With SBA Communications reporting their second quarter earnings this week, our analysts took to their keyboards to share their thoughts. SBA was the last of the tower companies to release their earnings.
Colby Synesael of Cowen and Company: SBAC posted 2Q15 results mostly at the high-end but still in range of guidance. The company lowered 2015 guidance mostly driven by FX, though a modest real reduction on AFFO, however we expect the stock to trade mostly in line with the market as long-awaited buyback activity begins. For 2015, the company lowered guidance mostly taking down the high end and mostly driven by FX, though a legit modest reduction on constant currency AFFO as interest expenses are expected higher. For 3Q15, SBAC expects total revenue of $403-413 million vs. our last published estimate of $416.7 million and the Street’s $416.7 million estimate and EBITDA of $271.5-276.5 million vs. our last published estimate of $275.7 million and the Street’s $276.1 million estimate. For 3Q15, it expects AFFO of $177.5-186.5 million vs. our last published estimate of $186 million. For 2015, SBAC lowered total revenue to $1.623-1.648 billion (from $1.620-1.665 billion) vs. our last published estimate of $1.658 billion and the Street’s $1.664 billion estimate however expects a $9.0 million FX headwind.
Jonathan Schildkraut of Evercore ISI: SBAC reported largely inline 2Q results with site leasing and EBITDA above our estimates by 0.7% and 0.8%, respectively. AFFO per share matched our $1.42 (and was ahead of consenus of $1.41). In 2Q, SBAC produced Y/Y growth in site leasing, EBITDA, and AFFOps of 8.8%, 9.2%, and 8.2% Y/Y, respectively. Adjusting for FX, site leasing would have increased 13.9% and EBITDA would have increased 12.9%. Updated FY15 guidance reflects an incremental FX headwind of $9 million on site leasing revs and $5 million on EBITDA and AFFO (we had calculated a ~$2.7 million FX headwind) – reducing the company’s outlook (at the mid-point) by 0.6%, 0.2%, and 1.1%, respectively. As such, new guidance implies Y/Y growth of 8.9% for site leasing (vs. 9.6% prior), 9.5% for EBITDA (vs. 9.7% prior), and 9.0% for AFFOps (vs. 9.0% prior and assuming 129.1 million shares (AFFOps stayed constant despite a reduction in AFFO because of share buybacks)). On a constant currency basis, we estimate that new guidance implies Y/Y growth of 12.3% for site leasing, 11.9% for EBITDA, and 12.6% for AFFOps (an improvement from the company’s original outlook of 11.3%, 11.2%, and 10.9%, respectively). Management expects to deploy additional capital for acquisitions and additional share repurchases – though, given the timing in the year, it is unlikely to have a meaningful impact on the FY15 outlook. Net/net, SBAC closes out what has been a relatively muted quarter for the tower operators on the back of slow U.S. trends (as expected) and continued FX headwinds (which intensified since we previewed the group just 10 days ago). And, while shares are likely to pressure in trading tomorrow morning – we continue to see SBAC as well positioned as investors focus begins to shift to an expected improvement in 2H spending and better overall trends in 2016.
Amir Rozwadowski of Barclays: SBAC reported healthy results that were broadly in-line/marginally above our forecasts. Overall, the company reported results that were ~1% ahead on Total Revenues (in-line on Leasing Revenues), ~1% ahead on Site Leasing operating profit, ~2% ahead on Site Development operating profit, ~1% ahead on adjusted EBITDA, and in-line on AFFO. While management’s 2015 guidance may optically imply a more tempered outlook, overall, we believe that this is largely covered by negative changes in F/X. That said, we do believe that FY15 guidance bears monitoring, in particular for full-year AFFO. The company did outline that its backlog remains strong driven by on-going network improvement initiatives among its customers and thus we look for incremental color to assess the company’s AFFO trajectory expectations over the mid-term.
Jennifer Fritzsche of Wells Fargo: SBAC reported Q2 total revenue, Adjusted EBITDA and AFFO of $411 million, $274 million and $185 million vs. our estimates of $409 million, $271 million and $182 million, respectively. Site leasing revenue of $371 million was up 8.8% y/y, and vs. our estimates of $370 million and up 8.7% y/y. Domestic cash site leasing revenue was up 8.5% y/y, and international was up 17.3% y/y. Site development revenue was $40 million vs. our $39 million estimate. Q2 capex was $50 million vs. our $62 million, inclusive of $24 million for new tower builds, $15 million for tower upgrades, $2.7 million of headquarters capital, and $8.5 million in maintenance capex. Total tower cash flow was $284 million, up 9.7% y/y and vs. our estimates of $285 million and 10.1% y/y, with $224 million coming from domestic operations (up 8.8% y/y) and $40 million from international (up 15.0% y/y).
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