SBA Communications Corporation Reports First Quarter 2019 Results; Updates Full Year 2019 Outlook

SBA Communications Corporation (Nasdaq: SBAC) (“SBA” or the “Company”)
today reported results for the quarter ended March 31, 2019.

Highlights of the first quarter include:

• Strong leasing and services results
• Net income of $26.0 million or $0.23 per share
• AFFO per share growth of 14.6% over the year earlier period on a
  constant currency basis
• Increased 2019 Outlook for Revenue, Adjusted EBITDA and AFFO

“We had a great start to 2019,” commented Jeffrey A. Stoops, President
and CEO. “Our customers rolled into the new year with the continued
strong levels of activity we saw in the second half of 2018, and that
level of activity continues. In the U.S., both our leasing and our
services results in the first quarter were ahead of expectations,
contributing to the increase in our full year Outlook. Internationally,
leasing activity remains strong as well, with changes in the
International Outlook driven entirely by foreign currency movements.
Against this favorable demand environment, we executed very well and
produced material growth in AFFO per share. We believe 2019 is shaping
up to be another strong year for SBA.”

Operating Results

The table below details select financial results for the three months
ended March 31, 2019 and comparisons to the prior year period.

Total revenues in the first quarter of 2019 were $493.3 million compared
to $458.3 million in the year earlier period, an increase of 7.6%. Site
leasing revenue in the quarter of $452.1 million was comprised of
domestic site leasing revenue of $362.8 million and international site
leasing revenue of $89.3 million. Domestic cash site leasing revenue was
$361.2 million in the first quarter of 2019 compared to $338.7 million
in the year earlier period, an increase of 6.7%. International cash site
leasing revenue was $88.3 million in the first quarter of 2019 compared
to $86.4 million in the year earlier period, an increase of 2.2%, or
13.0% excluding the impact of changes in foreign currency exchange rates.

Site leasing operating profit was $359.5 million, an increase of 6.4%
over the year earlier period. Site leasing contributed 97.3% of the
Company’s total operating profit in the first quarter of 2019. Domestic
site leasing segment operating profit was $297.7 million, an increase of
7.6% over the year earlier period. International site leasing segment
operating profit was $61.7 million, an increase of 1.2% over the year
earlier period.

Tower Cash Flow for the first quarter of 2019 of $362.9 million was
comprised of Domestic Tower Cash Flow of $301.8 million and
International Tower Cash Flow of $61.1 million. Domestic Tower Cash Flow
for the quarter increased 7.8% over the prior year period and
International Tower Cash Flow increased 3.4% over the prior year period.
Tower Cash Flow Margin was 80.7% for the first quarter of 2019, as
compared to 79.8% for the year earlier period.

During the first quarter of 2019, the Company received a partial
recovery of pre-petition obligations owed to the Company from Oi, S.A.
(“Oi”) in accordance with the reorganization plan approved by the
Brazilian courts. Net of costs incurred in connection with the Oi
bankruptcy process, the Company recovered $2.3 million in the quarter
(the “Oi recovery”). The Oi recovery resulted in a partial reversal of
the Company’s allowance for doubtful accounts which was recorded as an
offset to bad debt expense within Selling, general and administrative
expenses. Any future recoveries will be recorded in a similar manner in
the period in which payment is received.

Adjusted EBITDA for the quarter was $345.6 million, which includes the
$2.3 million Oi recovery, an 8.4% increase over the prior year period.
Adjusted EBITDA Margin was 70.4% in the first quarter of 2019 compared
to 70.4% in the first quarter of 2018.

Net Cash Interest Expense was $96.9 million in the first quarter of 2019
compared to $87.6 million in the first quarter of 2018, an increase of
10.6%.

Net income for the first quarter of 2019 was $26.0 million, or $0.23 per
share, and included a $2.1 million loss, net of taxes, on the currency
related remeasurement of U.S. dollar denominated intercompany loans with
a Brazilian subsidiary, while net income for the first quarter of 2018
was $31.5 million, or $0.27 per share, and included a $1.6 million gain
on the currency related remeasurement of U.S. dollar denominated
intercompany loans with a Brazilian subsidiary.

AFFO for the quarter was $236.1 million, which includes the $2.3 million
Oi recovery, an 8.1% increase over the prior year period. AFFO per share
for the first quarter of 2019 was $2.07, an 11.9% increase over the
prior year period.

Investing Activities

During the first quarter of 2019, SBA purchased 54 communication sites
for total cash consideration of $36.1 million. SBA also built 72 towers
during the first quarter of 2019. As of March 31, 2019, SBA owned or
operated 29,687 communication sites, 16,289 of which are located in the
United States and its territories, and 13,398 of which are located
internationally. In addition, the Company spent $15.4 million to
purchase land and easements and to extend lease terms. Total cash
capital expenditures for the first quarter of 2019 were $91.7 million,
consisting of $7.2 million of non-discretionary cash capital
expenditures (tower maintenance and general corporate) and $84.5 million
of discretionary cash capital expenditures (new tower builds, tower
augmentations, acquisitions, and purchasing land and easements).

The Company has agreed to purchase and anticipates closing on 256
additional communication sites for an aggregate amount of $123.9
million. The Company anticipates that the majority of these acquisitions
will be consummated by the end of the third quarter of 2019.

Financing Activities and Liquidity

SBA ended the first quarter of 2019 with $9.8 billion of total debt,
$7.2 billion of total secured debt, $142.0 million of cash and cash
equivalents, short-term restricted cash, and short-term investments, and
$9.7 billion of Net Debt. SBA’s Net Debt and Net Secured Debt to
Annualized Adjusted EBITDA Leverage Ratios were 7.0x and 5.1x,
respectively.

As of the date of this press release, the Company had $50.0 million
outstanding under the $1.25 billion Revolving Credit Facility.

The Company did not repurchase any shares of its Class A common stock
during the first quarter. As of the date of this press release, the
Company has $204.5 million of authorization remaining under the stock
repurchase plan authorized on February 16, 2018.

Outlook

The Company is updating its full year 2019 Outlook for anticipated
results. The Outlook provided is based on a number of assumptions that
the Company believes are reasonable at the time of this press release.
Information regarding potential risks that could cause the actual
results to differ from these forward-looking statements is set forth
below and in the Company’s filings with the Securities and Exchange
Commission.

The Company’s full year 2019 Outlook assumes the acquisitions of only
those communication sites under contract and anticipated to close at the
time of this press release. The Company may spend additional capital in
2019 on acquiring revenue producing assets not yet identified or under
contract, the impact of which is not reflected in the 2019 guidance. The
Outlook also does not contemplate any repurchases of the Company’s stock
during 2019. The Outlook contemplates one new financing during the third
quarter of 2019 to refinance the Company’s 2014-1C Tower Securities. The
assumed interest rate of this new financing is 4.25%. There are no
additional new financings contemplated in our 2019 Outlook.

The Company’s Outlook assumes an average foreign currency exchange rate
of 3.90 Brazilian Reais to 1.0 U.S. Dollar and 1.33 Canadian Dollars to
1.0 U.S. Dollar throughout the last three quarters of 2019. When
compared to the Company’s initial full year 2019 Outlook provided
February 21, 2019, the variances in the actual first quarter foreign
currency exchange rates versus the Company’s assumptions, and the
changes in the Company’s foreign currency rate assumptions for the
remainder of the year negatively impacted the full year 2019 Outlook by
approximately $4.5 million for Site Lease Revenue, $3.0 million for
Tower Cash Flow, and $2.7 million for Adjusted EBITDA and AFFO.

Conference Call Information

SBA Communications Corporation will host a conference call on Monday,
April 29, 2019 at 5:00 PM (EST) to discuss the quarterly results. The
call may be accessed as follows:

Information Concerning Forward-Looking Statements

This press release and our earnings call include forward-looking
statements, including statements regarding the Company’s expectations or
beliefs regarding (i) customer demand and its ability to capture demand,
(ii) the Company’s portfolio growth goals, its strategy with respect to
portfolio growth and opportunities throughout its domestic and
international markets, (iii) capital allocation and the Company’s target
net debt leverage range, (iv) the Company’s financial and operational
guidance for the full year 2019, the assumptions it made and the drivers
contributing to the increase in its full year guidance, (v) the timing
of closing for currently pending acquisitions, (vi) additional capital
spending in 2019 and the Company’s capital allocation mix, including
allocating capital to both share repurchases and portfolio growth, (vii)
its belief that 2019 will be a strong year for the Company, (viii)
financing of indebtedness in 2019, and (ix) foreign exchange rates and
their impact on the Company’s financial and operational guidance.

The Company wishes to caution readers that these forward-looking
statements may be affected by the risks and uncertainties in the
Company’s business as well as other important factors may have affected
and could in the future affect the Company’s actual results and could
cause the Company’s actual results for subsequent periods to differ
materially from those expressed in any forward-looking statement made by
or on behalf of the Company. With respect to the Company’s expectations
regarding all of these statements, including its financial and
operational guidance, such risk factors include, but are not limited to:
(1) the ability and willingness of wireless service providers to
maintain or increase their capital expenditures; (2) the Company’s
ability to identify and acquire sites at prices and upon terms that will
provide accretive portfolio growth; (3) the Company’s ability to
accurately identify and manage any risks associated with its acquired
sites, to effectively integrate such sites into its business and to
achieve the anticipated financial results; (4) the Company’s ability to
secure and retain as many site leasing tenants as planned at anticipated
lease rates; (5) the impact of continued consolidation among wireless
service providers, including the impact of the potential T-Mobile and
Sprint merger, on the Company’s leasing revenue; (6) the Company’s
ability to successfully manage the risks associated with international
operations, including risks associated with foreign currency exchange
rates; (7) the Company’s ability to secure and deliver anticipated
services business at contemplated margins; (8) the Company’s ability to
maintain expenses and cash capital expenditures at appropriate levels
for its business while seeking to attain its investment goals; (9) the
Company’s ability to acquire land underneath towers on terms that are
accretive; (10) the economic climate for the wireless communications
industry in general and the wireless communications infrastructure
providers in particular in the United States, Brazil, and
internationally; (11) the Company’s ability to obtain future financing
at commercially reasonable rates or at all; (12) the ability of the
Company to achieve its long-term stock repurchases strategy, which will
depend, among other things, on the trading price of the Company’s common
stock, which may be positively or negatively impacted by the repurchase
program, market and business conditions; (13) the Company’s ability to
achieve the new builds targets included in its anticipated annual
portfolio growth goals, which will depend, among other things, on
obtaining zoning and regulatory approvals, weather, availability of
labor and supplies and other factors beyond the Company’s control that
could affect the Company’s ability to build additional towers in 2019;
and (14) the Company’s ability to meet its total portfolio growth, which
will depend, in addition to the new build risks, on the availability of
sufficient towers for sale to meet our targets, competition from third
parties for such acquisitions and our ability to negotiate the terms of,
and acquire, these potential tower portfolios on terms that meet our
internal return criteria. With respect to its expectations regarding the
ability to close pending acquisitions, these factors also include
satisfactorily completing due diligence, the amount and quality of due
diligence that the Company is able to complete prior to closing of any
acquisition and its ability to accurately anticipate the future
performance of the acquired towers, the ability to receive required
regulatory approval, the ability and willingness of each party to
fulfill their respective closing conditions and their contractual
obligations and the availability of cash on hand or borrowing capacity
under the Revolving Credit Facility to fund the consideration. With
respect to the repurchases under the Company’s stock repurchase program,
the amount of shares repurchased, if any, and the timing of such
repurchases will depend on, among other things, the trading price of the
Company’s common stock, which may be positively or negatively impacted
by the repurchase program, market and business conditions, the
availability of stock, the Company’s financial performance or
determinations following the date of this announcement in order to use
the Company’s funds for other purposes. Furthermore, the Company’s
forward-looking statements and its 2019 outlook assumes that the Company
continues to qualify for treatment as a REIT for U.S. federal income tax
purposes and that the Company’s business is currently operated in a
manner that complies with the REIT rules and that it will be able to
continue to comply with and conduct its business in accordance with such
rules. In addition, these forward-looking statements and the information
in this press release is qualified in its entirety by cautionary
statements and risk factor disclosures contained in the Company’s
Securities and Exchange Commission filings, including the Company’s
Annual Report on Form 10-K filed with the Commission on February 28,
2019.

This press release contains non-GAAP financial measures. Reconciliation
of each of these non-GAAP financial measures and the other Regulation G
information is presented below under “Non-GAAP Financial Measures.”

This press release will be available on our website at www.sbasite.com.

About SBA Communications Corporation

SBA Communications Corporation is a first choice provider and leading
owner and operator of wireless communications infrastructure in North,
Central, and South America. By “Building Better Wireless,” SBA generates
revenue from two primary businesses – site leasing and site development
services. The primary focus of the Company is the leasing of antenna
space on its multi-tenant communication sites to a variety of wireless
service providers under long-term lease contracts. For more information
please visit: www.sbasite.com.

Communication Site Portfolio Summary

Segment Operating Profit and Segment Operating
Profit Margin

Domestic site leasing and International site leasing are the two
segments within our site leasing business. Segment operating profit is a
key business metric and one of our two measures of segment
profitability. The calculation of Segment operating profit for each of
our segments is set forth below.

Non-GAAP Financial Measures

The press release contains non-GAAP financial measures including (i)
Cash Site Leasing Revenue; (ii) Tower Cash Flow and Tower Cash Flow
Margin; (iii) Adjusted EBITDA, Annualized Adjusted EBITDA, and Adjusted
EBITDA Margin; (iv) Net Debt, Net Secured Debt, Leverage Ratio, and
Secured Leverage Ratio (collectively, our “Non-GAAP Debt Measures”); (v)
Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”),
and AFFO per share; and (vi) certain financial metrics after eliminating
the impact of changes in foreign currency exchange rates (collectively,
our “Constant Currency Measures”).

We have included these non-GAAP financial measures because we believe
that they provide investors additional tools in understanding our
financial performance and condition.

Specifically, we believe that:

(1) Cash Site Leasing Revenue and Tower Cash Flow are useful indicators
of the performance of our site leasing operations;

(2) Adjusted EBITDA is useful to investors or other interested parties
in evaluating our financial performance. Adjusted EBITDA is the primary
measure used by management (1) to evaluate the economic productivity of
our operations and (2) for purposes of making decisions about allocating
resources to, and assessing the performance of, our operations.
Management believes that Adjusted EBITDA helps investors or other
interested parties meaningfully evaluate and compare the results of our
operations (1) from period to period and (2) to our competitors, by
excluding the impact of our capital structure (primarily interest
charges from our outstanding debt) and asset base (primarily
depreciation, amortization and accretion) from our financial results.
Management also believes Adjusted EBITDA is frequently used by investors
or other interested parties in the evaluation of REITs. In addition,
Adjusted EBITDA is similar to the measure of current financial
performance generally used in our debt covenant calculations. Adjusted
EBITDA should be considered only as a supplement to net income computed
in accordance with GAAP as a measure of our performance;

(3) FFO, AFFO and AFFO per share, which are metrics used by our public
company peers in the communication site industry, provide investors
useful indicators of the financial performance of our business and
permit investors an additional tool to evaluate the performance of our
business against those of our two principal competitors. FFO, AFFO, and
AFFO per share are also used to address questions we receive from
analysts and investors who routinely assess our operating performance on
the basis of these performance measures, which are considered industry
standards. We believe that FFO helps investors or other interested
parties meaningfully evaluate financial performance by excluding the
impact of our asset base (primarily depreciation, amortization and
accretion). We believe that AFFO and AFFO per share help investors or
other interested parties meaningfully evaluate our financial performance
as they include (1) the impact of our capital structure (primarily
interest expense on our outstanding debt) and (2) sustaining capital
expenditures and exclude the impact of our (1) asset base (primarily
depreciation, amortization and accretion) and (2) certain non-cash
items, including straight-lined revenues and expenses related to fixed
escalations and rent free periods and the non-cash portion of our
reported tax provision. GAAP requires rental revenues and expenses
related to leases that contain specified rental increases over the life
of the lease to be recognized evenly over the life of the lease. In
accordance with GAAP, if payment terms call for fixed escalations, or
rent free periods, the revenue or expense is recognized on a
straight-lined basis over the fixed, non-cancelable term of the
contract. We only use AFFO as a performance measure. AFFO should be
considered only as a supplement to net income computed in accordance
with GAAP as a measure of our performance and should not be considered
as an alternative to cash flows from operations or as residual cash flow
available for discretionary investment. We believe our definition of FFO
is consistent with how that term is defined by the National Association
of Real Estate Investment Trusts (“NAREIT”) and that our definition and
use of AFFO and AFFO per share is consistent with those reported by the
other communication site companies;

(4) Our Non-GAAP Debt Measures provide investors a more complete
understanding of our net debt and leverage position as they include the
full principal amount of our debt which will be due at maturity and, to
the extent that such measures are calculated on Net Debt are net of our
cash and cash equivalents, short-term restricted cash, and short-term
investments; and

(5) Our Constant Currency Measures provide management and investors the
ability to evaluate the performance of the business without the impact
of foreign currency exchange rate fluctuations.

In addition, Tower Cash Flow, Adjusted EBITDA, and our Non-GAAP Debt
Measures are components of the calculations used by our lenders to
determine compliance with certain covenants under our Senior Credit
Agreement and indentures relating to our 2014 Senior Notes, 2016 Senior
Notes, and 2017 Senior Notes. These non-GAAP financial measures are not
intended to be an alternative to any of the financial measures provided
in our results of operations or our balance sheet as determined in
accordance with GAAP.

Financial Metrics after Eliminating the Impact of
Changes In Foreign Currency Exchange Rates

We eliminate the impact of changes in foreign currency exchange rates
for each of the financial metrics listed in the table below by dividing
the current period’s financial results by the average monthly exchange
rates of the prior year period, and by eliminating the impact of the
remeasurement of our intercompany loans. The table below provides the
reconciliation of the reported growth rate year-over-year of each of
such measures to the growth rate after eliminating the impact of changes
in foreign currency exchange rates to such measure.

Cash Site Leasing Revenue, Tower Cash Flow, and
Tower Cash Flow Margin

The table below sets forth the reconciliation of Cash Site Leasing
Revenue and Tower Cash Flow to their most comparable GAAP measurement
and Tower Cash Flow Margin, which is calculated by dividing Tower Cash
Flow by Cash Site Leasing Revenue.

Forecasted Tower Cash Flow for Full Year 2019

The table below sets forth the reconciliation of forecasted Tower Cash
Flow set forth in the Outlook section to its most comparable GAAP
measurement for the full year 2019:

Adjusted EBITDA, Annualized Adjusted EBITDA, and
Adjusted EBITDA Margin

The table below sets forth the reconciliation of Adjusted EBITDA to its
most comparable GAAP measurement.

The calculation of Adjusted EBITDA Margin is as follows:

Forecasted Adjusted EBITDA for Full Year 2019

The table below sets forth the reconciliation of the forecasted Adjusted
EBITDA set forth in the Outlook section to its most comparable GAAP
measurement for the full year 2019:

Funds from Operations (“FFO”) and Adjusted Funds
from Operations (“AFFO”)

The table below sets forth the reconciliations of FFO and AFFO to their
most comparable GAAP measurement.

Forecasted AFFO for the Full Year 2019

The table below sets forth the reconciliation of the forecasted AFFO and
AFFO per share set forth in the Outlook section to its most comparable
GAAP measurement for the full year 2019:

Net Debt, Net Secured Debt, Leverage Ratio, and
Secured Leverage Ratio

Net Debt is calculated using the notional principal amount of
outstanding debt. Under GAAP policies, the notional principal amount of
the Company’s outstanding debt is not necessarily reflected on the face
of the Company’s financial statements.

The Net Debt and Leverage calculations are as follows:

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