Item 1. FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS

70K characters. Original on sec.gov · Markdown

Payable to Shareholders

Cash to

of Record at the Close

be Paid

Date Declared

of Business on

Per Share

Date to be Paid

April 30, 2023

May 26, 2023

June 21, 2023

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except par values)



	March 31,		December 31,
	2023		2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	152,772	$	143,708
Restricted cash		36,615		41,959
Accounts receivable, net		183,134		184,368
Costs and estimated earnings in excess of billings on uncompleted contracts		58,815		79,549
Prepaid expenses and other current assets		40,214		33,149
Total current assets		471,550		482,733
Property and equipment, net		2,709,784		2,713,727
Intangible assets, net		2,693,883		2,776,472
Operating lease right-of-use assets, net		2,376,609		2,381,955
Acquired and other right-of-use assets, net		1,518,648		1,507,781
Other assets		771,055		722,373
Total assets	$	10,541,529	$	10,585,041
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,
AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	53,553	$	51,427
Accrued expenses		92,797		101,484
Current maturities of long-term debt		24,000		24,000
Deferred revenue		145,399		154,553
Accrued interest		28,215		54,173
Current lease liabilities		270,308		262,365
Other current liabilities		24,511		48,762
Total current liabilities		638,783		696,764
Long-term liabilities:
Long-term debt, net		12,797,828		12,844,162
Long-term lease liabilities		2,033,167		2,040,628
Other long-term liabilities		302,721		248,067
Total long-term liabilities		15,133,716		15,132,857
Redeemable noncontrolling interests		38,184		31,735
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, 108,326 shares and
107,997 shares issued and outstanding at March 31, 2023 and December 31, 2022,
respectively		1,083		1,080
Additional paid-in capital		2,800,046		2,795,176
Accumulated deficit		(7,473,913)		(7,482,061)
Accumulated other comprehensive loss, net		(596,370)		(590,510)
Total shareholders' deficit		(5,269,154)		(5,276,315)
Total liabilities, redeemable noncontrolling interests, and shareholders' deficit	$	10,541,529	$	10,585,041

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
	ended March 31,
	2023		2022

Revenues:
Site leasing	$	617,268	$	559,432
Site development		58,248		60,338
Total revenues		675,516		619,770
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion,
and amortization shown below):
Cost of site leasing		120,119		107,155
Cost of site development		44,185		45,773
Selling, general, and administrative expenses (1)		72,209		62,124
Acquisition and new business initiatives related
adjustments and expenses		6,057		5,104
Asset impairment and decommission costs		26,390		8,512
Depreciation, accretion, and amortization		182,415		174,323
Total operating expenses		451,375		402,991
Operating income		224,141		216,779
Other income (expense):
Interest income		2,816		2,502
Interest expense		(101,226)		(82,252)
Non-cash interest expense		(14,239)		(11,526)
Amortization of deferred financing fees		(4,988)		(4,881)
Other income, net		37,558		108,161
Total other (expense) income, net		(80,079)		12,004
Income before income taxes		144,062		228,783
Provision for income taxes		(43,508)		(40,477)
Net income		100,554		188,306
Net loss attributable to noncontrolling interests		663		317
Net income attributable to SBA Communications
Corporation	$	101,217	$	188,623
Net income per common share attributable to SBA
Communications Corporation:
Basic	$	0.94	$	1.75
Diluted	$	0.93	$	1.72
Weighted-average number of common shares
Basic		108,132		108,086
Diluted		109,271		109,544

(1)Includes non-cash compensation of $25,529 and $24,116 for the three months ended March 31, 2023 and 2022, respectively.

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited) (in thousands)



	For the three months
	ended March 31,

	2023		2022

Net income	$	100,554	$	188,306
Adjustments related to interest rate swaps		(22,389)		85,322
Foreign currency translation adjustments		16,529		85,506
Comprehensive income		94,694		359,134
Comprehensive loss attributable to noncontrolling interests		663		434
Comprehensive income attributable to SBA
Communications Corporation	$	95,357	$	359,568

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		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Capital		Deficit		Loss, Net		Deficit

BALANCE, December 31, 2022	107,997	$	1,080	$	2,795,176	$	(7,482,061)	$	(590,510)	$	(5,276,315)
Net income attributable to SBA
Communications Corporation	—		—		—		101,217		—		101,217
Common stock issued in connection with equity
awards and stock purchase plans, offset
by the impact of net share settlements	329		3		(14,719)		—		—		(14,716)
Non-cash stock compensation	—		—		26,701		—		—		26,701
Adjustments related to interest rate swaps	—		—		—		—		(22,389)		(22,389)
Foreign currency translation adjustments
attributable to SBA Communications
Corporation	—		—		—		—		16,529		16,529
Dividends and dividend equivalents
on common stock	—		—		—		(93,069)		—		(93,069)
Adjustment to redemption amount related to
noncontrolling interests	—		—		(7,112)		—		—		(7,112)
BALANCE, March 31, 2023	108,326	$	1,083	$	2,800,046	$	(7,473,913)	$	(596,370)	$	(5,269,154)



								Accumulated
	Class A			Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Capital		Deficit		Loss, Net		Deficit

BALANCE, December 31, 2021	108,956	$	1,089	$	2,681,347	$	(7,203,531)	$	(762,309)	$	(5,283,404)
Net income attributable to SBA
Communications Corporation	—		—		—		188,623		—		188,623
Common stock issued in connection with equity
awards and stock purchase plans, offset
by the impact of net share settlements	150		2		1,566		—		—		1,568
Non-cash stock compensation	—		—		25,143		—		—		25,143
Adjustments related to interest rate swaps	—		—		—		—		85,322		85,322
Repurchase and retirement of common stock	(1,300)		(13)		—		(431,654)		—		(431,667)
Foreign currency translation adjustments
attributable to SBA Communications
Corporation	—		—		—		—		85,623		85,623
Dividends and dividend equivalents
on common stock	—		—		—		(77,134)		—		(77,134)
Adjustment to redemption amount related to
noncontrolling interests	—		—		(19,221)		—		—		(19,221)
BALANCE, March 31, 2022	107,806	$	1,078	$	2,688,835	$	(7,523,696)	$	(591,364)	$	(5,425,147)

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

‎

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)



	For the three months ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	100,554	$	188,306
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization		182,415		174,323
Gain on remeasurement of U.S. denominated intercompany loans		(41,932)		(109,644)
Non-cash compensation expense		26,206		24,747
Non-cash asset impairment and decommission costs		26,417		8,366
Deferred and non-cash income tax provision		36,320		34,262
Other non-cash items reflected in the Statements of Operations		23,883		16,896
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts, net		9,103		(9,812)
Prepaid expenses and other assets		(4,235)		(2,201)
Operating lease right-of-use assets, net		37,452		33,682
Accounts payable and accrued expenses		(8,904)		(7,002)
Accrued interest		(25,958)		(25,384)
Long-term lease liabilities		(34,475)		(31,038)
Other liabilities		(15,678)		(3,019)
Net cash provided by operating activities		311,168		292,482
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(19,929)		(215,181)
Capital expenditures		(49,135)		(38,008)
Purchase of investments		(213,371)		(30,393)
Proceeds from sale of investments		213,003		30,214
Other investing activities		(77,329)		(2,513)
Net cash used in investing activities		(146,761)		(255,881)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Credit Facility		140,000		330,000
Repayments under Revolving Credit Facility		(185,000)		—
Repurchase and retirement of common stock		—		(431,667)
Payment of dividends on common stock		(93,933)		(76,873)
Proceeds from employee stock purchase/stock option plans		11,942		10,836
Payments related to taxes on stock options and restricted stock units		(26,658)		(9,228)
Other financing activities		(7,079)		25,182
Net cash used in financing activities		(160,728)		(151,750)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		220		15,961
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		3,899		(99,188)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period		189,283		435,626
End of period	$	193,182	$	336,438

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)



	For the three months ended March 31,
	2023		2022

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	127,094	$	107,594
Income taxes	$	7,000	$	5,696

SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH ACTIVITIES:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7,733	$	41,038
Operating lease modifications and reassessments	$	12,859	$	12,445
Right-of-use assets obtained in exchange for new finance lease liabilities	$	256	$	674

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

‎

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

**1.**BASIS OF PRESENTATION

The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals and deferrals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.

Foreign Currency Translation

All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end exchange rates, while revenues and expenses are translated at monthly average exchange rates during the period. Unrealized translation gains and losses are reported as foreign currency translation adjustments through Accumulated other comprehensive loss, net in the Consolidated Statement of Shareholders’ Deficit.

For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities of such subsidiaries, which are not denominated in U.S. dollars, are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Remeasurement gains and losses are reported as Other income, net in the Consolidated Statements of Operations.

Intercompany Loans Subject to Remeasurement

In accordance with Accounting Standards Codification (ASC) 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income, net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future. The Company recorded a $27.4 million gain and a $72.9 million gain, net of taxes, on the remeasurement of intercompany loans for the three months ended March 31, 2023 and 2022, respectively, due to changes in foreign exchange rates. During the three months ended March 31, 2023, the Company repaid $45.8 million under its intercompany loan agreements. As of March 31, 2023 and December 31, 2022, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $1.5 billion.

**2.**FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis— The Company’s asset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Other long-term liabilities in the Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model.

Refer to Note 16 for discussion of the Company’s redeemable noncontrolling interests.

Items Measured at Fair Value on a Nonrecurring Basis— The Company estimates the fair value of assets subject to impairment using a discounted cash flow (“DCF”) (Level 3 input) analysis. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable earnings and trading multiples. The cash flows employed in the DCF analysis are based on estimates of future revenues, earnings, and cash flows after considering factors such as tower location demographics, timing of additions of new tenants, lease rates, rate and term of renewal, attrition, ongoing cash requirements, and market multiples. Each of the assumptions are applied based on the specific facts and circumstances of the identified assets at the lowest level of identifiable cash flows. The DCF analysis used an average discount rate ranging from 7.2% - 8.7%.

Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs:



	For the three months
	ended March 31,
	2023		2022

	(in thousands)
Asset impairment (1)	$	22,332	$	7,790
Write-off of carrying value of decommissioned towers		1,954		590
Other (including third party decommission costs)		2,104		132
Total asset impairment and decommission costs	$	26,390	$	8,512

(1)Represents impairment charges resulting from the Company’s regular analysis of whether the anticipated future cash flows from certain towers are sufficient to recover the carrying value of the investment in those towers. As a result of increased churn from Sprint, the Company experienced increased asset impairment charges for the three months ended March 31, 2023.

The Company’s long-term investments were $37.1 million and $40.7 million as of March 31, 2023 and December 31, 2022, respectively, and are recorded in Other assets on the Consolidated Balance Sheets. Some of these investments provide for the Company to increase its investment in the future through call options exercisable by the Company and put options exercisable by the investee. These put and call options are recorded at fair market value. The estimation of the fair value of the investment involves the use of Level 3 inputs. The Company evaluates these investments for indicators of impairment. The Company considers impairment indicators such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. If indicators exist and the fair value of the investment is below the carrying amount, the investment could be impaired.

Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the short maturity of these instruments. The Company’s estimate of its short-term investments is based primarily upon Level 1 reported market values. As of March 31, 2023 and December 31, 2022, the Company had $1.9 million and $1.3 million of short-term investments, respectively. For the three months ended March 31, 2023, the Company purchased $213.3 million and sold $213.0 million of short-term investments. For the three months ended March 31, 2022, the Company purchased and sold $30.2 million of short-term investments.

The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate was set for the Revolving Credit Facility (112.5 to 150.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.

For discussion of the Company’s derivatives and hedging activities, refer to Note 17.

**3.**CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

The cash, cash equivalents, and restricted cash balances on the Consolidated Statements of Cash Flows consist of the following:



	As of		As of
	March 31, 2023		December 31, 2022		Included on Balance Sheet

	(in thousands)
Cash and cash equivalents	$	152,772	$	143,708	Cash and cash equivalents
Securitization escrow accounts		30,616		35,820	Restricted cash - current asset
Payment, performance bonds, and other		5,999		6,139	Restricted cash - current asset
Surety bonds and workers compensation		3,795		3,616	Other assets - noncurrent
Total cash, cash equivalents, and restricted cash	$	193,182	$	189,283

Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing

expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted cash on the Company’s Consolidated Balance Sheets.

Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company. Other restricted cash includes $5.8 million and $6.0 million held in escrow as of March 31, 2023 and December 31, 2022, respectively, related to the Company’s acquisition activities.

Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily related to the Company’s tower removal obligations. As of March 31, 2023 and December 31, 2022, the Company had $41.5 million and $42.3 million in surety and payment and performance bonds, respectively, for which no collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of March 31, 2023 and December 31, 2022, the Company had pledged $2.3 million as collateral related to its workers’ compensation policy.

**4.**COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

The Company’s costs and estimated earnings on uncompleted contracts are comprised of the following:



	As of		As of
	March 31, 2023		December 31, 2022

	(in thousands)
Costs incurred on uncompleted contracts	$	152,600	$	137,736
Estimated earnings		79,772		51,287
Billings to date		(183,567)		(134,665)
	$	48,805	$	54,358

These amounts are included in the Consolidated Balance Sheets under the following captions:



	As of		As of
	March 31, 2023		December 31, 2022

	(in thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	58,815	$	79,549
Billings in excess of costs and estimated earnings on
uncompleted contracts (included in Other current liabilities)		(10,010)		(25,191)
	$	48,805	$	54,358

At March 31, 2023 and December 31, 2022, the two largest customers comprised 95.0% and 96.7%, respectively, of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings.

**5.**PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

The Company’s prepaid expenses and other current assets are comprised of the following:



	As of		As of
	March 31, 2023		December 31, 2022

		(in thousands)
Short-term investments	$	1,864	$	1,331
Prepaid real estate taxes		3,594		3,333
Prepaid taxes		10,500		10,639
Other current assets		24,256		17,846
Total prepaid expenses and other current assets	$	40,214	$	33,149

‎

The Company’s other assets are comprised of the following:



	As of		As of
	March 31, 2023		December 31, 2022

		(in thousands)
Straight-line rent receivable	$	396,617	$	388,638
Interest rate swap asset (1)		151,464		182,860
Loans receivable (2)		117,880		39,922
Deferred lease costs, net		8,509		7,747
Deferred tax asset - long term		11,736		16,173
Long-term investments		37,068		40,696
Other		47,781		46,337
Total other assets	$	771,055	$	722,373

(1)Refer to Note 17 for more information on the Company’s interest rate swaps.

(2)On March 17, 2023, the Company entered into a loan with one of its unconsolidated joint ventures (“the Investee”). As part of the loan agreement, the Investee may borrow up to $120.0 million in aggregate principal amount, consisting of a $73.0 million initial term loan and $47.0 million of delayed draw term loans. The final maturity date of the loans is November 30, 2024. The loans accrue interest at a variable rate, adjusting monthly, plus the applicable margin. Interest on the loans is received monthly. The funding of the loans is recorded in Other investing activities on the Consolidated Statements of Cash Flows. As of March 31, 2023, the outstanding principal balance of the loan was $78.0 million and was accruing interest at 9.49%.

**6.**ACQUISITIONS

The following table summarizes the Company’s acquisition activity:



	For the three months
	ended March 31,
	2023		2022

	(in thousands)
Acquisitions of towers and related intangible assets (1)	$	11,471	$	207,863
Acquisition of right-of-use assets		1,309		—
Land buyouts and other assets (2)		7,149		7,318
Total cash acquisition capital expenditures	$	19,929	$	215,181

(1)The three months ended March 31, 2022 includes $176.1 million of acquisitions related to the Company’s purchase of sites from Airtel Tanzania.

(2)Excludes $5.1 million and $3.8 million spent to extend ground lease terms for the three months ended March 31, 2023 and 2022, respectively. The Company recorded these amounts in prepaid rent within prepaid and other current assets on its Consolidated Balance Sheets.

During the three months ended March 31, 2023, the Company acquired 14 towers and related assets and liabilities consisting of $1.6 million of property and equipment, net, $8.9 million of intangible assets, net, $1.0 million of operating lease right of use assets, net, $0.8 million of acquired and other right-of-use assets, net, $0.1 million of acquisition related holdbacks, $0.5 million of long-term lease liabilities, and $1.1 million of other net assets assumed. In the three months ended March 31, 2023, the Company concluded that for all of its acquisitions substantially all of the value of its tower acquisition is concentrated in a group of similar identifiable assets.

Additionally, subsequent to March 31, 2023, the Company purchased or is under contract to purchase 66 communication sites for an aggregate consideration of $63.7 million in cash. The Company anticipates that these acquisitions will be consummated by the end of the fourth quarter of 2023.

The maximum potential obligation related to contingent consideration for acquisitions was $9.9 million and $10.1 million as of March 31, 2023 and December 31, 2022, respectively. No such amounts have been recorded on the Company’s Consolidated Balance Sheets. ‎

**7.**PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:



	As of		As of
	March 31, 2023		December 31, 2022

	(in thousands)
Towers and related assets (1)	$	5,705,778	$	5,650,902
Construction-in-process (2)		83,839		77,564
Furniture, equipment, and vehicles		67,501		67,403
Land, buildings, and improvements		896,728		889,293
Total property and equipment		6,753,846		6,685,162
Less: accumulated depreciation		(4,044,062)		(3,971,435)
Property and equipment, net	$	2,709,784	$	2,713,727

(1)Includes amounts related to the Company’s data centers.

(2)Construction-in-process represents costs incurred related to towers and other assets that are under development and will be used in the Company’s site leasing operations.

Depreciation expense was $69.4 million and $68.1 million for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023 and December 31, 2022, unpaid capital expenditures that are included in accounts payable and accrued expenses were $8.8 million and $7.5 million, respectively.

**8.**INTANGIBLE ASSETS, NET

The following table provides the gross and net carrying amounts for each major class of intangible assets:



	As of March 31, 2023						As of December 31, 2022
	Gross carrying		Accumulated		Net book		Gross carrying		Accumulated		Net book
	amount		amortization		value		amount		amortization		value

	(in thousands)
Current contract intangibles	$	5,197,602	$	(3,151,097)	$	2,046,505	$	5,170,187	$	(3,060,494)	$	2,109,693
Network location intangibles		1,902,092		(1,254,714)		647,378		1,893,048		(1,226,269)		666,779
Intangible assets, net	$	7,099,694	$	(4,405,811)	$	2,693,883	$	7,063,235	$	(4,286,763)	$	2,776,472

All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $101.8 million and $100.6 million for the three months ended March 31, 2023 and 2022, respectively.

**9.**ACCRUED EXPENSES

The Company’s accrued expenses are comprised of the following:



	As of		As of
	March 31, 2023		December 31, 2022

	(in thousands)
Salaries and benefits	$	14,840	$	27,727
Real estate and property taxes		8,112		8,422
Unpaid capital expenditures		8,762		7,476
Acquisition related holdbacks		25,622		25,681
Other		35,461		32,178
Total accrued expenses	$	92,797	$	101,484

‎

**10.**DEBT

The principal values, fair values, and carrying values of debt consist of the following (in thousands):



		As of						As of
		March 31, 2023						December 31, 2022
	Maturity Date	Principal‎Balance		Fair Value		Carrying‎Value		Principal‎Balance		Fair Value		Carrying‎Value
Revolving Credit Facility	Jul. 7, 2026	$	675,000	$	675,000	$	675,000	$	720,000	$	720,000	$	720,000
2018 Term Loan	Apr. 11, 2025		2,286,000		2,286,000		2,278,817		2,292,000		2,280,540		2,284,007
2014-2C Tower Securities (1)	Oct. 8, 2024		620,000		604,612		618,357		620,000		598,480		618,099
2019-1C Tower Securities (1)	Jan. 12, 2025		1,165,000		1,110,828		1,160,474		1,165,000		1,095,776		1,159,860
2020-1C Tower Securities (1)	Jan. 9, 2026		750,000		678,660		745,841		750,000		665,633		745,480
2020-2C Tower Securities (1)	Jan. 11, 2028		600,000		519,390		595,793		600,000		506,574		595,586
2021-1C Tower Securities (1)	Nov. 9, 2026		1,165,000		1,014,550		1,156,304		1,165,000		991,705		1,155,724
2021-2C Tower Securities (1)	Apr. 9, 2027		895,000		774,265		887,867		895,000		756,302		887,443
2021-3C Tower Securities (1)	Oct. 9, 2031		895,000		709,565		886,711		895,000		686,134		886,495
2022-1C Tower Securities (1)	Jan. 11, 2028		850,000		868,488		840,091		850,000		855,899		840,053
2020 Senior Notes	Feb. 15, 2027		1,500,000		1,406,595		1,487,739		1,500,000		1,375,815		1,487,013
2021 Senior Notes	Feb. 1, 2029		1,500,000		1,248,750		1,488,834		1,500,000		1,286,250		1,488,402
Total debt		$	12,901,000	$	11,896,703	$	12,821,828	$	12,952,000	$	11,819,108	$	12,868,162
Less: current maturities of long-term debt							(24,000)						(24,000)
Total long-term debt, net of current maturities						$	12,797,828					$	12,844,162

(1)The maturity date represents the anticipated repayment date for each issuance.

The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:



	Interest	For the three months ended March 31,
	Rates as of	2023				2022
	March 31,	Cash		Non-cash		Cash		Non-cash
	2023	Interest		Interest		Interest		Interest

		(in thousands)
Revolving Credit Facility	6.037%	$	9,286	$	—	$	2,279	$	—
2018 Term Loan (1)	2.569%		14,363		9,223		10,910		11,438
2014-2C Tower Securities	3.869%		6,046		—		6,046		—
2018-1C Tower Securities	3.448%		—		—		5,570		—
2019-1C Tower Securities	2.836%		8,357		—		8,357		—
2020-1C Tower Securities	1.884%		3,598		—		3,598		—
2020-2C Tower Securities	2.328%		3,540		—		3,540		—
2021-1C Tower Securities	1.631%		4,846		—		4,846		—
2021-2C Tower Securities	1.840%		4,196		—		4,196		—
2021-3C Tower Securities	2.593%		5,873		—		5,873		—
2022-1C Tower Securities	6.599%		14,093		—		—		—
2020 Senior Notes	3.875%		14,531		88		14,531		88
2021 Senior Notes	3.125%		11,719		—		11,719		—
Other			778		4,928		787		—
Total		$	101,226	$	14,239	$	82,252	$	11,526

(1)The 2018 Term Loan has a blended rate of 2.569%, which includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan. Excluding the impact of the interest rate swap, the 2018 Term Loan was accruing interest at 6.600% as of March 31, 2023. Refer to Note 17 for more information on the Company’s interest rate swap.

‎

Revolving Credit Facility under the Senior Credit Agreement

The key terms of the Revolving Credit Facility are as follows:



		Unused	Financial Covenant
	Interest Rate	Commitment	Compliance
	as of	Fee as of	Status as of
	March 31, 2023 (1)	March 31, 2023 (2)	March 31, 2023

Revolving Credit Facility	6.037%	0.140%	In Compliance

(1)The rate reflected includes a 0.050% reduction in the applicable spread as a result of meeting certain sustainability-linked targets as of December 31, 2022.

(2)The rate reflected includes a 0.010% reduction in the applicable commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2022.

The table below summarizes the Company’s Revolving Credit Facility activity during the three months ended March 31, 2023 and 2022 (in thousands):



	For the three months
	ended March 31,
	2023		2022

Beginning outstanding balance	$	720,000	$	350,000
Borrowings		140,000		330,000
Repayments		(185,000)		—
Ending outstanding balance	$	675,000	$	680,000

Subsequent to March 31, 2023, the Company repaid $80.0 million under the Revolving Credit Facility, and as of the date of this filing, $595.0 million was outstanding.

Term Loan under the Senior Credit Agreement

During the three months ended March 31, 2023, the Company repaid an aggregate of $6.0 million of principal on the 2018 Term Loan. As of March 31, 2023, the 2018 Term Loan had a principal balance of $2.3 billion.

Secured Tower Revenue Securities

As of March 31, 2023, the entities that are borrowers on the mortgage loan (the “Borrowers”) met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of the Borrowers.

**11.**SHAREHOLDERS’ EQUITY

Common Stock Equivalents

The Company has outstanding stock options, time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) which were considered in the Company’s diluted earnings per share calculation (see Note 15).

Stock Repurchases

The Company’s Board of Directors authorizes the Company to purchase, from time to time, outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act, and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements, and other factors. Once authorized, the repurchase plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. Shares repurchased are retired. On October 28, 2021, the Company’s Board of Directors authorized a $1.0 billion stock repurchase plan, replacing the prior plan. As of the date of this filing, the Company had $504.7 million of authorization remaining under the new plan.

The following is a summary of the Company’s share repurchases:


	For the three months
	ended March 31,
	2023		2022

Total number of shares purchased (in millions) (1)		—		1.3
Average price paid per share (1)	$	—	$	332.00
Total price paid (in millions) (1)	$	—	$	431.6

(1)Amounts reflected are based on the trade date and differ from the Consolidated Statements of Cash Flows which reflects share repurchases based on the settlement date.

Dividends

For the three months ended March 31, 2023, the Company paid the following cash dividends:



	Payable to Shareholders
	of Record at the Close	Cash Paid	Aggregate Amount
Date Declared	of Business on	Per Share	Paid	Date Paid

February 20, 2023	March 10, 2023	$0.85	$93.9 million	March 24, 2023

Dividends paid in 2023 were ordinary taxable dividends.

Subsequent to March 31, 2023, the Company declared the following cash dividends:

**12.**STOCK-BASED COMPENSATION

Stock Options

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. There were no options granted during the three months ended March 31, 2023.

The following table summarizes the Company’s activities with respect to its stock option plans for the three months ended March 31, 2023 as follows (dollars and shares in thousands, except for per share data):



		Weighted-		Weighted-Average
		Average		Remaining
	Number	Exercise Price		Contractual	Aggregate
	of Shares	Per Share		Life (in years)	Intrinsic Value
Outstanding at December 31, 2022	1,673	$	161.02
Exercised	(112)	$	107.43
Forfeited/canceled	(1)	$	217.40
Outstanding at March 31, 2023	1,560	$	164.84	2.3	$	150,596
Exercisable at March 31, 2023	1,543	$	163.68	2.2	$	150,375
Unvested at March 31, 2023	17	$	282.56	7.2	$	221

The total intrinsic value for options exercised during the three months ended March 31, 2023 was $19.0 million.

Restricted Stock Units and Performance-Based Restricted Stock Units

The following table summarizes the Company’s RSU and PSU activity for the three months ended March 31, 2023:



	RSUs			PSUs (1)
		Weighted-Average			Weighted-Average
	Number of	Grant Date Fair		Number of	Grant Date Fair
	Shares	Value per Share		Shares	Value per Share
	(in thousands)			(in thousands)
Outstanding at December 31, 2022	222	$	280.66	429	$	332.18
Granted	163	$	256.19	95	$	263.53
PSU adjustment (2)	—	$	—	65	$	302.96
Vested	(111)	$	262.07	(207)	$	345.08
Forfeited/canceled	(7)	$	281.10	(13)	$	295.77
Outstanding at March 31, 2023	267	$	273.43	369	$	298.88

(1)PSUs represent the target number of shares granted that are issuable at the end of the three year performance period. Fair value for a portion of the PSUs was calculated using a Monte Carlo simulation model.

(2)PSU adjustment represents the net PSUs awarded above or below their target grants resulting from the achievement of performance targets established at the grant date.

**13.**INCOME TAXES

The primary reasons for the difference between the Company’s effective tax rate and the U.S. statutory rate are the Company’s REIT election and the Company’s full valuation allowance on the net deferred tax assets of the U.S. taxable REIT subsidiary (“TRS”). The TRS has concluded that a full valuation allowance is appropriate for the current period. A foreign tax provision is recognized because certain foreign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.

The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $545.2 million as of December 31, 2022, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized.

The Company is subject to income tax and other taxes in the geographic areas where it holds assets or operates, and the Company periodically receives notifications of audits, assessments, or other actions by taxing authorities. In certain jurisdictions, taxing authorities may issue notices and assessments that may not be reflective of the actual tax liability for which the Company will ultimately be liable. In the process of responding to assessments of taxes that the Company believes are not reflective of the Company’s actual tax liability, the Company avails itself of both administrative and judicial remedies. The Company evaluates the circumstances of each notification or assessment based on the information available and, in those instances in which the Company does not anticipate a successful defense of positions taken in its tax filings, a liability is recorded in the appropriate amount based on the underlying assessment.

In connection with a current assessment in Brazil, the taxing authorities have issued income tax deficiencies related to purchase accounting adjustments for tax years 2016 through 2019. The Company strongly disagrees with the assessment and have filed an appeal with the higher appellate taxing authorities as the Company believes the proposed adjustments are without merit. The Company estimates that there is a more likely than not probability that the Company’s position will be sustained upon appeal. Accordingly, no liability has been recorded. The Company will continue to vigorously contest the adjustments and expect to exhaust all administrative and judicial remedies necessary to resolve the matters, which could be a lengthy process. There can be no assurance that these matters will be resolved in the Company’s favor, and an adverse outcome, or any future tax examinations involving similar assertions, could have a material effect on the Company’s results of operations or cash flows in any one period. As of March 31, 2023,

the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued to be between zero and $93.1 million (excluding penalties and interest, which as of such date would have been $86.9 million).

**14.**SEGMENT DATA

The Company operates principally in two business segments: site leasing and site development. The Company’s site leasing business includes two reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region.

Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.



	Domestic Site		Int'l Site		Site
	Leasing		Leasing		Development		Other		Total

For the three months ended March 31, 2023	(in thousands)
Revenues (1)	$	454,833	$	162,435	$	58,248	$	—	$	675,516
Cost of revenues (2)		69,750		50,369		44,185		—		164,304
Operating profit		385,083		112,066		14,063		—		511,212
Selling, general, and administrative expenses		31,743		16,730		6,077		17,659		72,209
Acquisition and new business initiatives
related adjustments and expenses		3,232		2,825		—		—		6,057
Asset impairment and decommission costs		19,435		4,886		—		2,069		26,390
Depreciation, amortization and accretion		119,487		60,412		916		1,600		182,415
Operating income (loss)		211,186		27,213		7,070		(21,328)		224,141
Other expense, net (principally interest
expense and other income)								(80,079)		(80,079)
Income before income taxes										144,062
Cash capital expenditures (3)		44,636		23,033		395		1,256		69,320

For the three months ended March 31, 2022
Revenues (1)	$	432,986	$	126,446	$	60,338	$	—	$	619,770
Cost of revenues (2)		65,804		41,351		45,773		—		152,928
Operating profit		367,182		85,095		14,565		—		466,842
Selling, general, and administrative expenses		23,373		15,494		5,522		17,735		62,124
Acquisition and new business initiatives
related adjustments and expenses		3,599		1,505		—		—		5,104
Asset impairment and decommission costs		5,483		3,029		—		—		8,512
Depreciation, amortization and accretion		123,133		48,881		588		1,721		174,323
Operating income (loss)		211,594		16,186		8,455		(19,456)		216,779
Other income, net (principally interest
expense and other income)								12,004		12,004
Income before income taxes										228,783
Cash capital expenditures (3)		39,545		211,771		966		1,581		253,863



	Domestic Site		Int'l Site		Site
	Leasing		Leasing		Development		Other (4)		Total

Assets	(in thousands)
As of March 31, 2023	$	6,186,249	$	3,855,779	$	127,215	$	372,286	$	10,541,529
As of December 31, 2022	$	6,308,204	$	3,808,699	$	158,137	$	310,001	$	10,585,041

(1)For the three months ended March 31, 2023 and 2022, site leasing revenue in Brazil was $93.8 million and $65.2 million, respectively. Other than Brazil, no foreign country represented more than 5% of the Company’s total revenues in any of the periods presented.

(2)Excludes depreciation, amortization, and accretion.

(3)Includes cash paid for capital expenditures, acquisitions, and right-of-use assets.

(4)Assets in Other consist primarily of general corporate assets and short-term investments.

Total domestic long-lived assets were $5.8 billion and $5.9 billion as of March 31, 2023 and December 31, 2022, respectively. Total international long-lived assets were $3.5 billion as of March 31, 2023 and December 31, 2022. Total long-lived assets in Brazil were $2.1 billion and $2.0 billion as of March 31, 2023 and December 31, 2022, respectively. Long-lived assets include property and equipment, net, intangible assets, net, operating lease right-of-use assets, net, and acquired and other right-of-use assets, net. Other than Brazil, no foreign country represented more than 5% of the Company’s total long-lived assets in any of the periods presented.

**15.**EARNINGS PER SHARE

Basic earnings per share was computed by dividing net income attributable to SBA Communications Corporation by the weighted-average number of shares of Class A common stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income attributable to SBA Communications Corporation by the weighted-average number of shares of Class A common stock outstanding adjusted for any dilutive Class A common stock equivalents, including unvested RSUs, PSUs, and shares issuable upon exercise of stock options as determined under the “Treasury Stock” method.

The following table sets forth basic and diluted net income per common share attributable to common shareholders for the three months ended March 31, 2023 and 2022 (in thousands, except per share data):



	For the three months
	ended March 31,
	2023		2022
Numerator:
Net income attributable to SBA
Communications Corporation	$	101,217	$	188,623
Denominator:
Basic weighted-average shares outstanding		108,132		108,086
Dilutive impact of stock options, RSUs, and PSUs		1,139		1,458
Diluted weighted-average shares outstanding		109,271		109,544
Net income per common share attributable to SBA
Communications Corporation:
Basic	$	0.94	$	1.75
Diluted	$	0.93	$	1.72

For the three months ended March 31, 2023 and 2022, the diluted weighted-average number of common shares outstanding excluded an immaterial number of shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive.

16. REDEEMABLE NONCONTROLLING INTERESTS

The Company allocates income and losses to its redeemable noncontrolling interest holders based on the applicable membership interest percentage. At each reporting period, the redeemable noncontrolling interest is recognized at the greater of (1) the initial carrying amount of the noncontrolling interest as adjusted for accumulated income or loss attributable to the noncontrolling interest holder, or (2) the redemption value as of the balance sheet date. Adjustments to the carrying amount of redeemable noncontrolling interest are charged against retained earnings (or additional paid-in capital if there are no retained earnings). The fair value of the redeemable noncontrolling interest is estimated using Level 3 inputs.

‎

The components of redeemable noncontrolling interests as of March 31, 2023 and December 31, 2022 are as follows (in thousands):



	March 31,		December 31,
	2023		2022

Beginning balance	$	31,735	$	17,250
Net loss attributable to noncontrolling interests		(663)		(1,630)
Foreign currency translation adjustments		—		(204)
Adjustment to redemption amount		7,112		16,319
Ending balance	$	38,184	$	31,735

**17.**DERIVATIVES AND HEDGING ACTIVITIES

The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. On August 4, 2020, the Company, through its wholly owned subsidiary, SBA Senior Finance II, terminated an existing $1.95 billion cash flow hedge on a portion of its 2018 Term Loan in exchange for a payment of $176.2 million. On the same date, the Company entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan. The Company designated this interest rate swap as a cash flow hedge as it is expected to be highly effective at offsetting changes in cash flows of the LIBOR based component interest payments of its 2018 Term Loan. As of March 31, 2023, the hedge remains highly effective; therefore, changes in fair value are recorded in Accumulated other comprehensive loss, net. As of March 31, 2023 and December 31, 2022, the interest rate swap had a fair value of $151.5 million and $182.9 million, respectively, and is recorded in Other assets on the Consolidated Balance Sheets.

On August 4, 2020, the Company also terminated its existing interest rate swaps, which were previously de-designated as cash flow hedges. There was no cash transferred in connection with the termination of these swaps. The Company reclassifies the fair value of its interest rate swaps recorded in Accumulated other comprehensive loss, net on their de-designation date to non-cash interest expense on the Consolidated Statements of Operations over their respective remaining term end dates, which range from 2023 to 2025.

Accumulated other comprehensive loss, net includes an aggregate $97.2 million gain and a $119.6 million gain as of March 31, 2023 and December 31, 2022, respectively.

The Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform.

The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows except for the termination of interest rate swaps, which are recorded in Net cash used in financing activities.

The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three months ended March 31, 2023 and 2022.



	For the three months
	ended March 31,
	2023		2022

Cash Flow Hedge - Interest Rate Swap Agreement	(in thousands)
Change in fair value recorded in Accumulated other comprehensive loss, net	$	(31,396)	$	74,101

Derivatives Not Designated as Hedges - Interest Rate Swap Agreements
Amount reclassified from Accumulated other comprehensive
loss, net into Non-cash interest expense	$	9,007	$	11,221

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS