SBA Communications Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the SBA fourth quarter results conference call. 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. 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 DeRussy, Vice President of Finance. Please go ahead.

Good morning, everyone. I'm sorry, good evening, everyone, and thank you for joining us for SBA's fourth quarter 2023 earnings conference call. Here with me today are Brendan Cavanaugh, our President and Chief Executive Officer, and Mark Montagnier, our Chief Financial Officer. Some of the information we'll discuss on this call is forward-looking, including but not limited to any guidance for 2024 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, February 26th, and we have no obligation to update any forward-looking statement you 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 Mark to discuss our fourth quarter results in 2024 outlook.

Thank you, Mark. We ended 2023 with another strong quarter. Our fourth quarter results were ahead of our expectation and allow us to finish at or near the IAN of our full year 2023 outlook for site leasing revenue, tower cash flow, adjusted EBITDA, AFFO, and AFFO per share. Consolidated same-tower recurring cash leasing revenue growth for the fourth quarter, which is calculated on a constant currency basis, was 3.6% net year-over-year, including an impact of 3.9% of churn. On a gross basis, same-tower recurring cash leasing revenue growth was 7.5%. Domestic same-tower recurring cash leasing revenue growth over the fourth quarter of last year was 6.9% on a gross basis, and 3.5% on a net basis, including 3.4% of churn. Of that 3.4%, 1.6% was related to spring consolidation churn. As expected, domestic operational leasing activity, or bookings, representing new revenue placed under contract during the fourth quarter was consistent with the lower levels of activity we saw during the second and third quarter of 2023. Full-year organic leasing contribution to domestic site leasing revenue ended up in line with our previously provided outlook. Non-spring related domestic annual churn was also in line with our prior expectation and continues to be between 1 and 2% of our domestic site leasing revenue. International same-tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 4.2% net, including 5.9% of churn or 10.1% on a gross basis. In Brazil, our largest international market, same-tower organic growth was 8% on a constant currency basis. Total international churn remained elevated in the fourth quarter, due mostly to key area consolidation. During the fourth quarter, 77.5% of consolidated cash cycle leasing revenue was denominated in US dollars. The majority of non-US dollar denominated revenue was from Brazil, with Brazil representing 16.1% of consolidated cash cycle leasing revenues during the quarter. During the fourth quarter, We expanded our tower portfolio, acquiring 23 communication sites for a total cash consideration of $21.3 million. We also built 138 new sites. Subsequent to the quarter end, we have purchased under agreement to acquire 281 sites in all of our existing markets for an aggregate price of $87.8 million. We anticipate closing on these sites under contract by the end of the third quarter. Looking ahead, this afternoon earnings press release includes our initial outlook for the full year 2024. Our outlook reflects a continuation of the reduced level of carrier capex that began early last year. Despite this, our leasing business will continue to grow organically through contributions from new leases, amendments, and contracted escalators. Domestically, our outlook assumes $55 million of customer churn in 2024, of which approximately $30 million is related to spring-related decommissioning. Our previously provided estimate of aggregate spring-related churn over the next several years remain largely unchanged. We anticipate a range of $40 to $45 million in 2025, $45 to $55 in 2026, and $10 to $20 million in 2027. Internationally, our output includes approximately $22 million of churn in 2024. During the fourth quarter of 2023, we signed a multi-year agreement with Vivo in Brazil. Under this agreement, we expect to incur $4 million of oil wireless consolidation churn in 2024 and an additional $2 million over the next several years. Total anticipated oil wireless consolidation remains at approximately $30 million. Additionally, our full-year 2024 outlook reflects a year-over-year decline in service revenue and gross profit due to the low overall carrier activity in the U.S. However, our outlook is in line with our historical performance, excluding a very strong result in 2022 and 2023, due to the initial rollout of 5G network by some of our wireless customers during these years. This outlook does not assume any further acquisition beyond those under contract and does not assume any share repurchase. However, we are likely to invest in additional assets and or share repurchase during the year. Our outlook for net cash interest expense and for FFO and FFO per share include the recent refinancing of our turn loan bid debt, the upsides of our credit facility, and the future we're financing a prevailing rate in the future of our $620 million ABS Tower securities maturing in October of 2024. Our balance sheet remains very strong, and we have ample liquidity. In January of 2024, we refinanced our $2.3 billion credit facility, pushing out the maturity to 2031. We also increased our revolver capacity by $500 million. A $2 billion revolver is almost fully paid down. Our leverage remains at historical lows and well below our steady target of 7 to 7.5 turns, giving us plenty of drive power for opportunistic acquisition and or share repurchase. Lastly, we purchased a fourth starting interest rate swap in the fourth quarter. This will give us greater certainty around future interest costs. With that, let me turn the call over to Mark, who will provide additional details.