SBA Communications Corporation

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

Good evening, and thank you for joining us for SBA's first quarter 2023 earnings conference call. Here with me today are Jeff Stoops, our President and Chief Executive Officer, and Brendan Cavanaugh, our Chief Financial Officer. Some of the information we'll discuss in this call is forward-looking, including but not limited to any guidance for 2023 and beyond. In today's press release, 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, May 1st, 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. Thank you, Mark. Good evening.

We started the year off with a solid first quarter. Our results were slightly ahead of our expectations and allowed us to increase our full year 2023 outlook for most metrics. Total GAAP site leasing revenues for the first quarter were $617.3 million and cash site leasing revenues were $610.4 million. Foreign exchange rates represented a benefit of approximately $600,000 when compared with our previously forecasted FX rate estimates for the quarter and a headwind of $2.5 million when compared to the first quarter of 2022. Same-tower recurring cash leasing revenue growth for the first quarter which is calculated on a constant currency basis, was 4.7% net over the first quarter of 2022, including the impact of 4.2% of churn. On a gross basis, same-tower recurring cash leasing revenue growth was 8.9%. Domestic same-tower recurring cash leasing revenue growth over the first quarter of last year was 8.5% on a gross basis and 5.1% on a net basis including 3.4% of term. Domestic operational leasing activity, or bookings, representing new revenue placed under contract during the first quarter, remained steady, and it was similar to the fourth quarter. We again saw balanced contributions from each of our largest customers. During the first quarter, amendment activity represented 51% of our domestic bookings, and new leases represented 49%. The big four carriers of AT&T, T-Mobile, Verizon, and DISH represented approximately 95% of total incremental domestic leasing revenue signed up during the quarter. Domestically, churn was in line with our prior quarter projections, and our full year churn expectations remain the same as we provided last quarter, including $25 to $30 million of Sprint merger-related churn. Internationally, on a constant currency basis, And same-power cash leasing revenue growth was 2.5% net, including 7.8% of churn or 10.3% on a gross basis. International leasing activity was good again, with similar results to our solid fourth quarter. Inflation-based escalators also continued to make healthy contributions for our organic growth, although these inflationary rates have begun to decline from their 2022 highs. In Brazil, our largest international market, we had another good quarter, although the impact of the previously discussed TEM agreement weighed on our first quarter same-tower organic growth. This growth rate in Brazil was 4.7% on a constant currency basis, including the impact of 5.9% of churn. International churn remains elevated, but in line with expectations and our previously provided outlook. Excluding oil consolidation-related churn, We believe 2023 will be the high watermark for international churn. As a reminder, our 2023 outlook does not include any churn assumptions related to the oil consolidation other than associated with the TEM agreement. But if during the year we were to enter into any further agreements with other carriers related to the oil consolidation that have an impact on the current year, we would adjust our outlook accordingly at that time. During the first quarter, 78% of consolidated cash site leasing revenue was denominated in U.S. dollars. The majority of non-U.S. dollar denominated revenue was from Brazil, with Brazil representing 15.5% of consolidated cash site leasing revenues during the quarter, and 12.4% of cash site leasing revenue excluding revenues from pass-through expenses. Tower cash flow for the first quarter was $491 million. Our tower cash flow margins remain very strong as well, with a first quarter domestic tower cash flow margin of 84.3%, and an international tower cash flow margin of 69.9%, or 91.8%, excluding the impact of pass-through reimbursable expenses. Adjusted EBITDA in the first quarter was $459.3 million. The adjusted EBITDA margin was 68.7% in the quarter. Excluding the impact of revenues from pass-through expenses, adjusted EBITDA margin was 74%. 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 had another strong quarter with $58.2 million in revenue and $14.1 million of segment operating profits. Our carrier customers remained busy deploying new 5G-related equipment during the quarter, and our services backlogs also remained healthy at quarter end. Adjusted funds from operations, or AFFO, in the first quarter was $341.7 million. AFFO per share was $3.13, an increase of 5.7% over the first quarter of 2022. AFFO growth was hindered by increased interest rates, which are anticipated to impact growth rates throughout the year. During the first quarter, we continued to invest in our portfolio, acquiring 14 communication sites for total cash consideration of $8.6 million. During the quarter, we also built 52 new sites. Subsequent to quarter end, we have purchased or are under agreement to purchase 66 sites, all in our existing markets, for an aggregate price of $63.7 million. We anticipate closing on these sites under contract by the end of the year. In addition to new towers, we also continue to invest in the land under our sites. During the quarter, we spent an aggregate of $11.6 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 70% of our towers, and the average remaining life under our ground leases, including renewal options under our control, is approximately 36 years. With that, I'll now turn things over to Mark who will provide an update on our balance sheet.