SBA Communications Corporation SBAC reported third-quarter 2024 adjusted funds from operations (AFFO) per share of $3.32, which met the Zacks Consensus Estimate. However, the figure fell short of the prior-year quarter’s $3.34.
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Results reflect a marginal improvement in domestic cash site-leasing revenues due to increasing carrier activity. However, lower revenues clocked by site development hurt the results to some extent. The company raised its 2024 outlook.
Total quarterly revenues decreased 2.2% year over year to $667.6 million. The figure also missed the Zacks Consensus Estimate of $669 million.
Per Brendan Cavanagh, president and CEO of the company, “Carrier activity in the US increased from levels during the first half of the year, indicating a positive upward trajectory that we anticipate will carry through the balance of 2024 and into 2025. Leasing results across our international markets also remained very solid during the quarter, and our services business had its strongest quarter of the year in terms of both revenue and gross profit.”
SBA Communications Corporation Price, Consensus and EPS Surprise
SBA Communications Corporation Price, Consensus and EPS Surprise
Site-leasing revenues decreased by 1.8% year over year to $625.7 million. Quarterly site-leasing revenues consisted of domestic site-leasing revenues of $464.9 million and international site-leasing revenues of $160.8 million. The domestic cash site-leasing revenues grew marginally year over year to $463.9 million. International cash site leasing revenues came in at $160.8 million, decreasing by 5.1% year over year.
However, site development revenues decreased 7.1% year over year to $41.9 million.
The site-leasing operating profit was $507.8 million, a decrease of 2.2% year over year. Moreover, 98.2% of SBAC’s total operating profit in the quarter came from site leasing.
The overall operating income rose 199.8% to $255.9 million.
The adjusted EBITDA totaled $472.6 million, decreasing 2%, while the adjusted EBITDA margin decreased to 70.9% from 71.4% in the prior-year quarter.
SBAC’s Portfolio Activity
In the third quarter, SBAC acquired 51 communication sites for a total cash consideration of $194.1 million. The company also built 147 towers during this period. It owned or operated 39,762 communication sites as of Sept. 30, 2024, of which 17,477 were in the United States and its territories and 22,285 internationally.
SBA Communications also spent $12.9 million to purchase land and easements and extend lease terms. The total cash capital expenditure was $272.1 million in the reported quarter, of which $257.8 million represented discretionary and $14.3 million was non-discretionary.
After the quarter ended, SBAC agreed to acquire 7,000 communication sites in Central America from Millicom International Cellular S.A. for around $975 million in cash. The acquired sites are anticipated to produce approximately $129.0 million of revenues and $89.0 million of tower cash flow during their first full year of operations after closing.
In addition to the above transaction, SBAC purchased or is under contract to buy 45 communication sites for a total consideration of $16.3 million in cash. It expects to complete the acquisition by the end of the first quarter of 2025.
SBAC’s Cash Flow & Liquidity
In the third quarter, SBA Communications generated $304.7 million of net cash from operating activities compared with the year-ago quarter’s $313.7 million.
As of Sept. 30, 2024, it had $263.6 million in cash and cash equivalents, short-term restricted cash and short-term investments, down from $309.4 million recorded as of June 30, 2024. SBAC ended the quarter with a net debt-to-annualized adjusted EBITDA of 6.4X.
As of Oct. 28, 2024, the company had no amount outstanding under the $2 billion revolving credit facility.
Dividend Update for SBAC
Concurrent with the earnings release, SBAC announced a cash dividend of 98 cents on its Class A common stock. The dividend will be paid out on Dec. 12 to shareholders of record as of Nov. 18, 2024.
SBAC’s 2024 Guidance
SBAC now expects AFFO per share in the range of $13.20-$13.45, up from the prior guided range of $13.06-$13.43. The Zacks Consensus Estimate for the same is currently pegged at $13.20, which is at the lower end of the guided range.
Site-leasing revenues are now projected in the band of $2,520-$2,530 million, revised upward from the $2,507-$2,527 million band guided earlier. The site-development revenue guidance range has been revised upward to $140-$150 million from the previous guidance range of $135-$145 million.
The adjusted EBITDA is now projected in the range of $1,890-$1,900 million, compared to the previously guided range of $1,889-$1,909 million.
SBA Communications currently carries a Zacks Rank #3 (Hold).
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs, such as Ventas VTR and Realty Income O, slated to report on Oct. 30 and Nov. 4, respectively.
The Zacks Consensus Estimate for Ventas’ third-quarter 2024 FFO per share stands at 80 cents, indicating a 6.7% rise year over year. VTR currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Realty Income’s third-quarter 2024 FFO per share is pegged at $1.05, implying a 2.9% year-over-year increase. O currently carries a Zacks Rank #2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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