SBA Communications (SBAC) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 31, 2023 5:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the SBA Second Quarter Earnings Results Conference Call. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session. [Operator Instructions]

And I would now like to turn the conference over to our host, Vice President of Finance, Mark DeRussy. Please go ahead.

Mark DeRussy

Good evening and thank you for joining us for SBA's second quarter 2023 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer; and Brendan Cavanagh, our Chief Financial Officer.

Some of the information we will discuss on this call is forward-looking, including but not limited to, any guidance for 2023 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, July 31. We have no obligation to update any forward-looking statement we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package which is located on the landing page of our Investor Relations website.

With that, I will now turn it over to Brendan to discuss our second quarter results.

Brendan Cavanagh

Thank you, Mark. Good evening. We had another steady quarter in Q2 with solid financial results that were slightly ahead of our expectations. Based on these results and our updated expectations for the balance of the year, we have increased our full year 2023 outlook for site leasing revenue, tower cash flow, adjusted EBITDA, AFFO and AFFO per share.

Total GAAP site leasing revenues for the second quarter or $626.1 million and cash site leasing revenues were $618.7 million. Foreign exchange rates represented a benefit of approximately $1.9 million when compared with our previously forecasted FX rate estimates for the quarter and a headwind of $4.2 million when compared to the second quarter of 2022. Same tower recurring cash leasing revenue growth for the second quarter which is calculated on a constant currency basis was 4.3% net over the second quarter of 2022 and including the impact of 3.9% of churn.

On a gross basis, same-tower recurring cash leasing revenue growth was 8.2%. The Domestic same-tower recurring cash leasing revenue growth over the second quarter of last year was 7.8% on a gross basis and 4.2% on a net basis, including 3.6% of churn. Domestic operational leasing activity or bookings representing new revenue placed under contract during the second quarter declined from the first quarter. While all major carriers remained active with their networks, agreement execution levels in the second quarter from several of our customers were below our prior expectations. Longer term, we continue to see significant runway for new 5G-related leasing activity based on the number of our sites that remain to be upgraded with mid-band spectrum deployments by the major mobile network operators.