SBA Communications Corporation

Ladies and gentlemen, thank you very much for standing by and welcome to the SBA first quarter results for 2022 conference. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. And if you should require any assistance during the call, please press star then zero on your phone. As a reminder, this conference is being recorded, and I would now like to turn the conference over to our host, Mark DeRussi, Vice President of Finance. Please go ahead, sir.

Good evening, everyone, and thank you for joining us for SBA's first quarter 2022 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Kavanaugh, 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 2022 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, April 25th, and we have no obligation to update any forward-looking statement that 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 first quarter results.

Thanks, Mark. Good evening. SBA started the year off with a very strong quarter, with many of the results ahead of our internal expectations, and we continue to anticipate a solid performance throughout 2022. Total GAAP site leasing revenues for the first quarter were $559.4 million and cash site leasing revenues were $551.4 million. Foreign exchange rates were slightly ahead of our previously forecasted FX rate estimates for the quarter, positively impacting revenues by approximately $2.3 million. They were also a tailwind on comparisons to the first quarter of 2021, positively impacting revenues by $2.3 million on a year-over-year basis. Same Tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 4.3% over the first quarter of 2021, including the impact of 3.1% of churn. On a gross basis, Same Tower growth was 7.4%. Domestic Same Tower recurring cash leasing revenue growth over the first quarter of last year was 6.4% on a gross basis, and 3.7% on a net basis, including 2.7% of churn. Domestic operational leasing activity, or bookings, representing new revenue placed under contract during the first quarter, was very strong again, and materially higher than the first quarter of last year. And we continued to replenish our domestic new lease and new amendment application backlog, which remained very healthy at quarter end. These backlogs support our expectations for continued strong domestic operational leasing activity throughout the rest of 2022. During the first quarter, amendment activity represented 55% of our domestic booking, with 45% coming from new leases. The big four carriers of AT&T, T-Mobile, Verizon, and DISH represented 95% of total incremental domestic leasing revenue signed up during the quarter. Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 7% net, including 4.8% of churn or 11.8% on a gross basis. International leasing activity was very good again, and we continue to see increasing customer activity levels in many of our markets. International growth continued to climb higher, in part due to increased inflation of I'm sorry, in part due to increased inflation based escalators. In Brazil, our largest international market, we also had another solid quarter of leasing activity. Gross same-tower organic growth in Brazil was 13.3% on a constant currency basis. During the first quarter, 82.1% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-US dollar denominated revenue was from Brazil, with Brazil representing 12% of consolidated cash site leasing revenues during the quarter and 8.8% of cash site leasing revenue excluding revenues from pass-through expenses. Tower cash flow for the first quarter was $445.3 million. Our tower cash flow margins remain very strong, with a first quarter domestic tower cash flow margin of 84.6%, and an international tower cash flow margin of 68%, or 90.3%, excluding the impact of pass-through reimbursable expenses. International tower margins were modestly impacted by our new, less mature Tanzania assets. Adjusted EBITDA in the first quarter was $423.8 million. The adjusted EBITDA margin was 69.3% in the quarter. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 74.2%. Approximately 97% of our total adjusted EBITDA was attributable to our tower leasing business in the first quarter. During the first quarter, our services business produced record results for the fourth quarter in a row, with $60.3 million in revenue and $14.6 million of segment operating profits. We also continue to replenish and build even higher our services backlogs, finishing the quarter at the highest level in our company's history. Based on this backlog and the continuing high activity levels by our customers, we have raised our outlook for increased contributions from our services business throughout the balance of 2022. AFFO in the first quarter was $324.3 million. AFFO per share was $2.96, an increase of 14.7% over the first quarter of 2021. During the first quarter, we continued to expand our portfolio, acquiring 1,807 communication sites for total cash consideration of $215.4 million, which includes 1,445 sites for $176.1 million closed on January 4th in our previously disclosed acquisition from Airtel Tanzania. We also built 86 new sites in the quarter. Subsequent to quarter end, we have purchased or are under agreement to purchase 358 sites in our existing markets for an aggregate price of $127.9 million. We anticipate closing on these sites under contract by the end of the year. In addition, subsequent to quarter end, we closed on the acquisition of a standalone data center in Sao Paulo, Brazil for cash consideration of approximately $49 million. The data center currently produces approximately $8.3 million U.S. in annual revenue and $3.5 million U.S. in annual adjusted EBITDA. This acquisition was done in support of our continuing evaluation and efforts around the potential expansion of mobile edge computing to our tower sites. In addition to new tower and other assets, we also continue to invest in the land under our site. During the quarter, we spent an aggregate of $8.7 million to buy land and easements and to extend ground lease terms. At the end of the quarter, we owned or controlled for more than 20 years the land underneath approximately 71% of our towers. And the average remaining life under our ground leases, including renewal options under our control, is approximately 36 years. Looking ahead now, this afternoon's earnings press release includes our updated outlook for full year 2022. We have increased our outlook for most of our key metrics from the outlook we previously provided with our prior quarter earnings release. These increases are partially due to revised expectations for better foreign currency exchange rates than previously assumed. These FX changes have contributed an increase to our revenue outlook of approximately $21 million, and our adjusted EBITDA outlook of approximately $13 million. In addition, we have increased the midpoint of our outlook for site leasing revenue by $17 million on a constant currency basis. This increase is due to several factors, including lowered domestic churn impact during 2022 as a result of longer decommissioning cycles as compared to SBA's initial estimates, higher international CPI-based escalators, higher reimbursable and miscellaneous one-time revenue items, and contributions from acquisitions completed during and after the quarter, all of which is partially offset by increased churn in Panama. On April 6th, Digicel Panama, one of our primary customers in Panama, announced that they intend to apply for voluntary liquidation and withdraw from the telecommunications market in Panama. While there are likely many developments and steps to take place over the coming months, we have increased our projected 2022 churn impact by approximately $6 million to account for the loss of all leasing revenue from Digicel Panama for the balance of the year. Notwithstanding this one churn issue, as noted, there were a number of very positive developments in our business over the last two months that have resulted in a significant increase in our full-year revenue outlook. In addition to the leasing benefits I just mentioned, we also raised the midpoint of our services revenue outlook by $27 million, or over 13% due to our very strong first quarter results and the continuing strength of our backlogs. The strength of both our leasing and services business has allowed us to raise the midpoint of our full year outlook for AFFO per share by 24 cents. Our full year 2022 outlook does not assume any further acquisitions beyond those under contract today, and the outlook also does not assume any share repurchases other than those completed as of today. However, we are likely to invest in additional assets or share repurchases or both during the rest of the year. Our outlook for net cash interest expense and for AFFO do not contemplate any further financing activity in 2022. However, we will continue to look for opportunities to continue to optimize our balance sheet. With that, I will now turn things over to Mark, who will provide an update on our liquidity position and balance sheet. Thanks, Brendan.