UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172021
OR
☐¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 001-16853
SBA COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
Florida | 65-0716501 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
8051 Congress Avenue | |
Boca Raton, Florida | 33487 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (561) 995-7670
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Class A Common Stock, $0.01 par value per share | SBAC | The NASDAQ Stock Market LLC |
(NASDAQ Global Select Market) |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐ ¨
Indicate by check mark whether the registrantRegistrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒x No ☐¨
Indicate by check mark whether the registrantRegistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large |
| Accelerated |
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Non-Accelerated |
| Smaller |
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Emerging |
|
If an emerging growth company, indicate by check markcheckmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐¨ No ☒ x
Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: 117,542,678109,553,452 shares of Class A common stock as of October 27, 2017.July 28, 2021.
Table of Contents
Page | ||||
Item 1. | ||||
Consolidated Balance Sheets as of | 1 | |||
2 | ||||
3 | ||||
4 | ||||
6 | ||||
Condensed Notes to Consolidated Financial Statements (unaudited) | 8 | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||
Item3. | ||||
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38 | ||||
Item 4. | 42 | |||
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Item | ||||
42 | ||||
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43 |
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except par values)
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| September 30, |
| December 31, | June 30, | December 31, | ||||||
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| 2017 |
| 2016 | 2021 | 2020 | ||||||
ASSETS |
| (unaudited) |
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| (unaudited) | ||||||
Current assets: |
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Cash and cash equivalents |
| $ | 139,711 |
| $ | 146,109 | $ | 273,803 | $ | 308,560 | ||
Restricted cash |
| 30,168 |
|
| 36,786 | 62,370 | 31,671 | |||||
Accounts receivable, net |
| 87,417 |
|
| 78,344 | 85,976 | 74,088 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
| 12,508 |
|
| 11,127 | 33,237 | 34,796 | |||||
Prepaid expenses and other current assets |
|
| 54,262 |
|
| 52,205 | 26,840 | 23,875 | ||||
Total current assets |
|
| 324,066 |
|
| 324,571 | 482,226 | 472,990 | ||||
Property and equipment, net |
| 2,777,339 |
|
| 2,792,076 | 2,625,097 | 2,677,326 | |||||
Intangible assets, net |
| 3,550,710 |
|
| 3,656,924 | 3,051,616 | 3,156,150 | |||||
Operating lease right-of-use assets, net | 2,353,365 | 2,369,358 | ||||||||||
Acquired and other right-of-use assets, net | 956,011 | 4,202 | ||||||||||
Other assets |
|
| 648,355 |
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| 587,374 | 491,998 | 477,992 | ||||
Total assets |
| $ | 7,300,470 |
| $ | 7,360,945 | $ | 9,960,313 | $ | 9,158,018 | ||
LIABILITIES AND SHAREHOLDERS' DEFICIT |
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Current liabilities: |
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LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, | ||||||||||||
AND SHAREHOLDERS' DEFICIT | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts payable |
| $ | 32,429 |
| $ | 28,320 | $ | 34,602 | $ | 109,969 | ||
Accrued expenses |
| 85,052 |
|
| 61,129 | 68,655 | 63,031 | |||||
Current maturities of long-term debt |
| 773,289 |
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| 627,157 | 24,000 | 24,000 | |||||
Deferred revenue |
| 101,168 |
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| 101,098 | 176,996 | 113,117 | |||||
Accrued interest |
| 19,668 |
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| 44,503 | 66,392 | 54,350 | |||||
Current lease liabilities | 242,516 | 236,037 | ||||||||||
Other current liabilities |
|
| 11,109 |
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| 11,240 | 12,845 | 14,297 | ||||
Total current liabilities |
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| 1,022,715 |
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| 873,447 | 626,006 | 614,801 | ||||
Long-term liabilities: |
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Long-term debt, net |
| 8,185,512 |
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| 8,148,426 | 11,908,447 | 11,071,796 | |||||
Long-term lease liabilities | 2,064,831 | 2,094,363 | ||||||||||
Other long-term liabilities |
|
| 350,041 |
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| 334,993 | 185,594 | 186,246 | ||||
Total long-term liabilities |
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| 8,535,553 |
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| 8,483,419 | 14,158,872 | 13,352,405 | ||||
Redeemable noncontrolling interests | 15,177 | 15,194 | ||||||||||
Shareholders' deficit: |
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Preferred stock - par value $.01, 30,000 shares authorized, no shares issued or outst. |
| — |
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| — | |||||||
Common stock - Class A, par value $.01, 400,000 shares authorized, 118,428 |
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and 121,004 shares issued and outstanding at September 30, 2017 |
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and December 31, 2016, respectively |
| 1,184 |
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| 1,210 | |||||||
Preferred stock - par value $0.01, 30,000 shares authorized, 0 shares issued or outstanding | — | — | ||||||||||
Common stock - Class A, par value $0.01, 400,000 shares authorized, 109,534 shares and | ||||||||||||
109,819 shares issued and outstanding at June 30, 2021 and December 31, 2020, | ||||||||||||
respectively | 1,095 | 1,098 | ||||||||||
Additional paid-in capital |
| 2,148,273 |
|
| 2,010,520 | 2,657,540 | 2,586,130 | |||||
Accumulated deficit |
| (4,064,805) |
|
| (3,637,467) | (6,759,382) | (6,604,028) | |||||
Accumulated other comprehensive loss, net |
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| (342,450) |
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| (370,184) | (738,995) | (807,582) | ||||
Total shareholders' deficit |
|
| (2,257,798) |
|
| (1,995,921) | (4,839,742) | (4,824,382) | ||||
Total liabilities and shareholders' deficit |
| $ | 7,300,470 |
| $ | 7,360,945 | ||||||
Total liabilities, redeemable noncontrolling interests, and shareholders' deficit | $ | 9,960,313 | $ | 9,158,018 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share amounts)
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| For the three months |
| For the nine months | For the three months | For the six months | ||||||||||||||||||
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| ended September 30, |
| ended September 30, | ended June 30, | ended June 30, | ||||||||||||||||||
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| 2017 |
| 2016 |
| 2017 |
| 2016 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues: |
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Site leasing |
| $ | 408,538 |
| $ | 388,168 |
| $ | 1,209,089 |
| $ | 1,144,461 | $ | 524,095 | $ | 482,403 | $ | 1,029,197 | $ | 974,758 | ||||
Site development |
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| 25,407 |
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| 23,151 |
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| 75,513 |
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| 72,159 | 51,433 | 24,823 | 95,069 | 49,534 | ||||||||
Total revenues |
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| 433,945 |
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| 411,319 |
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| 1,284,602 |
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| 1,216,620 | 575,528 | 507,226 | 1,124,266 | 1,024,292 | ||||||||
Operating expenses: |
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Cost of revenues (exclusive of depreciation, accretion, |
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and amortization shown below): |
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Cost of site leasing |
| 90,351 |
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| 86,354 |
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| 269,070 |
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| 255,609 | 95,350 | 91,598 | 190,718 | 187,397 | |||||||||
Cost of site development |
| 21,117 |
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| 19,114 |
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| 62,713 |
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| 59,021 | 40,409 | 19,904 | 74,815 | 39,620 | |||||||||
Selling, general, and administrative (1)(2) |
| 32,559 |
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| 32,255 |
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| 100,177 |
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| 110,326 | |||||||||||||
Acquisition related adjustments and expenses |
| 1,583 |
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| 2,970 |
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| 6,857 |
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| 8,974 | |||||||||||||
Selling, general, and administrative expenses (1) | 53,945 | 49,088 | 105,546 | 98,704 | ||||||||||||||||||||
Acquisition and new business initiatives related | ||||||||||||||||||||||||
adjustments and expenses | 6,794 | 4,634 | 11,795 | 8,433 | ||||||||||||||||||||
Asset impairment and decommission costs |
| 9,417 |
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| 2,305 |
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| 25,908 |
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| 23,180 | 3,797 | 6,242 | 8,700 | 20,597 | |||||||||
Depreciation, accretion, and amortization |
|
| 161,907 |
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| 160,111 |
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| 480,457 |
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| 479,635 | 175,469 | 178,706 | 359,350 | 361,285 | ||||||||
Total operating expenses |
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| 316,934 |
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| 303,109 |
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| 945,182 |
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| 936,745 | 375,764 | 350,172 | 750,924 | 716,036 | ||||||||
Operating income |
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| 117,011 |
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| 108,210 |
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| 339,420 |
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| 279,875 | 199,764 | 157,054 | 373,342 | 308,256 | ||||||||
Other income (expense): |
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Interest income |
| 2,505 |
| 3,101 |
|
| 8,648 |
| 7,704 | 547 | 699 | 1,179 | 1,584 | |||||||||||
Interest expense |
| (81,357) |
| (83,426) |
|
| (237,415) |
| (250,913) | (90,544) | (95,687) | (180,639) | (191,538) | |||||||||||
Non-cash interest expense |
| (725) |
| (585) |
|
| (2,146) |
| (1,500) | (11,812) | (2,337) | (23,615) | (4,743) | |||||||||||
Amortization of deferred financing fees |
| (4,957) |
| (5,445) |
|
| (16,603) |
| (16,035) | (4,865) | (5,188) | (9,755) | (10,328) | |||||||||||
Loss from extinguishment of debt, net |
| — |
| (34,512) |
|
| (1,961) |
| (34,512) | (2,020) | — | (13,672) | (16,864) | |||||||||||
Other income (expense), net |
|
| 20,062 |
|
| (1,139) |
|
| 16,218 |
|
| 92,137 | 108,849 | (31,588) | 20,410 | (257,885) | ||||||||
Total other expense |
|
| (64,472) |
|
| (122,006) |
|
| (233,259) |
|
| (203,119) | ||||||||||||
Income (loss) before provision for income taxes |
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| 52,539 |
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| (13,796) |
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| 106,161 |
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| 76,756 | ||||||||||||
Provision for income taxes |
|
| (3,378) |
|
| (1,574) |
|
| (10,167) |
|
| (5,780) | ||||||||||||
Total other income (expense), net | 155 | (134,101) | (206,092) | (479,774) | ||||||||||||||||||||
Income (loss) before income taxes | 199,919 | 22,953 | 167,250 | (171,518) | ||||||||||||||||||||
(Provision) benefit for income taxes | (47,250) | 165 | (26,328) | 66,702 | ||||||||||||||||||||
Net income (loss) |
| $ | 49,161 |
| $ | (15,370) |
| $ | 95,994 |
| $ | 70,976 | 152,669 | 23,118 | 140,922 | (104,816) | ||||||||
Net income (loss) per common share |
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Net (income) loss attributable to noncontrolling interests | — | (305) | — | 569 | ||||||||||||||||||||
Net income (loss) attributable to SBA Communications | ||||||||||||||||||||||||
Corporation | $ | 152,669 | $ | 22,813 | $ | 140,922 | $ | (104,247) | ||||||||||||||||
Net income (loss) per common share attributable to SBA | ||||||||||||||||||||||||
Communications Corporation: | ||||||||||||||||||||||||
Basic |
| $ | 0.41 |
| $ | (0.12) |
| $ | 0.80 |
| $ | 0.57 | $ | 1.40 | $ | 0.20 | $ | 1.29 | $ | (0.93) | ||||
Diluted |
| $ | 0.41 |
| $ | (0.12) |
| $ | 0.79 |
| $ | 0.56 | $ | 1.37 | $ | 0.20 | $ | 1.27 | $ | (0.93) | ||||
Weighted average number of common shares |
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Basic |
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| 119,746 |
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| 124,604 |
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| 120,745 |
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| 125,041 | 109,412 | 111,738 | 109,441 | 111,823 | ||||||||
Diluted |
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| 121,026 |
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| 124,604 |
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| 121,727 |
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| 125,761 | 111,301 | 113,634 | 111,210 | 111,823 |
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(1)Includes non-cash compensation of $21,077 and $18,131 for the three months ended June 30, 2021 and 2020, respectively, and $40,661 and $33,684 for the six months ended June 30, 2021 and 2020, respectively.
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited) (in thousands)
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| For the three months | For the six months | ||||||||||||||
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| For the three months |
| For the nine months | ended June 30, | ended June 30, | ||||||||||||||||||
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| ended September 30, |
| ended September 30, | ||||||||||||||||||||
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| 2021 | 2020 | 2021 | 2020 | ||||||||||
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| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
Net income (loss) |
| $ | 49,161 |
| $ | (15,370) |
| $ | 95,994 |
| $ | 70,976 | $ | 152,669 | $ | 23,118 | $ | 140,922 | $ | (104,816) | ||||
Adjustments related to interest rate swaps | 5,565 | (12,684) | 48,352 | (115,923) | ||||||||||||||||||||
Foreign currency translation adjustments |
| 36,472 |
| (5,525) |
| 27,734 |
| 131,659 | 63,869 | (8,166) | 20,235 | (184,193) | ||||||||||||
Comprehensive income (loss) |
| $ | 85,633 |
| $ | (20,895) |
| $ | 123,728 |
| $ | 202,635 | 222,103 | 2,268 | 209,509 | (404,932) | ||||||||
Comprehensive (income) loss attributable to noncontrolling interests | — | (485) | — | 1,573 | ||||||||||||||||||||
Comprehensive income (loss) attributable to SBA | ||||||||||||||||||||||||
Communications Corporation | $ | 222,103 | $ | 1,783 | $ | 209,509 | $ | (403,359) |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTSTATEMENTS OF SHAREHOLDERS’ DEFICIT
(unaudited) (in thousands)
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| Accumulated |
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| Class A |
| Additional |
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| Other |
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| Common Stock |
| Paid-In |
| Accumulated |
| Comprehensive |
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| Shares |
| Amount |
| Capital |
| Deficit |
| Loss |
| Total | |||||
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BALANCE, December 31, 2016 |
| 121,004 |
| $ | 1,210 |
| $ | 2,010,520 |
| $ | (3,637,467) |
| $ | (370,184) |
| $ | (1,995,921) |
Net income |
| — |
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| — |
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| — |
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| 95,994 |
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| — |
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| 95,994 |
Common stock issued in connection with |
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stock purchase/option plans |
| 711 |
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| 7 |
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| 45,098 |
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| — |
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| — |
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| 45,105 |
Non-cash stock compensation |
| — |
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| — |
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| 29,347 |
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| — |
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| — |
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| 29,347 |
Common stock issued in connection with |
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acquisitions |
| 488 |
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| 5 |
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| 63,308 |
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| — |
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| — |
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| 63,313 |
Repurchase and retirement of common stock |
| (3,775) |
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| (38) |
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| — |
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| (523,332) |
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| — |
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| (523,370) |
Foreign currency translation adjustments |
| — |
|
| — |
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| — |
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| — |
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| 27,734 |
|
| 27,734 |
BALANCE, September 30, 2017 |
| 118,428 |
| $ | 1,184 |
| $ | 2,148,273 |
| $ | (4,064,805) |
| $ | (342,450) |
| $ | (2,257,798) |
Accumulated | |||||||||||||||||
Class A | Additional | Other | Total | ||||||||||||||
Common Stock | Paid-In | Accumulated | Comprehensive | Shareholders' | |||||||||||||
Shares | Amount | Capital | Deficit | Loss, Net | Deficit | ||||||||||||
BALANCE, March 31, 2021 | 109,331 | $ | 1,093 | $ | 2,610,472 | $ | (6,848,313) | $ | (808,429) | $ | (5,045,177) | ||||||
Net income attributable to SBA | |||||||||||||||||
Communications Corporation | — | — | — | 152,669 | — | 152,669 | |||||||||||
Common stock issued in connection with equity | |||||||||||||||||
awards and stock purchase plans, offset | |||||||||||||||||
by the impact of net share settlements | 203 | 2 | 25,093 | — | — | 25,095 | |||||||||||
Non-cash stock compensation | — | — | 21,975 | — | — | 21,975 | |||||||||||
Adjustments related to interest rate swaps | — | — | — | — | 5,565 | 5,565 | |||||||||||
Foreign currency translation adjustments | |||||||||||||||||
attributable to SBA Communications | |||||||||||||||||
Corporation | — | — | — | — | 63,869 | 63,869 | |||||||||||
Dividends and dividend equivalents | |||||||||||||||||
on common stock | — | — | — | (63,738) | — | (63,738) | |||||||||||
BALANCE, June 30, 2021 | 109,534 | $ | 1,095 | $ | 2,657,540 | $ | (6,759,382) | $ | (738,995) | $ | (4,839,742) |
Accumulated | |||||||||||||||||
Class A | Additional | Other | Total | ||||||||||||||
Common Stock | Paid-In | Accumulated | Comprehensive | Shareholders' | |||||||||||||
Shares | Amount | Capital | Deficit | Loss | Deficit | ||||||||||||
BALANCE, March 31, 2020 | 111,559 | $ | 1,116 | $ | 2,471,886 | $ | (5,943,386) | $ | (846,847) | $ | (4,317,231) | ||||||
Net income attributable to SBA | |||||||||||||||||
Communications Corporation | — | — | — | 22,813 | — | 22,813 | |||||||||||
Common stock issued in connection with equity | |||||||||||||||||
awards and stock purchase plans, offset | |||||||||||||||||
by the impact of net share settlements | 359 | 3 | 42,932 | — | — | 42,935 | |||||||||||
Non-cash stock compensation | — | — | 18,991 | — | — | 18,991 | |||||||||||
Adjustments related to interest rate swaps | — | — | — | — | (12,684) | (12,684) | |||||||||||
Foreign currency translation adjustments | |||||||||||||||||
attributable to SBA Communications | |||||||||||||||||
Corporation | — | — | — | — | (8,346) | (8,346) | |||||||||||
Dividends and dividend equivalents | |||||||||||||||||
on common stock | — | — | — | (52,084) | — | (52,084) | |||||||||||
Adjustment to fair value related to | |||||||||||||||||
noncontrolling interests | — | — | 614 | — | — | 614 | |||||||||||
BALANCE, June 30, 2020 | 111,918 | $ | 1,119 | $ | 2,534,423 | $ | (5,972,657) | $ | (867,877) | $ | (4,304,992) |
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(unaudited) (in thousands)
Accumulated | |||||||||||||||||
Class A | Additional | Other | Total | ||||||||||||||
Common Stock | Paid-In | Accumulated | Comprehensive | Shareholders' | |||||||||||||
Shares | Amount | Capital | Deficit | Loss | Deficit | ||||||||||||
BALANCE, December 31, 2020 | 109,819 | 1,098 | 2,586,130 | (6,604,028) | (807,582) | (4,824,382) | |||||||||||
Net income attributable to SBA | |||||||||||||||||
Communications Corporation | — | — | — | 140,922 | — | 140,922 | |||||||||||
Common stock issued in connection with equity | |||||||||||||||||
awards and stock purchase plans, offset | |||||||||||||||||
by the impact of net share settlements | 368 | 4 | 27,106 | — | — | 27,110 | |||||||||||
Non-cash stock compensation | — | — | 42,787 | — | — | 42,787 | |||||||||||
Adjustments related to interest rate swaps | — | — | — | — | 48,352 | 48,352 | |||||||||||
Repurchase and retirement of common stock | (653) | (7) | — | (168,915) | — | (168,922) | |||||||||||
Foreign currency translation adjustments | |||||||||||||||||
attributable to SBA Communications | |||||||||||||||||
Corporation | — | — | — | — | 20,235 | 20,235 | |||||||||||
Dividends and dividend equivalents | |||||||||||||||||
on common stock | — | — | — | (127,361) | — | (127,361) | |||||||||||
Adjustment to fair value related to | |||||||||||||||||
noncontrolling interests | — | — | 1,517 | — | — | 1,517 | |||||||||||
BALANCE, June 30, 2021 | 109,534 | $ | 1,095 | $ | 2,657,540 | $ | (6,759,382) | $ | (738,995) | $ | (4,839,742) |
Accumulated | |||||||||||||||||
Class A | Additional | Other | Total | ||||||||||||||
Common Stock | Paid-In | Accumulated | Comprehensive | Shareholders' | |||||||||||||
Shares | Amount | Capital | Deficit | Loss | Deficit | ||||||||||||
BALANCE, December 31, 2019 | 111,775 | $ | 1,118 | $ | 2,461,335 | $ | (5,560,695) | $ | (568,765) | $ | (3,667,007) | ||||||
Net loss attributable to SBA | |||||||||||||||||
Communications Corporation | — | — | — | (104,247) | — | (104,247) | |||||||||||
Common stock issued in connection with equity | |||||||||||||||||
awards and stock purchase plans, offset | |||||||||||||||||
by the impact of net share settlements | 980 | 9 | 37,307 | — | — | 37,316 | |||||||||||
Non-cash stock compensation | — | — | 35,651 | — | — | 35,651 | |||||||||||
Adjustments related to interest rate swaps | — | — | — | — | (115,923) | (115,923) | |||||||||||
Repurchase and retirement of common stock | (837) | (8) | — | (203,322) | — | (203,330) | |||||||||||
Foreign currency translation adjustments | |||||||||||||||||
attributable to SBA Communications | |||||||||||||||||
Corporation | — | — | — | — | (183,189) | (183,189) | |||||||||||
Dividends and dividend equivalents | |||||||||||||||||
on common stock | — | — | — | (104,393) | — | (104,393) | |||||||||||
Adjustment to fair value related to | |||||||||||||||||
noncontrolling interests | — | — | 130 | — | — | 130 | |||||||||||
BALANCE, June 30, 2020 | 111,918 | $ | 1,119 | $ | 2,534,423 | $ | (5,972,657) | $ | (867,877) | $ | (4,304,992) |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
|
|
|
|
| ||||||||
|
|
|
|
| ||||||||
|
| For the nine months | ||||||||||
|
| ended September 30, | For the six months ended June 30, | |||||||||
|
| 2017 |
| 2016 | 2021 | 2020 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||||||
Net income |
| $ | 95,994 |
| $ | 70,976 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
| ||||||||
Net income (loss) | $ | 140,922 | $ | (104,816) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, accretion, and amortization |
| 480,457 |
| 479,635 | 359,350 | 361,285 | ||||||
(Gain) loss on remeasurement of U.S. dollar denominated intercompany loans | (25,044) | 261,308 | ||||||||||
Non-cash compensation expense | 42,066 | 34,857 | ||||||||||
Non-cash asset impairment and decommission costs |
| 22,316 |
| 19,050 | 8,289 | 20,160 | ||||||
Non-cash compensation expense |
| 28,894 |
| 24,752 | ||||||||
Amortization of deferred financing fees |
| 16,603 |
| 16,035 | ||||||||
Gain on remeasurement of U.S. dollar denominated intercompany loan |
| (11,649) |
| (88,964) | ||||||||
Provision for doubtful accounts (1) |
| 1,498 |
| 20,516 | ||||||||
Loss from extinguishment of debt, net |
| 1,961 |
| 34,512 | ||||||||
Loss from extinguishment of debt | 12,672 | 16,864 | ||||||||||
Deferred income tax expense (benefit) | 14,159 | (77,707) | ||||||||||
Other non-cash items reflected in the Statements of Operations |
| (2,481) |
| (3,418) | 37,829 | 10,339 | ||||||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
| ||||||||
Accounts receivable and costs and estimated earnings in excess of |
|
|
|
| ||||||||
billings on uncompleted contracts, net |
| (11,950) |
| (3,644) | 6,582 | 34,127 | ||||||
Prepaid expenses and other assets |
| (18,168) |
| (30,973) | (2,595) | 1,979 | ||||||
Operating lease right-of-use assets, net | 56,995 | 59,559 | ||||||||||
Accounts payable and accrued expenses |
| 4,846 |
| (4,263) | 3,099 | 4,093 | ||||||
Accrued interest |
| (24,836) |
| (17,825) | 12,042 | (474) | ||||||
Long-term lease liabilities | (54,772) | (49,828) | ||||||||||
Other liabilities |
|
| 7,987 |
|
| 10,842 | 26,688 | 20,672 | ||||
Net cash provided by operating activities |
|
| 591,472 |
|
| 527,231 | 638,282 | 592,418 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
| ||||||
Acquisitions |
| (161,007) |
| (191,402) | (1,129,851) | (119,035) | ||||||
Capital expenditures |
| (106,310) |
| (104,320) | (55,375) | (66,979) | ||||||
Purchase of investments | (755,176) | (1,135,026) | ||||||||||
Proceeds from sale of investments | 755,063 | 910,000 | ||||||||||
Other investing activities |
|
| (23,598) |
|
| (4,491) | 585 | (2,930) | ||||
Net cash used in investing activities |
|
| (290,915) |
|
| (300,213) | (1,184,754) | (413,970) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
| ||||||
Borrowings under Revolving Credit Facility |
| 415,000 |
| 290,000 | 810,000 | 515,000 | ||||||
Repayments under Revolving Credit Facility |
| (375,000) |
| (140,000) | (1,105,000) | (1,005,000) | ||||||
Proceeds from issuance of Senior Notes, net of fees | 1,485,512 | 1,480,206 | ||||||||||
Repayment of Senior Notes | (757,500) | (759,143) | ||||||||||
Proceeds from issuance of Tower Securities, net of fees | 1,152,631 | — | ||||||||||
Repayment of Tower Securities |
| (610,000) |
| (550,000) | (760,000) | — | ||||||
Proceeds from issuance of Tower Securities, net of fees |
| 749,811 |
| 690,584 | ||||||||
Repurchase and retirement of common stock, inclusive of fees |
| (523,370) |
| (202,349) | ||||||||
Proceeds from 2016 Senior Notes, net of fees |
| — |
| 1,078,387 | ||||||||
Payment for the redemption of 5.75% Senior Notes |
| — |
| (825,795) | ||||||||
Repurchase and retirement of common stock | (168,922) | (203,330) | ||||||||||
Payment of dividends on common stock | (126,893) | (104,171) | ||||||||||
Proceeds from employee stock purchase/stock option plans, net of taxes | 27,140 | 37,316 | ||||||||||
Other financing activities |
|
| 25,957 |
|
| (7,293) | (11,574) | (12,999) | ||||
Net cash (used in) provided by financing activities |
|
| (317,602) |
|
| 333,534 | ||||||
Net cash provided by (used in) financing activities | 545,394 | (52,121) | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
| 3,537 |
|
| 13,760 | (2,920) | (15,809) | ||||
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
| (13,508) |
| 574,312 | (3,998) | 110,518 | ||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: |
|
|
|
| ||||||||
Beginning of period |
|
| 185,970 |
|
| 146,619 | 342,808 | 141,120 | ||||
End of period |
| $ | 172,462 |
| $ | 720,931 | $ | 338,810 | $ | 251,638 |
|
|
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in(unaudited) (in thousands)
|
|
|
|
| ||||||||
|
|
|
|
|
|
| ||||||
|
| For the nine months | ||||||||||
|
| ended September 30, | For the six months ended June 30, | |||||||||
|
| 2017 |
| 2016 | 2021 | 2020 | ||||||
|
|
|
|
|
|
| ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
| ||||||||
Cash paid during the period for: |
|
|
|
| ||||||||
Interest |
| $ | 262,257 |
| $ | 268,997 | $ | 169,509 | $ | 191,929 | ||
Income taxes |
| $ | 11,323 |
| $ | 8,133 | $ | 15,766 | $ | 8,940 | ||
|
|
|
|
|
|
| ||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: |
|
|
|
| ||||||||
Assets acquired through capital leases |
| $ | 254 |
| $ | 1,386 | ||||||
Common stock issued in connection with acquisitions |
| $ | 63,313 |
| $ | — | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH ACTIVITIES: | ||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 22,397 | $ | 12,269 | ||||||||
Operating lease modifications and reassessments | $ | 9,049 | $ | 20,501 | ||||||||
Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 1,765 | $ | 893 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.BASIS OF PRESENTATION
The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 20162020 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.
Foreign Currency Translation
TheAll assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency forare translated at period-end exchange rates, while revenues and expenses are translated at monthly average exchange rates during the Company’s Central Americanperiod. Unrealized translation gains and losses are reported as foreign currency translation adjustments through Accumulated other comprehensive loss, net in the Consolidated Statement of Shareholders’ Deficit.
For foreign subsidiaries where the U.S. dollar is the U.S. dollar. Monetaryfunctional currency, monetary assets and liabilities of such subsidiaries, which are not denominated in U.S. dollars, are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Unrealized translationRemeasurement gains and losses are reported as other income (expense), net in the Consolidated StatementStatements of Operations.
All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end rates of exchange, while revenues and expenses are translated at monthly average rates of exchange prevailing during the period. Unrealized remeasurement gains and losses are reported as foreign currency translation adjustments through Accumulated Other Comprehensive Loss in the accompanying Consolidated Statement of Shareholders’ Deficit.
Intercompany Loans Subject to Remeasurement
In accordance with ASCAccounting Standards Codification (ASC) 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated StatementStatements of Operations as settlement is anticipated or planned in the foreseeable future. The Company recorded an $18.4a $73.6 million gain and a $3.2$20.4 million loss, net of taxes, on the remeasurement of intercompany loans for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and an $11.6a $16.6 million gain and an $89.0a $173.2 million gainloss, net of taxes, on the remeasurement of intercompany loans for the ninesix months ended SeptemberJune 30, 20172021 and 2016, respectively.2020, respectively, due to changes in foreign exchange rates. During the six months ended June 30, 2021, the Company repaid $116.3 million of the intercompany loans. As of SeptemberJune 30, 2017,2021 and December 31, 2020, the aggregate amount outstanding balance under the intercompany loan agreementagreements subject to remeasurement with our Brazilian subsidiary was $433.3 million.
Accounting Pronouncements Recently Adopted
In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business. The standard provides guidance to help entities determine whether transactions should be accounted for as acquisitions or disposals of assets or businesses. ASU 2017-01 provides revised guidance to determine when an acquisition meets the definition of a business or should be accounted for as an asset acquisition, likely resulting in more acquisitions being accounted for as asset acquisitions as opposed to business combinations. The Company adopted this standard prospectively effective January 1, 2017. Under this update, substantially all of the Company’s acquisitionsforeign subsidiaries was $794.1 million and $909.8 million, respectively.
Reference Rate Reform
ASU 2020-04 and ASU 2021-01, Reference Rate Reform, provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to qualifybe discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for asset acquisition treatment under ASC 360, Property, Plant, and Equipment, rather than business combination treatment under ASC 805 Business Combinations. For asset acquisitions, external, direct transaction costs will be capitalizedhedging relationships existing as a component of the cost of the asset acquired, while internal costs related to the asset acquisition will continue to be expensed as incurred. Additionally, earnout liabilities will be recognized at the time when the contingency is resolved or becomes payable and will increase the cost basis of the assets acquired. The adoption of ASU 2017-01 did not have a material impact on the Company’s unaudited consolidated financial statements and related disclosures.
7
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB released an updated standard regarding the recognition of revenue from contracts with customers, exclusive of those contracts within lease accounting. The core principle of the standard isDecember 31, 2022, that an entity should recognize revenuehas elected certain optional expedients for and that are retained through the end of the hedging relationship. An entity may elect to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identifyamendments prospectively through December 31, 2022. The ICE Benchmark Administration Limited (“IBA”) intends to cease the contracts withpublication of USD LIBOR as follows: the customer; (2) identify1 week and 2 month tenors on December 31, 2021 and all other tenors on June 30, 2023. On July 7, 2021, the performance obligations inCompany amended its Credit Facility to provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the contract; (3) determinereplacement of LIBOR by an alternative benchmark rate. Refer to Note 10 for further discussion of the contract price; (4) allocate the transaction priceCredit Facility. As of June 30, 2021, other than modifications to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This standard is effective forCredit Facility, the Company in the first quarterhas not modified any contracts as a result of 2018. Early adoption is permitted. This standard is required to be applied retrospectively to each prior reporting period presented or with the cumulative effect being recognized at the date of initial application. The Companyreference rate reform and is evaluating the impact this standard and does not expect a material financial statement impact upon adoption since the standard only affects the Company’s site development segment, which represents approximately 6% of the Company’s total revenues.
In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. The accounting for lessors remains largely unchanged from existing guidance. This standard is effective for annual and interim periods beginning after December 15, 2018 and requires a modified retrospective transition approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. Early adoption is permitted; however, the Company does not currently plan to early adopt. The Company has established a cross functional project plan and is currently assessing the impact of the standardmay have on its consolidated financial statements. The Company expects this guidance to have a material impact on its consolidated balance sheet due to the recognition
2.FAIR VALUE MEASUREMENTS
Items Measured at Fair Value on a Recurring Basis— The Company’s earnout liabilities related to business combinationsasset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Accrued expensesOther long-term liabilities in the accompanying Consolidated Balance Sheets. Changes in estimates are recorded in Acquisition related adjustments and expenses in the accompanying Consolidated Statement of Operations. The Company determines the fair value of earnouts (contingent consideration) and any subsequent changes in fair value using a discounted probability-weighted approach using Level 3 inputs. Level 3 valuations rely on unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value of the earnoutsasset retirement obligations is reviewed quarterly and is based on the payments the Company expectscalculated using a discounted cash flow model.
Refer to make based on historical internal observations related to the anticipated performanceNote 16 for discussion of the underlying assets. The Company’s estimate of the fair value of its obligation contained in various acquisitions prior to January 1, 2017 (adoption of ASU 2017-01) was $2.8 million and $4.1 million as of September 30, 2017 and December 31, 2016, respectively. The maximum potential obligation related to the performance targets for these various acquisitions was $4.2 million and $5.8 million as of September 30, 2017 and December 31, 2016, respectively. The maximum potential obligation related to the performance targets for acquisitions after January 1, 2017 was $7.9 million as of September 30, 2017.redeemable non-controlling interests.
Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived assets, intangibles, and asset retirement obligationsintangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including, but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived assets, intangibles, and asset retirement obligationsintangible assets is calculated using a discounted cash flow model.
8
Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs (in thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months |
| For the nine months | ||||||||
|
| ended September 30, |
| ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
|
|
|
|
|
|
|
|
|
| |||
Asset impairment (1) |
| $ | 4,128 |
| $ | 6,673 |
| $ | 10,162 |
| $ | 14,138 |
Write-off of carrying value of decommissioned towers |
|
| 4,496 |
|
| 3,587 |
|
| 12,143 |
|
| 11,449 |
Write-off and disposal of former corporate headquarters |
|
| — |
|
| — |
|
| — |
|
| 2,346 |
Gain on sale of fiber assets (2) |
|
| — |
|
| (8,965) |
|
| — |
|
| (8,965) |
Other third party decommission costs |
|
| 793 |
|
| 1,010 |
|
| 3,603 |
|
| 4,212 |
Total asset impairment and decommission costs |
| $ | 9,417 |
| $ | 2,305 |
| $ | 25,908 |
| $ | 23,180 |
|
|
|
|
For the three months | For the six months | |||||||||||
ended June 30, | ended June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Asset impairment (1) | $ | 2,211 | $ | 5,424 | $ | 5,366 | $ | 16,432 | ||||
Write-off of carrying value of decommissioned towers | 1,264 | 739 | 2,592 | 3,439 | ||||||||
Other (including third party decommission costs) | 322 | 79 | 742 | 726 | ||||||||
Total asset impairment and decommission costs | $ | 3,797 | $ | 6,242 | $ | 8,700 | $ | 20,597 |
(1)Represents impairment charges resulting from the Company’s regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers.
The Company’s long-term investments were $51.9 million and $57.6 million as of June 30, 2021 and December 31, 2020, respectively, and are recorded in Other assets on the Consolidated Balance Sheets. Some of these investments provide for the Company to increase their investment in the future through call options exercisable by the Company and put options exercisable by the investee. These put and call options are recorded at fair market value. The estimation of the fair value of the investment involves the use of Level 3 inputs. The Company evaluates these investments for indicators of impairment. The Company considers impairment indicators such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. If indicators exist and the fair value of the investment is below the carrying amount, the investment could be impaired.
Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the shortshorter maturity of these instruments. Short-term investments consisted of $0.2 million in Treasury securities as of September 30, 2017 and December 31, 2016. The Company’s estimate of the fair value of its held-to-maturityshort-term investments in treasury and corporate bonds, including current portion, areis based primarily upon Level 1 reported market values. As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the carrying valueCompany had $0.8 million and fair value$0.7 million of short-term investments, respectively. For the held-to-maturity investments, including current portion, were $0.7 million. These amounts are recorded in Prepaid expensessix months ended June 30, 2021, the Company purchased and other current assetssold $755.1 million of short-term investments. For the six months ended June 30, 2020, the Company purchased $1.1 billion and Other assets in the accompanying Consolidated Balance Sheets.sold $0.9 billion of short-term investments.
The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the interest payments are based on Eurodollar rates that reset monthly or more frequently. The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate plus 137.5 to 200.0 basis points was set for the Revolving Credit Facility.Facility (112.5 to 150.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.
For discussion of the Company’s derivatives and hedging activities, refer to Note 17.
3.CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
The cash, cash equivalents, and restricted cash balances on the consolidated statementConsolidated Statements of cash flows consistsCash Flows consist of the following:
As of | As of | |||||||
June 30, 2021 | December 31, 2020 | Included on Balance Sheet | ||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 273,803 | $ | 308,560 | ||||
Securitization escrow accounts | 62,201 | 31,507 | Restricted cash - current asset | |||||
Payment and performance bonds | 169 | 164 | Restricted cash - current asset | |||||
Surety bonds and workers compensation | 2,637 | 2,577 | Other assets - noncurrent | |||||
Total cash, cash equivalents, and restricted cash | $ | 338,810 | $ | 342,808 |
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| As of |
| As of |
|
| ||
|
| September 30, 2017 |
| December 31, 2016 |
| Included on Balance Sheet | ||
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
| |||
Cash and cash equivalents |
| $ | 139,711 |
| $ | 146,109 |
|
|
Securitization escrow accounts |
|
| 29,929 |
|
| 36,607 |
| Restricted cash - current asset |
Payment and performance bonds |
|
| 239 |
|
| 179 |
| Restricted cash - current asset |
Surety bonds and workers compensation |
|
| 2,583 |
|
| 3,075 |
| Other assets - noncurrent |
Total cash, cash equivalents, and restricted cash |
| $ | 172,462 |
| $ | 185,970 |
|
|
Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service
9
costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted cash on the Company’s Consolidated Balance Sheets.
Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily related to the Company’s tower removal obligations. As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the Company had $39.1$41.9 million and $39.2$41.8 million in surety and payment and performance bonds, respectively, for which it was only required to post $0.5 million in collateral as of December 31, 2016. As of September 30, 2017, no0 collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the Company had also pledged $2.5$2.3 million as collateral related to its workersworkers’ compensation policy.
4.PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other current assets are comprised of the following:
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|
|
|
|
|
|
|
|
| As of |
| As of | ||
|
| September 30, 2017 |
| December 31, 2016 | ||
|
|
|
|
|
|
|
|
|
| (in thousands) | |||
Prepaid land rent |
| $ | 30,932 |
| $ | 33,975 |
Other |
|
| 23,330 |
|
| 18,230 |
Total prepaid expenses and other current assets |
| $ | 54,262 |
| $ | 52,205 |
5.ACQUISITIONS
The following table summarizes the Company’s cash acquisition capital expenditures:
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| For the three months |
| For the nine months | ||||||||
|
| ended September 30, |
| ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) | ||||||||||
Towers and related intangible assets (1)(2) |
| $ | 66,338 |
| $ | 31,022 |
| $ | 124,476 |
| $ | 144,534 |
Land buyouts and other assets (3) |
|
| 12,488 |
|
| 11,676 |
|
| 36,531 |
|
| 46,868 |
Total cash acquisition capital expenditures |
| $ | 78,826 |
| $ | 42,698 |
| $ | 161,007 |
| $ | 191,402 |
|
|
|
|
|
|
For acquisitions which qualify as asset acquisitions, the aggregate purchase price is allocated on a relative fair value basis to towers and related intangible assets. The fair values of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures
10
and techniques. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management at the time. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could be subject to a possible impairment of the intangible assets, or require acceleration of the amortization expense of intangible assets in subsequent periods.
For business combinations, the estimates of the fair value of the assets acquired and liabilities assumed at the date of an acquisition are subject to adjustment during the measurement period (up to one year from the particular acquisition date). During the measurement period, the Company will adjust assets and/or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in a revised estimated value of those assets and/or liabilities as of that date. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, including contingent consideration and any related tax impact.
During the nine months ended September 30, 2017, the Company acquired 436 completed towers and related assets and liabilities consisting of $48.0 million of property and equipment, $160.0 million of intangible assets, and $0.2 million of working capital adjustments.
Subsequent to September 30, 2017, the Company acquired 35 towers and related assets for $24.4 million in cash.
6.INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
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|
|
| As of September 30, 2017 |
| As of December 31, 2016 | ||||||||||||||
|
| Gross carrying |
| Accumulated |
| Net book |
| Gross carrying |
| Accumulated |
| Net book | ||||||
|
| amount |
| amortization |
| value |
| amount |
| amortization |
| value | ||||||
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|
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| (in thousands) | ||||||||||||||||
Current contract intangibles |
| $ | 4,284,068 |
| $ | (1,612,010) |
| $ | 2,672,058 |
| $ | 4,141,968 |
| $ | (1,401,025) |
| $ | 2,740,943 |
Network location intangibles |
|
| 1,555,579 |
|
| (676,927) |
|
| 878,652 |
|
| 1,515,348 |
|
| (599,367) |
|
| 915,981 |
Intangible assets, net |
| $ | 5,839,647 |
| $ | (2,288,937) |
| $ | 3,550,710 |
| $ | 5,657,316 |
| $ | (2,000,392) |
| $ | 3,656,924 |
All intangible assets noted above are included in the Company’s site leasing segment. The Company amortizes its intangible assets using the straight-line method over 15 years. Amortization expense relating to the intangible assets above was $96.8 million and $93.6 million for the three months ended September 30, 2017 and 2016, respectively, and $286.8 million and $276.4 million for the nine months ended September 30, 2017 and 2016, respectively.
7.PROPERTY AND EQUIPMENT, NET
Property and equipment, net (including assets held under capital leases) consists of the following:
|
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|
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|
|
|
|
|
| As of |
| As of | ||
|
| September 30, 2017 |
| December 31, 2016 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Towers and related components |
| $ | 4,691,935 |
| $ | 4,563,756 |
Construction-in-process |
|
| 36,429 |
|
| 38,926 |
Furniture, equipment, and vehicles |
|
| 51,713 |
|
| 50,671 |
Land, buildings, and improvements |
|
| 617,032 |
|
| 578,680 |
Total property and equipment |
|
| 5,397,109 |
|
| 5,232,033 |
Less: accumulated depreciation |
|
| (2,619,770) |
|
| (2,439,957) |
Property and equipment, net |
| $ | 2,777,339 |
| $ | 2,792,076 |
11
Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s operations. Depreciation expense was $65.0 million and $66.4 million for the three months ended September 30, 2017 and 2016, respectively, and $193.2 million and $202.8 million for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017 and December 31, 2016, non-cash capital expenditures that are included in accounts payable and accrued expenses were $7.5 million and $7.0 million, respectively.
8.4.COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
CostsThe Company’s costs and estimated earnings on uncompleted contracts consistare comprised of the following:
As of | As of | |||||
June 30, 2021 | December 31, 2020 | |||||
(in thousands) | ||||||
Costs incurred on uncompleted contracts | $ | 73,925 | $ | 54,949 | ||
Estimated earnings | 27,991 | 21,778 | ||||
Billings to date | (71,992) | (43,725) | ||||
$ | 29,924 | $ | 33,002 |
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|
|
|
| As of |
| As of | ||
|
| September 30, 2017 |
| December 31, 2016 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Costs incurred on uncompleted contracts |
| $ | 31,845 |
| $ | 34,577 |
Estimated earnings |
|
| 11,255 |
|
| 11,185 |
Billings to date |
|
| (30,861) |
|
| (36,027) |
|
| $ | 12,239 |
| $ | 9,735 |
These amounts are included in the accompanying Consolidated Balance Sheets under the following captions:
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|
| ||||||||
|
|
|
|
| ||||||||
|
| As of |
| As of | As of | As of | ||||||
|
| September 30, 2017 |
| December 31, 2016 | June 30, 2021 | December 31, 2020 | ||||||
|
|
|
|
|
|
| ||||||
|
| (in thousands) | (in thousands) | |||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
| $ | 12,508 |
| $ | 11,127 | $ | 33,237 | $ | 34,796 | ||
Billings in excess of costs and estimated earnings on |
|
|
|
| ||||||||
uncompleted contracts (included in Other current liabilities) |
|
| (269) |
|
| (1,392) | (3,313) | (1,794) | ||||
|
| $ | 12,239 |
| $ | 9,735 | $ | 29,924 | $ | 33,002 |
EightAs of June 30, 2021 and December 31, 2020, the 8 largest customers comprised 82.3%98.9% and 81.6%99.4%, respectively, of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings at September 30, 2017 and December 31, 2016, respectively.earnings.
9.EARNINGS PER SHARE
Basic earnings per share was computed by dividing net income from continuing operations attributable to common shareholders by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income from continuing operations attributable to common shareholders by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested restricted stock and shares issuable upon exercise of stock options as determined under the “If-Converted” method and also Common Stock warrants as determined under the “Treasury Stock” method.
5.PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS
The Company’s prepaid expenses and other current assets are comprised of the following:
As of | As of | |||||
June 30, 2021 | December 31, 2020 | |||||
(in thousands) | ||||||
Prepaid ground rent | $ | 2,137 | $ | 1,412 | ||
Prepaid real estate taxes | 2,069 | 3,153 | ||||
Prepaid taxes | 9,866 | 8,121 | ||||
Other current assets | 12,768 | 11,189 | ||||
Total prepaid expenses and other current assets | $ | 26,840 | $ | 23,875 |
The Company’s other assets are comprised of the following:
As of | As of | |||||
June 30, 2021 | December 31, 2020 | |||||
(in thousands) | ||||||
Straight-line rent receivable | $ | 333,434 | $ | 321,816 | ||
Interest rate swap asset (1) | 38,032 | 12,123 | ||||
Loan receivables | 5,382 | 5,931 | ||||
Deferred lease costs, net | 4,960 | 4,788 | ||||
Deferred tax asset - long term | 38,890 | 53,722 | ||||
Long-term investments | 51,941 | 57,575 | ||||
Other | 19,359 | 22,037 | ||||
Total other assets | $ | 491,998 | $ | 477,992 |
(1)Refer to Note 17 for more information on the Company’s interest rate swaps.
6.ACQUISITIONS
The following table sets forth basicsummarizes the Company’s acquisition activity:
For the three months | For the six months | |||||||||||
ended June 30, | ended June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
(in thousands) | ||||||||||||
Acquisitions of towers and related intangible assets (1) | $ | 67,255 | $ | 17,150 | $ | 168,885 | $ | 99,424 | ||||
Acquisition of right-of-use assets (2) | 1,783 | — | 947,698 | — | ||||||||
Land buyouts and other assets (3) | 8,137 | 12,354 | 13,268 | 19,611 | ||||||||
Total cash acquisition capital expenditures | $ | 77,175 | $ | 29,504 | $ | 1,129,851 | $ | 119,035 |
(1)The six months ended June 30, 2021 includes $77.1 million of acquisitions completed during the fourth quarter of 2020 which were not funded until the first quarter of 2021.
(2)During the six months ended June 30, 2021, the Company acquired the exclusive right to lease and diluted net income per common shareoperate 699 utility transmission structures, which included existing wireless tenant licenses from PG&E for $955.8 million. The difference between the agreed upon purchase price of $955.8 million and the cash acquisition amount is due to working capital adjustments. The Company accounted for the threepayment with respect to these sites as a right-of-use asset, which is recorded in Acquired and nine months ended September 30, 2017other right of use assets, net on its Consolidated Balance Sheets. The payments associated with the right of use of these structures has been fully funded and 2016 (in thousands, except per share data):will be recognized over 70 years.
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|
| For the three months |
| For the nine months | ||||||||
|
| ended September 30, |
| ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Numerator: |
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|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 49,161 |
| $ | (15,370) |
| $ | 95,994 |
| $ | 70,976 |
Denominator: |
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|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding |
|
| 119,746 |
|
| 124,604 |
|
| 120,745 |
|
| 125,041 |
Dilutive impact of stock options and restricted shares |
|
| 1,280 |
|
| — |
|
| 982 |
|
| 720 |
Diluted weighted-average shares outstanding |
|
| 121,026 |
|
| 124,604 |
|
| 121,727 |
|
| 125,761 |
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.41 |
| $ | (0.12) |
| $ | 0.80 |
| $ | 0.57 |
Diluted |
| $ | 0.41 |
| $ | (0.12) |
| $ | 0.79 |
| $ | 0.56 |
For(3)In addition, the threeCompany paid $3.6 million and nine months ended September 30, 2017, the diluted weighted average number of common shares outstanding excluded an additional 11,674$1.6 million for ground lease extensions and 1.8 million shares, respectively, issuable upon exercise ofterm easements on land underlying the Company’s stock options because the impact would be anti-dilutive.
Fortowers during the three months ended SeptemberJune 30, 2016, all potential common stock equivalents, including 4.52021 and 2020, respectively, and paid $6.4 million shares of stock options outstanding and 0.3$3.6 million shares of restricted stock units outstanding, were excluded asfor ground lease extensions and term easements on land underlying the effect would be anti-dilutive.
ForCompany’s towers during thenine six months ended SeptemberJune 30, 2016,2021 and 2020, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.
During the diluted weighted average numbersix months ended June 30, 2021, in addition to the acquisition of common shares outstanding excludedright-of-use assets, the Company allocated the purchase price of 89 acquired towers and related assets and liabilities consisting of $7.8 million of property and equipment, $76.4
million of intangible assets, and $84.7 million of other net assets and liabilities assumed. In the six months ended June 30, 2021, all acquisitions were accounted for as asset acquisitions.
Subsequent to June 30, 2021, the Company purchased or agreed to purchaseapproximately 1,800 communication sites for an additional 2.2aggregate consideration of approximately $270.0 million shares issuable upon exercisein cash, including approximately 1,400 sites for approximately $175.0 million in cash relating to the previously announced deal to acquire towers from Airtel Tanzania.
The maximum potential obligation related to contingent consideration for acquisitions were $17.1 million and $35.0 million as of June 30, 2021 and December 31, 2020, respectively. No such amounts have been recorded on the Company’s Consolidated Balance Sheet.
7.PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
As of | As of | |||||
June 30, 2021 | December 31, 2020 | |||||
(in thousands) | ||||||
Towers and related components | $ | 5,292,525 | $ | 5,213,019 | ||
Construction-in-process (1) | 35,143 | 38,065 | ||||
Furniture, equipment, and vehicles | 55,750 | 54,610 | ||||
Land, buildings, and improvements | 831,958 | 818,272 | ||||
Total property and equipment | 6,215,376 | 6,123,966 | ||||
Less: accumulated depreciation | (3,590,279) | (3,446,640) | ||||
Property and equipment, net | $ | 2,625,097 | $ | 2,677,326 |
(1)Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s stock options becausesite leasing operations.
Depreciation expense was $68.2 million and $71.3 million for the impact would be anti-dilutive.three months ended June 30, 2021 and 2020, respectively, and $139.8 million and $143.2 million for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021 and December 31, 2020, unpaid capital expenditures that are included in accounts payable and accrued expenses were $7.0 million and $6.1 million, respectively.
8.INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
As of June 30, 2021 | As of December 31, 2020 | |||||||||||||||||
Gross carrying | Accumulated | Net book | Gross carrying | Accumulated | Net book | |||||||||||||
amount | amortization | value | amount | amortization | value | |||||||||||||
(in thousands) | ||||||||||||||||||
Current contract intangibles | $ | 4,976,910 | $ | (2,643,245) | $ | 2,333,665 | $ | 4,876,880 | $ | (2,471,438) | $ | 2,405,442 | ||||||
Network location intangibles | 1,796,926 | (1,078,975) | 717,951 | 1,770,944 | (1,020,236) | 750,708 | ||||||||||||
Intangible assets, net | $ | 6,773,836 | $ | (3,722,220) | $ | 3,051,616 | $ | 6,647,824 | $ | (3,491,674) | $ | 3,156,150 |
13All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $103.2 million and $107.4 million for the three months ended June 30, 2021 and 2020, respectively, and $212.9 million and $218.0 million for the six months ended June 30, 2021 and 2020, respectively.
10.DEBT9.ACCRUED EXPENSES
The Company’s accrued expenses are comprised of the following:
As of | As of | |||||
June 30, 2021 | December 31, 2020 | |||||
(in thousands) | ||||||
Salaries and benefits | $ | 21,397 | $ | 20,958 | ||
Real estate and property taxes | 9,932 | 9,583 | ||||
Unpaid capital expenditures | 6,987 | 6,073 | ||||
Other | 30,339 | 26,417 | ||||
Total accrued expenses | $ | 68,655 | $ | 63,031 |
10.DEBT
The principal values, fair values, and carrying values of debt consist of the following (in thousands):
As of | As of | |||||||||||||||||||
June 30, 2021 | December 31, 2020 | |||||||||||||||||||
Maturity Date | Principal | Fair Value | Carrying | Principal | Fair Value | Carrying | ||||||||||||||
Revolving Credit Facility (1) | Apr. 11, 2023 | $ | 85,000 | $ | 85,000 | $ | 85,000 | $ | 380,000 | $ | 380,000 | $ | 380,000 | |||||||
2018 Term Loan | Apr. 11, 2025 | 2,328,000 | 2,304,720 | 2,315,022 | 2,340,000 | 2,310,750 | 2,325,391 | |||||||||||||
2013-2C Tower Securities (2) | Apr. 11, 2023 | 575,000 | 589,065 | 572,680 | 575,000 | 599,662 | 572,063 | |||||||||||||
2014-2C Tower Securities (2) | Oct. 8, 2024 | 620,000 | 653,027 | 616,608 | 620,000 | 670,003 | 616,131 | |||||||||||||
2017-1C Tower Securities (2) | Apr. 11, 2022 | — | — | — | 760,000 | 774,410 | 757,165 | |||||||||||||
2018-1C Tower Securities (2) | Mar. 9, 2023 | 640,000 | 658,419 | 636,920 | 640,000 | 671,341 | 636,045 | |||||||||||||
2019-1C Tower Securities (2) | Jan. 12, 2025 | 1,165,000 | 1,191,061 | 1,156,267 | 1,165,000 | 1,218,613 | 1,155,106 | |||||||||||||
2020-1C Tower Securities (2) | Jan. 9, 2026 | 750,000 | 756,480 | 743,365 | 750,000 | 752,910 | 742,782 | |||||||||||||
2020-2C Tower Securities (2) | Jan. 11, 2028 | 600,000 | 611,646 | 594,387 | 600,000 | 597,840 | 594,081 | |||||||||||||
2021-1C Tower Securities (2) | Nov. 9, 2026 | 1,165,000 | 1,164,918 | 1,152,901 | — | — | — | |||||||||||||
2016 Senior Notes | Sep. 1, 2024 | 1,100,000 | 1,119,151 | 1,090,317 | 1,100,000 | 1,127,500 | 1,088,924 | |||||||||||||
2017 Senior Notes | Oct. 1, 2022 | — | — | — | 750,000 | 757,500 | 746,642 | |||||||||||||
2020 Senior Notes | Feb. 15, 2027 | 1,500,000 | 1,545,000 | 1,482,803 | 1,500,000 | 1,567,500 | 1,481,466 | |||||||||||||
2021 Senior Notes | Feb. 1, 2029 | 1,500,000 | 1,449,375 | 1,486,177 | — | — | — | |||||||||||||
Total debt | $ | 12,028,000 | $ | 12,127,862 | $ | 11,932,447 | $ | 11,180,000 | $ | 11,428,029 | $ | 11,095,796 | ||||||||
Less: current maturities of long-term debt | (24,000) | (24,000) | ||||||||||||||||||
Total long-term debt, net of current maturities | $ | 11,908,447 | $ | 11,071,796 |
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|
| As of |
| As of | ||||||||||||||
|
|
|
| September 30, 2017 |
| December 31, 2016 | ||||||||||||||
|
| Maturity Date |
| Principal Balance |
| Fair Value |
| Carrying Value |
| Principal Balance |
| Fair Value |
| Carrying Value | ||||||
2014 Senior Notes |
| July 15, 2022 |
| $ | 750,000 |
| $ | 772,500 |
| $ | 738,547 |
| $ | 750,000 |
| $ | 763,125 |
| $ | 736,992 |
2016 Senior Notes |
| Sep. 1, 2024 |
|
| 1,100,000 |
|
| 1,134,375 |
|
| 1,080,674 |
|
| 1,100,000 |
|
| 1,083,500 |
|
| 1,078,954 |
2012-1C Tower Securities |
| Dec. 11, 2017 |
|
| ��� |
|
| — |
|
| — |
|
| 610,000 |
|
| 610,165 |
|
| 607,157 |
2013-1C Tower Securities |
| April 10, 2018 |
|
| 425,000 |
|
| 423,959 |
|
| 424,049 |
|
| 425,000 |
|
| 423,381 |
|
| 422,768 |
2013-2C Tower Securities |
| April 11, 2023 |
|
| 575,000 |
|
| 586,103 |
|
| 568,339 |
|
| 575,000 |
|
| 563,322 |
|
| 567,545 |
2013-1D Tower Securities |
| April 10, 2018 |
|
| 330,000 |
|
| 330,234 |
|
| 329,240 |
|
| 330,000 |
|
| 334,521 |
|
| 328,225 |
2014-1C Tower Securities |
| Oct. 8, 2019 |
|
| 920,000 |
|
| 921,168 |
|
| 914,244 |
|
| 920,000 |
|
| 922,199 |
|
| 912,219 |
2014-2C Tower Securities |
| Oct. 8, 2024 |
|
| 620,000 |
|
| 623,181 |
|
| 613,253 |
|
| 620,000 |
|
| 608,921 |
|
| 612,641 |
2015-1C Tower Securities |
| Oct. 8, 2020 |
|
| 500,000 |
|
| 501,790 |
|
| 492,920 |
|
| 500,000 |
|
| 495,145 |
|
| 491,289 |
2016-1C Tower Securities |
| July 9, 2021 |
|
| 700,000 |
|
| 697,081 |
|
| 692,658 |
|
| 700,000 |
|
| 688,072 |
|
| 691,322 |
2017-1C Tower Securities |
| April 11, 2022 |
|
| 760,000 |
|
| 759,248 |
|
| 750,645 |
|
| — |
|
| — |
|
| — |
Revolving Credit Facility |
| Feb. 5, 2020 |
|
| 430,000 |
|
| 430,000 |
|
| 430,000 |
|
| 390,000 |
|
| 390,000 |
|
| 390,000 |
2014 Term Loan |
| Mar. 24, 2021 |
|
| 1,451,250 |
|
| 1,454,878 |
|
| 1,442,529 |
|
| 1,462,500 |
|
| 1,467,984 |
|
| 1,452,039 |
2015 Term Loan |
| June 10, 2022 |
|
| 488,750 |
|
| 489,361 |
|
| 481,703 |
|
| 492,500 |
|
| 494,347 |
|
| 484,432 |
Total debt |
|
|
| $ | 9,050,000 |
| $ | 9,123,878 |
| $ | 8,958,801 |
| $ | 8,875,000 |
| $ | 8,844,682 |
| $ | 8,775,583 |
Less: current maturities of long-term debt |
|
|
|
|
| (773,289) |
|
|
|
|
|
|
|
| (627,157) | |||||
Total long-term debt, net of current maturities |
|
|
|
| $ | 8,185,512 |
|
|
|
|
|
|
| $ | 8,148,426 |
(1)On July 7, 2021, the Company amended its Revolving Credit Facility to extend the maturity date to July 7, 2026 as well as amend certain other terms and conditions under the Senior Credit Agreement. For further discussion of the amendments, refer to “Revolving Credit Facility under the Senior Credit Agreement” below.
(2) The maturity date represents the anticipated repayment date for each issuance.
The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:
Interest | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||
Rates as of | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
June 30, | Cash | Non-cash | Cash | Non-cash | Cash | Non-cash | Cash | Non-cash | ||||||||||||||||||
2021 | Interest | Interest | Interest | Interest | Interest | Interest | Interest | Interest | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Revolving Credit Facility | 1.600% | $ | 1,573 | $ | — | $ | 1,661 | $ | — | $ | 3,721 | $ | — | $ | 4,375 | $ | — | |||||||||
2018 Term Loan (1) | 1.872% | 11,067 | 11,438 | 20,950 | 2,030 | 22,064 | 22,872 | 43,152 | 4,052 | |||||||||||||||||
2013-2C Tower Securities | 3.722% | 5,396 | — | 5,396 | — | 10,792 | — | 10,792 | — | |||||||||||||||||
2014-2C Tower Securities | 3.869% | 6,046 | — | 6,046 | — | 12,092 | — | 12,092 | — | |||||||||||||||||
2015-1C Tower Securities | 3.156% | — | — | 3,985 | — | — | — | 7,969 | — | |||||||||||||||||
2016-1C Tower Securities | 2.877% | — | — | 5,090 | — | — | — | 10,181 | — | |||||||||||||||||
2017-1C Tower Securities | 3.168% | 3,115 | — | 6,088 | — | 9,201 | — | 12,173 | — | |||||||||||||||||
2018-1C Tower Securities | 3.448% | 5,570 | — | 5,570 | — | 11,141 | — | 11,141 | — | |||||||||||||||||
2019-1C Tower Securities | 2.836% | 8,357 | — | 8,357 | — | 16,714 | — | 16,714 | — | |||||||||||||||||
2020-1C Tower Securities | 1.884% | 3,598 | — | — | — | 7,195 | — | — | — | |||||||||||||||||
2020-2C Tower Securities | 2.328% | 3,540 | — | — | — | 7,079 | — | — | — | |||||||||||||||||
2021-1C Tower Securities | 1.631% | 2,550 | — | — | — | 2,550 | — | — | — | |||||||||||||||||
2014 Senior Notes | 4.875% | — | — | — | 275 | — | — | 3,352 | 112 | |||||||||||||||||
2016 Senior Notes | 4.875% | 13,406 | 289 | 13,406 | 32 | 26,813 | 575 | 26,813 | 547 | |||||||||||||||||
2017 Senior Notes | 4.000% | — | — | 7,500 | — | 2,333 | — | 15,000 | — | |||||||||||||||||
2020 Senior Notes | 3.875% | 14,531 | 85 | 11,571 | — | 29,063 | 168 | 17,707 | 32 | |||||||||||||||||
2021 Senior Notes | 3.125% | 11,719 | — | — | — | 19,792 | — | — | — | |||||||||||||||||
Other | 76 | — | 67 | — | 89 | — | 77 | — | ||||||||||||||||||
Total | $ | 90,544 | $ | 11,812 | $ | 95,687 | $ | 2,337 | $ | 180,639 | $ | 23,615 | $ | 191,538 | $ | 4,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended September 30, |
| For the nine months ended September 30, | ||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
| Cash |
| Non-cash |
| Cash |
| Non-cash |
| Cash |
| Non-cash |
| Cash |
| Non-cash | ||||||||
|
| Interest |
| Interest |
| Interest |
| Interest |
| Interest |
| Interest |
| Interest |
| Interest | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) | ||||||||||||||||||||||
5.625% Senior Notes |
| $ | — |
| $ | — |
| $ | 7,031 |
| $ | — |
| $ | — |
| $ | — |
| $ | 21,094 |
|
| — |
5.75% Senior Notes |
|
| — |
|
| — |
|
| 5,494 |
|
| — |
|
| — |
|
| — |
|
| 28,494 |
|
| — |
2014 Senior Notes |
|
| 9,141 |
|
| 182 |
|
| 9,141 |
|
| 173 |
|
| 27,422 |
|
| 540 |
|
| 27,422 |
|
| 513 |
2016 Senior Notes |
|
| 13,406 |
|
| 240 |
|
| 6,852 |
|
| 117 |
|
| 40,219 |
|
| 711 |
|
| 6,852 |
|
| 117 |
2010-2C Tower Securities |
|
| — |
|
| — |
|
| 1,098 |
|
| — |
|
| — |
|
| — |
|
| 15,213 |
|
| — |
2012-1C Tower Securities |
|
| — |
|
| — |
|
| 4,529 |
|
| — |
|
| 5,331 |
|
| — |
|
| 13,596 |
|
| — |
2013 Tower Securities |
|
| 10,804 |
|
| — |
|
| 10,804 |
|
| — |
|
| 32,413 |
|
| — |
|
| 32,413 |
|
| — |
2014 Tower Securities |
|
| 12,785 |
|
| — |
|
| 12,785 |
|
| — |
|
| 38,354 |
|
| — |
|
| 38,354 |
|
| — |
2015-1C Tower Securities |
|
| 3,985 |
|
| — |
|
| 3,985 |
|
| — |
|
| 11,954 |
|
| — |
|
| 11,954 |
|
| — |
2016-1C Tower Securities |
|
| 5,090 |
|
| — |
|
| 4,808 |
|
| — |
|
| 15,271 |
|
| — |
|
| 4,808 |
|
| — |
2017-1C Tower Securities |
|
| 6,096 |
|
| — |
|
| — |
|
| — |
|
| 11,098 |
|
| — |
|
| — |
|
| — |
Revolving Credit Facility |
|
| 2,673 |
|
| — |
|
| 667 |
|
| — |
|
| 6,848 |
|
| — |
|
| 2,245 |
|
| — |
2014 Term Loan |
|
| 12,964 |
|
| 133 |
|
| 12,209 |
|
| 129 |
|
| 36,291 |
|
| 391 |
|
| 36,453 |
|
| 380 |
2015 Term Loan |
|
| 4,366 |
|
| 170 |
|
| 4,111 |
|
| 166 |
|
| 12,221 |
|
| 504 |
|
| 12,275 |
|
| 490 |
Other |
|
| 47 |
|
| — |
|
| (88) |
|
| — |
|
| (7) |
|
| — |
|
| (260) |
|
| — |
Total |
| $ | 81,357 |
| $ | 725 |
| $ | 83,426 |
| $ | 585 |
| $ | 237,415 |
| $ | 2,146 |
| $ | 250,913 |
| $ | 1,500 |
(1)The 2018 Term Loan has a blended rate of 1.872%, which includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan. Excluding the impact of the interest rate swap, the 2018 Term Loan was accruing interest at 1.860% as of June 30, 2021. Refer to Note 17 for more information on the Company’s interest rate swap.
Revolving Credit Facility under the Senior Credit Agreement
TheOn July 7, 2021, the Company, through its wholly owned subsidiary, SBA Senior Finance II LLC, amended its Revolving Credit Facility is governedto (1) increase the total commitments under the Facility from $1.25 billion to $1.5 billion, (2) extend the maturity date of the Facility to July 7, 2026, (3) lower the applicable interest rate margins and commitment fees under the Facility, (4) provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate, (5) incorporate sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how the Company performs against those targets, and (6) amend certain other terms and conditions under the Senior Credit Agreement. TheAs amended, the Revolving Credit Facility consists of a revolving loan under which up to $1.0$1.5 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (i)(1) the Eurodollar Rate plus a margin that ranges from 137.5112.5 basis points to 200.0150.0 basis points or (ii)(2) the Base Rate plus a margin that ranges from 37.512.5 basis points to 100.050.0 basis points, in each case based on the ratio of Consolidated TotalNet Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.15% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II,
During the Revolving Credit Facility will terminate on,three months ended June 30, 2021, the Company borrowed $100.0 million and SBA Senior Finance II will repay all amountsrepaid $605.0 million of the outstanding on or before, February 5, 2020. The proceeds availablebalance under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during such period.
During the three and ninesix months ended SeptemberJune 30, 2017,2021, the Company borrowed $315.0$810.0 million and $415.0 million, respectively, and repaid $35.0 million and $375.0 million, respectively,$1.1 billion of the outstanding balance under the Revolving Credit Facility. As of SeptemberJune 30, 2017,2021, the balance outstanding under the Revolving Credit Facility was $85.0 million accruing interest at 1.600% per annum. In addition, SBA Senior Finance II LLC, the Company’s wholly owned subsidiary (“SBA Senior Finance II”) was required to pay a commitment fee of 0.20% per annum on the amount of the unused commitment. As of June 30, 2021, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
Subsequent to SeptemberJune 30, 2017,2021, the Company borrowed an additional $30.0 million and repaid $460.0$85.0 million of the outstanding balance under the Revolving Credit Facility. As of the date of this filing, no0 amount was outstanding under the Revolving Credit Facility.
15
Term LoansLoan under the Senior Credit Agreement
Repricing Amendment to the Senior Credit Agreement
On January 20, 2017, SBA Senior Finance II amended its Senior Credit Agreement, primarily to reduce the stated rate of interest applicable to its senior secured term loans. As amended, the senior secured term loans accrue interest, at SBA Senior Finance II’s election, at either the Base Rate plus 125 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 225 basis points (with a zero Eurodollar Rate floor).
2014 Term Loan
The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that matures on March 24, 2021. Prior to the reduction in the term loan interest rates as discussed above, the 2014 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of September 30, 2017, the 2014 Term Loan was accruing interest at 3.49% per annum. Principal payments on the 2014 Term Loan commenced on September 30, 2014 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2014 Term Loan. The Company incurred deferred financing fees of approximately $14.1 million in relation to this transaction, which are being amortized through the maturity date.
During the three and ninesix months ended SeptemberJune 30, 2017,2021, the Company repaid $3.8an aggregate of $6.0 million and $11.3$12.0 million, respectively, of principal on the 20142018 Term Loan. As of SeptemberJune 30, 2017,2021, the 20142018 Term Loan had a principal balance of $1,451.3 million.$2.3 billion.
2015 Term Loan
The 2015 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $500.0 million that matures on June 10, 2022. Prior to the reduction in the term loan interest rates as discussed above, the 2015 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2017, the 2015 Term Loan was accruing interest at 3.49% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2015 Term Loan. The Company incurred deferred financing fees of approximately $5.5 million in relation to this transaction, which are being amortized through the maturity date.
During the three and nine months ended September 30, 2017, the Company repaid $1.3 million and $3.8 million of principal on the 2015 Term Loan. As of September 30, 2017, the 2015 Term Loan had a principal balance of $488.8 million.
Secured Tower Revenue Securities
2012-1C2021-1C Tower Securities
On August 9, 2012,May 14, 2021, the Company, through a New York common law trust (the “Trust”), issued $610.0 million$1.165 billion of Secured Tower Revenue Securities Series 2012-1C (the “2012-1C Tower Securities”), which had an anticipated repayment date of December 11, 2017 and a final maturity date of December 9, 2042. The fixed interest rate of the 2012-1C Tower Securities was 2.933% per annum, payable monthly. The Company incurred deferred financing fees of $14.9 million in relation to this transaction, which were being amortized through the anticipated repayment date of the 2012-1C Tower Securities.
On April 17, 2017, the Company repaid in full the 2012-1C Tower Securities with proceeds from the 2017-1C Tower Securities. In connection with the prepayment, the Company expensed $2.0 million of net deferred financing fees.
The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”).
16
2013 Tower Securities
On April 18, 2013, the Company, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C,2021-1C which have an anticipated repayment date of April 10, 2018November 9, 2026 and a final maturity date of AprilMay 9, 20432051 (the “2013-1C Tower Securities”), $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C, which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048 (the “2013-2C Tower Securities”), and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D, which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (the “2013-1D Tower Securities”) (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. The Company incurred deferred financing fees of $25.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2013 Tower Securities.
2014 Tower Securities
On October 15, 2014, the Company, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C, which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 (the “2014-1C Tower Securities”) and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C, which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (the “2014-2C Tower Securities”) (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. The Company incurred deferred financing fees of $22.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.
2015-1C Tower Securities
On October 14, 2015, the Company, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C, which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015-1C“2021-1C Tower Securities”). The fixed interest rate ofon the 2015-1C2021-1C Tower Securities is 3.156%1.631% per annum, payable monthly. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2017-1C Tower Securities ($760.0 million) and the Secured Tower Revenue Securities, Series 2017-1R ($40.0 million) and for general corporate purposes. The Company has incurred deferred financing fees of $11.2$12.4 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2015-1C2021-1C Tower Securities.
2016-1C Tower Securities
On July 7, 2016, the Company, through the Trust, issued $700.0 million of Secured Tower Revenue Securities Series 2016-1C, which have an anticipated repayment date of July 9, 2021 and a final maturity date of July 10, 2046 (the “2016-1C Tower Securities”). The fixed interest rate of the 2016-1C Tower Securities is 2.877% per annum, payable monthly. Net proceeds from this offering were used to prepay the full $550.0 million outstanding on the 2010-2C Tower Securities and for general corporate purposes. The Company incurred deferred financing fees of $9.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2016-1C Tower Securities.
2017-1C Tower Securities
On April 17, 2017, the Company, through the Trust, issued $760.0 million of Secured Tower Revenue Securities Series 2017-1C, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1C Tower Securities”). The fixed interest rate on the 2017-1C Tower Securities is 3.168% per annum, payable monthly. Net proceeds from this offering were used to prepay the entire $610.0 million aggregate principal amount, as well as accrued and unpaid interest, of the 2012-1C Tower Securities and for general corporate purposes. The Company incurred deferred financing fees of $10.2 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2017-1C Tower Securities.
In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), SBA Guarantor, LLC, a wholly owned subsidiary, of the Company, purchased $40.0$61.4 million of Secured Tower Revenue Securities Series 2017-1R2021-1R issued by the Trust, whichTrust. These securities have an anticipated repayment date of April 11, 2022November 9, 2026 and a final maturity date of AprilMay 9, 20472051 (the “2017-1R“2021-1R Tower Securities”). The fixed interest rate on the 2017-1R2021-1R Tower Securities is 4.459%3.625% per annum, payable monthly. Principal and interest payments made on the 2017-1R2021-1R Tower Securities eliminate in consolidation.
In connection withAs of June 30, 2021, the issuance ofentities that are borrowers on the 2017-1C Tower Securities, the non-recourse mortgage loan was increased by $800.0 million (or by a net of $190.0 million after giving effect to prepayment of the loan components relating to the 2012-1C Tower Securities). The new loan accrues interest at the same rate as the 2017-1C Tower Securities; however, it is subject to all other material terms of the existing mortgage loan, including collateral and interest rate after the anticipated repayment date.
17
Debt Covenants
As of September 30, 2017, the Borrowers(the “Borrowers”) met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of the Borrowers.
Senior Notes
20142021 Senior Notes
On July 1, 2014,January 29, 2021, the Company issued $750.0 million$1.5 billion of unsecured senior notes due July 15, 2022February 1, 2029 at par value (the “2014“2021 Senior Notes”). The 20142021 Senior Notes accrue interest at a rate of 4.875%3.125% per annum and were issued at 99.178% of par value.annum. Interest on the 20142021 Senior Notes is due semi-annually on January 15 and July 15 of each year. The Company incurred deferred financing fees of $11.6 million in relation to this transaction, which are being amortized through the maturity date.
2016 Senior Notes
On August 15, 2016, the Company issued $1.1 billion of unsecured senior notes due September 1, 2024 (the “2016 Senior Notes”). The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2016 Senior Notes is due semi-annually on MarchFebruary 1 and SeptemberAugust 1 of each year, beginning on MarchAugust 1, 2017.2021. The Company incurred deferred financing fees of $12.8$14.5 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering and cash on hand were used to redeem $800.0 million, the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of the Company’s 5.625% Senior Notes and pay the associated call premiums.
2017 Senior Notes
On October 13, 2017, the Company issued $750.0 million of unsecured senior notes due October 1, 2022 (the “2017 Senior Notes”). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. The Company incurred deferred financing fees of $8.2 milliondate in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering were used to redeem all of the outstanding principal amount of the 2017 Senior Notes, repay $460.0 millionthe amounts outstanding under the Revolving Credit Facility, and for general corporate purposes.
The 2021 Senior Notes are subject to redemption in whole or in part on or after February 1, 2024 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to February 1, 2024, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes originally issued at a redemption price of 103.125% of the principal amount of the 2021 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. The Company may redeem the 2021 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 1, 2024 at 101.563%, February 1, 2025 at 100.781%, or February 1, 2026 until maturity at 100.000%, of the principal amount of the 2021 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
2017 Senior Notes
On February 11, 2021, the Company redeemed the entire $750.0 million balance of the 2017 Senior Notes with proceeds from the 2021 Senior Notes. In addition, the Company paid a $7.5 million call premium and expensed $4.2 million for the write-off of financing fees related to the redemption of the 2017 Senior Notes, which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations.
11.SHAREHOLDERS’ EQUITY
Common Stock equivalentsEquivalents
The Company has potential common stock equivalents (see Note 12) related to its outstanding stock options, andtime-based restricted stock units. These potential commonunits (“RSUs”), and performance-based restricted stock equivalentsunits (“PSUs”) which were considered in the Company’s diluted earnings per share calculation (see Note 9)15).
Registration of Additional Shares
On February 26, 2021, the Company filed with the Securities and Exchange Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3, which enables the Company to issue shares of its Class A common stock, preferred stock, debt securities, warrants, or depositary shares as well as units that include any of these securities. The Company will file a prospectus supplement containing the amount and type of securities each time it issues securities using its automatic shelf registration statement on Form S-3. No securities were issued under this automatic shelf registration statement through the date of this filing.
Stock Repurchases
On June 4, 2015, theThe Company’s Board of Directors authorized a stock repurchase plan. This plan authorizedauthorizes the Company to purchase, from time to time, up to $1.0 billion of the Company’s outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors.
On January 12, 2017, Once authorized, the Company’s Board of Directors authorized a new stock repurchase plan, replacing the plan authorized on June 4, 2015, which had a remaining authorization of $150.0 million. This plan authorizes the Company to purchase, from time to time, up to $1.0 billion of the Company’s outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretionbased on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. During the three months ended September 30, 2017, the Company repurchased 2.7 million shares of its Class A common stock under this plan for $383.9 million, at an average price per share of $141.17. During the nine months ended September 30, 2017, the Company repurchased 3.9 million shares of its Class A common stock under this plan for $538.9 million, at an average price per share of $139.16. Shares repurchased wereare retired.
18
Subsequent to September 30, 2017,Directors authorized a new $1.0 billion stock repurchase plan, replacing the Company repurchased 0.8 million sharesprior plan authorized on July 29, 2019, which had a remaining authorization of its Class A common stock for $111.1 million, at an average price per share of $147.19. Shares repurchased were retired.$124.3 million. As of the date of this filing, the Company had $350.0$475.1 million of authorization remaining under the current stock repurchasenew plan.
RegistrationThe following is a summary of Additional Sharesthe Company’s share repurchases:
The Company filed a shelf registration statement on Form S-4 with the Securities and Exchange Commission registering 4.0 million shares of its Class A common stock in 2007. These shares may be issued in connection with acquisitions of wireless communication towers or antenna sites and related assets or companies that own wireless communication towers, antenna sites, or related assets. During the year ended December 31, 2016, the Company did not issue any shares of its Class A common stock pursuant to this registration statement in connection with acquisitions. During the nine months ended September 30, 2017, the Company issued 487,963 shares of Class A common stock under this registration statement. As of September 30, 2017, the Company had approximately 1.2 million shares of Class A common stock remaining under this registration statement.
For the three months | For the six months | |||||||||||
ended June 30, | ended June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Total number of shares purchased (in millions) (1) | — | — | 0.7 | 0.8 | ||||||||
Average price paid per share (1) | $ | — | $ | — | $ | 258.33 | $ | 242.86 | ||||
Total price paid (in millions) (1) | $ | — | $ | — | $ | 168.9 | $ | 200.0 |
12.STOCK-BASED COMPENSATION
Stock Options
The Company records compensation expense for employee stock options(1)Amounts are calculated based on the estimated fair valuetrade date and differ from the Consolidated Statements of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option life. The risk-free rate isCash Flows which calculate share repurchases based on the U.S. Treasury yield curvesettlement date.
Dividends
For the six months ended June 30, 2021, the Company paid the following cash dividends:
Payable to Shareholders | ||||||||
of Record at the Close | Cash Paid | Aggregate Amount | ||||||
Date Declared | of Business on | Per Share | Paid | Date Paid | ||||
February 19, 2021 | March 10, 2021 | $0.58 | $63.4 million | March 26, 2021 | ||||
April 26, 2021 | May 20, 2021 | $0.58 | $63.4 million | June 15, 2021 |
Dividends paid in effect at2021 and 2020 were ordinary income.
Subsequent to June 30, 2021, the timeCompany declared the following cash dividends:
Payable to Shareholders | Cash to | |||||
of Record at the Close | be Paid | |||||
Date Declared | of Business on | Per Share | Date to be Paid | |||
August 1, 2021 | August 26, 2021 | $0.58 | September 23, 2021 |
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| For the nine months ended | |||
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| 2017 |
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| 2016 |
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Risk free interest rate |
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| 1.70% - 1.97% |
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| 1.11% - 1.43% |
Dividend yield |
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| 0.0% |
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| 0.0% |
Expected volatility |
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| 20% |
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| 20% |
Expected lives |
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| 4.6 years |
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| 4.7 years |
12.STOCK-BASED COMPENSATION
Stock Options
The following table summarizes the Company’s activities with respect to its stock option plans for the ninesix months ended SeptemberJune 30, 20172021 as follows (dollars and number of shares in thousands, except for per share data):
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| Weighted- |
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| Weighted- |
| Average |
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| Average |
| Remaining |
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| Number |
| Exercise Price |
| Contractual |
| Aggregate | ||
|
| of Shares |
| Per Share |
| Life (in years) |
| Intrinsic Value | ||
Outstanding at December 31, 2016 |
| 4,447 |
| $ | 93.09 |
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Granted |
| 1,171 |
| $ | 115.41 |
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Exercised |
| (615) |
| $ | 78.64 |
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Canceled |
| (62) |
| $ | 105.44 |
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Outstanding at September 30, 2017 |
| 4,941 |
| $ | 100.03 |
| 4.6 |
| $ | 217,485 |
Exercisable at September 30, 2017 |
| 2,076 |
| $ | 87.74 |
| 3.3 |
| $ | 116,910 |
Unvested at September 30, 2017 |
| 2,865 |
| $ | 108.93 |
| 5.5 |
| $ | 100,575 |
Weighted- | Weighted-Average | |||||||||
Average | Remaining | |||||||||
Number | Exercise Price | Contractual | Aggregate | |||||||
of Shares | Per Share | Life (in years) | Intrinsic Value | |||||||
Outstanding at December 31, 2020 | 3,202 | $ | 143.01 | |||||||
Exercised | (262) | $ | 124.23 | |||||||
Forfeited/canceled | (12) | $ | 179.51 | |||||||
Outstanding at June 30, 2021 | 2,928 | $ | 144.55 | 3.3 | $ | 509,774 | ||||
Exercisable at June 30, 2021 | 2,191 | $ | 134.00 | 3.0 | $ | 404,727 | ||||
Unvested at June 30, 2021 | 737 | $ | 175.96 | 4.4 | $ | 105,047 |
The weighted-average per share fair value of options granted during the nine months ended September 30, 2017 was $23.88. The total intrinsic value for options exercised during the ninesix months ended SeptemberJune 30, 20172021 was $30.9$44.8 million.
19
Restricted Stock Units and Performance-Based Restricted Stock Units
The following table summarizes the Company’s restricted stock unitRSU and PSU activity for the ninesix months ended SeptemberJune 30, 2017: 2021:
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| Weighted- | |
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| Average | |
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| Grant Date | |
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| Number of |
| Fair Value per | |
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| Shares |
| Share | |
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| (in thousands) |
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Outstanding at December 31, 2016 |
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| 291 |
| $ | 101.74 |
Granted |
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| 171 |
| $ | 116.52 |
Vested |
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| (122) |
| $ | 98.75 |
Forfeited/canceled |
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| (10) |
| $ | 109.83 |
Outstanding at September 30, 2017 |
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| 330 |
| $ | 110.27 |
RSUs | PSUs | |||||||||
Weighted-Average | Weighted-Average | |||||||||
Number of | Grant Date Fair | Number of | Grant Date Fair | |||||||
Shares | Value per Share | Shares | Value per Share | |||||||
(in thousands) | (in thousands) | |||||||||
Outstanding at December 31, 2020 (1) | 274 | $ | 206.48 | 148 | $ | 376.48 | ||||
Granted (1) | 106 | $ | 238.09 | 154 | $ | 236.64 | ||||
Vested | (127) | $ | 187.00 | — | $ | — | ||||
Forfeited/canceled | (6) | $ | 230.33 | (3) | $ | 361.43 | ||||
Outstanding at June 30, 2021 | 247 | $ | 229.57 | 299 | $ | 304.49 |
(1)PSUs represent the target number of shares granted that are issuable at the end of the three year performance period. Fair value for a portion of the PSUs was calculated using a Monte Carlo simulation model.
13.INCOME TAXES
The primary reasonreasons for the difference inbetween the Company’s effective tax rate and the U.S. statutory rate is a result ofare the Company’s REIT election and the Company having aCompany’s full valuation allowance on the U.S. net deferred tax assets of the U.S. taxable REIT subsidiariessubsidiary (“TRSs”TRS”). The CompanyTRS has concluded that it is not more likely than not that its deferred tax assets will be realized and has recorded a full valuation allowance. A foreign tax provision is recognized because certain internationalforeign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.
The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $1.1 billion$651.1 million as of December 31, 2016,2020, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized.
14.SEGMENT DATA
The Company operates principally in two2 business segments: site leasing and site development. The Company’s site leasing business includes two2 reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region.
20
Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.
Domestic Site | Int'l Site | Site | |||||||||||||
Leasing | Leasing | Development | Other | Total | |||||||||||
For the three months ended June 30, 2021 | (in thousands) | ||||||||||||||
Revenues | $ | 418,829 | $ | 105,266 | $ | 51,433 | $ | — | $ | 575,528 | |||||
Cost of revenues (1) | 63,948 | 31,402 | 40,409 | — | 135,759 | ||||||||||
Operating profit | 354,881 | 73,864 | 11,024 | — | 439,769 | ||||||||||
Selling, general, and administrative expenses | 29,201 | 9,521 | 3,994 | 11,229 | 53,945 | ||||||||||
Acquisition and new business initiatives | |||||||||||||||
related adjustments and expenses | 4,596 | 2,198 | — | — | 6,794 | ||||||||||
Asset impairment and decommission costs | 2,690 | 961 | — | 146 | 3,797 | ||||||||||
Depreciation, amortization and accretion | 128,034 | 44,744 | 1,017 | 1,674 | 175,469 | ||||||||||
Operating income (loss) | 190,360 | 16,440 | 6,013 | (13,049) | 199,764 | ||||||||||
Other income (expense) (principally interest | |||||||||||||||
expense and other expense) | 155 | 155 | |||||||||||||
Income before income taxes | 199,919 | ||||||||||||||
Cash capital expenditures (2) | 88,051 | 18,728 | 721 | 1,246 | 108,746 | ||||||||||
For the three months ended June 30, 2020 | |||||||||||||||
Revenues | $ | 388,018 | $ | 94,385 | $ | 24,823 | $ | — | $ | 507,226 | |||||
Cost of revenues (1) | 64,093 | 27,505 | 19,904 | — | 111,502 | ||||||||||
Operating profit | 323,925 | 66,880 | 4,919 | — | 395,724 | ||||||||||
Selling, general, and administrative expenses | 25,233 | 9,035 | 4,494 | 10,326 | 49,088 | ||||||||||
Acquisition and new business initiatives | |||||||||||||||
related adjustments and expenses | 3,004 | 1,630 | — | — | 4,634 | ||||||||||
Asset impairment and decommission costs | 5,342 | 900 | — | — | 6,242 | ||||||||||
Depreciation, amortization and accretion | 134,569 | 42,011 | 597 | 1,529 | 178,706 | ||||||||||
Operating income (loss) | 155,777 | 13,304 | (172) | (11,855) | 157,054 | ||||||||||
Other income (expense) (principally interest | |||||||||||||||
expense and other expense) | (134,101) | (134,101) | |||||||||||||
Income before income taxes | 22,953 | ||||||||||||||
Cash capital expenditures (2) | 38,507 | 17,201 | 282 | 1,202 | 57,192 |
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| Domestic Site |
| Int'l Site |
| Site |
| Not Identified |
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| |||||
|
| Leasing |
| Leasing |
| Development |
| by Segment |
| Total | |||||
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For the three months ended September 30, 2017 |
| (in thousands) | |||||||||||||
Revenues |
| $ | 328,395 |
| $ | 80,143 |
| $ | 25,407 |
| $ | — |
| $ | 433,945 |
Cost of revenues (2) |
|
| 65,226 |
|
| 25,125 |
|
| 21,117 |
|
| — |
|
| 111,468 |
Operating profit |
|
| 263,169 |
|
| 55,018 |
|
| 4,290 |
|
| — |
|
| 322,477 |
Selling, general, and administrative |
|
| 16,945 |
|
| 6,658 |
|
| 3,826 |
|
| 5,130 |
|
| 32,559 |
Acquisition related adjustments and expenses |
|
| 962 |
|
| 621 |
|
| — |
|
| — |
|
| 1,583 |
Asset impairment and decommission costs |
|
| 7,898 |
|
| 1,554 |
|
| (35) |
|
| — |
|
| 9,417 |
Depreciation, amortization and accretion |
|
| 125,142 |
|
| 34,548 |
|
| 605 |
|
| 1,612 |
|
| 161,907 |
Operating income (loss) |
|
| 112,222 |
|
| 11,637 |
|
| (106) |
|
| (6,742) |
|
| 117,011 |
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
| (64,472) |
|
| (64,472) |
Income before provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 52,539 |
Cash capital expenditures (3) |
|
| 57,352 |
|
| 57,507 |
|
| 372 |
|
| 724 |
|
| 115,955 |
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|
|
For the three months ended September 30, 2016 |
|
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|
|
|
|
|
|
Revenues |
| $ | 319,109 |
| $ | 69,059 |
| $ | 23,151 |
| $ | — |
| $ | 411,319 |
Cost of revenues (2) |
|
| 65,353 |
|
| 21,001 |
|
| 19,114 |
|
| — |
|
| 105,468 |
Operating profit |
|
| 253,756 |
|
| 48,058 |
|
| 4,037 |
|
| — |
|
| 305,851 |
Selling, general, and administrative |
|
| 19,206 |
|
| 5,277 |
|
| 3,128 |
|
| 4,644 |
|
| 32,255 |
Acquisition related adjustments and expenses |
|
| 335 |
|
| 2,635 |
|
| — |
|
| — |
|
| 2,970 |
Asset impairment and decommission costs |
|
| 1,974 |
|
| 331 |
|
| — |
|
| — |
|
| 2,305 |
Depreciation, amortization and accretion |
|
| 126,059 |
|
| 31,453 |
|
| 997 |
|
| 1,602 |
|
| 160,111 |
Operating income (loss) |
|
| 106,182 |
|
| 8,362 |
|
| (88) |
|
| (6,246) |
|
| 108,210 |
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
| (122,006) |
|
| (122,006) |
Loss before provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (13,796) |
Cash capital expenditures (3) |
|
| 52,589 |
|
| 23,057 |
|
| 320 |
|
| 704 |
|
| 76,670 |
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| Not |
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| |||
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| Domestic Site |
| Int'l Site |
| Site |
| Identified by |
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| |||||
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| Leasing |
| Leasing |
| Development |
| Segment |
| Total | |||||
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For the nine months ended September 30, 2017 |
| (in thousands) | |||||||||||||
Revenues |
| $ | 974,850 |
| $ | 234,239 |
| $ | 75,513 |
| $ | — |
| $ | 1,284,602 |
Cost of revenues (2) |
|
| 195,903 |
|
| 73,167 |
|
| 62,713 |
|
| — |
|
| 331,783 |
Operating profit |
|
| 778,947 |
|
| 161,072 |
|
| 12,800 |
|
| — |
|
| 952,819 |
Selling, general, and administrative |
|
| 53,147 |
|
| 19,007 |
|
| 11,495 |
|
| 16,528 |
|
| 100,177 |
Acquisition related adjustments and expenses |
|
| 4,300 |
|
| 2,557 |
|
| — |
|
| — |
|
| 6,857 |
Asset impairment and decommission costs |
|
| 22,746 |
|
| 2,956 |
|
| 206 |
|
| — |
|
| 25,908 |
Depreciation, amortization and accretion |
|
| 373,262 |
|
| 100,388 |
|
| 1,968 |
|
| 4,839 |
|
| 480,457 |
Operating income (loss) |
|
| 325,492 |
|
| 36,164 |
|
| (869) |
|
| (21,367) |
|
| 339,420 |
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
| (233,259) |
|
| (233,259) |
Income before provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 106,161 |
Cash capital expenditures (3) |
|
| 160,814 |
|
| 103,609 |
|
| 692 |
|
| 2,456 |
|
| 267,571 |
|
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For the nine months ended September 30, 2016 |
|
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|
|
Revenues |
| $ | 951,181 |
| $ | 193,280 |
| $ | 72,159 |
| $ | — |
| $ | 1,216,620 |
Cost of revenues (2) |
|
| 196,027 |
|
| 59,582 |
|
| 59,021 |
|
| — |
|
| 314,630 |
Operating profit |
|
| 755,154 |
|
| 133,698 |
|
| 13,138 |
|
| — |
|
| 901,990 |
Selling, general, and administrative (4) |
|
| 55,141 |
|
| 30,727 |
|
| 9,960 |
|
| 14,498 |
|
| 110,326 |
Acquisition related adjustments and expenses |
|
| 3,533 |
|
| 5,441 |
|
| — |
|
| — |
|
| 8,974 |
Asset impairment and decommission costs |
|
| 19,359 |
|
| 1,476 |
|
| — |
|
| 2,345 |
|
| 23,180 |
Depreciation, amortization and accretion |
|
| 384,208 |
|
| 88,111 |
|
| 2,661 |
|
| 4,655 |
|
| 479,635 |
Operating income (loss) |
|
| 292,913 |
|
| 7,943 |
|
| 517 |
|
| (21,498) |
|
| 279,875 |
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
| (203,119) |
|
| (203,119) |
Income before provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 76,756 |
Cash capital expenditures (3) |
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| 232,558 |
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| 60,125 |
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| 1,792 |
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| 2,633 |
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| 297,108 |
Domestic Site | Int'l Site | Site | |||||||||||||
Leasing | Leasing | Development | Other | Total | |||||||||||
For the six months ended June 30, 2021 | (in thousands) | ||||||||||||||
Revenues | $ | 822,407 | $ | 206,790 | $ | 95,069 | $ | — | $ | 1,124,266 | |||||
Cost of revenues (1) | 129,069 | 61,649 | 74,815 | — | 265,533 | ||||||||||
Operating profit | 693,338 | 145,141 | 20,254 | — | 858,733 | ||||||||||
Selling, general, and administrative expenses | 57,257 | 17,281 | 9,783 | 21,225 | 105,546 | ||||||||||
Acquisition and new business initiatives | |||||||||||||||
related adjustments and expenses | 7,928 | 3,867 | — | — | 11,795 | ||||||||||
Asset impairment and decommission costs | 6,561 | 1,993 | — | 146 | 8,700 | ||||||||||
Depreciation, amortization and accretion | 267,025 | 87,865 | 1,162 | 3,298 | 359,350 | ||||||||||
Operating income (loss) | 354,567 | 34,135 | 9,309 | (24,669) | 373,342 | ||||||||||
Other income (expense) (principally interest | |||||||||||||||
expense and other expense) | (206,092) | (206,092) | |||||||||||||
Income before income taxes | 167,250 | ||||||||||||||
Cash capital expenditures (2) | 1,147,729 | 35,675 | 1,591 | 1,996 | 1,186,991 | ||||||||||
For the six months ended June 30, 2020 | |||||||||||||||
Revenues | $ | 774,361 | $ | 200,397 | $ | 49,534 | $ | — | $ | 1,024,292 | |||||
Cost of revenues (1) | 127,997 | 59,400 | 39,620 | — | 227,017 | ||||||||||
Operating profit | 646,364 | 140,997 | 9,914 | — | 797,275 | ||||||||||
Selling, general, and administrative expenses | 52,555 | 16,966 | 8,950 | 20,233 | 98,704 | ||||||||||
Acquisition and new business initiatives | |||||||||||||||
related adjustments and expenses | 5,601 | 2,832 | — | — | 8,433 | ||||||||||
Asset impairment and decommission costs | 16,168 | 4,429 | — | — | 20,597 | ||||||||||
Depreciation, amortization and accretion | 268,375 | 88,623 | 1,213 | 3,074 | 361,285 | ||||||||||
Operating income (loss) | 303,665 | 28,147 | (249) | (23,307) | 308,256 | ||||||||||
Other income (expense) (principally interest | |||||||||||||||
expense and other expense) | (479,774) | (479,774) | |||||||||||||
Loss before income taxes | (171,518) | ||||||||||||||
Cash capital expenditures (2) | 139,813 | 43,634 | 1,064 | 2,396 | 186,907 |
Domestic Site | Int'l Site | Site | |||||||||||||
Leasing | Leasing | Development | Other (3) | Total | |||||||||||
Assets | (in thousands) | ||||||||||||||
As of June 30, 2021 | $ | 6,716,342 | $ | 2,912,584 | $ | 84,486 | $ | 246,901 | $ | 9,960,313 | |||||
As of December 31, 2020 | $ | 5,893,636 | $ | 2,955,563 | $ | 61,729 | $ | 247,090 | $ | 9,158,018 |
22
(1)Excludes depreciation, amortization, and accretion.
(2)Includes cash paid for capital expenditures, acquisitions, and right-of-use assets.
(3)Assets in Other consist primarily of general corporate assets and short-term investments.
For the six months ended June 30, 2021 and 2020, site leasing revenue in Brazil was $113.8 million and $115.3 million, respectively. Other than Brazil, no foreign country represented a material amount of the Company’s total revenues in any of the periods presented. Total long-lived assets in Brazil were $1.0 billion as of June 30, 2021 and December 31, 2020.
15.EARNINGS PER SHARE
Basic earnings per share was computed by dividing net loss attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net loss attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested RSUs, PSUs, and shares issuable upon exercise of stock options as determined under the “Treasury Stock” method.
The following table sets forth basic and diluted net income (loss) per common share attributable to common shareholders for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share data):
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| Total | |||||
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Assets |
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As of September 30, 2017 |
| $ | 5,247,946 |
| $ | 1,929,355 |
| $ | 44,976 |
| $ | 78,193 |
| $ | 7,300,470 |
As of December 31, 2016 |
| $ | 5,396,394 |
| $ | 1,839,703 |
| $ | 43,769 |
| $ | 81,079 |
| $ | 7,360,945 |
For the three months | For the six months | |||||||||||
ended June 30, | ended June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Numerator: | ||||||||||||
Net income (loss) attributable to SBA | ||||||||||||
Communications Corporation | $ | 152,669 | $ | 22,813 | $ | 140,922 | $ | (104,247) | ||||
Denominator: | ||||||||||||
Basic weighted-average shares outstanding | 109,412 | 111,738 | 109,441 | 111,823 | ||||||||
Dilutive impact of stock options, RSUs, and PSUs | 1,889 | 1,896 | 1,769 | — | ||||||||
Diluted weighted-average shares outstanding | 111,301 | 113,634 | 111,210 | 111,823 | ||||||||
Net income (loss) per common share attributable to SBA | ||||||||||||
Communications Corporation: | ||||||||||||
Basic | $ | 1.40 | $ | 0.20 | $ | 1.29 | $ | (0.93) | ||||
Diluted | $ | 1.37 | $ | 0.20 | $ | 1.27 | $ | (0.93) |
For the three months ended June 30, 2021 and 2020, the diluted weighted average number of common shares outstanding excluded an immaterial number of shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive.
For the six months ended June 30, 2021, the diluted weighted average number of common shares outstanding excluded an immaterial number of shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive.
For the six months ended June 30, 2020, all potential common stock equivalents, including 3.3 million shares underlying stock options outstanding, 0.3 million shares underlying RSUs outstanding, and 0.1 million shares underlying PSUs outstanding, were excluded as the effect would be anti-dilutive.
16. REDEEMABLE NONCONTROLLING INTERESTS
As a result of its acquisition of additional interests of a previously unconsolidated joint venture in South Africa which operated under the name Atlas Tower South Africa (“Atlas SA”), the Company has consolidated the results of the entity into its financial statements since August 2019. In connection with the acquisition of the additional interest in Atlas SA, the parties agreed to both a put option exercisable by the noncontrolling interest holder and a call option exercisable by the Company for the remaining 6% minority interest based on a formulaic approach. During the third quarter of 2020, the Company noticed its intent to exercise its call option to acquire its remaining 6% interest in the joint venture. On March 25, 2021, the Company remitted $13.7 million to the seller as closing consideration for the remaining 6% interest in the joint venture, subject to an earnout in September 2021 based on the attainment of certain future performance metrics. The parties are currently in litigation regarding various issues arising in connection with the closing of the transaction. Consequently, the Company is retaining the fair value of the acquired 6% noncontrolling interest in Redeemable Noncontrolling Interests until such time as the litigation is resolved.
The fair value assigned to the redeemable noncontrolling interest as of June 30, 2021 is based on the contractually-defined redemption value, which was delivered as closing consideration for the remaining 6% interest. In accordance with the terms of the call option, the amount of closing consideration was fixed upon exercise of the call option. The Company allocates income and losses to the noncontrolling interest holder based on the applicable membership interest percentage. At each reporting period, the redeemable noncontrolling interest is recognized at the higher of (1) the initial carrying amount of the noncontrolling interest as adjusted for accumulated income or loss attributable to the noncontrolling interest holder, or (2) the contractually-defined redemption value as of the balance sheet date. Adjustments to the carrying amount of redeemable noncontrolling interest are charged against retained earnings (or additional paid-in capital if there are no retained earnings). For the six months ended June 30, 2021, the loss attributable to the 6% interest was immaterial.
17.DERIVATIVES AND HEDGING ACTIVITIES
The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. On August 4, 2020, the Company, through its wholly owned subsidiary, SBA Senior Finance II, terminated its existing $1.95 billion cash flow hedge on a portion of its 2018 Term Loan in exchange for a payment of $176.2 million. On the same date, the Company entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the
2018 Term Loan. The Company designated this interest rate swap as a cash flow hedge as it is expected to be highly effective at offsetting changes in cash flows of the LIBOR based component interest payments of its 2018 Term Loan. As of June 30, 2021, the hedge remains highly effective; therefore, subsequent changes in the fair value are recorded in Accumulated other comprehensive loss, net. As of June 30, 2021 and December 31, 2020, the interest rate swap has a fair value of $38.0 million and $12.1 million, respectively, and is recorded in Other assets on the Consolidated Balance Sheets.
On August 4, 2020, the Company also terminated its existing interest rate swaps, which were previously de-designated as cash flow hedges. There was 0 cash transferred in connection with the termination of these swaps. The Company reclassifies the fair value of its interest rate swaps recorded in Accumulated other comprehensive loss, net on their de-designation date to non-cash interest expense on the Consolidated Statements of Operations over their respective remaining term end dates, which range from 2023 to 2025.
Accumulated other comprehensive loss, net includes an aggregate of $92.5 million and $140.9 million of accumulated derivative net losses as of June 30, 2021 and December 31, 2020, respectively.
The Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform.
The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows with the exception of the termination of interest rate swaps, which are recorded in Net cash used in financing activities.
The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three and six month periods ended June 30, 2021 and 2020.
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ended June 30, | ended June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Cash Flow Hedge - Interest Rate Swap Agreement | (in thousands) | |||||||||||
Change in fair value recorded in Accumulated other comprehensive loss, net | $ | (5,657) | $ | (17,326) | $ | 25,909 | $ | (125,208) | ||||
Amount recognized in Non-cash interest expense | $ | — | $ | (2,822) | $ | — | $ | (5,646) | ||||
Derivatives Not Designated as Hedges - Interest Rate Swap Agreements | ||||||||||||
Amount reclassified from Accumulated other comprehensive | ||||||||||||
loss, net into Non-cash interest expense | $ | 11,222 | $ | 4,642 | $ | 22,443 | $ | 9,285 | ||||
Change in fair value recorded in Other income (expense), net | $ | — | $ | (774) | $ | — | $ | 3,192 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a leading independent owner and operator of wireless communications infrastructure, including tower structures, rooftops and other structures that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations are in the United States and its territories. In addition, we own and operate towers in South America, Central America, Canada, and Canada.South Africa. Our primary business line is our site leasing business, which contributed 98.7%97.6% of our total segment operating profit for the ninesix months ended SeptemberJune 30, 2017.2021. In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of SeptemberJune 30, 2017,2021, we owned 26,76433,854 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers. We also managed or leased approximately 5,300 actual or potential sites, approximately 500 of which were revenue producing as of September 30, 2017. Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks.
Site Leasing Services
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, Canada,South America, Central America, Canada, and South America.Africa. As of SeptemberJune 30, 2017, (1)2021, no U.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) no U.S. state or territory accounted
for more than 10% of our total revenues for the ninesix months ended SeptemberJune 30, 2017.2021. In addition, as of SeptemberJune 30, 2017,2021, approximately 27.6%30% of our total towers are located in Brazil and less than 3%4% of our total towers are located in any of our other international markets (each country is considered a market). We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T, T-Mobile, Verizon Wireless, Sprint, Oi S.A., Telefonica, Claro, Tigo, and TIM. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual site. In the United States and Canada, our tenant leases are generally for an initial term of five years to ten10 years with five 5-yearmultiple renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. Tenant leases in South Africa and our Central American and South American markets typically have an initial term of ten10 years with multiple five-year renewal periods. In Central America, we have similar rent escalators to that of leases in the United States and Canada while our leases in South America and South Africa escalate in accordance with a standard cost of living index. Site leases in South America typically provide for a fixed rental amount and a pass through charge for the underlying ground lease rent.
In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases, tenant leases, and tower-related expenses are due and paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limitedrent related to (1) permitting and other local fees, (2) utilities, and (3) taxes. In Brazil, Canada, Chile, and Colombia, significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other tower-related expenses are denominated in local currency. In Argentina and Peru, our revenue, expenses, and capital expenditures, including tenant leases, ground leases, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars.property interests.
23
Cost of site leasing revenue primarily consists of:
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GroundCash and non-cash rental expense on ground leases and other underlying property interests;
Property taxes;
Site maintenance and monitoring costs (exclusive of employee related costs);
Utilities;
Property insurance; and
Lease initial direct cost amortization.
In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years or moreto 10 years with multiple renewal terms of five-year periods, at our option, and provide for rent escalators which typically average 2-3% annually, or in our South American markets and South Africa, adjust in accordance with a standard cost of living index. As of SeptemberJune 30, 2017,2021, approximately 70%71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing.
In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases and other property interests, tenant leases, and tower-related expenses are paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. In Brazil, Canada, Chile, and South Africa significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in local currency. In Colombia, Argentina, and Peru, our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars.
As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our Condensed Notescondensed notes to Consolidated Financial Statementsconsolidated financial statements included in this quarterly report.
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total operating profit | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
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Domestic site leasing |
| 81.6% |
| 83.0% |
| 81.8% |
| 83.7% | 80.7% | 81.9% | 80.7% | 81.1% | ||||||||||||
International site leasing |
| 17.1% |
| 15.7% |
| 16.9% |
| 14.8% | 16.8% | 16.9% | 16.9% | 17.7% | ||||||||||||
Total site leasing |
| 98.7% |
| 98.7% |
| 98.7% |
| 98.5% | 97.5% | 98.8% | 97.6% | 98.8% |
We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology. We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements. During the remainder of 2017,2021, we expect organic site leasing revenue growth in both our domestic and international segments to be consistent with our growthincrease over 2020 levels due in 2016 and the nine months ended September 30, 2017.part to wireless carriers deploying unused spectrum. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we
expect to grow our cash flows by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment. Furthermore, because our towers are strategically positioned, and our customers typically do not relocate, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology (e.g. iDEN, MetroPCS, Clearwire, and Cricket). technology.
Site Development Services
Our site development business, which is conducted in the United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locations. Site development services revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas on existing infrastructure; (4) support in leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related
24
site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for all site development operations.
For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements in this quarterly report.
Capital Allocation Strategy
Our capital allocation strategy is to prioritizeaimed at increasing shareholder value through investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value. A primary goalvalue, and by returning cash generated by our operations in the form of cash dividends. While the addition of a cash dividend to our capital allocation strategy isin 2019 has provided us with a new tool to increasereturn value to our shareholders, we will also continue to make investments focused on increasing Adjusted Funds From Operations per share. To achieve this, we expect we wouldto continue to deploy capital betweento portfolio growth and stock repurchases, subject to compliance with REIT distribution requirements, available funds and market conditions, while maintaining our target leverage levels. Key elements of our capital allocation strategy include:
Portfolio Growth.We intend to continue to grow our towerasset portfolio, domestically and internationally, primarily through tower acquisitions and the construction of new towers.towers that meet our internal return on invested capital criteria.
Stock Repurchase Program.We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share.
Dividend. Cash dividends are an additional component of our strategy of returning value to shareholders. We do not expect our dividend to require any changes in our leverage and, we believe, it will allow us to continue to focus on building and buying quality assets and opportunistically buying back our stock. While the timing and amount of future dividends will be subject to approval by our Board of Directors, we believe that our future cash flow generation will permit us to grow our cash dividend in the future.
COVID-19 Update
We have experienced minimal impact to our business or results of operations from the coronavirus (COVID-19) pandemic. The extent to which COVID-19 could adversely affect our future business operations will depend on future developments such as the duration of the outbreak, new information on the severity of COVID-19 or its variants, and methods taken to contain or treat the outbreak of COVID-19 including a vaccine distribution program. While the full impact of COVID-19 is not yet known, we will continue to monitor these developments and the potential effects on our business.
Critical Accounting Policies and Estimates
We have identified the policies and significant estimation processes listed below and in theour Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally
accepted in the United States, with no need for management’s judgment in their application. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 2 of our Consolidated Financial Statementsconsolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant.
Acquisitions Reference Rate Reform
In January 2017,ASU 2020-04 and ASU 2021-01, Reference Rate Reform, provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the FASB issued ASU 2017-01, Clarifyingamendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the Definitionend of a Business.the hedging relationship. An entity may elect to apply the amendments prospectively through December 31, 2022. The standard provides guidanceICE Benchmark Administration Limited (“IBA”) intends to help entities determine whether transactions should be accounted forcease the publication of USD LIBOR as acquisitions or disposals of assets or businesses. ASU 2017-01 provides revised guidance to determine when an acquisition meetsfollows: the definition of a business or when the acquisition should be accounted for as an asset acquisition. We adopted this standard effective January 1 2017week and 2 month tenors on December 31, 2021 and all changes will be accounted for prospectively. The adoption of ASU 2017-01 did not haveother tenors on June 30, 2023. On July 7, 2021, we amended our Credit Facility to provide mechanics relating to a material impact on our unaudited consolidated financial statements and related disclosures.
Under the new standard, our acquisitions will generally qualify for asset acquisition treatment under ASC 360, Property, Plant, and Equipment, rather than business combination treatment under ASC 805 Business Combinations. For acquisitions which qualify as asset acquisitions, the aggregate purchase price is allocated on a relative fair value basis to towers and related intangible assets. For asset acquisitions, external, direct transaction costs will be capitalizedtransition away from LIBOR as a componentbenchmark interest rate and the replacement of LIBOR by an alternative benchmark rate. Refer to “Debt Instruments and Debt Service Requirements” below for further discussion of the costCredit Facility. As of the asset acquired. We will continue to expense internal acquisition costs as incurred.
We account for business combinations under the acquisition method of accounting. The assets and liabilities acquired are recorded at fair market value at the date of each acquisition and the results of operations of the acquired assets are included with those from the dates of the respective acquisitions. We continue to evaluate all acquisitions for a period not to exceed one year after the applicable closing date of each transaction to determine whether any additional adjustments are neededJune 30, 2021, other than modifications to the allocation of the purchase price paid for the assets acquired and liabilities assumedCredit Facility, we have not modified any contracts as a result of information available atreference rate reform and are evaluating the acquisition date.impact this standard may have on our consolidated financial statements.
RESULTS OF OPERATIONS
The fair valuesThis report presents our financial results and other financial metrics after eliminating the impact of net assets acquiredchanges in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are based on management’s estimatesnon-GAAP measures, gives management and assumptions,investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as other information compiled by management, including valuations that utilize customary valuation procedureseliminating the impact of realized and techniques. The fair value estimates are basedunrealized gains and losses on available historical informationour intercompany loans.
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Revenues and on future expectations and assumptions deemed reasonable by management at theSegment Operating Profit:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
Revenues | (in thousands) | ||||||||||||||
Domestic site leasing | $ | 418,829 | $ | 388,018 | $ | — | $ | 30,811 | 7.9% | ||||||
International site leasing | 105,266 | 94,385 | 3,461 | 7,420 | 7.9% | ||||||||||
Site development | 51,433 | 24,823 | — | 26,610 | 107.2% | ||||||||||
Total | $ | 575,528 | $ | 507,226 | $ | 3,461 | $ | 64,841 | 12.8% | ||||||
Cost of Revenues | |||||||||||||||
Domestic site leasing | $ | 63,948 | $ | 64,093 | $ | — | $ | (145) | (0.2%) | ||||||
International site leasing | 31,402 | 27,505 | 1,102 | 2,795 | 10.2% | ||||||||||
Site development | 40,409 | 19,904 | — | 20,505 | 103.0% | ||||||||||
Total | $ | 135,759 | $ | 111,502 | $ | 1,102 | $ | 23,155 | 20.8% | ||||||
Operating Profit | |||||||||||||||
Domestic site leasing | $ | 354,881 | $ | 323,925 | $ | — | $ | 30,956 | 9.6% | ||||||
International site leasing | 73,864 | 66,880 | 2,359 | 4,625 | 6.9% | ||||||||||
Site development | 11,024 | 4,919 | — | 6,105 | 124.1% |
25
time. If
Revenues
Domestic site leasing revenues increased $30.8 million for the actual results differthree months ended June 30, 2021, as compared to the prior year, primarily due to (1) revenues from 843 towers acquired (including wireless tenant licenses on 699 utility transmission structures from the estimatesPG&E transaction) and judgments used12 towers built since April 1, 2020 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.
International site leasing revenues increased $10.9 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $7.4 million. These changes were primarily due to (1) revenues from 109 towers acquired and 408 towers built since April 1, 2020 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals. Site leasing revenue in these fair values,Brazil represented 11.1% of total site leasing revenue for the amounts recordedperiod. No other individual international market represented more than 4% of our total site leasing revenue.
Site development revenues increased $26.6 million for the three months ended June 30, 2021, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.
Operating Profit
Domestic site leasing segment operating profit increased $31.0 million for the three months ended June 30, 2021, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2020 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $7.0 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $4.6 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since April 1, 2020 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
Site development segment operating profit increased $6.1 million for the three months ended June 30, 2021, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.
Selling, General, and Administrative Expenses:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 29,201 | $ | 25,233 | $ | — | $ | 3,968 | 15.7% | ||||||
International site leasing | 9,521 | 9,035 | 406 | 80 | 0.9% | ||||||||||
Total site leasing | $ | 38,722 | $ | 34,268 | $ | 406 | $ | 4,048 | 11.8% | ||||||
Site development | 3,994 | 4,494 | — | (500) | (11.1%) | ||||||||||
Other | 11,229 | 10,326 | — | 903 | 8.7% | ||||||||||
Total | $ | 53,945 | $ | 49,088 | $ | 406 | $ | 4,451 | 9.1% |
Selling, general, and administrative expenses increased $4.9 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses increased $4.5 million. These changes were primarily as a result of an increase in personnel and other support related costs including noncash compensation as well as an increase in travel related expenses.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 4,596 | $ | 3,004 | $ | — | $ | 1,592 | 53.0% | ||||||
International site leasing | 2,198 | 1,630 | 731 | (163) | (10.0%) | ||||||||||
Total | $ | 6,794 | $ | 4,634 | $ | 731 | $ | 1,429 | 30.8% |
Acquisition and new business initiatives related adjustments and expenses increased $2.2 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $1.4 million. These changes were primarily as a result of an increase in third party acquisition and integration costs as well as incremental costs incurred in support of new business initiatives as compared to the prior year.
Asset Impairment and Decommission Costs:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 2,690 | $ | 5,342 | $ | — | $ | (2,652) | (49.6%) | ||||||
International site leasing | 961 | 900 | 58 | 3 | 0.3% | ||||||||||
Total site leasing | $ | 3,651 | $ | 6,242 | $ | 58 | $ | (2,649) | (42.4%) | ||||||
Other | 146 | — | — | 146 | —% | ||||||||||
Total | $ | 3,797 | $ | 6,242 | $ | 58 | $ | (2,503) | (40.1%) |
Asset impairment and decommission costs decreased $2.4 million for the three months ended June 30, 2021, as compared to the prior year. This change was primarily as a result of a $3.2 million decrease in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $0.8 million increase related to sites decommissioned in the consolidated financial statements could be subjectsecond quarter of 2021 compared to the prior year period.
Depreciation, Accretion, and Amortization Expense:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 128,034 | $ | 134,569 | $ | — | $ | (6,535) | (4.9%) | ||||||
International site leasing | 44,744 | 42,011 | 1,316 | 1,417 | 3.4% | ||||||||||
Total site leasing | $ | 172,778 | $ | 176,580 | $ | 1,316 | $ | (5,118) | (2.9%) | ||||||
Site development | 1,017 | 597 | — | 420 | 70.4% | ||||||||||
Other | 1,674 | 1,529 | — | 145 | 9.5% | ||||||||||
Total | $ | 175,469 | $ | 178,706 | $ | 1,316 | $ | (4,553) | (2.5%) |
Depreciation, accretion, and amortization expense decreased $3.2 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense decreased $4.6 million. These changes were primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since April 1, 2020.
Operating Income (Expense):
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 190,360 | $ | 155,777 | $ | — | $ | 34,583 | 22.2% | ||||||
International site leasing | 16,440 | 13,304 | (152) | 3,288 | 24.7% | ||||||||||
Total site leasing | $ | 206,800 | $ | 169,081 | $ | (152) | $ | 37,871 | 22.4% | ||||||
Site development | 6,013 | (172) | — | 6,185 | 3,595.9% | ||||||||||
Other | (13,049) | (11,855) | — | (1,194) | 10.1% | ||||||||||
Total | $ | 199,764 | $ | 157,054 | $ | (152) | $ | 42,862 | 27.3% |
Domestic site leasing operating income increased $34.6 million for the three months ended June 30, 2021, as compared to the prior year, primarily due to higher segment operating profit and decreases in depreciation, accretion, amortization expense and asset impairment and decommission costs, partially offset by increases in selling, general, and administrative expenses and acquisition and new business initiatives related adjustments and expenses.
International site leasing operating income increased $3.1 million for the three months ended June 30, 2021, as compared to the prior year. This change was primarily due to higher segment operating profit, partially offset by an increase in depreciation, accretion, and amortization expense.
Site development operating income increased $6.2 million for the three months ended June 30, 2021, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH and a decrease in selling, general, and administrative expenses.
Other Income (Expense):
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Interest income | $ | 547 | $ | 699 | $ | 10 | $ | (162) | (23.2%) | ||||||
Interest expense | (90,544) | (95,687) | 12 | 5,131 | (5.4%) | ||||||||||
Non-cash interest expense | (11,812) | (2,337) | — | (9,475) | 405.4% | ||||||||||
Amortization of deferred financing fees | (4,865) | (5,188) | — | 323 | (6.2%) | ||||||||||
Loss from extinguishment of debt, net | (2,020) | — | — | (2,020) | —% | ||||||||||
Other income (expense), net | 108,849 | (31,588) | 143,176 | (2,739) | 842.8% | ||||||||||
Total | $ | 155 | $ | (134,101) | $ | 143,198 | $ | (8,942) | 8.7% |
Interest expense decreased $5.1 million for the three months ended June 30, 2021, as compared to the prior year primarily due to a possible impairmentlower weighted average interest rate due in part to the interest rate swap entered into during the third quarter of 2020, partially offset by a higher average principal amount of cash interest bearing debt outstanding.
Non-cash interest expense increased $9.5 million for the three months ended June 30, 2021, as compared to the prior year primarily related to amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges.
Loss from extinguishment of debt was $2.0 million for the three months ended June 30, 2021 representing the write-off of unamortized financing fees related to the repayment of the intangible assets, or require acceleration2017-1C Tower Securities in May 2021.
Other income (expense), net includes a $111.3 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the amortization expensethree months ended June 30, 2021, while the prior year period included a $31.2 million loss.
(Provision) Benefit for Income Taxes:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
(Provision) benefit for income taxes | $ | (47,250) | $ | 165 | $ | (50,276) | $ | 2,861 | (27.0%) |
The intangible assets representProvision for income taxes increased $47.4 million for the value associated with the current leases at the acquisition date (“Current contract intangibles”) and future tenant leases anticipated to be addedthree months ended June 30, 2021, as compared to the towers (“Network location intangibles”)prior year. On a constant currency basis, provision for income taxes decreased $2.9 million. This change was primarily due to a decrease in foreign withholding taxes and deferred state taxes.
Net Income:
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Net income | $ | 152,669 | $ | 23,118 | $ | 92,770 | $ | 36,781 | 84.8% |
Net income increased $129.6 million for the three months ended June 30, 2021, as compared to the prior year. On a constant currency basis, net income increased $36.8 million. These changes were calculated using the discounted values of the current or future expected cash flows. The intangible assets are estimatedprimarily due to have a useful life consistent with the useful life of the related tower assets, which is typically 15 years.
In connection with certain acquisitions, we may agree to pay contingent consideration (or earnouts)an increase in operating income and decreases in cash or stock ifinterest expense related to the communication sites or businesses that areinterest rate swaps and provision for income taxes. This was partially offset by increases in non-cash interest expense.
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
Revenues and Segment Operating Profit:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
Revenues | (in thousands) | ||||||||||||||
Domestic site leasing | $ | 822,407 | $ | 774,361 | $ | — | $ | 48,046 | 6.2% | ||||||
International site leasing | 206,790 | 200,397 | (9,118) | 15,511 | 7.7% | ||||||||||
Site development | 95,069 | 49,534 | — | 45,535 | 91.9% | ||||||||||
Total | $ | 1,124,266 | $ | 1,024,292 | $ | (9,118) | $ | 109,092 | 10.7% | ||||||
Cost of Revenues | |||||||||||||||
Domestic site leasing | $ | 129,069 | $ | 127,997 | $ | — | $ | 1,072 | 0.8% | ||||||
International site leasing | 61,649 | 59,400 | (3,149) | 5,398 | 9.1% | ||||||||||
Site development | 74,815 | 39,620 | — | 35,195 | 88.8% | ||||||||||
Total | $ | 265,533 | $ | 227,017 | $ | (3,149) | $ | 41,665 | 18.4% | ||||||
Operating Profit | |||||||||||||||
Domestic site leasing | $ | 693,338 | $ | 646,364 | $ | — | $ | 46,974 | 7.3% | ||||||
International site leasing | 145,141 | 140,997 | (5,969) | 10,113 | 7.2% | ||||||||||
Site development | 20,254 | 9,914 | — | 10,340 | 104.3% |
Revenues
Domestic site leasing revenues increased $48.0 million for the six months ended June 30, 2021, as compared to the prior year, primarily due to (1) revenues from 906 towers acquired meet or exceed certain performance targets over a period of one to three years after they have been acquired. We accrue for contingent consideration in connection with business combinations at fair value as of(including wireless tenant licenses on 699 utility transmission structures from the date of the acquisition. All subsequent changes in fair value of contingent consideration payable in cash are recorded through Consolidated Statements of Operations. Contingent consideration in connection with asset acquisitions will be recognized at the time when the contingency is resolved or becomes payablePG&E transaction) and will increase the cost basis of the assets acquired.
REIT Conversion
We believe that our business has been operated in a manner that complies with the REIT rules16 towers built since January 1, 2016,2020 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.
International site leasing revenues increased $6.4 million for the six months ended June 30, 2021, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $15.5 million. These changes were primarily due to (1) revenues from 115 towers acquired and 453 towers built since January 1, 2020 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals. Site leasing revenue in Brazil represented
11.1% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue.
Site development revenues increased $45.5 million for the six months ended June 30, 2021, as compared to prior year, as a result we madeof increased carrier activity driven primarily by T-Mobile and DISH.
Operating Profit
Domestic site leasing segment operating profit increased $47.0 million for the electionsix months ended June 30, 2021, as compared to be subjectthe prior year, primarily due to taxadditional profit generated by (1) towers acquired and built since January 1, 2020 and organic site leasing growth as a REIT commencing with our taxable year ended December 31, 2016. A REIT is an entity that qualifies for special treatment for U.S. federal income tax purposes because, among other things, it derives most of its income from real estate-based sources and makes a special election under the Code. We operate as a REIT that principally invests in, and derives most of its income from the ownership, operation and leasing of, towers. As a REIT, we generally will be entitled to a deduction for dividends that we pay and therefore not subject to U.S. federal corporate income tax on that portion of our net income that we distribute to our shareholders. However, we will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through taxable REIT subsidiaries (“TRSs”). These assets and operations currently consist primarilynoted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $4.1 million for the six months ended June 30, 2021, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $10.1 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2020 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
Site development servicessegment operating profit increased $10.3 million for the six months ended June 30, 2021, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.
Selling, General, and Administrative Expenses:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 57,257 | $ | 52,555 | $ | — | $ | 4,702 | 8.9% | ||||||
International site leasing | 17,281 | 16,966 | 92 | 223 | 1.3% | ||||||||||
Total site leasing | $ | 74,538 | $ | 69,521 | $ | 92 | $ | 4,925 | 7.1% | ||||||
Site development | 9,783 | 8,950 | — | 833 | 9.3% | ||||||||||
Other | 21,225 | 20,233 | — | 992 | 4.9% | ||||||||||
Total | $ | 105,546 | $ | 98,704 | $ | 92 | $ | 6,750 | 6.8% |
Selling, general, and administrative expenses increased $6.8 million for the six months ended June 30, 2021, as compared to the prior year. This change was primarily as a result of an increase in personnel and other support related costs including noncash compensation.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 7,928 | $ | 5,601 | $ | — | $ | 2,327 | 41.5% | ||||||
International site leasing | 3,867 | 2,832 | 812 | 223 | 7.9% | ||||||||||
Total | $ | 11,795 | $ | 8,433 | $ | 812 | $ | 2,550 | 30.2% |
Acquisition and new business initiatives related adjustments and expenses increased $3.4 million for the six months ended June 30, 2021, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $2.6 million. These changes were primarily as a result of an increase in third party acquisition and integration costs as well as incremental costs incurred in support of new business initiatives as compared to the prior year.
Asset Impairment and Decommission Costs:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 6,561 | $ | 16,168 | $ | — | $ | (9,607) | (59.4%) | ||||||
International site leasing | 1,993 | 4,429 | 21 | (2,457) | (55.5%) | ||||||||||
Total site leasing | $ | 8,554 | $ | 20,597 | $ | 21 | $ | (12,064) | (58.6%) | ||||||
Other | 146 | — | — | 146 | —% | ||||||||||
Total | $ | 8,700 | $ | 20,597 | $ | 21 | $ | (11,918) | (57.9%) |
Asset impairment and decommission costs decreased $11.9 million for the six months ended June 30, 2021, as compared to the prior year. This change was primarily as a result of a $11.1 million decrease in impairment charges resulting from our international operations. Our international operations will continueregular analysis of whether the future cash flows from certain towers are adequate to be subject, as applicable,recover the carrying value of the investment in those towers and a $0.8 million decrease related to foreign taxessites decommissioned in the jurisdictionssix months ended June 30, 2021 compared to the prior year period.
Depreciation, Accretion, and Amortization Expenses:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 267,025 | $ | 268,375 | $ | — | $ | (1,350) | (0.5%) | ||||||
International site leasing | 87,865 | 88,623 | (3,981) | 3,223 | 3.6% | ||||||||||
Total site leasing | $ | 354,890 | $ | 356,998 | $ | (3,981) | $ | 1,873 | 0.5% | ||||||
Site development | 1,162 | 1,213 | — | (51) | (4.2%) | ||||||||||
Other | 3,298 | 3,074 | — | 224 | 7.3% | ||||||||||
Total | $ | 359,350 | $ | 361,285 | $ | (3,981) | $ | 2,046 | 0.6% |
Depreciation, accretion, and amortization expense decreased $1.9 million for the six months ended June 30, 2021, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $2.0 million. This change was primarily due to an increase in which those operations are located. We may also be subjectthe number of towers we acquired and built since January 1, 2020, partially offset by the impact of assets that became fully depreciated since the prior year period.
Operating Income (Expense):
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Domestic site leasing | $ | 354,567 | $ | 303,665 | $ | — | $ | 50,902 | 16.8% | ||||||
International site leasing | 34,135 | 28,147 | (2,913) | 8,901 | 31.6% | ||||||||||
Total site leasing | $ | 388,702 | $ | 331,812 | $ | (2,913) | $ | 59,803 | 18.0% | ||||||
Site development | 9,309 | (249) | — | 9,558 | (3,838.6%) | ||||||||||
Other | (24,669) | (23,307) | — | (1,362) | 5.8% | ||||||||||
Total | $ | 373,342 | $ | 308,256 | $ | (2,913) | $ | 67,999 | 22.1% |
Domestic site leasing operating income increased $50.9 million for the six months ended June 30, 2021, as compared to the prior year, primarily due to higher segment operating profit and decreases in asset impairment and decommission costs and depreciation, accretion, and amortization expense, partially offset by increases in selling, general, and administrative expenses and acquisition and new business initiatives related adjustments and expenses.
International site leasing operating income increased $6.0 million for the six months ended June 30, 2021, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $8.9 million. These changes were primarily due to higher segment operating profit and a decrease in asset impairment and decommission costs, partially offset by an increase in depreciation, accretion, and amortization expense.
Site development operating income increased $9.6 million for the six months ended June 30, 2021, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH, partially offset by an increase in selling, general, and administrative expenses.
Other Income (Expense):
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Interest income | $ | 1,179 | $ | 1,584 | $ | (91) | $ | (314) | (19.8%) | ||||||
Interest expense | (180,639) | (191,538) | 9 | 10,890 | (5.7%) | ||||||||||
Non-cash interest expense | (23,615) | (4,743) | 1 | (18,873) | 397.9% | ||||||||||
Amortization of deferred financing fees | (9,755) | (10,328) | — | 573 | (5.5%) | ||||||||||
Loss from extinguishment of debt, net | (13,672) | (16,864) | — | 3,192 | (18.9%) | ||||||||||
Other income (expense), net | 20,410 | (257,885) | 286,764 | (8,469) | (231.2%) | ||||||||||
Total | $ | (206,092) | $ | (479,774) | $ | 286,683 | $ | (13,001) | 6.0% |
Interest expense decreased $10.9 million for the six months ended June 30, 2021, as compared to the prior year primarily due to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on our assets and operations.
As a REIT, we will generally be required to distribute at least 90% of our REIT taxable income after the utilization of any available net operating losses (“NOLs”) (determined without regardlower weighted average interest rate due in part to the dividends paid deduction and excluding net capital gain) eachinterest rate swap entered into during third quarter of 2020, partially offset by a higher average principal amount of cash interest bearing debt outstanding.
Non-cash interest expense increased $18.9 million for the six months ended June 30, 2021, as compared to the prior year primarily related to amortization of accumulated losses related to our shareholders. In additioninterest rate swaps de-designated as cash flow hedges.
Loss from extinguishment of debt was $13.7 million for the six months ended June 30, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of the unamortized financing fees related to the REIT distribution requirements, our determinationredemption of the 2017 Senior Notes in February 2021, as well as the write-off of $2.0 million of unamortized financing fees related to the repayment of the 2017-1C in May 2021. Loss from extinguishment of debt was $16.9 million for the six months ended June 30, 2020 representing the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and unamortized financing fees related to the redemption of the 2014 Senior Notes.
Other income (expense), net includes a $25.0 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2021, while the prior year period included a $261.3 million loss.
(Provision) Benefit for Income Taxes:
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
(Provision) benefit for income taxes | $ | (26,328) | $ | 66,702 | $ | (94,869) | $ | 1,839 | (8.6%) |
Net Income (Loss):
For the six months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Net income (loss) | $ | 140,922 | $ | (104,816) | $ | 188,901 | $ | 56,837 | 83.2% |
Net income was $140.9 million for the six months ended June 30, 2021, as compared to net loss of $104.8 million in the prior year period. This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with foreign subsidiaries, an increase in operating income, and decreases in cash interest expense related to the interest rate swaps, loss from extinguishment of debt, and provision for income taxes. This was partially offset by increases in non-cash interest expense.
NON-GAAP FINANCIAL MEASURES
This report contains information regarding Adjusted EBITDA, a non-GAAP measure. We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to the timing and amount of future dividend distributions will be based on a number of factors, including investment opportunities around our core business, the availability of our existing federal NOLs of approximately $1.1 billion as of December 31, 2016 that are attributes of the REIT, our financial condition, earnings, debt covenants, and other possible uses of such funds. We may use these NOLs to offset our REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized.
RESULTS OF OPERATIONS
why management utilizes this measure. This report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans.
26
Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 328,395 |
| $ | 319,109 |
| $ | — |
| $ | 9,286 |
|
| 2.9% |
International site leasing |
|
| 80,143 |
|
| 69,059 |
|
| 1,521 |
|
| 9,563 |
|
| 13.8% |
Site development |
|
| 25,407 |
|
| 23,151 |
|
| — |
|
| 2,256 |
|
| 9.7% |
Total |
| $ | 433,945 |
| $ | 411,319 |
| $ | 1,521 |
| $ | 21,105 |
|
| 5.1% |
Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 65,226 |
| $ | 65,353 |
| $ | — |
| $ | (127) |
|
| (0.2%) |
International site leasing |
|
| 25,125 |
|
| 21,001 |
|
| 531 |
|
| 3,593 |
|
| 17.1% |
Site development |
|
| 21,117 |
|
| 19,114 |
|
| — |
|
| 2,003 |
|
| 10.5% |
Total |
| $ | 111,468 |
| $ | 105,468 |
| $ | 531 |
| $ | 5,469 |
|
| 5.2% |
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 263,169 |
| $ | 253,756 |
| $ | — |
| $ | 9,413 |
|
| 3.7% |
International site leasing |
|
| 55,018 |
|
| 48,058 |
|
| 990 |
|
| 5,970 |
|
| 12.4% |
Site development |
|
| 4,290 |
|
| 4,037 |
|
| — |
|
| 253 |
|
| 6.3% |
Revenues
Domestic site leasing revenues increased $9.3 million for the three months ended September 30, 2017, as compared to the prior year, due to (i) revenues from 248 towers acquired and 60 towers built since July 1, 2016 and (ii) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals primarily by MetroPCS, Clearwire, and Cricket.
International site leasing revenues increased $11.1 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $9.6 million. These changes were primarily due to (i) revenues from 560 towers acquired and 439 towers built since July 1, 2016, (ii) organic site leasing growth from new leases and contractual escalators, and (iii) an increase in reimbursable pass-through expenses. Site leasing revenue in Brazil represented 13.5% of total site leasing revenue for the period. No other individual international market represented more than 3% of our total site leasing revenue.
Site development revenues increased $2.3 million for the three months ended September 30, 2017, as compared to the prior year, as a result of increased carrier activity.
Operating Profit
Domestic site leasing segment operating profit increased $9.4 million for the three months ended September 30, 2017, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since July 1, 2016 and organic site leasing growth as noted above, (ii) continued control of our site leasing cost of revenue, and (iii) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $7.0 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $6.0 million. These changes were primarily due to towers acquired and built since July 1, 2016 and organic site leasing growth as noted above, partially offset by increases in cost of revenues.
27
Site development segment operating profit increased $0.3 million for the three months ended September 30, 2017, as compared to the prior year, primarily due to increased revenue, partially offset by lower margins due to a change in the mix of work performed.
Selling, General, and Administrative Expenses:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 16,945 |
| $ | 19,206 |
| $ | — |
| $ | (2,261) |
|
| (11.8%) |
International site leasing |
|
| 6,658 |
|
| 5,277 |
|
| 121 |
|
| 1,260 |
|
| 23.9% |
Total site leasing |
| $ | 23,603 |
| $ | 24,483 |
| $ | 121 |
| $ | (1,001) |
|
| (4.1%) |
Site development |
|
| 3,826 |
|
| 3,128 |
|
| — |
|
| 698 |
|
| 22.3% |
Not identified by segment |
|
| 5,130 |
|
| 4,644 |
|
| — |
|
| 486 |
|
| 10.5% |
Total |
| $ | 32,559 |
| $ | 32,255 |
| $ | 121 |
| $ | 183 |
|
| 0.6% |
Selling, general, and administrative expenses increased $0.3 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses increased $0.2 million. These changes were primarily as a result of increases in non-cash compensation, personnel, salaries, benefits, and other support costs particularly in connection with our international expansion, partially offset by a decrease in the provision for doubtful accounts associated with our domestic site leasing business.
Acquisition Related Adjustments and Expenses:
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|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 962 |
| $ | 335 |
| $ | — |
| $ | 627 |
|
| 187.2% |
International site leasing |
|
| 621 |
|
| 2,635 |
|
| (12) |
|
| (2,002) |
|
| (76.0%) |
Total |
| $ | 1,583 |
| $ | 2,970 |
| $ | (12) |
| $ | (1,375) |
|
| (46.3%) |
Acquisition related adjustments and expenses decreased $1.4 million, on an actual and constant currency basis, for the three months ended September 30, 2017, as compared to the prior year. These changes were primarily as a result of a reduction in third party acquisition costs expensed in the current year as compared to the prior year.
Asset Impairment and Decommission Costs:
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|
|
| For the three months ended |
|
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|
|
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| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
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|
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|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 7,898 |
| $ | 1,974 |
| $ | — |
| $ | 5,924 |
|
| 300.1% |
International site leasing |
|
| 1,554 |
|
| 331 |
|
| 66 |
|
| 1,157 |
|
| 349.5% |
Total site leasing |
| $ | 9,452 |
| $ | 2,305 |
| $ | 66 |
| $ | 7,081 |
|
| 307.2% |
Site development |
|
| (35) |
|
| — |
|
| — |
|
| (35) |
|
| —% |
Total |
| $ | 9,417 |
| $ | 2,305 |
| $ | 66 |
| $ | 7,046 |
|
| 305.7% |
28
Asset impairment and decommission costs increased $7.1 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs increased $7.0 million. These changes were primarily as a result of a $9.0 million gain on the sale of fiber assets recorded in the prior year period, partially offset by a $2.5 million decrease in impairment charges from the prior year associated with our regular analysis of whether the future cash flows are adequate to recover the carrying value of the investment.
Depreciation, Accretion, and Amortization Expenses:
|
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|
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|
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|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 125,142 |
| $ | 126,059 |
| $ | — |
| $ | (917) |
|
| (0.7%) |
International site leasing |
|
| 34,548 |
|
| 31,453 |
|
| 662 |
|
| 2,433 |
|
| 7.7% |
Total site leasing |
| $ | 159,690 |
| $ | 157,512 |
| $ | 662 |
| $ | 1,516 |
|
| 1.0% |
Site development |
|
| 605 |
|
| 997 |
|
| — |
|
| (392) |
|
| (39.3%) |
Not identified by segment |
|
| 1,612 |
|
| 1,602 |
|
| — |
|
| 10 |
|
| 0.6% |
Total |
| $ | 161,907 |
| $ | 160,111 |
| $ | 662 |
| $ | 1,134 |
|
| 0.7% |
Depreciation, accretion, and amortization expense increased $1.8 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $1.1 million. These changes were primarily due to additional international site leasing depreciation associated with the increase in the number of towers we acquired and built since July 1, 2016, partially offset by a decrease in domestic site leasing depreciation associated with assets that became fully depreciated since the prior year period.
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 112,222 |
| $ | 106,182 |
| $ | — |
| $ | 6,040 |
|
| 5.7% |
International site leasing |
|
| 11,637 |
|
| 8,362 |
|
| 153 |
|
| 3,122 |
|
| 37.3% |
Total site leasing |
| $ | 123,859 |
| $ | 114,544 |
| $ | 153 |
| $ | 9,162 |
|
| 8.0% |
Site development |
|
| (106) |
|
| (88) |
|
| — |
|
| (18) |
|
| 20.5% |
Not identified by segment |
|
| (6,742) |
|
| (6,246) |
|
| — |
|
| (496) |
|
| 7.9% |
Total |
| $ | 117,011 |
| $ | 108,210 |
| $ | 153 |
| $ | 8,648 |
|
| 8.0% |
Domestic site leasing operating income increased $6.0 million for the three months ended September 30, 2017, as compared to the prior year, primarily due to higher segment operating profit and decreases in selling, general, and administrative expenses and depreciation, accretion, and amortization expenses, partially offset by increases in asset impairment and decommission costs and acquisition related adjustments and expenses.
International site leasing operating income increased $3.3 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $3.1 million. These changes were primarily due to higher segment operating profit and a decrease in acquisition related adjustments and expenses, partially offset by increases in depreciation, accretion, and amortization expenses, selling, general, and administrative expenses, and asset impairment and decommission costs.
29
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Interest income |
| $ | 2,505 |
| $ | 3,101 |
| $ | 42 |
| $ | (638) |
|
| (20.6%) |
Interest expense |
|
| (81,357) |
|
| (83,426) |
|
| (3) |
|
| 2,072 |
|
| (2.5%) |
Non-cash interest expense |
|
| (725) |
|
| (585) |
|
| — |
|
| (140) |
|
| 23.9% |
Amortization of deferred financing fees |
|
| (4,957) |
|
| (5,445) |
|
| — |
|
| 488 |
|
| (9.0%) |
Loss from extinguishment of debt, net |
|
| — |
|
| (34,512) |
|
| — |
|
| 34,512 |
|
| —% |
Other (expense) income, net |
|
| 20,062 |
|
| (1,139) |
|
| 21,521 |
|
| (320) |
|
| 28.1% |
Total |
| $ | (64,472) |
| $ | (122,006) |
| $ | 21,560 |
| $ | 35,974 |
|
| (29.5%) |
Interest expense decreased $2.1 million, on an actual and constant currency basis, for the three months ended September 30, 2017, as compared to the prior year, due to a lower weighted average interest rate on debt and lower average principal amount of cash-interest bearing debt outstanding as compared to the prior year. The decrease primarily resulted from the repayment of the 2010-2C Tower Securities in July 2016, the 5.75% Senior Notes in August 2016, the 5.625% Senior Notes in October 2016, and the 2012-1C Tower Securities in April 2017, partially offset by the issuance of the 2016 Senior Notes in August 2016 and the 2017-1C Tower Securities in April 2017, and a higher average balance outstanding on the Revolving Credit Facility in the current year period.
Loss from extinguishment of debt was $34.5 million for the three months ended September 30, 2016 due to the payment of a $25.8 million call premium on the redemption of the 5.75% Senior Notes, the write-off of $7.7 million in deferred financing fees related to the 5.75% Senior Notes, and the write-off of $1.0 million in deferred financing fees related to the redemption of the 2010-2C Tower Securities.
Other (expense) income, net includes an $18.4 million gain on the remeasurement of a U.S. dollar denominated intercompany loan with a Brazilian subsidiary for the three months ended September 30, 2017, while the prior year period included a $3.2 million loss.
Provision for Income Taxes:
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Provision for income taxes |
| $ | (3,378) |
| $ | (1,574) |
| $ | 8 |
| $ | (1,812) |
|
| 115.1% |
Provision for income taxes increased $1.8 million, on an actual and constant currency basis, for the three months ended September 30, 2017, as compared to the prior year. These changes were primarily due to an increase in state tax provisions from becoming a taxpayer in additional jurisdictions.
Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Net income (loss) |
| $ | 49,161 |
| $ | (15,370) |
| $ | 21,705 |
| $ | 42,826 |
|
| 278.6% |
30
Net income increased $64.5 million for the three months ended September 30, 2017, as compared to the prior year. On a constant currency basis, net income increased $42.8 million. These changes were primarily due to fluctuations in our foreign currency exchange rates including changes recorded on the remeasurement of the intercompany loan, an increase in operating income, and a decrease in the loss from extinguishment of debt.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 974,850 |
| $ | 951,181 |
| $ | — |
| $ | 23,669 |
|
| 2.5% |
International site leasing |
|
| 234,239 |
|
| 193,280 |
|
| 16,365 |
|
| 24,594 |
|
| 12.7% |
Site development |
|
| 75,513 |
|
| 72,159 |
|
| — |
|
| 3,354 |
|
| 4.6% |
Total |
| $ | 1,284,602 |
| $ | 1,216,620 |
| $ | 16,365 |
| $ | 51,617 |
|
| 4.2% |
Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 195,903 |
| $ | 196,027 |
| $ | — |
| $ | (124) |
|
| (0.1%) |
International site leasing |
|
| 73,167 |
|
| 59,582 |
|
| 5,738 |
|
| 7,847 |
|
| 13.2% |
Site development |
|
| 62,713 |
|
| 59,021 |
|
| — |
|
| 3,692 |
|
| 6.3% |
Total |
| $ | 331,783 |
| $ | 314,630 |
| $ | 5,738 |
| $ | 11,415 |
|
| 3.6% |
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
| $ | 778,947 |
| $ | 755,154 |
| $ | — |
| $ | 23,793 |
|
| 3.2% |
International site leasing |
|
| 161,072 |
|
| 133,698 |
|
| 10,627 |
|
| 16,747 |
|
| 12.5% |
Site development |
|
| 12,800 |
|
| 13,138 |
|
| — |
|
| (338) |
|
| (2.6%) |
Revenues
Domestic site leasing revenues increased $23.7 million for the nine months ended September 30, 2017, as compared to the prior year, due to (i) revenues from 402 towers acquired and 85 towers built since January 1, 2016 and (ii) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals primarily by MetroPCS, Clearwire, and Cricket.
International site leasing revenues increased $41.0 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $24.6 million. These changes were primarily due to (i) revenues from 565 towers acquired and 575 towers built since January 1, 2016, (ii) organic site leasing growth from new leases and contractual escalators, and (iii) an increase in reimbursable pass-through expenses. Site leasing revenue in Brazil represented 13.4% of total site leasing revenue for the period. No other individual international market represented more than 3% of our total site leasing revenue.
Site development revenues increased $3.4 million for the nine months ended September 30, 2017, as compared to the prior year, as a result of increased carrier activity.
Operating Profit
Domestic site leasing segment operating profit increased $23.8 million for the nine months ended September 30, 2017, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2016 and organic site leasing growth as noted above, (ii) continued control of our site leasing cost of revenue, and (iii) the positive impact of our ground lease purchase program.
31
International site leasing segment operating profit increased $27.4 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $16.7 million. These changes were primarily due to towers acquired and built since January 1, 2016 and organic site leasing growth as noted above, partially offset by increases in cost of revenues.
Site development segment operating profit decreased $0.3 million for the nine months ended September 30, 2017, as compared to the prior year, primarily due to lower margins resulting from a change in the mix of work performed, partially offset by an increase in revenue due to increased carrier activity.
Selling, General, and Administrative Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 53,147 |
| $ | 55,141 |
| $ | — |
| $ | (1,994) |
|
| (3.6%) |
International site leasing |
|
| 19,007 |
|
| 30,727 |
|
| 911 |
|
| (12,631) |
|
| (41.1%) |
Total site leasing |
| $ | 72,154 |
| $ | 85,868 |
| $ | 911 |
| $ | (14,625) |
|
| (17.0%) |
Site development |
|
| 11,495 |
|
| 9,960 |
|
| — |
|
| 1,535 |
|
| 15.4% |
Not identified by segment |
|
| 16,528 |
|
| 14,498 |
|
| — |
|
| 2,030 |
|
| 14.0% |
Total |
| $ | 100,177 |
| $ | 110,326 |
| $ | 911 |
| $ | (11,060) |
|
| (10.0%) |
Selling, general, and administrative expenses decreased $10.1 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses decreased $11.1 million. These changes were primarily as a result of a decrease in the provision for doubtful accounts which included the $16.5 million Oi reserve recorded in the second quarter of 2016, partially offset by increases in non-cash compensation, personnel, salaries, benefits, and other support costs.
Acquisition Related Adjustments and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 4,300 |
| $ | 3,533 |
| $ | — |
| $ | 767 |
|
| 21.7% |
International site leasing |
|
| 2,557 |
|
| 5,441 |
|
| 194 |
|
| (3,078) |
|
| (56.6%) |
Total |
| $ | 6,857 |
| $ | 8,974 |
| $ | 194 |
| $ | (2,311) |
|
| (25.8%) |
Acquisition related adjustments and expenses decreased $2.1 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, acquisition related adjustments and expenses decreased $2.3 million. These changes were primarily as a result of changes in our estimated pre-acquisition contingencies as compared to the prior year period and a reduction in third party acquisition costs expensed in the current year as compared to the prior year.
32
Asset Impairment and Decommission Costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 22,746 |
| $ | 19,359 |
| $ | — |
| $ | 3,387 |
|
| 17.5% |
International site leasing |
|
| 2,956 |
|
| 1,476 |
|
| 201 |
|
| 1,279 |
|
| 86.7% |
Total site leasing |
| $ | 25,702 |
| $ | 20,835 |
| $ | 201 |
| $ | 4,666 |
|
| 22.4% |
Site development |
|
| 206 |
|
| — |
|
| — |
|
| 206 |
|
| —% |
Not identified by segment |
|
| — |
|
| 2,345 |
|
| — |
|
| (2,345) |
|
| (100.0%) |
Total |
| $ | 25,908 |
| $ | 23,180 |
| $ | 201 |
| $ | 2,527 |
|
| 10.9% |
Asset impairment and decommission costs increased by $2.7 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs increased $2.5 million. These changes were primarily as a result of a $9.0 million gain on the sale of fiber assets recorded in the prior year period, partially offset by a $2.3 million decrease in write-off and disposal costs related to our former corporate headquarters building during the second quarter of 2016 and a $4.0 million decrease in impairment charges resulting from our regular analysis of whether the future cash flows are adequate to recover the carrying value of the investment.
Depreciation, Accretion, and Amortization Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 373,262 |
| $ | 384,208 |
| $ | — |
| $ | (10,946) |
|
| (2.8%) |
International site leasing |
|
| 100,388 |
|
| 88,111 |
|
| 6,988 |
|
| 5,289 |
|
| 6.0% |
Total site leasing |
| $ | 473,650 |
| $ | 472,319 |
| $ | 6,988 |
| $ | (5,657) |
|
| (1.2%) |
Site development |
|
| 1,968 |
|
| 2,661 |
|
| — |
|
| (693) |
|
| (26.0%) |
Not identified by segment |
|
| 4,839 |
|
| 4,655 |
|
| — |
|
| 184 |
|
| 4.0% |
Total |
| $ | 480,457 |
| $ | 479,635 |
| $ | 6,988 |
| $ | (6,166) |
|
| (1.3%) |
Depreciation, accretion, and amortization expense increased $0.8 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense decreased $6.2 million. These changes were primarily due to a decrease in domestic site leasing depreciation associated with assets that became fully depreciated since the prior year period, partially offset by additional international site leasing depreciation associated with an increase in the number of towers we acquired and built since January 1, 2016.
33
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Domestic site leasing |
| $ | 325,492 |
| $ | 292,913 |
| $ | — |
| $ | 32,579 |
|
| 11.1% |
International site leasing |
|
| 36,164 |
|
| 7,943 |
|
| 2,333 |
|
| 25,888 |
|
| 325.9% |
Total site leasing |
| $ | 361,656 |
| $ | 300,856 |
| $ | 2,333 |
| $ | 58,467 |
|
| 19.4% |
Site development |
|
| (869) |
|
| 517 |
|
| — |
|
| (1,386) |
|
| (268.1%) |
Not identified by segment |
|
| (21,367) |
|
| (21,498) |
|
| — |
|
| 131 |
|
| (0.6%) |
Total |
| $ | 339,420 |
| $ | 279,875 |
| $ | 2,333 |
| $ | 57,212 |
|
| 20.4% |
Domestic site leasing operating income increased $32.6 million for the nine months ended September 30, 2017, as compared to the prior year, primarily due to higher segment operating profit and decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.
International site leasing operating income increased $28.2 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $25.9 million. These changes were primarily due to higher segment operating profit and decreases in selling, general, and administrative expenses resulting from the $16.5 million Oi reserve recorded in the second quarter of 2016 and acquisition related adjustments and expenses, partially offset by increases in depreciation, accretion, and amortization expenses and asset impairment and decommission costs.
Site development operating income decreased $1.4 million for the nine months ended September 30, 2017, as compared to the prior year, primarily due to lower segment operating profit and increases in selling, general, and administrative expenses and asset impairment and decommission costs, partially offset by a decrease in depreciation, accretion, and amortization expense.
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Interest income |
| $ | 8,648 |
| $ | 7,704 |
| $ | 685 |
| $ | 259 |
|
| 3.4% |
Interest expense |
|
| (237,415) |
|
| (250,913) |
|
| (3) |
|
| 13,501 |
|
| (5.4%) |
Non-cash interest expense |
|
| (2,146) |
|
| (1,500) |
|
| — |
|
| (646) |
|
| 43.1% |
Amortization of deferred financing fees |
|
| (16,603) |
|
| (16,035) |
|
| — |
|
| (568) |
|
| 3.5% |
Loss from extinguishment of debt, net |
|
| (1,961) |
|
| (34,512) |
|
| — |
|
| 32,551 |
|
| (94.3%) |
Other (expense) income, net |
|
| 16,218 |
|
| 92,137 |
|
| (78,029) |
|
| 2,110 |
|
| 2.3% |
Total |
| $ | (233,259) |
| $ | (203,119) |
| $ | (77,347) |
| $ | 47,207 |
|
| (23.2%) |
Interest expense decreased $13.5 million, on an actual and constant currency basis, for the nine months ended September 30, 2017, as compared to the prior year, due to a lower weighted average interest rate on debt and a lower average principal amount of cash-interest bearing debt outstanding as compared to the prior year. The decrease primarily resulted from the repayment of the 2010-2C Tower Securities in July 2016, the 5.75% Senior Notes in August 2016, the 5.625% Senior Notes in October 2016, and the 2012-1C Tower Securities in April 2017, partially offset by the issuance of the 2016-1C Tower Securities in July 2016, the 2016 Senior Notes in August 2016, and the 2017-1C Tower Securities in April 2017, and a higher average balance outstanding on the Revolving Credit Facility in the current year period.
34
Loss from extinguishment of debt was $2.0 million for the nine months ended September 30, 2017 due tothe write-off of unamortized financing costs associated with the repayment of the 2012-1C Tower Securities in April 2017. Loss from extinguishment of debt was$34.5 million for the nine months ended September 30, 2016 due to the payment of a $25.8 million call premium and the write off of $7.7 million in deferred financing fees on the redemption of the 5.75% Senior Notes, and the write off of $1.0 million in deferred financing fees related to the redemption of the 2010-2C Tower Securities.
Other (expense) income, net includes an $11.6 million gain on the remeasurement of a U.S. dollar denominated intercompany loan with a Brazilian subsidiary for the nine months ended September 30, 2017, while the prior year period included an $89.0 million gain.
Provision for Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Provision for income taxes |
| $ | (10,167) |
| $ | (5,780) |
| $ | 19 |
| $ | (4,406) |
|
| 76.2% |
Provision for income taxes increased $4.4 million, on an actual and constant currency basis, for the nine months ended September 30, 2017, as compared to the prior year. These changes were primarily due to an increase in state tax provisions from becoming a taxpayer in additional jurisdictions.
Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Net income |
| $ | 95,994 |
| $ | 70,976 |
| $ | (75,033) |
| $ | 100,051 |
|
| 141.0% |
Net income increased $25.0 million for the nine months ended September 30, 2017, as compared to the prior year. On a constant currency basis, net income increased $100.1 million. These changes were primarily due to an increase in operating income and a decrease in interest expense, partially offset by fluctuations in our foreign currency exchange rates including changes recorded on the remeasurement of the intercompany loan.
NON-GAAP FINANCIAL MEASURES
This report contains information regarding a non-GAAP measure, Adjusted EBITDA. We have provided below a description of Adjusted EBITDA a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure. This report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates and the Oi reserve recorded in the second quarter of 2016. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans. In addition, we believe that excluding the Oi reserve, which represents a $16.5 million one-time provision for doubtful accounts recorded in the prior year, provides management and investors the ability to better analyze our core results without the impact of what we believe is a non-recurring event.
35
Adjusted EBITDA
We define Adjusted EBITDA as net income excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition and new business initiatives related adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and amortization, and provision for or benefit fromincome taxes.
We believe that Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties to meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs. In addition, Adjusted EBITDA is a componentsimilar to the measure of the calculation that has beencurrent financial performance generally used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to the 2014 Senior Notes, 2016 Senior Notes, 2020 Senior Notes, and 20172021 Senior Notes. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
For the three months ended | Constant | ||||||||||||||
June 30, | Foreign | Constant | Currency | ||||||||||||
2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||
(in thousands) | |||||||||||||||
Net income | $ | 152,669 | $ | 23,118 | $ | 92,770 | $ | 36,781 | 84.8% | ||||||
Non-cash straight-line leasing revenue | (9,515) | (346) | — | (9,169) | 2,650.0% | ||||||||||
Non-cash straight-line ground lease expense | 2,007 | 3,678 | 36 | (1,707) | (46.4%) | ||||||||||
Non-cash compensation | 21,643 | 18,579 | 165 | 2,899 | 15.6% | ||||||||||
Loss from extinguishment of debt, net | 2,020 | — | — | 2,020 | —% | ||||||||||
Other (income) expense, net | (108,849) | 31,588 | (143,176) | 2,739 | 842.8% | ||||||||||
Acquisition and new business initiatives | |||||||||||||||
related adjustments and expenses | 6,794 | 4,634 | 731 | 1,429 | 30.8% | ||||||||||
Asset impairment and decommission costs | 3,797 | 6,242 | 58 | (2,503) | (40.1%) | ||||||||||
Interest income | (547) | (699) | (10) | 162 | (23.2%) | ||||||||||
Total interest expense (1) | 107,221 | 103,212 | (12) | 4,021 | 3.9% | ||||||||||
Depreciation, accretion, and amortization | 175,469 | 178,706 | 1,316 | (4,553) | (2.5%) | ||||||||||
Provision for income taxes (2) | 47,485 | 55 | 50,277 | (2,847) | (26.3%) | ||||||||||
Adjusted EBITDA | $ | 400,194 | $ | 368,767 | $ | 2,155 | $ | 29,272 | 7.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended |
|
|
|
|
|
|
| Constant | |||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | |||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| ||||||||||
Net income (loss) |
| $ | 49,161 |
| $ | (15,370) |
| $ | 21,705 |
| $ | 42,826 |
|
| (278.6%) |
Non-cash straight-line leasing revenue |
|
| (4,376) |
|
| (7,334) |
|
| (86) |
|
| 3,044 |
|
| (41.5%) |
Non-cash straight-line ground lease expense |
|
| 7,698 |
|
| 8,323 |
|
| 14 |
|
| (639) |
|
| (7.7%) |
Non-cash compensation |
|
| 9,423 |
|
| 8,076 |
|
| 31 |
|
| 1,316 |
|
| 16.3% |
Loss from extinguishment of debt, net |
|
| — |
|
| 34,512 |
|
| — |
|
| (34,512) |
|
| —% |
Other expense (income), net |
|
| (20,062) |
|
| 1,139 |
|
| (21,521) |
|
| 320 |
|
| 28.1% |
Acquisition related adjustments and expenses |
|
| 1,583 |
|
| 2,970 |
|
| (12) |
|
| (1,375) |
|
| (46.3%) |
Asset impairment and decommission costs |
|
| 9,417 |
|
| 2,305 |
|
| 66 |
|
| 7,046 |
|
| 305.7% |
Interest income |
|
| (2,505) |
|
| (3,101) |
|
| (42) |
|
| 638 |
|
| (20.6%) |
Interest expense (1) |
|
| 87,039 |
|
| 89,456 |
|
| 3 |
|
| (2,420) |
|
| (2.7%) |
Depreciation, accretion, and amortization |
|
| 161,907 |
|
| 160,111 |
|
| 662 |
|
| 1,134 |
|
| 0.7% |
Provision for taxes (2) |
|
| 3,835 |
|
| 2,123 |
|
| 8 |
|
| 1,704 |
|
| 80.3% |
Adjusted EBITDA |
| $ | 303,120 |
| $ | 283,210 |
| $ | 828 |
| $ | 19,082 |
|
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| ||||||||||||||||||||
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| For the nine months ended |
|
|
|
|
| Constant | For the six months ended | Constant | ||||||||||||||||||||
|
| September 30, |
| Foreign |
| Constant |
| Currency | June 30, | Foreign | Constant | Currency | ||||||||||||||||||
|
| 2017 |
| 2016 |
| Currency Impact |
| Currency Change |
| % Change | 2021 | 2020 | Currency Impact | Currency Change | % Change | |||||||||||||||
|
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|
|
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|
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| |||||||||||||||
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| (in thousands) |
|
| (in thousands) | |||||||||||||||||||||||||
Net income |
| $ | 95,994 |
| $ | 70,976 |
| $ | (75,033) |
| $ | 100,051 |
| 141.0% | ||||||||||||||||
Net income (loss) | $ | 140,922 | $ | (104,816) | $ | 188,901 | $ | 56,837 | 83.2% | |||||||||||||||||||||
Non-cash straight-line leasing revenue |
| (12,440) |
| (24,955) |
| (1,061) |
| 13,576 |
| (54.4%) | (10,091) | (2,687) | (98) | (7,306) | 271.9% | |||||||||||||||
Non-cash straight-line ground lease expense |
| 23,461 |
| 26,610 |
| 130 |
| (3,279) |
| (12.3%) | 4,648 | 7,527 | 46 | (2,925) | (38.9%) | |||||||||||||||
Non-cash compensation |
| 28,894 |
| 24,752 |
| 110 |
| 4,032 |
| 16.3% | 42,066 | 34,857 | 112 | 7,097 | 20.4% | |||||||||||||||
Loss from extinguishment of debt, net |
| 1,961 |
| 34,512 |
| — |
| (32,551) |
| (94.3%) | 13,672 | 16,864 | — | (3,192) | (18.9%) | |||||||||||||||
Other expense (income), net |
| (16,218) |
| (92,137) |
| 78,029 |
| (2,110) |
| 2.3% | ||||||||||||||||||||
Acquisition related adjustments and expenses |
| 6,857 |
| 8,974 |
| 194 |
| (2,311) |
| (25.8%) | ||||||||||||||||||||
Other (income) expense, net | (20,410) | 257,885 | (286,764) | 8,469 | 231.2% | |||||||||||||||||||||||||
Acquisition and new business initiatives | ||||||||||||||||||||||||||||||
related adjustments and expenses | 11,795 | 8,433 | 812 | 2,550 | 30.2% | |||||||||||||||||||||||||
Asset impairment and decommission costs |
| 25,908 |
| 23,180 |
| 201 |
| 2,527 |
| 10.9% | 8,700 | 20,597 | 21 | (11,918) | (57.9%) | |||||||||||||||
Interest income |
| (8,648) |
| (7,704) |
| (685) |
| (259) |
| 3.4% | (1,179) | (1,584) | 91 | 314 | (19.8%) | |||||||||||||||
Interest expense (1) |
| 256,164 |
| 268,448 |
| 3 |
| (12,287) |
| (4.6%) | ||||||||||||||||||||
Total interest expense (1) | 214,009 | 206,609 | (10) | 7,410 | 3.6% | |||||||||||||||||||||||||
Depreciation, accretion, and amortization |
| 480,457 |
| 479,635 |
| 6,988 |
| (6,166) |
| (1.3%) | 359,350 | 361,285 | (3,981) | 2,046 | 0.6% | |||||||||||||||
Provision for taxes (2) |
| 11,680 |
| 7,185 |
| 50 |
| 4,445 |
| 61.9% | ||||||||||||||||||||
Provision (benefit) for income taxes (2) | 26,783 | (66,255) | 94,869 | (1,831) | (8.4%) | |||||||||||||||||||||||||
Adjusted EBITDA |
|
| 894,070 |
|
| 819,476 |
|
| 8,926 |
|
| 65,668 |
|
| $ | 790,265 | $ | 738,715 | $ | (6,001) | $ | 57,551 | 7.8% | |||||||
Oi reserve |
|
| — |
|
| 16,498 |
|
| — |
|
| (16,498) |
|
| ||||||||||||||||
Adjusted EBITDA excluding Oi reserve |
| $ | 894,070 |
| $ | 835,974 |
| $ | 8,926 |
| $ | 49,170 |
|
|
|
|
|
|
(1)Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
(2)Provision (benefit) for taxes includes $235 and $220 of franchise taxes for the three months ended June 30, 2021 and 2020, respectively, and $455 and $447 of franchise taxes for the six months ended June 30, 2021 and 2020, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.
Adjusted EBITDA increased $19.9$31.4 million for the three months ended SeptemberJune 30, 2017,2021, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $19.1$29.3 million. These changes were primarily due to increasesan increase in domestic site leasing, international site leasing, and site development segment operating profit.profit, partially offset by an increase in cash selling, general, and administrative expenses.
Adjusted EBITDA excluding the Oi reserve increased $58.1$51.6 million for the ninesix months ended SeptemberJune 30, 2017,2021, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA excluding the Oi reserve increased $49.2$57.6 million. These changes were primarily due to increases in domestic and international site leasing segment operating profit, partially offset by an increase in selling, general, and administrative expenses after excluding the Oi reserve and a decrease in site development segment operating profit.
LIQUIDITY AND CAPITAL RESOURCES
SBACSBA Communications Corporation (“SBAC”) is a holding company with no business operations of its own. SBAC’s only significant asset is 100% of the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.
37
A summary of our cash flows is as follows:
For the six months ended | ||||||
June 30, 2021 | June 30, 2020 | |||||
(in thousands) | ||||||
Cash provided by operating activities | $ | 638,282 | $ | 592,418 | ||
Cash used in investing activities | (1,184,754) | (413,970) | ||||
Cash provided by (used in) financing activities | 545,394 | (52,121) | ||||
Change in cash, cash equivalents, and restricted cash | (1,078) | 126,327 | ||||
Effect of exchange rate changes on cash, cash equiv., and restricted cash | (2,920) | (15,809) | ||||
Cash, cash equivalents, and restricted cash, beginning of period | 342,808 | 141,120 | ||||
Cash, cash equivalents, and restricted cash, end of period | $ | 338,810 | $ | 251,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months ended | ||||
|
| September 30, 2017 |
| September 30, 2016 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Cash provided by operating activities |
| $ | 591,472 |
| $ | 527,231 |
Cash used in investing activities |
|
| (290,915) |
|
| (300,213) |
Cash (used in) provided by financing activities |
|
| (317,602) |
|
| 333,534 |
Change in cash, cash equivalents, and restricted cash |
|
| (17,045) |
|
| 560,552 |
Effect of exchange rate changes on cash, cash equiv., and restricted cash |
|
| 3,537 |
|
| 13,760 |
Cash, cash equivalents, and restricted cash, beginning of period |
|
| 185,970 |
|
| 146,619 |
Cash, cash equivalents, and restricted cash, end of period |
| $ | 172,462 |
| $ | 720,931 |
Operating Activities
Cash provided by operating activities was $591.5$638.3 million for the ninesix months ended SeptemberJune 30, 20172021 as compared to $527.2$592.4 million for the ninesix months ended SeptemberJune 30, 2016.2020. The increase of $64.2 million was primarily due to increasesan increase in segment operating profit, the positive impact on cash from domestic site leasing and international site leasing operating segmentschanges in foreign currency exchange rates, and a decrease in net cash interest paid, partially offset by a decrease in cash inflows associated with working capital changes primarily from timing of customer payments.
Investing Activities
A detail of our cash capital expenditures is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the nine months | ||||
|
| ended September 30, | ||||
|
| 2017 |
| 2016 | ||
|
|
|
|
|
|
|
|
| (in thousands) | ||||
Acquisitions of towers and related intangible assets (1)(2) |
| $ | 124,476 |
| $ | 144,535 |
Construction and related costs on new tower builds |
|
| 49,650 |
|
| 51,487 |
Augmentation and tower upgrades |
|
| 31,704 |
|
| 28,201 |
Land buyouts and other assets (3) |
|
| 36,531 |
|
| 46,867 |
Tower maintenance |
|
| 21,752 |
|
| 21,125 |
General corporate |
|
| 3,204 |
|
| 3,507 |
Total cash capital expenditures |
| $ | 267,317 |
| $ | 295,722 |
For the six months ended June 30, | ||||||
2021 | 2020 | |||||
(in thousands) | ||||||
Acquisitions of towers and related intangible assets | $ | (168,885) | $ | (99,424) | ||
Acquisition of right-of-use assets (1) | (947,698) | — | ||||
Land buyouts and other assets (2) | (13,268) | (19,611) | ||||
Construction and related costs on new builds | (22,587) | (28,012) | ||||
Augmentation and tower upgrades | (14,437) | (21,423) | ||||
Tower maintenance | (16,292) | (15,180) | ||||
General corporate | (2,059) | (2,364) | ||||
Other investing activities | 472 | (227,956) | ||||
Net cash used in investing activities | $ | (1,184,754) | $ | (413,970) |
|
|
|
|
|
|
(1)During all of 2017, inclusive of the capital expenditures made during the ninesix months ended SeptemberJune 30, 2017,2021, we acquired the exclusive right to lease and operate 699 utility transmission structures, which included existing wireless tenant licenses from PG&E.
(2)Excludes $6.4 million and $3.6 million spent to extend ground lease terms for the six months ended June 30, 2021 and 2020, respectively.
Subsequent to June 30, 2021, we purchased or agreed to purchase approximately 1,800 communication sites for an aggregate consideration of approximately $270.0 million in cash, including approximately 1,400 sites for approximately $175.0 million in cash relating to the previously announced deal to acquire towers from Airtel Tanzania.
For 2021, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $32.5$35.0 million to $37.5$45.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $395.0$1,450.0 million to $415.0 million as well as potential, additional tower acquisitions not yet under contract.$1,470.0 million. We expect to fund these cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings. The exact amount of our future
38
cash capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.
Financing Activities
DuringA detail of our financing activities is as follows:
For the six months ended | ||||||
June 30, 2021 | June 30, 2020 | |||||
(in thousands) | ||||||
Net repayments under Revolving Credit Facility (1) | $ | (295,000) | $ | (490,000) | ||
Proceeds from issuance of Senior Notes, net of fees (1) | 1,485,512 | 1,480,206 | ||||
Repayment of Senior Notes (1) | (757,500) | (759,143) | ||||
Proceeds from issuance of Tower Securities, net of fees (1) | 1,152,631 | — | ||||
Repayment of Tower Securities (1) | (760,000) | — | ||||
Repurchase and retirement of common stock | (168,922) | (203,330) | ||||
Payment of dividends on common stock | (126,893) | (104,171) | ||||
Proceeds from employee stock purchase/stock option plans, net of taxes | 27,140 | 37,316 | ||||
Other financing activities | (11,574) | (12,999) | ||||
Net cash provided by (used in) financing activities | $ | 545,394 | $ | (52,121) |
(1)For additional information regarding our debt instruments and financings, refer to “Debt Instruments and Debt Service Requirements” below.
Dividends
For the ninesix months ended SeptemberJune 30, 2017,2021, we borrowed $415.0paid the following cash dividends:
Payable to Shareholders | ||||||||
of Record at the Close | Cash Paid | Aggregate Amount | ||||||
Date Declared | of Business on | Per Share | Paid | Date Paid | ||||
February 19, 2021 | March 10, 2021 | $0.58 | $63.4 million | March 26, 2021 | ||||
April 26, 2021 | May 20, 2021 | $0.58 | $63.4 million | June 15, 2021 |
Dividends paid in 2021 and repaid $375.0 million of the outstanding balance under the Revolving Credit Facility. As of September 30, 2017, we had $430.0 million outstanding under the $1.0 billion Revolving Credit Facility. 2020 were ordinary dividends.
Subsequent to SeptemberJune 30, 2017,2021, we borrowed an additional $30.0 milliondeclared the following cash dividends:
Payable to Shareholders | Cash to | |||||
of Record at the Close | be Paid | |||||
Date Declared | of Business on | Per Share | Date to be Paid | |||
August 1, 2021 | August 26, 2021 | $0.58 | September 23, 2021 |
The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and repaid $460.0 millionretaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value. The actual amount, timing, and frequency of future dividends will be at the outstanding balance under the Revolving Credit Facility with proceeds from the 2017 Senior Notes (defined below). As of the date of this filing, no amount was outstanding under the Revolving Credit Facility.
During the nine months ended September 30, 2017, we repurchased 3.9 million sharessole discretion of our Class A common stock underBoard of Directors and will be declared based upon various factors, many of which are beyond our current stock repurchase plan for $538.9 million at a weighted average price per share of $139.16. Subsequent to September 30, 2017, we repurchased 0.8 million shares of our Class A common stock under our current stock repurchase plan for $111.1 million at a weighted average price per share of $147.19. Shares repurchased were retired. As of the date of this filing, we had $350.0 million of authorization remaining under the current stock repurchase plan.control.
On January 20, 2017, SBA Senior Finance II repriced its senior secured term loans from a Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%) to a Eurodollar Rate plus 225 basis points (with a zero Eurodollar floor).
On April 17, 2017, we, through a New York common law trust (the “Trust”), issued $760.0 million of 2017-1C Tower Securities (as defined below). The fixed interest rate on the 2017-1C Tower Securities is 3.168% per annum, payable monthly. Net proceeds from this offering were used to prepay the entire $610.0 million aggregate principal amount, as well as accrued and unpaid interest, of the 2012-1C Tower Securities and for general corporate purposes.
On October 13, 2017, we issued $750.0 million of 2017 Senior Notes (as defined below). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. Net proceeds from this offering were used to repay $460.0 million outstanding under the Revolving Credit Facility and for general corporate purposes.
Registration Statements
We have on file with the Securities and Exchange Commission (the “Commission”) a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets. During the ninesix months ended SeptemberJune 30, 2017,2021, we issued 487,963did not issue any shares of Class A common stock under this registration statement. As of SeptemberJune 30, 2017,2021, we had approximately 1.2 million shares of Class A common stock remaining under this shelf registration statement.
On March 3, 2015,February 26, 2021, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR. This registration statementS-3, which enables us to issue shares of our Class A common stock, preferred stock, or debt securities, either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing automatic shelf registration statements, weWe will file a prospectus supplement and advise the Commission ofcontaining the amount and
type of securities each time we issue securities under thisour automatic shelf registration statement.statement on Form S-3. No securities were issued under this registration statement from March 3, 2015 through the date of this filing.
Debt Instruments and Debt Service Requirements
Revolving Credit Facility under the Senior Credit Agreement
TheOn July 7, 2021, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, amended our Revolving Credit Facility is governedto (1) increase the total commitments under the Facility from $1.25 billion to $1.5 billion, (2) extend the maturity date of the Facility to July 7, 2026, (3) lower the applicable interest rate margins and commitment fees under the Facility, (4) provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate, (5) incorporate sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how we perform against those targets, and (6) amend certain other terms and conditions under the Senior Credit Agreement. TheAs amended, the Revolving Credit Facility consists of a revolving loan under which up to $1.0$1.5 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (i)(1) the Eurodollar Rate plus a margin that ranges from 137.5112.5 basis points to 200.0150.0 basis points or (ii)(2) the Base Rate plus a margin that ranges from 37.512.5 basis points to 100.050.0 basis points, in each case based on the ratio of Consolidated TotalNet Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. As of September 30, 2017, the balance outstanding under the Revolving Credit Facility was accruing interest at 3.20% per annum. In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.15% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA
39
Senior Finance II will repay all amounts outstanding on or before, February 5, 2020. The proceeds availableBorrowings under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of athe period may not be reflective of the total amounts outstanding during such period.
During the three months ended June 30, 2021, we borrowed $100.0 million and repaid $605.0 million of the outstanding balance under the Revolving Credit Facility. During the six months ended June 30, 2021, we borrowed $810.0 million and repaid $1.1 billion of the outstanding balance under the Revolving Credit Facility. As of SeptemberJune 30, 2017,2021, the balance outstanding under the Revolving Credit Facility was $85.0 million accruing interest at 1.600% per annum. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.20% per annum on the amount of the unused commitment. As of June 30, 2021, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
Subsequent to June 30, 2021, we repaid $85.0 million of the outstanding balance under the Revolving Credit Facility. As of the date of this filing, no amount was outstanding under the Revolving Credit Facility.
Term LoansLoan under the Senior Credit Agreement
Repricing Amendment to the Senior Credit Agreement2018 Term Loan
On January 20, 2017,April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a term loan (the “2018 Term Loan”) under the amended itsand restated Senior Credit Agreement, primarily to reduce the stated rate of interest applicable to its senior secured term loans. As amended, the senior secured term loans accrue interest, at SBA Senior Finance II’s election, at either the Base Rate plus 125 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 225 basis points (with a zero Eurodollar Rate floor).
2014 Term Loan
Agreement. The 20142018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5$2.4 billion that matures on March 24, 2021. Prior to the reduction in the term loan interest rates as discussed above, the 2014April 11, 2025. The 2018 Term Loan accruedaccrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 15075 basis points (with a zero Base Rate floor of 1.75%)floor) or the Eurodollar Rate plus 250175 basis points (with a zero Eurodollar Rate floor of 0.75%)floor). The 20142018 Term Loan was issued at 99.75% of par value. As of SeptemberJune 30, 2017,2021, the 20142018 Term Loan was accruing interest at 3.49%1.860% per annum. Principal payments on the 20142018 Term Loan commenced on September 30, 2014 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8$6.0 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2014 Term Loan. We incurred deferred financing fees of approximately $14.1 million in relation to this transaction, which are being amortized through the maturity date.
During the three and ninesix months ended SeptemberJune 30, 2017,2021, we repaid $3.8an aggregate of $6.0 million and $11.3$12.0 million of principal on the 20142018 Term Loan.Loan, respectively. As of SeptemberJune 30, 2017,2021, the 20142018 Term Loan had a principal balance of $1,451.3 million.$2.3 billion.
2015 Term Loan
The 2015 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $500.0 million that matures on June 10, 2022. Prior to the reduction in the term loan interest rates as discussed above, the 2015 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2017, the 2015 Term Loan was accruing interest at 3.49% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million.On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, has the ability to prepay any or all amounts under the 2015 Term Loan. We incurred deferred financing feesentered into an interest rate swap for $1.95 billion of approximately $5.5 million in relation to this transaction, which are being amortizednotional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date.
Duringdate of the three and nine months ended September 30, 2017, we repaid $1.3 million and $3.8 million of principal on the 20152018 Term Loan. As of September 30, 2017, the 2015 Term Loan had a principal balance of $488.8 million.
Secured Tower Revenue Securities
2012-1C Tower Securities
On August 9, 2012,May 14, 2021, we, through the Trust, issued $610.0 million$1.165 billion of Secured Tower Revenue Securities Series 2012-1C (the “2012-1C Tower Securities”), which had an anticipated repayment date of December 11, 2017 and a final maturity date of December 9, 2042. The fixed interest rate of the 2012-1C Tower Securities was 2.933% per annum, payable monthly. We incurred deferred financing fees of $14.9 million in relation to this transaction, which were being amortized through the anticipated repayment date of the 2012-1C Tower Securities.
40
On April 17, 2017, we repaid in full the 2012-1C Tower Securities with proceeds from the 2017-1C Tower Securities. In connection with the prepayment, we expensed $2.0 million of net deferred financing fees.
The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”).
2013 Tower Securities
On April 18, 2013, we, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C,2021-1C, which have an anticipated repayment date of April 10, 2018November 9, 2026 and a final maturity date of AprilMay 9, 20432051 (the “2013-1C Tower Securities”), $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C, which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048 (the “2013-2C Tower Securities”), and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D, which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (the “2013-1D Tower Securities”) (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. We incurred deferred financing fees of $25.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2013 Tower Securities.
2014 Tower Securities
On October 15, 2014, we, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C, which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 (the “2014-1C Tower Securities”) and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C, which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (the “2014-2C Tower Securities”) (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. We incurred deferred financing fees of $22.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.
2015-1C Tower Securities
On October 14, 2015, we, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C, which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015-1C“2021-1C Tower Securities”). The fixed interest rate ofon the 2015-1C2021-1C Tower Securities is 3.156%1.631% per annum, payable monthly. Net proceeds from this offering were
used to repay the entire aggregate principal amount of the 2017-1C Tower Securities ($760.0 million) and the Secured Tower Revenue Securities, Series 2017-1R ($40.0 million) and for general corporate purposes. We have incurred deferred financing fees of $11.2$12.4 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2015-1C2021-1C Tower Securities.
2016-1C Tower Revenue Securities Terms
On July 7, 2016,As of June 30, 2021, we, through the Trust,a New York common law trust (the “Trust”), had issued $700.0 millionand outstanding an aggregate of $5.5 billion of Secured Tower Revenue Securities Series 2016-1C, which have an anticipated repayment date of July 9, 2021 and a final maturity date of July 10, 2046 (the “2016-1C (“Tower Securities”). The fixedsole asset of the Trust consists of a non-recourse mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security. The mortgage loan will be paid from the operating cash flows from the aggregate 9,929 tower sites owned by the Borrowers as of June 30, 2021. The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the 2016-1Ctower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing. For each calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.
The table below sets forth the material terms of our outstanding Tower Securities is 2.877% per annum, payable monthly. Net proceeds from this offering were used to prepay the full $550.0 million outstanding on the 2010-2Cas of June 30, 2021:
Security | Issue Date | Amount Outstanding | Interest Rate | Anticipated Repayment Date | Final Maturity Date | |||||||||
2013-2C Tower Securities | Apr. 18, 2013 | $575.0 million | 3.722% | Apr. 11, 2023 | Apr. 9, 2048 | |||||||||
2014-2C Tower Securities | Oct. 15, 2014 | $620.0 million | 3.869% | Oct. 8, 2024 | Oct. 8, 2049 | |||||||||
2018-1C Tower Securities | Mar. 9, 2018 | $640.0 million | 3.448% | Mar. 9, 2023 | Mar. 9, 2048 | |||||||||
2019-1C Tower Securities | Sep. 13, 2019 | $1.165 billion | 2.836% | Jan. 12, 2025 | Jan. 12, 2050 | |||||||||
2020-1C Tower Securities | Jul. 14, 2020 | $750.0 million | 1.884% | Jan. 9, 2026 | Jul. 11, 2050 | |||||||||
2020-2C Tower Securities | Jul. 14, 2020 | $600.0 million | 2.328% | Jan. 11, 2028 | Jul. 9, 2052 | |||||||||
2021-1C Tower Securities | May 14, 2021 | $1.165 billion | 1.631% | Nov. 9, 2026 | May 9, 2051 |
Risk Retention Tower Securities and for general corporate purposes. We incurred deferred financing fees of $9.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2016-1C Tower Securities.
2017-1C Tower Securities
On April 17, 2017, we, through the Trust, issued $760.0 million of Secured Tower Revenue Securities Series 2017-1C, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1C Tower Securities”). The fixed interest rate on the 2017-1C Tower Securities is 3.168% per annum, payable monthly. Net proceeds from this offering were used to prepay the entire $610.0 million aggregate principal amount, as well as accrued and unpaid interest, of the 2012-1C Tower Securities and for general corporate purposes. We incurred deferred financing fees of $10.2 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2017-1C Tower Securities.
In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), SBA Guarantor, LLC, a wholly owned subsidiary, purchased $40.0(1) $33.7 million of Secured Tower Revenue Securities Series 2017-1R2018-1R (the “2018-1R Tower Securities”) issued by the Trust which have anwith a fixed interest rate of 4.949% per annum, payable monthly, and with the same anticipated repayment date of April 11, 2022 and a final maturity date as the 2018-1C Tower Securities, (2) $61.4 million of April 9, 2047Secured Tower Revenue Securities Series 2019-1R (the “2017-
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1R“2019-1R Tower Securities”). The issued by the Trust with a fixed interest rate on the 2017-1R Tower Securities is 4.459%of 4.213% per annum, payable monthly.monthly, and with the same anticipated repayment date and final maturity date as the 2019-1C Tower Securities, (3) $71.1 million of Secured Tower Revenue Securities Series 2020-2R (the “2020-2R Tower Securities”) issued by the Trust with a fixed interest rate of 4.336% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2020-2C Tower Securities, and (4) $61.4 million of Secured Tower Revenue Securities Series 2021-1R (the “2021-1R Tower Securities”) issued by the Trust with a fixed interest rate of 3.625% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-1C Tower Securities. Principal and interest payments made on the 2017-1R2018-1R Tower Securities, 2019-1R Tower Securities, 2020-2R Tower Securities, and 2021-1R Tower Securities eliminate in consolidation.
In connection with the issuance of the 2017-1C Tower Securities, the non-recourse mortgage loan was increased by $800.0 million (or by a net of $190.0 million after giving effect to prepayment of the loan components relating to the 2012-1C Tower Securities). The new loan accrues interest at the same rate as the 2017-1C Tower Securities; however, it is subject to all other material terms of the existing mortgage loan, including collateral and interest rate after the anticipated repayment date.
Debt Covenants
As of SeptemberJune 30, 2017,2021, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.
Senior Notes
2014 Senior Notes
On July 1, 2014,January 29, 2021, we issued $750.0 million$1.5 billion of unsecured senior notes due July 15, 2022February 1, 2029 at par value (the “2014“2021 Senior Notes”). The 20142021 Senior Notes accrue interest at a rate of 4.875%3.125% per annum and were issued at 99.178% of par value.annum. Interest on the 20142021 Senior Notes is due semi-annually on January 15 and July 15 of each year. We incurred deferred financing fees of $11.6 million in relation to this transaction, which are being amortized through the maturity date.
2016 Senior Notes
On August 15, 2016, we issued $1.1 billion of unsecured senior notes due September 1, 2024 (the “2016 Senior Notes”). The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2016 Senior Notes is due semi-annually on MarchFebruary 1 and SeptemberAugust 1 of each year, beginning on MarchAugust 1, 2017.2021. We incurred deferred financing fees of $12.8$14.5 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering and cash on hand were used to redeem $800.0 million, the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of our 5.625% Senior Notes and pay the associated call premiums.
2017 Senior Notes
On October 13, 2017, we issued $750.0 million of unsecured senior notes due October 1, 2022 (the “2017 Senior Notes”). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. We incurred deferred financing fees of $8.2 milliondate in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering were used to redeem all of the outstanding principal amount of the 2017 Senior Notes, repay $460.0 millionthe amounts outstanding under the Revolving Credit Facility, and for general corporate purposes.
The 2021 Senior Notes are subject to redemption in whole or in part on or after February 1, 2024 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to February 1, 2024, we may, at our option, redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes originally issued at a redemption price of 103.125% of the principal amount of the 2021 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2021 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 1, 2024 at 101.563%, February 1, 2025 at 100.781%, or February 1, 2026 until maturity at 100.000%, of the principal amount of the 2021 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
The table below sets forth the material terms of our outstanding senior notes as of June 30, 2021:
Senior Notes | Issue Date | Amount Outstanding | Interest Rate Coupon | Maturity Date | Interest Due Dates | Optional Redemption Date | ||||||
2016 Senior Notes | Aug. 15, 2016 | $1.1 billion | 4.875% | Sep. 1, 2024 | Mar. 1 & Sep. 1 | Sep. 1, 2019 | ||||||
2020 Senior Notes | Feb. 4, 2020 | $1.5 billion | 3.875% | Feb. 15, 2027 | Feb. 15 & Aug. 15 | Feb. 15, 2023 | ||||||
2021 Senior Notes | Jan. 29, 2021 | $1.5 billion | 3.125% | Feb. 1, 2029 | Feb. 1 & Aug. 1 | Feb. 1, 2024 |
The unsecured senior notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.
Debt Service
As of SeptemberJune 30, 2017,2021, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.
The following table illustrates our estimate of our debt service requirement over the next twelve months ended September 30, 2018 based on the amounts outstanding as of SeptemberJune 30, 20172021 and the interest rates accruing on those amounts on such date (in thousands):
Revolving Credit Facility (1) | $ | 3,690 | |
2018 Term Loan (2) | 67,572 | ||
2013-2C Tower Securities | 21,585 | ||
2014-2C Tower Securities | 24,185 | ||
2018-1C Tower Securities | 22,270 | ||
2019-1C Tower Securities | 33,409 | ||
2020-1C Tower Securities | 14,368 | ||
2020-2C Tower Securities | 14,159 | ||
2021-1C Tower Securities | 19,371 | ||
2016 Senior Notes | 53,625 | ||
2020 Senior Notes | 58,125 | ||
2021 Senior Notes | 46,875 | ||
Total debt service for the next 12 months (2) | $ | 379,234 |
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The anticipated repayment date andof this filing, no amount was outstanding under the finalRevolving Credit Facility.
(2)Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date forof the 2013-1D Tower Securities are April 10, 2018 and April 9, 2043, respectively.Term Loan.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks that are inherent in our financial instruments. These instruments arise from transactions entered into in the normal course of business.
The following table presents the future principal payment obligations and fair values associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of SeptemberJune 30, 2017: 2021:
2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | Fair Value | |||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revolving Credit Facility (1) | $ | — | $ | — | $ | 85,000 | $ | — | $ | — | $ | — | $ | 85,000 | $ | 85,000 | ||||||||
2018 Term Loan | 12,000 | 24,000 | 24,000 | 24,000 | 2,244,000 | — | 2,328,000 | 2,304,720 | ||||||||||||||||
2013-2C Tower Securities (2) | — | — | 575,000 | — | — | — | 575,000 | 589,065 | ||||||||||||||||
2014-2C Tower Securities (2) | — | — | — | 620,000 | — | — | 620,000 | 653,027 | ||||||||||||||||
2018-1C Tower Securities (2) | — | — | 640,000 | — | — | — | 640,000 | 658,419 | ||||||||||||||||
2019-1C Tower Securities (2) | — | — | — | — | 1,165,000 | — | 1,165,000 | 1,191,061 | ||||||||||||||||
2020-1C Tower Securities (2) | — | — | — | — | — | 750,000 | 750,000 | 756,480 | ||||||||||||||||
2020-2C Tower Securities (2) | — | — | — | — | — | 600,000 | 600,000 | 611,646 | ||||||||||||||||
2021-1C Tower Securities (2) | — | — | — | — | — | 1,165,000 | 1,165,000 | 1,164,918 | ||||||||||||||||
2016 Senior Notes | — | — | — | 1,100,000 | — | — | 1,100,000 | 1,119,151 | ||||||||||||||||
2020 Senior Notes | — | — | — | — | — | 1,500,000 | 1,500,000 | 1,545,000 | ||||||||||||||||
2021 Senior Notes | — | — | — | — | — | 1,500,000 | 1,500,000 | 1,449,375 | ||||||||||||||||
Total debt obligation | $ | 12,000 | $ | 24,000 | $ | 1,324,000 | $ | 1,744,000 | $ | 3,409,000 | $ | 5,515,000 | $ | 12,028,000 | $ | 12,127,862 |
(1)On July 7, 2021, we amended our Revolving Credit Facility to extend the maturity date to July 7, 2026 as well as amend certain other terms and conditions under the Senior Credit Agreement. For further discussion of the amendments, refer to “Debt Instruments and Debt Service Requirements” above.
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| 2017 |
| 2018 |
| 2019 |
| 2020 |
| 2021 |
| Thereafter |
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2014 Senior Notes |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 750,000 |
| $ | 750,000 |
| $ | 772,500 |
2016 Senior Notes |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 1,100,000 |
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| 1,100,000 |
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| 1,134,375 |
2013-1C Tower Securities (1) |
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| — |
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| 425,000 |
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| — |
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| — |
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| — |
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| — |
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| 425,000 |
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| 423,959 |
2013-2C Tower Securities (1) |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 575,000 |
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| 575,000 |
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| 586,103 |
2013-1D Tower Securities (1) |
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| — |
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| 330,000 |
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| — |
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| — |
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| — |
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| — |
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| 330,000 |
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| 330,234 |
2014-1C Tower Securities (1) |
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| — |
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| — |
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| 920,000 |
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| — |
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| — |
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| — |
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| 920,000 |
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| 921,168 |
2014-2C Tower Securities (1) |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 620,000 |
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| 620,000 |
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| 623,181 |
2015-1C Tower Securities (1) |
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| — |
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| — |
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| — |
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| 500,000 |
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| — |
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| — |
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| 500,000 |
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| 501,790 |
2016-1C Tower Securities (1) |
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| — |
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| — |
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| — |
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| — |
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| 700,000 |
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| — |
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| 700,000 |
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| 697,081 |
2017-1C Tower Securities (1) |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 760,000 |
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| 760,000 |
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| 759,248 |
Revolving Credit Facility |
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| — |
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| — |
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| — |
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| 430,000 |
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| — |
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| — |
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| 430,000 |
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| 430,000 |
2014 Term Loan |
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| 3,750 |
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| 15,000 |
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| 15,000 |
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| 15,000 |
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| 1,402,500 |
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| — |
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| 1,451,250 |
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| 1,454,878 |
2015 Term Loan |
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| 1,250 |
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| 5,000 |
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| 5,000 |
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| 5,000 |
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| 5,000 |
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| 467,500 |
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| 488,750 |
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| 489,361 |
Total debt obligation (2) |
| $ | 5,000 |
| $ | 775,000 |
| $ | 940,000 |
| $ | 950,000 |
| $ | 2,107,500 |
| $ | 4,272,500 |
| $ | 9,050,000 |
| $ | 9,123,878 |
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The anticipated repayment date and the final maturity date for the 2013-2C Tower Securities is April 11, 2023each tower security, refer to “Debt Instruments and April 9, 2048, respectively.Debt Service Requirements” above.
The anticipated repayment date and the final maturity date for the 2013-1D Tower Securities are April 10, 2018 and April 9, 2043, respectively.
The anticipated repayment date and the final maturity date for the 2014-1C Tower Securities is October 8, 2019 and October 11, 2044, respectively.
The anticipated repayment date and the final maturity date for the 2014-2C Tower Securities is October 8, 2024 and October 8, 2049, respectively.
The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10, 2045, respectively.
The anticipated repayment date and the final maturity date for the 2016-1C Tower Securities is July 9, 2021 and July 10, 2046, respectively.
The anticipated repayment date and the final maturity date for the 2017-1C Tower Securities is April 11, 2022 and April 9, 2047, respectively.
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Our current primary market risk exposure is (1) interest rate risk relating to our ability to refinance our debt at commercially reasonable rates, if at all, and (2) interest rate risk relating to the impact of interest rate movements on the variable portion of our 2014 Term Loan and 20152018 Term Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest rate risk on our outstanding debt through our large percentage of fixed rate debt.debt, including interest rate swaps. On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan. While we cannot predict our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis. The IBA intends to cease the publication of USD LIBOR as follows: the 1 week and 2 month tenors on December 31, 2021 and all other tenors on June 30, 2023. The discontinuation of LIBOR and the replacement with an alternative reference rate may adversely impact interest rates and our interest expense could increase. On July 7, 2021, we amended our Revolving Credit Facility to provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate.
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We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil, Canada, Chile, Peru, Argentina, Colombia, South Africa, and to a lesser extent, our markets in Central America. In each of these countries, we pay most of our selling, general, and administrative expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in Brazil, Canada, Chile, and ColombiaSouth Africa, we receive significantly all of our revenue and pay significantly all of our operating expenses in local currency. In PeruColombia, Argentina, and Argentina,Peru, we receive our revenue and pay our operating expenses in a mix of local currency and U.S. dollars. All transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period, and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive income (loss). For the ninesix months ended SeptemberJune 30, 2017,2021, approximately 13.5% of our revenues and approximately 16.0%17.1% of our total operating expenses were denominated in foreign currencies.
We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Real from the quoted foreign currency exchange rates at SeptemberJune 30, 2017.2021. As of SeptemberJune 30, 2017,2021, the analysis indicated that such an adverse movement would have caused our revenues and operating income to decline by approximately 1.1%0.9% and 2.8%0.5%, respectively, for the ninesix months ended SeptemberJune 30, 2017.2021.
As of SeptemberJune 30, 2017,2021, we had intercompany debt, which is denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As settlement of this debt is anticipated or planned in the foreseeable future, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A change of 10% in the underlying exchange rates of our unsettled intercompany debt at SeptemberJune 30, 20172021 would have resulted in
approximately $43.8$62.7 million of unrealized gains or losses that would have been included in Other income (expense), net in our Consolidated StatementStatements of Operations for the ninesix months ended SeptemberJune 30, 2017.2021.
Special Note Regarding Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.Act. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:
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Table of Contentsthe wireless industry and the industry participants, the drivers of such growth, the demand for our towers, the future capital investments of our customers, future spectrum auctions, the trends developing in our industry, and competitive factors;
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our ability to capture and capitalize on industry growth and the impact of such growth on our financial and operational results;
our expectations regarding consolidation of wireless service providers and the impact of such consolidation on our financial and operational results;
our intent to grow our tower portfolio domestically and internationally and expand through acquisitions, new builds, and organic lease up on existing towers;
our belief that over the long-term, site leasing revenues will continue to grow as wireless service providers increase their use of our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements;
our expectation regarding site leasing revenue growth, on an organic basis, in our domestic and international segments, and the drivers of such growth;
our focus on our site leasing business and belief that our site leasing business is characterized by stable and long-term recurring revenues, reduced exposure to changes in customer spending, predictable operating costs, and minimal non-discretionary capital expenditures;
our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to maintain these towers will be minimal;
our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and executing monetary amendments;
our expectations regarding churn rates;
our election to be subject to tax as a REIT and our intent to continue to operate as a REIT;
our belief that our business is currently operated in a manner that complies with the REIT rules and our intent to continue to do so;
our plans regarding our distribution policy, and the amount and timing of, and source of funds for, any such distributions;
our expectations regarding the use of NOLs to reduce REIT taxable income;
our expectations regarding our capital allocation strategy, including future allocation decisions among portfolio growth, stock repurchases and dividends, the impact of our election to be taxed as a REIT on that strategy, and our goal of increasing our Adjusted Funds From Operations per share;
our expectations regarding dividends and our ability to grow our dividend in the future and the drivers of such growth;
our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including expenditures required for new builds and to maintain, improve, and modify our towers, ground lease purchases, and general corporate expenditures, and the source of funds for these expenditures;
our expectations regarding the timing for closing of refinancing transactions;
our expectations regarding our business strategies, including our strategy for securing rights to the land underlying our towers, and the impact of such strategies on our financial and operational results;
our intended use of our liquidity;
our intent to maintain our target leverage levels, including in light of our dividend;
our expectations regarding our debt service in 2021 and our belief that our cash on hand, capacity under our Revolving Credit Facility, and our cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months; and
our expectations and estimates regarding certain tax and accounting matters, including the impact on our financial statements.
These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements
and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
the impact of consolidation among wireless service providers, including the impact of T-Mobile and Sprint; the ability of DISH Network to become and compete as a nationwide carrier; our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures; our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems, and land ownership; our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to satisfactorily complete due diligence on acquired towers, the amount and quality of due diligence that we are able to complete prior to closing of any acquisition, our ability to accurately anticipate the future performance of the acquired towers, our ability to receive required regulatory approval, the ability and willingness of each party to fulfill their respective closing conditions and their contractual obligations, and, once acquired, our ability to effectively integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the acquired towers; the health of the South Africa economy and wireless communications market, and the willingness of carriers to invest in their networks in that market; developments in the wireless communications industry in general, and for wireless communications infrastructure providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to expend capital to fund network expansion or enhancements; our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to new tenants on our towers, and retain current leases on towers; our ability to secure and deliver anticipated services business at contemplated margins; our ability to build new towers, including our ability to identify and acquire land that would be attractive for our customers and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that arise in connection with the building of new towers; competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow us to maintain our long-term target leverage ratios while achieving our expected portfolio growth levels; our capital allocation decisions and the impact on our ability to achieve our expected tower portfolio growth levels; our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on terms that are accretive; our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth; the impact of rising interest rates on our results of operations and our ability to refinance our existing indebtedness at commercially reasonable rates or at all; the extent and duration of the impact of the COVID-19 crisis on the global economy, on our business and results of operations, and on foreign currency exchange rates; our ability to successfully estimate the impact of regulatory and litigation matters; natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; a decrease in demand for our towers; the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business less desirable to existing or potential tenants; our ability to qualify for treatment as a REIT for U.S. federal income tax purposes and to comply with and conduct our business in accordance with such rules; our ability to utilize available NOLs to reduce REIT taxable income; and our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company of adopting certain accounting pronouncements and the availability of sufficient NOLs to offset future REIT taxable income.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In order to ensure that the information we must disclose in our filings with the Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Securities and Exchange Act Rule 13a-15(e) as of SeptemberJune 30, 2017.2021. Based on such evaluation, such officers have concluded that, as of SeptemberJune 30, 2017,2021, our disclosure controls and procedures were effective.
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There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS6. EXHIBITS
Issuer Purchases of Equity Securities
The following table presents information related to our repurchases of Class A common stock during the third quarter of 2017:
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| Total |
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| Total Number of Shares |
| Approximate Dollar Value | ||
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| Number |
| Average |
| Purchased as Part of |
| of Shares that May Yet Be | ||
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| of Shares |
| Price Paid |
| Publicly Announced |
| Purchased Under the | ||
Period |
| Purchased |
| Per Share |
| Plans or Programs (1) |
| Plans or Programs | ||
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7/1/2017 - 7/31/2017 |
| 698,923 |
| $ | 135.92 |
| 698,923 |
| $ | 750,002,586 |
8/1/2017 - 8/31/2017 |
| 1,202,321 |
| $ | 141.39 |
| 1,202,321 |
| $ | 580,003,146 |
9/1/2017 - 9/30/2017 |
| 817,962 |
| $ | 145.33 |
| 817,962 |
| $ | 461,125,150 |
Total |
| 2,719,206 |
| $ | 141.17 |
| 2,719,206 |
| $ | 461,125,150 |
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
On August 15, 2017, we entered into an employment agreement with Jeffrey A. Stoops, our President and Chief Executive Officer. The agreement replaces his existing employment agreement entered into with him on October 30, 2014, which would have expired on December 31, 2017. The new employment agreement provides for Mr. Stoops to serve in his present position and expires on December 31, 2020.
Pursuant to the employment agreement, Mr. Stoops will receive an annual base salary of $800,000, which may be increased by the Board of Directors. In addition, Mr. Stoops will receive an annual bonus based on achievement of performance criteria established by the Compensation Committee of the Board of Directors. Mr. Stoops is eligible to receive a target bonus of 150% of base salary for 2017, and in subsequent years, the Compensation Committee will set Mr. Stoops’ target bonus, which may be greater or less than 150% of Mr. Stoops’ base salary for that year.
The employment agreement provides that upon termination of Mr. Stoops’ employment without cause, or Mr. Stoops’ resignation for good reason, Mr. Stoops is entitled to receive (i) an amount equal to the Applicable Multiple (as defined below) times the sum of his: (a) base salary for the year in which the termination or resignation occurs, (b) Reference Bonus (as defined below) and (c) Reference Benefits Value (as defined below), and (ii) a pro rata portion of the bonus for the year in which the termination or
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resignation occurs. The severance payments will be paid in a lump sum on the first business day of the third calendar month following the calendar month in which the termination or resignation is effective.
The Applicable Multiple means two, in the event the termination occurs prior to a change in control, and three, in the event the termination occurs on or after a change in control. Reference Benefits Value means the greater of (1) $33,560 and (2) the value of all medical, dental, health, life, and other fringe benefit plans and arrangements for the year in which the termination or resignation occurs. Reference Bonus means the greater of (i) 75% of Mr. Stoops’ target bonus for the year in which the termination or resignation occurs and (ii) 100% of the bonus for the year immediately preceding the year in which the termination or resignation occurred.
Upon a change in control, the agreement is automatically extended for three years. The employment agreement provides for noncompetition, noninterference, non-disparagement and nondisclosure covenants. Mr. Stoops’ severance payment is subject to his execution of a full release and waiver of claims against us.
Exhibit No. | Description of Exhibits |
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31.2 | |
32.1 | |
32.2 | |
101.INS | XBRL Instance |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
104 | Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101). |
† Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SBA COMMUNICATIONS CORPORATION | |
| /s/ Jeffrey A. Stoops |
Jeffrey A. Stoops | |
Chief Executive Officer | |
(Duly Authorized Officer) | |
| /s/ Brendan T. Cavanagh |
Brendan T. Cavanagh | |
Chief Financial Officer | |
(Principal Financial Officer) |