarter compared to 69.7% in the year earlier period. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 75.2%. Approximately 99% of our total adjusted EBITDA was attributable to our tower leasing business in the first quarter.

AFFO in the first quarter was $218.4 million. Our AFFO per share increased 9.5% to $1.85. AFFO was aided during the quarter by approximately $2 million of lower nondiscretionary CapEx than previously anticipated, about half of which is expected to still be incurred later in 2018.

During the first quarter, we also continued to expand our portfolio, investing incremental capital into both new tower builds and acquisitions. During the first quarter, we acquired 334 communication sites for $106.7 million, with 300 of these sites located internationally. We also built 67 sites during the first quarter. Subsequent to quarter end, we have acquired 190 additional communication sites at an aggregate purchase price of $119.5 million.

Also, as of today, we have 874 additional sites under contract