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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                     

Commission file number: 001-16853

SBA COMMUNICATIONS CORPORATION

(Exact name of Registrant as specified in its charter)

Florida

65-0716501

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

8051 Congress Avenue

Boca Raton, Florida

33487

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (561995-7670

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Class A Common Stock, $0.01 par value per share

SBAC

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x   No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

x

Accelerated filer

¨

Non-Accelerated filer

¨

Smaller reporting company

¨

Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: 113,105,564 shares of Class A common stock as of July 31, 2019.

Table of Contents

 

 

Page

PART I – FINANCIAL INFORMATION 

Item 1.

Financial Statements

 

Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018

1 

Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2019 and 2018

2 

Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2019 and 2018

3 

Consolidated Statement of Shareholders’ Deficit (unaudited) for the six months ended June 30, 2019 and 2018

4 

Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2019 and 2018

5 

Condensed Notes to Consolidated Financial Statements (unaudited)

7 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

Item 4.

Controls and Procedures

50 

PART II – OTHER INFORMATION 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51 

Item 6.

Exhibits

51 

SIGNATURES

52 

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except par values)

June 30,

December 31,

2019

2018

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$

101,836 

$

143,444 

Restricted cash

22,590 

32,464 

Accounts receivable, net

117,476 

111,035 

Costs and estimated earnings in excess of billings on uncompleted contracts

25,575 

23,785 

Prepaid expenses and other current assets (1)

48,252 

63,126 

Total current assets

315,729 

373,854 

Property and equipment, net (1)

2,761,580 

2,786,355 

Intangible assets, net

3,238,031 

3,331,465 

Right-of-use assets, net (1)

2,502,601 

Other assets (1)

451,474 

722,033 

Total assets

$

9,269,415 

$

7,213,707 

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities:

Accounts payable

$

41,270 

$

34,308 

Accrued expenses

58,483 

63,665 

Current maturities of long-term debt

943,161 

941,728 

Deferred revenue

95,127 

108,054 

Accrued interest

49,235 

48,722 

Current lease liabilities (1)

231,681 

Other current liabilities (1)

9,181 

9,802 

Total current liabilities

1,428,138 

1,206,279 

Long-term liabilities:

Long-term debt, net

8,749,450 

8,996,825 

Long-term lease liabilities (1)

2,235,524 

Other long-term liabilities (1)

195,649 

387,426 

Total long-term liabilities

11,180,623 

9,384,251 

Shareholders' deficit:

Preferred stock - par value $0.01, 30,000 shares authorized, no shares issued or outstanding

Common stock - Class A, par value $0.01, 400,000 shares authorized, 113,090

shares and 112,433 shares issued and outstanding at June 30, 2019

and December 31, 2018, respectively

1,131 

1,124 

Additional paid-in capital

2,408,385 

2,270,326 

Accumulated deficit

(5,193,942)

(5,136,368)

Accumulated other comprehensive loss, net

(554,920)

(511,905)

Total shareholders' deficit

(3,339,346)

(3,376,823)

Total liabilities and shareholders' deficit

$

9,269,415 

$

7,213,707 

(1)On January 1, 2019, the Company adopted ASU 2016-02 which requires lessees to recognize a right-of-use asset and a lease liability. Upon adoption, certain assets and liabilities were reclassified to Right-of-use assets, net and lease liabilities in accordance with provisions of ASU 2016-02. See Note 1 for further discussion.

The accompanying condensed notes are an integral part of these consolidated financial statements.

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) (in thousands, except per share amounts)

For the three months

For the six months

ended June 30,

ended June 30,

2019

2018

2019

2018

Revenues:

Site leasing

$

459,003

$

429,884

$

911,186

$

860,426

Site development

41,144

26,439

82,254

54,199

Total revenues

500,147

456,323

993,440

914,625

Operating expenses:

Cost of revenues (exclusive of depreciation, accretion,

and amortization shown below):

Cost of site leasing

93,460

93,688

186,175

186,506

Cost of site development

30,988

20,726

62,089

43,246

Selling, general, and administrative (1)

55,524

35,943

106,483

71,993

Acquisition and new business initiatives related

adjustments and expenses

2,539

3,133

4,976

6,177

Asset impairment and decommission costs

9,620

7,404

15,391

15,909

Depreciation, accretion, and amortization

171,564

169,558

342,602

334,956

Total operating expenses

363,695

330,452

717,716

658,787

Operating income

136,452

125,871

275,724

255,838

Other income (expense):

Interest income

1,581

1,671

3,381

2,966

Interest expense

(97,447)

(93,639)

(196,114)

(182,562)

Non-cash interest expense

(651)

(638)

(1,292)

(1,370)

Amortization of deferred financing fees

(5,116)

(4,897)

(10,176)

(10,285)

Loss from extinguishment of debt, net

(13,798)

(14,443)

Other income (expense), net

12,762

(90,210)

12,254

(85,657)

Total other expense, net

(88,871)

(201,511)

(191,947)

(291,351)

Income (loss) before income taxes

47,581

(75,640)

83,777

(35,513)

(Provision) benefit for income taxes

(15,608)

18,249

(25,815)

9,667

Net income (loss)

$

31,973

$

(57,391)

$

57,962

$

(25,846)

Net income (loss) per common share

Basic

$

0.28

$

(0.50)

$

0.51

$

(0.22)

Diluted

$

0.28

$

(0.50)

$

0.51

$

(0.22)

Weighted average number of common shares

Basic

113,205

115,064

112,958

115,775

Diluted

114,940

115,064

114,643

115,775

(1)Includes non-cash compensation of $24,131 and $11,034 for the three months ended June 30, 2019 and 2018, respectively, and $46,736 and $20,927 for the six months ended June 30, 2019 and 2018, respectively.

The accompanying condensed notes are an integral part of these consolidated financial statements.

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited) (in thousands)

For the three months

For the six months

ended June 30,

ended June 30,

2019

2018

2019

2018

Net income (loss)

$

31,973

$

(57,391)

$

57,962

$

(25,846)

Change in fair value of cash flow hedge

(36,281)

(51,593)

Foreign currency translation adjustments

13,122

(121,810)

8,578

(121,459)

Comprehensive income (loss)

$

8,814

$

(179,201)

$

14,947

$

(147,305)

The accompanying condensed notes are an integral part of these consolidated financial statements.


SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(unaudited) (in thousands)

Accumulated

Class A

Additional

Other

Common Stock

Paid-In

Accumulated

Comprehensive

Shares

Amount

Capital

Deficit

Loss, Net

Total

BALANCE, December 31, 2018

112,433 

$

1,124 

$

2,270,326 

$

(5,136,368)

$

(511,905)

$

(3,376,823)

Net income

25,989 

25,989 

Common stock issued in connection with

stock purchase/option plans

762 

8 

63,467 

63,475 

Non-cash stock compensation

23,722 

23,722 

Common stock issued in connection with

acquisitions

10 

1,680 

1,680 

Change in fair value of cash flow hedge

(15,312)

(15,312)

Foreign currency translation adjustments

(4,544)

(4,544)

Impact of adoption of ASU 2016-02

related to leases

(20,968)

(20,968)

BALANCE, March 31, 2019

113,205 

$

1,132 

$

2,359,195 

$

(5,131,347)

$

(531,761)

$

(3,302,781)

Net income

31,973 

31,973 

Common stock issued in connection with

stock purchase/option plans

348 

3 

24,443 

24,446 

Non-cash stock compensation

24,747 

24,747 

Change in fair value of cash flow hedge

(36,281)

(36,281)

Repurchase and retirement of common stock

(463)

(4)

(94,568)

(94,572)

Foreign currency translation adjustments

13,122 

13,122 

BALANCE, June 30, 2019

113,090 

$

1,131 

$

2,408,385 

$

(5,193,942)

$

(554,920)

$

(3,339,346)


Accumulated

Class A

Additional

Other

Common Stock

Paid-In

Accumulated

Comprehensive

Shares

Amount

Capital

Deficit

Loss

Total

BALANCE, December 31, 2017

116,446 

$