SBA Communications Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 1, 2022. This is an annual report, not a standalone fourth-quarter filing. SBA owns and operates wireless communications sites and earns most of its operating profit from leasing tower space. It owned 34,177 towers at year-end; the Tanzania acquisition closed after year-end.
Financial performance and position
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Total revenue | $2.309 billion | $2.083 billion | Up 10.8% reported; 11.2% constant currency |
| Site leasing revenue | $2.104 billion | $1.954 billion | Up 7.7%; 91% of total revenue |
| Site development revenue | $204.7 million | $128.7 million | Up 59.1%, reflecting greater carrier activity |
| Operating income | $782.5 million | $633.7 million | Up 23.5%; operating margin was 33.9%, versus 30.4% |
| Net income attributable to SBA | $237.6 million | $24.1 million | Diluted EPS $2.14 versus $0.21 |
| Adjusted EBITDA | $1.606 billion | $1.493 billion | Up 8.0% constant currency; non-GAAP measure |
| Cash from operating activities | $1.190 billion | $1.126 billion | Up $63.9 million |
| Cash, cash equivalents and restricted cash | $435.6 million | $342.8 million | Includes $65.6 million restricted cash |
| Debt principal | $12.396 billion | $11.180 billion | Shareholders’ deficit was $5.283 billion |
Reported net income improved substantially, alongside higher operating income. The comparison also reflects a smaller foreign-exchange remeasurement loss on intercompany loans than in 2020; 2021 still included a $66.3 million pretax remeasurement loss. 2021 included $39.5 million of losses from debt extinguishments. Cash interest paid was $360.1 million.
Year-end current assets were $614.4 million and current liabilities were $616.3 million. SBA reported $2.3 billion of operating lease right-of-use assets and $2.0 billion of long-term operating lease liabilities. The company stated that cash on hand, revolver capacity and operating cash flows should cover debt service for the next 12 months. Estimated 2022 debt service was $347.4 million.
Material changes and capital allocation
- Domestic site leasing revenue rose 7.9%; international site leasing revenue increased 8.7% on a constant-currency basis. Growth reflected acquired and built towers, organic lease-up, amendments and rent escalators.
- Site development revenue and operating profit grew significantly, mainly from increased T-Mobile and DISH activity. Site leasing generated 97.4% of total segment operating profit.
- Cash provided by investing activities was negative $1.423 billion, versus negative $446.4 million in 2020. Cash capital expenditures were $1.393 billion, including $950.5 million to acquire rights to lease and operate 713 PG&E utility structures for $972 million.
- Debt principal increased to $12.396 billion. SBA issued $1.5 billion of 2021 Senior Notes and $2.955 billion of Tower Securities during the year, while redeeming or repaying older debt, including $1.1 billion of 2016 Senior Notes.
- SBA repurchased $582.6 million of shares and paid $253.6 million in dividends. Quarterly dividends in 2021 were $0.58 per share; a $0.71 dividend was declared for payment in March 2022.
Outlook, risks and notable items
- Management expected organic site leasing revenue to increase in both domestic and international segments in 2022, partly as carriers deploy unused spectrum. It anticipated 2022 cash capital expenditures of $45–$55 million for maintenance and general corporate needs, plus $525–$545 million of discretionary spending.
- SBA estimated $140–$190 million of aggregate cash site leasing revenue churn over six years from T-Mobile/Sprint lease non-renewals; timing is uncertain. In Brazil, 1,568 of the 7,525 leases with Oi overlapped other carriers’ leases and may not renew at expiration.
- Customer concentration is material: T-Mobile, AT&T and Verizon accounted for 73.1% of total 2021 revenue. Oi, Telefonica and Claro represented 58.3% of international site leasing revenue; T-Mobile represented 78.2% of site development revenue.
- Key risks include customer consolidation and concentration, high leverage, interest-rate and refinancing exposure, LIBOR transition, foreign-exchange volatility, inflation, permitting constraints, and delays in carrier spectrum and 5G deployments. Aviation-safety concerns delayed some U.S. 5G facility deployments in January 2022.
- The July 2021 credit-facility amendment increased revolver commitments to $1.5 billion and extended maturity to July 2026. Year-end revolver borrowings were $350 million; $560 million was outstanding as of the filing date. SBA reported compliance with its financial covenants at year-end.
- The Tanzania transaction added 1,445 sites for $176.1 million after year-end; title for 482 towers remained subject to post-closing documentation and due diligence. Litigation was described as ordinary-course matters not expected to have a material adverse effect.
- COVID-19 had minimally affected operations to date, according to management, but future impacts remained uncertain. The company reported effective disclosure controls and internal control over financial reporting; the auditor issued unqualified opinions.
Investor verification priorities
- Reconcile reported earnings growth with foreign-exchange remeasurement, debt-extinguishment costs and other non-operating items; assess cash flow alongside non-GAAP Adjusted EBITDA.
- Track actual Sprint-related churn against the $140–$190 million six-year estimate and monitor potential Oi lease non-renewals and customer concentration.
- Review leverage, upcoming maturities, covenant headroom, floating-rate exposure and the effect of LIBOR replacement; verify the reported liquidity outlook against planned spending.
- Compare 2022 organic leasing growth and capital expenditures with management’s expectations, including acquisition integration and the Tanzania title-transfer process.
- Assess foreign-currency, inflation, land-rights and permitting exposures, including the Brazilian concession issue affecting 2,113 towers.