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NEWS
FOR IMMEDIATE RELEASE
SBA COMMUNICATIONS CORPORATION REPORTS 1/st/ QUARTER RESULTS
SBA COMMUNICATIONS CORPORATION (NASDAQ: SBAC); BOCA RATON, FLORIDA,
WEDNESDAY, MAY 14, 2003
SBA Communications Corporation ("SBA" or the "Company") today reported results
for the first quarter ended March 31, 2003. Highlights of the results include:
.. Record leasing revenue and leasing gross profit
.. Same tower revenue growth of 15%
.. Leasing gross profit margin improved 170 basis points sequentially
.. Leasing gross profit was 92.5% of total gross profit
.. Pro forma liquidity of $136 million after tower sale and senior credit
facility refinancing
Operating Results
Total revenues were $58.2 million, compared to $63.9 million in the year earlier
period. Site leasing revenues of $37.5 million were up 15.4% from the year
earlier period, the highest ever for SBA. Site development revenues were $20.7
million compared to $31.4 million in the year earlier period. Site leasing
contributed 92.5% of the Company's gross profit in the quarter reflecting the
continuing transition of the Company's revenue stream to its leasing business.
Site leasing gross profit margin was 65.5%, a 170 basis point improvement over
the fourth quarter of 2002. Selling, general and administrative expenses before
non-cash compensation were $8.2 million, and included approximately $.8 million
of professional and advisory fees related to SBA's review of its strategic
alternatives and decision to sell a portion of its tower portfolio. Excluding
such fees, SG&A expenses of $7.4 million were 8% lower sequentially and 15%
lower than the year earlier period. Net loss, which included a $.5 million
charge for the cumulative effect of a change in accounting principle for the
adoption of SFAS 143 "Accounting for Asset Retirement Obligations," improved to
$33.8 million in the first quarter of 2003 from a net loss of $163.8 million in
the year earlier period. The period ended March 31, 2002 included a charge of
($80.6) million, or ($1.64) per share, for the cumulative effect of a change in
accounting principle for the adoption of SFAS 142 "Goodwill and Other Intangible
Assets." Net loss per share improved to ($.66) from ($3.34) in the year earlier
period. Net cash used in
operating activities for the first quarter of 2003 was $4.8 million, compared to
$33.4 million in the year earlier period. Adjusted EBITDA was $19.2 million,
compared to $19.3 million in the year earlier period and fourth quarter of 2002.
Adjusted EBITDA margin improved to 32.9%, a 270 basis point improvement over the
fourth quarter of 2002.
Same tower revenue and gross profit growth on the 3,797 towers owned as of March
31, 2002 was 15% and 16%, respectively.
Investing Activities
SBA built 3 towers and disposed of 4 towers, ending the quarter with 3,876
towers. Capital expenditures for the first quarter were $6.1 million, down from
$29.6 million in the year earlier period. On May 9, 2003 SBA transferred its
interests in 631 towers to AAT Communications Corp. in exchange for
approximately $145 million of gross cash proceeds. Interests in an additional 48
towers are expected to be transferred to AAT on or before July 1, 2003 in
exchange for gross proceeds of approximately $15 million, resulting in a pro
forma tower count of 3,197 towers.
Financing Activities
SBA borrowed no additional funds in the first quarter of 2003, and ended the
quarter with $255 million borrowed under its $300 million senior credit
facility, $769 million of senior notes outstanding and net debt of $976.2
million. On May 9, 2003, SBA refinanced its senior credit facility with the
proceeds of a new $195 million senior credit facility, cash on hand and a
portion of the proceeds from the tower sale. On a pro forma basis giving effect
to the sale of 679 towers for gross proceeds of $160 million and refinancing of
the senior credit facility, as of March 31, 2003 SBA had net debt of $828
million and liquidity of $136 million, consisting entirely of cash and
restricted cash.
"We have had a number of positive recent developments at SBA," commented Jeffrey
A. Stoops, President and Chief Executive Officer. "Operationally, our tower
ownership business continues to perform well. In the first quarter, we
experienced solid revenue and even stronger tower cash flow growth on a
sequential basis from our leasing business. Carrier demand for our tower space
remains solid, and at this time we believe activity levels through 2003 will be
as good or better than we experienced in the second half of 2002. That growth,
combined with a reduction in our services business, has accelerated our
transition to a point where now substantially all of our gross profit is
generated from our tower ownership business. As a result, both the
predictability and recurring nature of our gross profit and EBITDA have
significantly improved over the year earlier period. Based on that
predictability, the proceeds from our tower sale and our new credit facility, we
believe we now have in place sufficient liquidity and a stable long-term capital
structure that will support, and be supported by, our expected growth in our
tower cash flows. Looking forward, we are very excited about, and confident in
attaining, our goals of increasing tower cash flow and EBITDA, reducing leverage
and attaining positive free cash flow."
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Outlook
The Company has provided its Second Quarter 2003 and Full Year 2003 Outlook.
This outlook is based on current expectations and assumptions and assumes the
sale of all 679 towers to AAT Communications in the second quarter 2003 which
will be reflected as discontinued operations in the second quarter and for the
full year. Information regarding potential risks which could cause the actual
results to differ from these forward-looking statements are set forth below and
in the Company's filings with the Securities and Exchange Commission.
(in millions, except per share information)
Quarter ended
June 30, 2003 Full year 2003
------------------------- -----------------------
Services revenue $ 19.0 to $ 22.0 $ 82.0 to $ 90.0
Leasing revenue 32.5 to 34.0 132.0 to 136.0
Total revenues 51.5 to 56.0 216.0 to 226.0
Tower cash flow 21.5 to 23.0 87.0 to 90.0
Operating loss (9.0) to (10.5) (27.0) to (29.0)
Depreciation, accretion and amortization 22.0 to 23.5 88.0 to 91.0
Cash interest expense 22.5 to 24.0 85.0 to 88.0
Non-cash interest expense .5 to 1.0 2.5 to 3.5
Loss per share from continuing operations (.60) to (.75) (2.45) to (2.75)
Loss per share (.75) to (.90) (2.60) to (2.90)
Adjusted EBITDA 16.5 to 18.0 68.0 to 71.0
Capital expenditures 2.5 to 5.0 10.0 to 15.0
Refer to the attached exhibits for a reconciliation of Adjusted EBITDA to GAAP
measures.
Conference Call Information
SBA Communications Corporation will host a conference call Thursday, May 15th at
10:00 A.M. EST to discuss quarterly results, the recent asset sale, and
refinancing. The call may be accessed as follows:
Dial-in number: 800-851-3058
Conference call name: SBA 1/st/ Quarter Results
Replay: May 15, 2003 at 5:00 P.M. through May 29, 2003 at 11:59 P.M.
Replay number: 800-642-1687
Access Code: 182347
Internet access: www.sbasite.com
Information Concerning Forward-Looking Statements
This press release includes forward looking statements, including statements
regarding (i) the Company's estimate of wireless carrier activity during 2003;
(ii) the Company's second quarter 2003 and full year 2003 guidance; (iii) the
Company's expectations regarding the number of towers that will actually be sold
to AAT and the gross cash proceeds generated by such sale; (iv) the likelihood
that the second stage of the contemplated tower sale closes on or before July 1,
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2003; (v) the Company's estimate that it has sufficient liquidity and a stable
long-term capital structure that will support expected growth of its tower cash
flows; and (vi) the Company's expectations regarding increasing tower cash flow
and EBITDA, reducing leverage and attaining positive free cash flow. 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 March 31, 2003. 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. With respect to
the Company's expectations regarding wireless carrier activity, 2003 guidance,
the Company's estimates regarding liquidity and capital structure and the
Company's expectations regarding tower cash flow and EBITDA, leverage and
positive free cash flow, such risk factors include, but are not limited to: (1)
the ability and willingness of wireless service providers to maintain or
increase their capital expenditures, (2) the Company's ability to secure as many
site leasing tenants as planned at anticipated lease rates, (3) the Company's
ability to expand its site leasing business, (4) the Company's ability to retain
current lessees on towers, (5) the Company's ability to secure and deliver
anticipated services business at contemplated margins, (6) the Company's ability
to increase revenues and maintain or decrease expenses and cash capital
expenditures, (7) the Company's ability to continue to comply with covenants and
the terms of its senior credit facility and to access sufficient capital to fund
its operations, (8) the business climate for the wireless communications
industry in general and the wireless communications infrastructure providers in
particular, and (9) the continued dependence on towers and outsourced site
development services by the wireless communications industry. With respect to
the Company's expectations of results from the tower sale, such factors include,
but are not limited to (1) the ability of the Company and AAT to satisfy all
closing conditions for the sale of the remaining 48 towers and potential
adjustments to the purchase price based on the aggregate tower cash flow of the
towers sold and (2) any indemnification obligations that may arise under the
agreement. The Company undertakes no obligation to update forward-looking
statements to reflect events or circumstances after the date hereof.
Information on Non-GAAP financial measures is presented below under "Unaudited
Condensed Consolidated Statements of Operations" and this press release will be
available on our website at www.sbasite.com through May 29, 2003.
For additional information about SBA, please contact Pam Kline,
Vice-President-Capital Markets, at (561) 995-7670, or visit our website at
www.sbasite.com.
SBA is a leading independent owner and operator of wireless communications
infrastructure in the United States. SBA generates revenue 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 20,000
antenna sites in the United States.
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------------------
(in thousands, except per share data)
For the three months ended March 31,
2003 2002
---- ----
Revenues:
Site development $ 20,674 $ 31,404
Site leasing 37,547 32,540
----------------- ----------------
Total revenues 58,221 63,944
Cost of revenues (exclusive of depreciation, accretion and amortization):
Cost of site development 18,694 24,680
Cost of site leasing 12,960 11,240
----------------- ----------------
Total cost of revenues 31,654 35,920
Gross profit 26,567 28,024
Operating expenses:
Selling, general and administrative 8,483 9,374
Restructuring and other charges 976 37,736
Asset impairment charge 452 16,381
Depreciation, accretion and amortization 25,605 26,053
----------------- ----------------
Total operating expenses 35,516 89,544
----------------- ----------------
Operating loss (8,949) (61,520)
Other income (expense):
Interest income 129 9
Interest expense (17,681) (13,216)
Non-cash interest expense (5,077) (6,913)
Amortization of debt issuance costs (1,155) (1,089)
Other 44 79
----------------- ----------------
Total other expense (23,740) (21,130)
Loss before provision for income taxes and cumulative effect of changes in
accounting principles (32,689) (82,650)
Provision for income taxes (521) (579)
----------------- ----------------
Net loss before cumulative effect of changes in accounting principles (33,210) (83,229)
Cumulative effect of changes in accounting principles (545) (80,592)
----------------- ----------------
Net loss $(33,755) $(163,821)
================= ================
Basic and diluted loss per common share before cumulative effect of changes
in accounting principles $ (0.65) $ (1.70)
Cumulative effect of changes in accounting principles (0.01) (1.64)
----------------- ----------------
Basic and diluted loss per common share $ (0.66) $ (3.34)
================= ================
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Basic and diluted weighted average number of share of common stock 51,130 49,010
================= ================
Other Data:
Adjusted EBITDA $ 19,158 $ 19,302
================= ================
Annualized Tower Cash Flow $ 98,340 $ 85,200
================= ================
Non-GAAP Financial Measures
This press release includes disclosures regarding EBITDA and Adjusted EBITDA
which are non-GAAP financial measures. EBITDA is defined as operating loss plus
depreciation, accretion and amortization, asset impairment charges, and non-cash
compensation. Adjusted EBITDA is defined as EBITDA plus restructuring and other
charges and other non-recurring expenses. The Company believes EBITDA and
Adjusted EBITDA are useful measures of the current financial performance and
liquidity of the business and is a concept used by our lenders to determine
compliance with some of our debt instruments, particularly our senior credit
facility. EBITDA and Adjusted EBITDA are not intended to be an alternative
measure of operating income as determined in accordance with generally accepted
accounting principles. EBITDA and Adjusted EBITDA for the three months ended
March 31, 2003 and 2002 are calculated below:
For the three months
ended March 31,
------------------------------------
2003 2002
------ -------
(in thousands)
Operating loss $ (8,949) $ (61,520)
Plus:
Depreciation, accretion and amortization 25,605 26,053
Asset impairment charge 452 16,381
Non-cash compensation (included in selling, general and administrative) 269 652
---------------- ---------------
EBITDA $ 17,377 $ (18,434)
Plus:
Restructuring and other charges 976 37,736
Other non-recurring expenses (included in selling, general and administrative) 805 -
---------------- ---------------
Adjusted EBITDA $ 19,158 $ 19,302
================ ===============
Adjusted EBITDA for the three months ended June 30, 2003 and full year 2003 will
be calculated as follows:
Operating loss
Plus:
Depreciation, accretion and amortization
Non-cash compensation (included in selling, general and
administrative)
Other non-recurring expenses (included in selling, general and
administrative)
Adjusted EBITDA
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Total
Revenues for the current period.
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Tower Cash Flow is defined as site leasing gross profit. The Company believes
Tower Cash Flow is useful because it allows a reader to compare tower
performance before the effect of expenses (selling, general and administrative)
that do not relate directly to tower performance. Annualized tower cash flow is
defined as tower cash flow for the respective calendar quarter attributable to
the site leasing business multiplied by four.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
March 31, December 31,
2003 2002
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 47,857 $ 61,141
Accounts receivable 28,163 36,292
Costs and estimated earnings in excess of billings on uncompleted
contracts 11,371 10,425
Prepaid and other current assets 5,012 5,741
---------------- ----------------
Total current assets 92,403 113,599
Property and equipment, net 1,121,934 1,140,625
Deferred financing fees, net 23,363 24,517
Other assets 23,050 21,853
Intangible assets, net 3,874 4,321
---------------- ----------------
Total assets $ 1,264,624 $ 1,304,915
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,877 $ 16,810
Accrued expenses 15,294 15,081
Deferred revenue 14,422 12,427
Interest payable 12,459 22,919
Long-term debt, current portion 60,066 189,397
Billings in excess of costs and estimated earnings on uncompleted
contracts 2,016 2,362
Other current liabilities 1,917 3,595
---------------- ----------------
Total current liabilities 120,051 262,591
---------------- ----------------
Long-term liabilities:
Long-term debt 969,102 834,885
Deferred tax liabilities, net 18,429 18,429
Deferred revenue 1,889 1,944
Other long-term liabilities 3,166 1,593
---------------- ----------------
Total long-term liabilities 992,586 856,851
---------------- ----------------
Total shareholders' equity 151,987 185,473
---------------- ----------------
Total liabilities and shareholders' equity $ 1,264,624 $ 1,304,915
================ ================
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the three months ended March 31,
------------------------------------
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (33,755) $ (163,821)
Depreciation, accretion and amortization 25,605 26,053
Other non-cash items reflected in statement of operations 8,057 56,873
Cumulative effect of changes in accounting principles 545 80,592
Changes in operating assets and liabilities (5,273) (33,089)
------------- -------------
Net cash used in operating activities (4,821) (33,392)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,133) (29,581)
Acquisitions and related earn-outs (2,303) (16,514)
------------- -------------
Net cash used in investing activities (8,436) (46,095)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from option exercises - 75
Borrowings under senior credit facility - 98,000
Repayment of notes payable (27) (216)
------------- -------------
Net cash provided by (used in) financing activities (27) 97,859
------------- -------------
Net increase (decrease) in cash and cash equivalents (13,284) 18,372
CASH AND CASH EQUIVALENTS:
Beginning of period 61,141 13,904
------------- -------------
End of period $ 47,857 $ 32,276
============= =============
Unaudited Supplemental Information
- ----------------------------------
For the three
months ended
Selected Capital Expenditure Detail March 31, 2003
- ----------------------------------- --------------
(in thousands)
Tower new build construction:
Towers completed in period $ 557
Towers completed in prior periods 2,960
Work in process 518
Operating tower expenditures:
Tower upgrades/augmentations 847
Maintenance/improvement capital expenditures 838
General corporate expenditures 413
-------------
$ 6,133
=============
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