SBA Communications (Nasdaq:SBAC) late yesterday reported results for the quarter ended September 30, 2018.
“We had a very good third quarter, and expect a strong finish to 2018,” said Jeffrey Stoops, President and CEO. “Our third quarter financial results were ahead of expectations and reflect a combination of strong new domestic leasing business executed earlier in the year, excellent services results and solid expense controls, even after some unfavorable foreign currency movements in the quarter.”
Highlights of the third quarter include:
- Net income of $16.1 million or $0.14 per share
- AFFO per share growth of 13.1% over the year earlier period on a constant currency basis
- Added 753 sites to the portfolio during the quarter
- Repurchased 1.6 million shares from July 1 through the present
- Tower cash flow margin of 80.2%
Stoops said customer activity remains strong both domestically and internationally. In the third quarter, SBA executed a new domestic leasing business at a rate which was well above the year ago period and the highest since 2014.
“Our domestic and international backlogs remain very healthy,” Stoops said. “We continued to allocate capital opportunistically to a mix of portfolio growth and stock repurchases, materially investing in both while staying within our target leverage range. We believe the combination of strong customer demand, operational excellence and disciplined yet opportunistic capital allocation will allow us to continue to drive shareholder value through growth in AFFO per share,” he said.
SBAC’s two tower peers have already reported Q3’18 results and pointed to higher activity from all Big 4 carriers in the U.S., said Jennifer Fritzsche, managing Director of Wells Fargo Securities’ Equity Research Group.
“The higher carrier activity is something we cited as a tide that should lift all tower boats,” Fritzsche said. “SBAC is historically the most strict towerco in pricing negotiations, and we wouldn’t expect that to change.”
If AT&T is slowing its new tower build plans, Fritzsche said the three public towercos should benefit given they have the largest portfolios. “While this should benefit SBAC – we believe it is fair to assume T likely is first working on establishing terms with the two larger towercos (CCI / AMT) given their greater reach. We would also highlight SBAC has an agreement with Sprint, which offers a floor of expected activity from the carrier that contributed least to AMT and CCI,” she said.
November 6, 2018