SBA [LOGO]
NEWS
FOR IMMEDIATE RELEASE
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SBA COMMUNICATIONS CORPORATION TO REDUCE
CAPITAL EXPENDITURES
SBA COMMUNICATIONS CORPORATION (NASDAQ: SBAC); BOCA RATON, FLORIDA, FEBRUARY 6,
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2002
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SBA Communications Corporation announced today that it anticipates reducing
capital expenditures for new tower development activities in 2002 and suspending
any material new investment for additional towers.
SBA anticipates reducing the number of towers built or acquired in 2002 from 400
- - 600 to 250 - 350. Under current capital markets conditions, the Company does
not anticipate building or buying a material number of new towers beyond those
it is currently contractually obligated to build or buy. The Company expects
approximately 150 new towers to be built or acquired in the first quarter of
2002, and the remainder of its obligations to build or buy towers to be
satisfied later in 2002. A portion of the Company's workforce will be reduced,
and certain offices will be closed, substantially all of which were primarily
dedicated to SBA's new tower development activities. The Company anticipates
incurring a non-recurring charge in the first quarter of 2002 estimated to be
between $30 million and $65 million for costs carried on the Company's balance
sheet as new tower build and acquisition work-in-process, severance payments,
office closings and other items. The amount of the charge will be determined
primarily by the fair value of SBA's new tower backlog and work-in-process with
respect to those towers it chooses not to build or buy.
As a result of these actions, SBA is adjusting its full year 2002 financial
guidance as follows:
Prior Guidance New Guidance
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($ in millions except per share amounts)
Site Leasing Revenues $145 to $160 $145 to $160
Services Revenues $135 to $155 $120 to $155
Total Revenues $280 to $315 $265 to $315
EBITDA /(1)/ $86 to $100 $82 to $100
Depreciation & Amortization $85 to $90 $85 to $90
Net Interest Expense $90 to $100 $87 to $97
Cash Interest Expense $61 to $67 $58 to $66
Net Loss Per Common Share $2.00 to $2.20 $2.90 to $3.20
Cash Capital Expenditures $130 to $180 $85 to $135
/(1)/ Earnings before interest, taxes, depreciation, amortization,
non-cash compensation and anticipated non-recurring charge
SBA reaffirms its revenue and EBITDA guidance for the fourth quarter of 2001 of
$65 to $70 million and $18.5 to $20.5 million, respectively, and will be
releasing its results for the fourth quarter of 2001 and full year 2001 on
February 27, 2002. At December 31, 2001, SBA owned 3,734 towers, had net debt of
$834 million and liquidity (cash plus full availability under its revolving line
of credit) of approximately $200 million. At December 31, 2002 the Company
expects to own approximately 4,000 to 4,100 towers and have net debt of $955 to
$980 million. The Company expects to have liquidity (cash plus full availability
under its revolving line of credit) of $85 to $110 million at year-end 2002 and
to have positive free cash flow in early 2003.
"The high cost of new capital today, and the erosion of our shareholder value
since the beginning of this year, has prompted us to reevaluate our current new
tower development activities," commented Jeffrey A. Stoops, SBA's President and
Chief Executive Officer. "Because it is discretionary, new tower development
must constantly be reevaluated in terms of the cost of the investment, the
magnitude and risks of the anticipated returns and our cost of new capital.
While the first two elements remain very attractive today, our cost of new
capital has increased dramatically since the beginning of this year and in our
opinion new capital is not currently available on attractive terms. While we
have the capital to complete our prior plan of 400 - 600 towers in 2002, we
believe that reducing our new tower development activities and conserving our
capital is in the best interests of our company and our shareholders today. Our
decision is helped by our belief that new tower development, while attractive
long-term under appropriate market conditions, is not necessary to our ability
to grow revenues and cash flows, satisfy our obligations and provide good
returns to our shareholders.
"We anticipate finishing the builds or buys we are contractually obligated to
complete. Beyond that, at our current cost of capital, we intend to forego
indefinitely any material new investment in additional towers. As a result of
these actions, we expect to reduce cash interest expense and improve our
liquidity cushion until we reach positive free cash flow, which we expect to
achieve in early 2003. With these actions we believe that positive free cash
flow will be greater in 2003 than it otherwise would have been, particularly
since we would be at or close to positive free cash flow today without new tower
development. At this time, positive free cash flow and our balance sheet are our
primary focus. We believe that by executing on this focus we will over time
improve our cost of new capital and improve shareholder value. We undertake
these actions with confidence in the continued performance of our core business
of leasing space on our existing towers and our services business. Our business
plan is working, and we continue to see good demand for our tower space and
services. We expect continued strong EBITDA growth for the foreseeable future,
but it is anticipated to come from organic lease-up of our existing assets, our
services business and cost reductions, and not from spending material amounts of
capital for additional towers.
"These actions are not expected to impact site leasing revenues in 2002. We may
incur some adverse impact on our services revenues and services margin,
particularly with respect to installations of anchor tenant equipment. Any
impact may or may not be offset by new services business, the prospects for
which continue to look good. EBITDA guidance, however, has not changed
materially because of the anticipated cost reductions to be gained through our
plan. We look forward to discussing this decision in more detail on our Fourth
Quarter 2001 earnings conference call to be held on February 28, 2002."
SBA is a leading independent owner and operator of wireless communications
infrastructure in the United States. SBA generates revenues from two primary
businesses - site leasing and site development services. The primary focus of
the company is the leasing of antenna space on its multi-tenant towers to a
variety of wireless service providers under long-term lease contracts. Since it
was founded in 1989, SBA has participated in the development of over 15,000
antenna sites in the United States.
For additional information, please contact Pamela J. Kline, Vice President,
Capital Markets, at (561) 995-7670.
Information Concerning Forward-Looking Statements
This press release includes forward looking statements, including statements
regarding (1) the estimate on the number of towers that will be built or
acquired in 2002, (2) the amount of the non-recurring charge that will be taken
in connection with the capital expenditure reduction plan, (3) the amount of
towers, debt and liquidity that the Company will have at December 31, 2002, (4)
the impact of the capital expenditure reduction plan on the Company's future
financial performance, its liquidity and free cash flow position, and (5) the
Company's ability to be a strong EBITDA growth company. These forward-looking
statements may be affected by the risks and uncertainties in the Company's
business. This information is qualified in its entirety by cautionary statements
and risk factor disclosure contained in the Company's Securities and Exchange
Commission filings, including the Company's report on Form 10-K filed with the
Commission on April 2, 2001. The Company wishes to caution readers that certain
important factors may have affected and could in the future affect the Company's
actual results and could cause the Company's actual results for subsequent
periods to differ materially from those expressed in any forward-looking
statement made by or on behalf of the Company. First, with respect to statements
regarding the Company's liquidity, such factors include, but are not limited to,
(1) the amount of the 1st quarter non-recurring charge and (2) the Company's
ability to continue to comply with covenants and the terms of its senior secured
facility. Second, with respect to statements regarding the estimated amount of
the non-recurring charge, such factors include, but are not limited to, the
Company's ability to maximize the value of its new tower backlog and
work-in-process. Finally, with respect to statements regarding the Company's
future financial performance, including its 2002 financial guidance, such
factors include, but are not limited to, (1) the business climate for the
wireless communications industry in general and the wireless communications
infrastructure providers in particular; (2) the Company's ability to secure as
many site leasing tenants as planned; (3) the Company's ability to expand its
site leasing business and maintain or expand its services business; (4) the
Company's ability to complete construction of new towers that it will construct
on a timely and cost-efficient basis, including our ability to successfully
address zoning issues, carrier design changes, changing local market conditions
and the impact of adverse weather conditions; (5) the Company's ability to
retain current lessees on newly acquired towers; (6) the Company's ability to
realize economies of scale for acquired towers; (7) the continued dependence on
towers and outsourced site development services by the wireless communications
industry; and (11) the Company's ability to continue to comply with covenants
and the terms of its senior secured facility. The Company undertakes no
obligation to update forward-looking statements to reflect events or
circumstances after the date hereof.