February 24, 2011

SBA Communications Corporation Reports 4th Quarter 2010 Results; Provides 1st Quarter, and Updated Full Year 2011 Outlook

BOCA RATON, Fla., Feb. 24, 2011 (GLOBE NEWSWIRE) -- SBA Communications Corporation (Nasdaq:SBAC) ("SBA" or the "Company") today reported results for the quarter ended December 31, 2010. Highlights of the results include:

-- Fourth quarter over year earlier period:

  • Site leasing revenue growth of 13.3%
  • Tower Cash Flow growth of 14.2%
  • Net loss decreased from $43.6 million to $38.6 million
  • Adjusted EBITDA growth of 15.9%
  • Equity Free Cash Flow Per Share growth of 26.2%

Operating Results

Total revenues in the fourth quarter of 2010 were $165.5 million compared to $145.0 million in the year earlier period, an increase of 14.2%. Site leasing revenue of $140.1 million was up 13.3% over the year earlier period. Site leasing Segment Operating Profit of $110.4 million was up 15.6% over the year earlier period. Site leasing contributed 97.1% of the Company's total Segment Operating Profit in the fourth quarter of 2010. Site development revenues were $25.4 million in the fourth quarter of 2010 compared to $21.3 million in the year earlier period, a 19.2% increase. Site development Segment Operating Profit Margin was 12.8% in the fourth quarter of 2010 compared to 12.2% in the year earlier period.

Tower Cash Flow for the fourth quarter of 2010 was $111.2 million, a 14.2% increase over the year earlier period. Tower Cash Flow Margin for the fourth quarter of 2010 was 80.3% compared to 79.5% in the year earlier period.

Net loss for the fourth quarter of 2010 was $38.6 million compared to $43.6 million in the year earlier period. Net loss attributable to SBA Communications Corporation for the fourth quarter of 2010 was $39.2 million or $(0.34) per share compared to $43.5 million or $(0.37) per share in the year earlier period.

Adjusted EBITDA in the fourth quarter of 2010 was $102.7 million compared to $88.7 million in the year earlier period, an increase of 15.9%. Adjusted EBITDA Margin was 62.7% in the fourth quarter of 2010 compared to 61.6% in the year earlier period.

Net Cash Interest Expense was $37.5 million in the fourth quarter of 2010 compared to $37.3 million in the year earlier period.

Equity Free Cash Flow for the fourth quarter of 2010 was $61.4 million compared to $48.8 million in the year earlier period, an increase of 25.8%. Equity Free Cash Flow Per Share was $0.53 for the fourth quarter of 2010 compared to $0.42 per share in the year earlier period, an increase of 26.2%.

"We had a strong finish to 2010 in the fourth quarter," commented Jeffrey A. Stoops, President and Chief Executive Officer. "Our customers were very busy improving and expanding their wireless networks, and as a result we had a very good quarter for both our leasing and services businesses. We expect customer activity to remain strong through 2011 in all of the markets in which we are operating. Because of our positive expectations around customer activity and organic growth, we intend to continue investing in our business. We believe 2011 will be another year where we grow our asset portfolio materially, and the foundation for that growth is already in place. We expect the combination of strong organic growth and material portfolio growth will once again allow SBA to post material growth in revenue, adjusted EBITDA and equity free cash flow per share for 2011."

Investing Activities

As of December 31, 2010, SBA owned 9,111 towers, and managed or leased approximately 5,300 actual or potential additional communication sites. During the fourth quarter of 2010, SBA purchased 405 towers and the rights to manage additional communication sites for approximately $147.8 million in cash (exclusive of any working capital adjustments). SBA also built 41 towers and decommissioned 40 towers during the fourth quarter of 2010. In addition, the Company spent $10.0 million to purchase land and easements and to extend lease terms with respect to land underlying its towers. Total cash capital expenditures for the fourth quarter of 2010 were $175.3 million, consisting of $2.8 million of non-discretionary cash capital expenditures (tower maintenance and general corporate) and $172.5 million of discretionary cash capital expenditures (new tower builds, tower augmentations, tower acquisitions and related earn-outs, and purchasing land and easements).

Subsequent to December 31, 2010, the Company acquired 123 towers and related assets and liabilities from third party sellers for an aggregate consideration of $63.6 million in cash. The Company has agreed to purchase an additional 154 towers for an aggregate amount of $70.7 million. The Company anticipates that these acquisitions will be consummated by the end of the second quarter of 2011.

Financing Activities and Liquidity

SBA ended the fourth quarter with $3.1 billion of total debt (recorded on the Company's balance sheet at a discounted carrying value of $2.8 billion), $0.1 billion of cash and cash equivalents, short-term restricted cash and short-term investments and $3.0 billion of Net Debt (as defined below). SBA's Net Debt and Net Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were 7.2x and 2.8x, respectively. As of December 31, 2010, SBA had $20.0 million outstanding under the 2010 Credit Facility with a weighted average interest rate for the amounts borrowed of 2.15%. As of December 31, 2010, the availability under the 2010 Credit Facility was $480.0 million.

In the fourth quarter, SBA repurchased 278,750 shares of its common stock for $10.3 million in cash, at the average price per share of $37.09, and has remaining authorization to repurchase an additional $140.9 million of its common stock under its current $250.0 million common stock repurchase plan.

Outlook

The Company is providing its first quarter 2011 Outlook, and updating its Full Year 2011 Outlook for anticipated results. The Outlook provided is based on a number of assumptions that the Company believes are reasonable at the time of this press release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in the Company's filings with the Securities and Exchange Commission.

The Company's Full Year 2011 Outlook is based on the following assumptions: (1) 9% organic leasing revenue growth on owned towers, (2) new tower builds in the U.S. and internationally of 390 to 410 towers in 2011 for the Company's ownership, (3) the acquisition of only those tower assets under contract at the time of this press release, and (4) no additional stock repurchases. The Company intends to spend additional capital in 2011 on acquiring revenue producing assets not yet identified or under contract, the impact of which is not reflected in the 2011 guidance.

  Quarter ending   Full
   March 31, 2011   Year 2011
   ($'s in millions)
Site leasing revenue $144.5 to $146.5   $599.0 to $609.0
Site development revenue $20.0 to $22.0   $85.0 to $95.0
Total revenues $164.5 to $168.5   $684.0 to $704.0
Tower Cash Flow $114.0 to $116.0   $469.0 to $484.0
Adjusted EBITDA $104.0 to $106.0   $430.0 to $447.0
Net cash interest expense (1) $37.0 to $38.0   $149.0 to $153.0
Cash taxes paid $0.9 to $1.3   $4.0 to $6.0
Non-discretionary cash capital expenditures (2) $2.5 to $3.5   $10.0 to $14.0
Equity Free Cash Flow (3) $61.2 to $65.6   $257.0 to $284.0
Discretionary cash capital expenditures (4) $130.0 to $140.0   $230.0 to $250.0

(1)   Net cash interest expense is defined as interest expense less interest income. Net cash interest expense does not include any impact from the amortization of deferred financing fees or non-cash interest expense.

(2)  Consists of tower maintenance and general corporate capital expenditures.

(3)   Defined as Adjusted EBITDA less net cash interest expense, non-discretionary cash capital expenditures and cash taxes paid.

(4)  Consists of new tower builds, tower augmentations, tower acquisitions and related earn-outs and ground lease purchases. Excludes expenditures for revenue producing assets not under contract at the date of this press release.

Conference Call Information

SBA Communications Corporation will host a conference call on Friday, February 25, 2011 at 10:00 AM (EST) to discuss the quarterly results. The call may be accessed as follows:

When:  Friday, February 25, 2011 at 10:00 AM (EST)
Dial-in number: (800) 230-1951
Conference call name: SBA Fourth Quarter Results
Replay: February 25, 2011 at 1:00 PM through March 11, 2011 at 11:59 PM
Number:  (800) 475-6701
Access Code: 190732
Internet access: www.sbasite.com

Information Concerning Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the Company's expectations or beliefs regarding (i) customer demand and activity for the full year 2011, (ii) the Company's financial and operational guidance for the first quarter of 2011 and full year 2011, including its expectations regarding equity free cash flow per share in 2011, (iii) the Company's sources and uses of liquidity and (iv) the Company's expectations regarding tower acquisitions and tower portfolio growth and its belief that pending acquisitions will close by the end of the second quarter of 2011. 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 disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's annual report on Form 10-K filed with the Commission on March 1, 2010. 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 all of these statements, including its financial and operational guidance, 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 and retain as many site leasing tenants as planned at anticipated lease rates; (3) the impact, if any, of consolidation among wireless service providers; (4) the Company's ability to secure and deliver anticipated services business at contemplated margins; (5) the Company's ability to maintain expenses and cash capital expenditures at appropriate levels for our business; (6) the Company's ability to acquire land underneath towers on terms that are accretive; (7) the Company's ability to realize economies of scale from its tower portfolio; (8) the Company's ability to comply with covenants and the terms of its credit instruments; (9) the economic climate for the wireless communications industry in general and the wireless communications infrastructure providers in particular and (10) the continued dependence on towers and outsourced site development services by the wireless carriers. With respect to the Company's plan for new builds, these factors also include zoning approvals, weather, availability of labor and supplies and other factors beyond the Company's control that could affect the Company's ability to build 390 to 410 towers in 2011. With respect to its expectations regarding the ability to close pending tower acquisitions, these factors also include satisfactorily completing due diligence, the ability and willingness of each party to fulfill their respective closing conditions and the availability of cash on hand, borrowing capacity under the senior credit facility or shares of the Company's Class A common stock to pay the anticipated consideration.

This press release contains non-GAAP financial measures. Reconciliation of each of these non-GAAP financial measures is presented below under "Non-GAAP Financial Measures." Please refer to the Company's Form 8-K filed with the Commission on February 24, 2011 for a more detailed explanation of why management believes they are useful in managing the Company.

This press release will be available on our website at www.sbasite.com.

About SBA Communications Corporation

SBA Communications Corporation is a first choice provider and leading owner and operator of wireless communications infrastructure in North and Central America. By "Building Better Wireless", 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. For more information please visit: www.sbasite.com.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
         
         
  For the three months
ended December 31,
For the fiscal year
ended December 31,
  2010  2009  2010  2009 
  (unaudited) (unaudited) (unaudited)  
Revenues:         
Site leasing   $140,054    $123,636   $535,444    $477,007  
Site development   25,443   21,343   91,175   78,506 
Total revenues   165,497   144,979   626,619   555,513 
         
Operating expenses:         
Cost of revenues (exclusive of depreciation, accretion and amortization shown below):         
Cost of site leasing   29,628   28,115   119,141   111,842 
Cost of site development   22,183   18,729   80,301   68,701 
Selling, general and administrative (1)  14,978   14,346   58,209   52,785 
Acquisition related expenses   3,428   2,164   10,106   4,810 
Asset impairment   5,862   3,884   5,862   3,884 
Depreciation, accretion and amortization   72,723   65,687   278,727   258,537 
Total operating expenses   148,802   132,925   552,346   500,559 
Operating income   16,695   12,054   74,273   54,954 
         
Other income (expense):         
Interest income   63   206   432   1,123 
Interest expense   (37,524) (37,537) (149,921) (130,853)
Non-cash interest expense  (15,334) (14,470) (60,070) (49,897)
Amortization of deferred financing fees  (2,207) (2,465) (9,099) (10,456)
Loss from extinguishment of debt, net  (6) (1,472) (49,060) (5,661)
Other (expense) income  (73)  74   29   163 
Total other expense  (55,081) (55,664) (267,689) (195,581)
         
Loss from operations before provision for income taxes  (38,386) (43,610) (193,416) (140,627)
Provision for income taxes  (195) (2) (1,005) (492)
Net loss  (38,581) (43,612) (194,421) (141,119)
Net (income) loss attributable to noncontrolling interest  (580)  100  (253)  248 
Net loss attributable to SBA Communications Corporation   $ (39,161)  $ (43,512)  $ (194,674)  $ (140,871)
         
Net loss per common share attributable to          
SBA Communications Corporation:         
Basic and diluted   (0.34) (0.37) (1.68) (1.20)
         
         
Weighted average number of common shares  114,866  116,928  115,591  117,165 
         
(1)  Includes non-cash compensation of $2,638 and $2,274 for the three months ended December 31, 2010 and 2009, respectively, and $10,312 and $8,008 for the years ended December 31, 2010 and 2009, respectively. 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
     
     
     
  December 31, 2010 December 31, 2009
  (unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents  $64,254   $161,317 
Restricted cash  29,456   30,285 
Short-term investments  4,016   5,352 
Accounts receivable, net of allowance of $263 and $350 in 2010 and 2009, respectively  18,784   19,644 
Other current assets  30,217   20,240 
Total current assets  146,727   236,838 
     
Property and equipment, net  1,534,318   1,496,938 
Intangible assets, net  1,500,012   1,435,591 
Other long-term assets  219,118   144,279 
Total assets  $3,400,175  $3,313,646 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Current maturities of long-term debt, net $ --   $28,648 
Accounts payable and accrued expenses  33,276   37,329 
Accrued interest  32,293   35,551 
Other current liabilities  65,015   57,197 
Total current liabilities  130,584   158,725 
     
Long-term liabilities:    
Long-term debt, net  2,827,450   2,460,402 
Other long-term liabilities  112,008   94,570 
Total long-term liabilities  2,939,458   2,554,972 
     
Redeemable noncontrolling interests  13,023  --
     
Shareholders' equity  317,110  599,949 
Total liabilities and shareholders' equity  $3,400,175   $3,313,646 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
     
  For the three months
ended December 31,
  2010  2009 
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss  $ (38,581)  $ (43,612)
Depreciation, accretion, and amortization  72,723   65,687 
Non-cash interest expense   15,334   14,470 
Loss from extinguishment of debt, net  6   1,472 
Other non-cash items reflected in the Statements of Operations  10,365   8,935 
Accrued interest  7,580   8,755 
Other changes in operating assets and liabilities (8,628) (5,950)
Net cash provided by operating activities   58,799   49,757 
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisitions and related earn-outs (156,630) (126,179)
Capital expenditures (18,650) (12,637)
Purchase of investments (940)  -- 
Sales and maturities of investments  660   980 
Proceeds from disposition of fixed assets  12   90 
Payment of restricted cash related to tower removal obligations   --  (31)
Net cash used in investing activities (175,548) (137,777)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from employee stock purchase/stock option plans  3,647   4,077 
Payment on the extinguishment of CMBS Certificates  --  (34,301)
Repurchase and retirement of common stock (10,345) (1,721)
Release (payment) of restricted cash relating to CMBS Certificates  667  (3,750)
Payments of financing fees (87) (811)
Payment on the extinguishment of convertible debt (30,409)  -- 
Borrowings on the 2010 Credit Facility  20,000   -- 
Net proceeds from the settlement of convertible note hedges  8,497   -- 
Purchase of redeemable noncontrolling interests (8,203)  -- 
Net cash used in financing activities (16,233) (36,506)
     
NET DECREASE IN CASH AND CASH EQUIVALENTS (132,982) (124,526)
CASH AND CASH EQUIVALENTS:    
Beginning of period  197,236  285,843 
End of period  $64,254   $161,317 
     
  For the three
months ended
December 31, 2010
For the fiscal
year ended
December 31, 2010
  (in thousands) 
     
SELECTED CAPITAL EXPENDITURE DETAIL:    
     
Tower new build construction  $13,387    $46,938  
     
Operating tower expenditures:    
Tower upgrades/augmentations  2,469   9,448 
Maintenance/improvement capital expenditures  2,225   8,158 
   4,694   17,606 
     
General corporate expenditures  569   2,074 
Total capital expenditures  $18,650    $66,618  

Non-GAAP Financial Measures

This press release includes disclosures regarding our Site Leasing Segment Operating Profit, Site Development Segment Operating Profit, Tower Cash Flow, Tower Cash Flow Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Equity Free Cash Flow, Equity Free Cash Flow Per Share, Net Debt, Leverage Ratio and Secured Leverage Ratio, which are non-GAAP financial measures. These non-GAAP measures are not intended to be alternative measures of performance as determined in accordance with GAAP. Rather, they are presented as additional information because management believes that these measures are indicators of the performance of our core operations.

Segment Operating Profit and Segment Operating Profit Margin

The reconciliation of Site Leasing Segment Operating Profit and Site Development Segment Operating Profit and the calculation of Segment Operating Profit Margin are as follows:

  Site Leasing Segment Site Development Segment
  For the three months
ended December 31,
For the three months
ended December 31,
  2010  2009  2010  2009 
  (in thousands) (in thousands)
         
Segment revenue  $140,054   $123,636   $25,443   $21,343 
Segment cost of revenues (excluding depreciation, accretion and amortization): (29,628) (28,115) (22,183) (18,729)
Segment operating profit  $110,426   $95,521   $3,260  $2,614 
         
Segment operating profit margin 78.8% 77.3% 12.8% 12.2%

Total Segment Operating Profit is the total of the Segment Operating Profits of the two segments.

Tower Cash Flow and Tower Cash Flow Margin

The tables below set forth the reconciliation of Tower Cash Flow to its most comparable GAAP measurement and the calculation of Tower Cash Flow Margin. Tower Cash Flow for each of the periods set forth in the Outlook section above will be calculated in the same manner.

  For the three months
ended December 31,
  2010  2009 
  (in thousands)
     
Site leasing revenue  $140,054   $123,636 
Site leasing cost of revenue (excluding depreciation, accretion, and amortization) (29,628) (28,115)
Site leasing segment operating profit  110,426   95,521 
Non-cash straight-line leasing revenue (1,516) (1,093)
Non-cash straight-line ground lease expense  2,321   2,963 
Tower Cash Flow  $111,231   $97,391 
     
     
The calculation of Tower Cash Flow Margin is as follows:    
     
  For the three months
ended December 31,
  2010  2009 
  (in thousands)
     
Site leasing revenue  $140,054   $123,636 
Non-cash straight-line leasing revenue (1,516) (1,093)
Site leasing revenue minus non-cash straight-line leasing revenue  $138,538   $122,543 
Tower Cash Flow  $111,231   $97,391 
Tower Cash Flow Margin 80.3% 79.5%

Adjusted EBITDA, Annualized Adjusted EBITDA and Adjusted EBITDA Margin

The table below sets forth the reconciliation of Adjusted EBITDA to its most comparable GAAP measurement. Adjusted EBITDA for each of the periods set forth in the Outlook section above will be calculated in the same manner: 

  For the three months
ended December 31,
  2010  2009 
     
  (in thousands)
     
Net loss   $ (38,581)  $ (43,612)
Interest income  (63) (206)
Interest expense (1)  55,065   54,472 
Depreciation, accretion, and amortization   72,723   65,687 
Provision for taxes (2)  723   671 
Asset impairment   5,862   3,884 
Loss from extinguishment of debt, net   6   1,472 
Acquisition related expenses   3,428   2,164 
Non-cash compensation   2,696   2,327 
Non-cash straight-line leasing revenue  (1,516) (1,093)
Non-cash straight-line ground lease expense   2,321   2,963 
Other expense (income)   73  (74)
Adjusted EBITDA   $102,737   $88,655 
Annualized Adjusted EBITDA (3)  $410,948   $354,620 
     
(1)  Interest expense includes cash interest expense, non-cash interest expense and amortization of deferred financing fees.
(2)  For the three months ended December 31, 2010 and December 31, 2009, these amounts included $528 and $669, respectively, of franchise taxes reflected on the Statements of Operations in selling, general and administrative expenses.
(3)  Annualized Adjusted EBITDA is calculated as Adjusted EBITDA for the most recent quarter multiplied by four.


The calculation of Adjusted EBITDA Margin is as follows:

  For the three months
ended December 31,
  2010  2009 
  (in thousands)
     
Total revenues  $165,497   $144,979 
Non-cash straight-line leasing revenue (1,516) (1,093)
Total revenues minus non-cash straight-line leasing revenue  $163,981   $143,886 
Adjusted EBITDA  $102,737   $88,655 
Adjusted EBITDA Margin 62.7% 61.6%

Equity Free Cash Flow and Equity Free Cash Flow Per Share

The table below sets forth the reconciliation of Equity Free Cash Flow for the three months ended December 31, 2010 and 2009 and the calculation of Equity Free Cash Flow Per Share for such periods. Equity Free Cash Flow for each of the periods set forth in the Outlook section above will be calculated in the same manner.

  For the three months
ended December 31,
  2010  2009 
  (in thousands)
     
Adjusted EBITDA  $102,737   $88,655 
Net cash interest expense (37,461) (37,331)
Non-discretionary cash capital expenditures (2,794) (2,306)
Cash taxes paid (1,038) (173)
Equity Free Cash Flow  $61,444   $48,845 
Weighted average number of common shares  114,866  116,928 
Equity Free Cash Flow Per Share - basic  $0.53   $0.42 


Net Debt, Leverage Ratio, and Secured Leverage Ratio

Net Debt is calculated using the notional principal amount of outstanding debt. Under GAAP policies, the notional principal amount of the Company's outstanding debt is not necessarily reflected on the face of the Company's financial statements.

The Debt and Leverage calculations are as follows:

  December 31, 2010
  (in thousands)
   
2010-1 Tower Securities  $680,000 
2010-2 Tower Securities  550,000 
Total secured debt  1,230,000 
   
1.875% Convertible Senior Notes (carrying value of $463,970)  550,000 
4.0% Convertible Senior Notes (carrying value of $368,463)  500,000 
2016 Senior Notes (carrying value of $372,889)  375,000 
2019 Senior Notes (carrying value of $372,128)  375,000 
2010 Credit Facility  20,000 
Total unsecured debt  1,820,000 
Total debt  $3,050,000 
   
Leverage Ratio  
   
Total debt  $3,050,000 
Less: Cash and cash equivalents, short-term restricted cash and short-term investments (97,726)
Net debt  2,952,274 
   
   
Divided by: Annualized Adjusted EBITDA  $410,948 
   
Leverage Ratio 7.2x
   
Secured Leverage Ratio  
   
Total secured debt  $1,230,000 
   
Less: Cash and cash equivalents, short-term restricted cash and short-term investments (97,726)
Net Secured Debt  $1,132,274 
   
   
Divided by: Annualized Adjusted EBITDA  $410,948 
   
Secured Leverage Ratio 2.8x
   
   
###
CONTACT: Mark DeRussy, CFA

         Capital Markets

         561-226-9531



         Lynne Hopkins

         Media Relations

         561-226-9431
Source: SBA Communications Corporation

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