Sign in
SC

SBA COMMUNICATIONS CORP (SBAC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid execution: total revenues $693.7M, site leasing revenue $646.3M, diluted EPS $1.61, Adjusted EBITDA $489.3M, and AFFO/share $3.47, with margins of 70.6% (Adj. EBITDA) and 81.7% (Tower Cash Flow) .
  • Management highlighted rising US carrier activity, highest year-end backlogs in leasing and services, and a mix shift toward new colocations; results were “in line to slightly ahead of our estimates” despite worse FX .
  • Balance sheet strengthened: net debt/annualized Adjusted EBITDA fell to an all-time low 6.1x; company refinanced $2.07B tower ABS at 4.778% blended and has an undrawn $2.0B revolver .
  • 2025 outlook: site leasing revenue $2.53–$2.56B, Adjusted EBITDA $1.885–$1.905B, AFFO/share $12.40–$12.76; dividend increased to $1.11 (+~13%), implying ~35% of AFFO midpoint, and Millicom towers expected to close around Sep 1, 2025 .

What Went Well and What Went Wrong

What Went Well

  • US demand acceleration: “carrier activity levels in the US continued to grow,” with year-end backlogs at the highest of 2024, and services had its best quarter; 2025 is off to a strong start .
  • Portfolio focus and scale: exited Philippines and agreed to exit Colombia; signed to acquire ~7,000 Central America sites from Millicom under long-term USD MLAs and a seven‑year build‑to‑suit exclusivity for up to 2,500 sites .
  • Capital structure progress: net leverage at 6.1x (lowest in company history), $2.07B ABS refinanced below prior assumptions, revolver undrawn; dividend raised ~13% to $1.11/share .

What Went Wrong

  • FX headwinds pressured reported growth; Q4 constant-currency growth outpaced reported across several metrics (e.g., Site Leasing revenue +4.6% cc vs +1.6% reported) .
  • International churn elevated due to consolidations (notably Oi in Brazil); management expects similar levels of international churn in 2025 before stabilization .
  • Mixed margin dynamics: Adjusted EBITDA margin edged down YoY in Q4 (70.6% vs 71.6% prior year), while Tower Cash Flow margin improved (81.7% vs 81.0%) .

Financial Results

Consolidated Results by Quarter

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$660.5 $667.6 $693.7
Site Leasing Revenue ($USD Millions)$626.5 $625.7 $646.3
Site Development Revenue ($USD Millions)$34.0 $41.9 $47.4
Net Income ($USD Millions)$159.5 $255.9 $178.8
Diluted EPS ($)$1.51 $2.40 $1.61
Adjusted EBITDA ($USD Millions)$467.1 $472.6 $489.3
AFFO ($USD Millions)$354.3 $358.3 $375.1
AFFO per share ($)$3.29 $3.32 $3.47
Tower Cash Flow Margin (%)81.1% 81.3% 81.7%
Adjusted EBITDA Margin (%)71.3% 70.9% 70.6%

Q4 2024 vs Prior Year (Q4 2023)

MetricQ4 2023Q4 2024YoY Change
Total Revenues ($USD Millions)$675.0 $693.7 —
Site Leasing Revenue ($USD Millions)$636.1 $646.3 +1.6%
Site Development Revenue ($USD Millions)$39.0 $47.4 +21.5%
Tower Cash Flow ($USD Millions)$512.2 $527.8 +3.0%
Net Cash Interest Expense ($USD Millions)$93.0 $89.5 −3.7%
Net Income ($USD Millions)$109.5 $178.8 +63.3%
Diluted EPS ($)$1.01 $1.61 +59.2%
Adjusted EBITDA ($USD Millions)$480.7 $489.3 +1.8%
AFFO ($USD Millions)$365.7 $375.1 +2.6%
AFFO per share ($)$3.37 $3.47 +3.0%

Segment Breakdown

Metric ($USD Millions)Q2 2024Q3 2024Q4 2024
Domestic Site Leasing Revenue$463.2 $464.9 $471.8
Domestic Cash Site Leasing Revenue$457.4 $463.9 $472.3
Domestic Segment Operating Profit$397.7 $396.0 $403.0
Domestic Tower Cash Flow$388.2 $394.1 $401.0
International Site Leasing Revenue$163.3 $160.8 $174.5
International Cash Site Leasing Revenue$163.6 $160.8 $173.8
International Segment Operating Profit$114.6 $111.8 $127.2
International Tower Cash Flow$115.6 $113.5 $126.8

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Sites Built (quarter)100 147 159
Sites Acquired (quarter)117 51 7
Sites Owned (end of quarter)39,744 39,762 39,749
Total Capital Expenditures ($USD Millions)$49.97 $64.76 $55.55
Net Cash Interest Expense ($USD Millions)$90.5 $88.7 $89.5
Net Debt / Annualized Adjusted EBITDA6.4x 6.4x 6.1x
Dividend per Share (declared)$0.98 $0.98 $1.11 (declared for Q1’25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Site Leasing Revenue ($MM)FY 2025N/A (initial FY25)$2,530–$2,555 New
Site Development Revenue ($MM)FY 2025N/A$160–$180 New
Total Revenues ($MM)FY 2025N/A$2,690–$2,735 New
Tower Cash Flow ($MM)FY 2025N/A$2,040–$2,065 New
Adjusted EBITDA ($MM)FY 2025N/A$1,885–$1,905 New
Net Cash Interest Expense ($MM)FY 2025N/A$429–$435 New
Non‑Discretionary Cash Capex ($MM)FY 2025N/A$53–$63 New
AFFO ($MM)FY 2025N/A$1,345–$1,385 New
AFFO per Share ($)FY 2025N/A$12.40–$12.76 New
Discretionary Cash Capex ($MM)FY 2025N/A$1,255–$1,275 New
FX Impact (vs 2024 actual)FY 2025N/A−$25.1M rev; −$17.0M Adj. EBITDA; −$16.7M AFFO New
Dividend per ShareQ1 2025 vs Q4 2024 paid$0.98 (Q3’24 paid) $1.11 (Q1’25 declared) Raised ~13%

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
US carrier activity & backlogQ2: “similar pace” US new business; Q3: US carrier activity increased; services strongest quarter Backlogs highest of year; quarter-over-quarter increase starting 2025 Improving
Mix shift to colocations—Greater contribution from colos vs amendments (US) Positive shift
Fixed Wireless Access (FWA) demandQ2: mentioned as driver in outlook FWA cited as meaningful driver of incremental investment Building
Spectrum auctions & constraints—New FCC auctions favored; near-term focus on optimizing existing spectrum Planning focus
International churn & consolidationsQ2/Q3: elevated churn, Brazil/Oi noted Elevated churn persists; similar levels expected in 2025; Brazil largest impact Headwind persists
Millicom acquisition & build‑to‑suitAnnounced ~7,000 sites; ABS refinancing Close assumed ~Sep 1, 2025; up to 800 builds in 2025 (majority CA) Execution
FX & macro ratesQ3: refinanced $2.07B ABS at 4.778%; forward SOFR hedge Worse FX than assumed; cc growth stronger vs reported FX headwind
Capital allocation & leverage/investment gradeQ2: leverage 6.4x; balanced allocation Leverage 6.1x; potential IG at current leverage but prioritizes flexibility Strengthening

Management Commentary

  • “We had a solid finish to 2024…Carrier activity levels in the US continued to grow…highest backlogs of the year for both leasing and services…balance sheet remains very strong…lowest net debt to Adjusted EBITDA leverage ratio of 6.1x…increase our quarterly dividend by 13%” .
  • “Beginning of 2025 is also off to a strong start…another quarter-over-quarter increase in new leasing…U.S. customers are busy” .
  • “Entered into an agreement to purchase approximately 7,000 towers…leading tower operator in [Central America]…build-to-suit…up to 800 new tower builds this year” .
  • “International churn…continues to be elevated, largely due to customer consolidations…we believe the surviving customers will be stronger” .

Q&A Highlights

  • Backlog composition and timing: broader across carriers; mix shift to new colos extends book-to-bill and supports sequential growth through 2025 .
  • US capex envelopes and outyear growth: densification, limited new spectrum, and FWA can drive macro-site activity even with flat budgets .
  • Sprint churn timing: largely already occurred or imminent; acceleration unlikely; remaining impact concentrated late‑2024/early‑2025 .
  • Leverage and potential investment grade: at ~6.1x; could be IG at current levels per agencies’ breakpoints, but prioritizes flexibility over small cost‑of‑debt benefit .
  • Millicom timing and impact: target close ~Sep 1, 2025; could close earlier in parts; standalone adds ~0.2 turns of leverage; majority of ~800 builds in Central America .

Estimates Context

  • Wall Street consensus comparison: S&P Global estimates for revenue/EPS/EBITDA were unavailable due to an SPGI daily limit error; we could not retrieve quarterly consensus for Q2–Q4 2024.
  • Management indicated Q4 results were “in line to slightly ahead of our estimates,” but this refers to internal expectations, not Street consensus .
  • Given 2025 guidance and FX assumptions, sell-side will likely revisit FX headwind and international churn pacing embedded in models; 2025 services revenue outlook ($160–$180M) and Millicom timing (~$42M cash site leasing, ~$29M cash flow in 2025) provide anchors for revisions .

Key Takeaways for Investors

  • US leasing momentum is building, with higher backlog and a mix shift to new colocations—supports sequential organic growth through 2025 .
  • International churn remains a near‑term headwind (Brazil/Oi consolidation) but should stabilize as surviving carriers rationalize networks; Central America and Tanzania provide offset via builds/lease‑ups .
  • Balance sheet flexibility improved: 6.1x net leverage, undrawn $2B revolver, and ABS refinanced at sub‑5% blended rates—capacity to fund Millicom close, growth capex, and opportunistic buybacks .
  • 2025 outlook implies resilient AFFO/share ($12.40–$12.76) despite FX drag; dividend raised to $1.11/share (~35% of AFFO midpoint), signaling confidence in cash generation .
  • Near-term stock catalysts: visible US leasing activity and services strength, progress toward Millicom closing/builds, and any earlier-than-assumed close updates .
  • Watch risks: FX volatility, elevated international churn in 2025, Sprint/T‑Mobile churn cadence, and potential delays in regulatory approvals for Millicom .
  • Strategic narrative: SBA is sharpening geographic focus, aligning with leading carriers under long-term USD contracts, and pursuing high‑yield builds—medium‑term thesis supported by macro-site densification and FWA capacity needs .