What changed in this filing

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Item 1. Financial Statements

2024-05-06 compared with 2023-11-07 · 158 added, 276 removed, 529 unchanged (45% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS (in thousands, except par values)

September 30,

Current assets:

10 unchanged sentences

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,

AND SHAREHOLDERS'

AND SHAREHOLDERS' DEFICIT

Current liabilities:

13 unchanged sentences

Redeemable noncontrolling interests

Shareholders'

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, 107,880 shares and

107,997 shares issued and outstanding at September 30, 2023 and December 31, 2022,

108,050 shares issued and outstanding at March 31, 2024 and December 31, 2023,

Additional paid-in capital

3 unchanged sentences

Accumulated other comprehensive loss, net

Total shareholders'

Total shareholders' deficit

( 5,222,820 )

( 5,170,882 )

Total liabilities, redeemable noncontrolling interests, and shareholders'

Total liabilities, redeemable noncontrolling interests, and shareholders' deficit

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

3 unchanged sentences

For the three months

For the nine months

ended September 30,

ended March 31,

Site development

17 unchanged sentences

Amortization of deferred financing fees

Loss from extinguishment of debt, net

Other (expense) income, net

7 unchanged sentences

Weighted-average number of common shares

(1) Includes non-cash compensation of $ 20,615 and $ 24,945 for the three months ended September 30, 2023 and 2022, respectively, and $ 63,709 and $ 72,309 for the nine months ended September 30, 2023 and 2022, respectively.

(1) Includes non-cash compensation of $ 20,773 and $ 25,529 for the three months ended March 31, 2024 and 2023, respectively.

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

3 unchanged sentences

For the three months

For the nine months

ended September 30,

ended March 31,

Adjustments related to interest rate swaps

9 unchanged sentences

Comprehensive

Shareholders'

BALANCE, June 30, 2023

( 7,362,838 )

( 5,092,330 )

Net income attributable to SBA

Communications Corporation

Common stock issued in connection with equity

awards and stock purchase plans, offset

by the impact of net share settlements

Non-cash stock compensation

Adjustments related to interest rate swaps

Repurchase and retirement of common stock

Foreign currency translation adjustments

attributable to SBA Communications

Dividends and dividend equivalents

on common stock

Adjustment to redemption amount related to

noncontrolling interests

BALANCE, September 30, 2023

( 7,421,725 )

( 5,166,486 )

Comprehensive

Shareholders'

BALANCE, December 31, 2023

13 unchanged sentences

on common stock

Adjustment to redemption amount related to

noncontrolling interests

BALANCE, September 30, 2023

BALANCE, March 31, 2024

( 7,509,379 )

( 5,222,820 )

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(unaudited) (in thousands)

Comprehensive

Shareholders'

BALANCE, June 30, 2022

Shareholders'

BALANCE, December 31, 2022

( 7,482,061 )

13 unchanged sentences

noncontrolling interests

BALANCE, September 30, 2022

( 7,508,231 )

( 5,364,830 )

Comprehensive

Shareholders'

BALANCE, December 31, 2021

( 7,203,531 )

( 5,283,404 )

Net income attributable to SBA

Communications Corporation

Common stock issued in connection with equity

awards and stock purchase plans, offset

by the impact of net share settlements

Non-cash stock compensation

Adjustments related to interest rate swaps

Repurchase and retirement of common stock

Foreign currency translation adjustments

attributable to SBA Communications

Dividends on common stock

Adjustment to redemption amount related to

noncontrolling interests

BALANCE, September 30, 2022

BALANCE, March 31, 2023

( 7,473,913 )

4 unchanged sentences

(unaudited) (in thousands)

For the nine months ended September 30,

For the three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation, accretion, and amortization

Gain on remeasurement of U.S.

Loss (gain) on remeasurement of U.S.

denominated intercompany loans

1 unchanged sentence

Non-cash asset impairment and decommission costs

Deferred and non-cash income tax (benefit) provision

Loss from extinguishment of debt, net

Deferred and non-cash income tax provision

Other non-cash items reflected in the Statements of Operations

12 unchanged sentences

Purchase of investments

( 1,005,143 )

Proceeds from sale of investments

4 unchanged sentences

Repayments under Revolving Credit Facility

Proceeds from issuance of Term Loans, net of fees

Repayment of Term Loans

( 2,268,000 )

Repurchase and retirement of common stock

13 unchanged sentences

(unaudited) (in thousands)

For the nine months ended September 30,

For the three months ended March 31,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

19 unchanged sentences

These estimates ultimately may differ from actual results and such differences could be material.

The Company is in the process of reviewing the remaining estimated useful lives of its towers and intangible assets and is considering whether it should modify its current estimates for asset lives based on its historical operating experience.

The Company has retained an independent consultant to assist in completing this review and analysis.

If the Company concludes that a revision in the estimated useful lives of its towers and intangible assets is appropriate based on its review and analysis, the Company will account for any changes in the useful lives as a change in accounting estimate under Accounting Standards Codification (ASC) 250 Accounting Changes and Error Corrections, which will be recorded prospectively beginning in the period of change.

The Company expects to conclude its analysis in 2024.

During the first quarter of 2024, the Company completed its assessment on the remaining estimated useful lives of its towers and intangible assets.

The Company concluded through its assessment that it should modify its current estimates for asset lives based on its historical operating experience and the findings obtained by its independent consultant.

The Company previously depreciated its towers on a straight-line basis over the shorter of the term of the underlying ground lease (including renewal options) taking into account residual value or the estimated useful life of the tower, which the Company had historically estimated to be 15 years.

Based on its assessment, the Company revised the estimated useful lives of its towers and certain related intangible assets (which are amortized on a similar basis to its tower assets, as their useful lives correlate to the useful life of the towers) from 15 years to 30 years, effective January 1, 2024.

The Company accounted for the change in estimated useful lives as a change in estimate under ASC 250 “Accounting Changes and Error Corrections.” The impact of the change in estimate was accounted for prospectively effective January 1, 2024, resulting in a reduction in depreciation and amortization expense of approximately $ 102.7 million ($ 93.0 million after tax, or an increase of $ 0.86 per diluted share) for the three months ended March 31, 2024.

The change in useful lives is expected to reduce depreciation expense by approximately $ 411.5 million ($ 372.5 million after tax, or an increase of $ 3.43 per diluted share) for the year ended December 31, 2024.

Foreign Currency Translation

5 unchanged sentences

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 (expense), net in the Consolidated Statements of Operations.

Remeasurement gains and losses are reported as Other (expense) income, net in the Consolidated Statements of Operations.

Intercompany Loans Subject to Remeasurement

In accordance with ASC 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future.

The Company recorded a $ 31.2 million loss and a $ 25.5 million loss, net of taxes, on the remeasurement of intercompany loans for the three months ended September 30, 2023 and 2022, respectively, and a $ 24.1 million gain and a $ 4.3 million gain, net of taxes, on the remeasurement of intercompany loans for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, the Company funded $ 4.2 million and repaid $ 148.4 million under its intercompany loan agreements.

As of September 30, 2023 and December 31, 2022, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $ 1.4 billion and $ 1.5 billion, respectively.

Reference Rate Reform

On June 21, 2023, the Company amended its interest rate swap to change from LIBOR as an interest rate benchmark to the replacement benchmark of Term SOFR effective on August 1, 2023.

The Company has elected the optional expedient which allows companies to change the reference rate and other critical terms related to the reference rate reform in derivative hedge documentation without having to de-designate the hedging relationship, allowing the Company to continue applying hedge accounting to its cash flow hedge.

On July 3, 2023, the Company amended its 2018 Term Loan and its Revolving Credit Facility to use Term SOFR as the benchmark rate.

The transition from LIBOR to Term SOFR did not have a material impact on the consolidated financial statements.

Refer to Notes 10 and 17 for further discussion of the 2018 Term Loan, Revolving Credit Facility, and the Company’s interest rate swap.

In accordance with ASC 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other (expense) income, net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future.

The Company recorded a $ 28.5 million loss and a $ 27.4 million gain, net of taxes, on the remeasurement of intercompany loans for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, the Company funded $ 8.3 million and repaid $ 50.7 million under its intercompany loan agreements.

March 31, 2024 and December 31, 2023, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $ 1.2 billion and $ 1.3 billion, respectively.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

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 discount rates ranging from 6.5 % - 8.8 %.

The DCF analysis used an average discount rate ranging from 7.8 % - 8.8 %.

Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment.

1 unchanged sentence

For the three months

For the nine months

ended September 30,

ended March 31,

(in thousands)

Towers and related assets (1)

Operating lease right-of-use assets (1)(2)

Asset impairment (1)

Write-off of carrying value of decommissioned towers

2 unchanged sentences

(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, the Company experienced increased asset impairment charges for the three and nine months ended September 30, 2023.

(2) Amounts relate to the recognition of impairment charges on our right-of-use assets recorded in accordance with ASC 842.

The Company’s long-term investments were $ 31.6 million and $ 40.7 million as of September 30, 2023 and December 31, 2022, respectively, and are recorded in Other assets on the Consolidated Balance Sheets.

As a result of increased churn, the Company experienced increased asset impairment charges for the three months ended March 31, 2024.

The Company’s long-term investments were $ 22.0 million and $ 24.5 million as of March 31, 2024 and December 31, 2023, respectively, and are recorded in Other assets on the Consolidated Balance Sheets.

The estimation of the fair value of the investment involves the use of Level 3 inputs.

2 unchanged sentences

If indicators exist and the fair value of the investment is less than the carrying amount, an impairment charge will be recorded.

The Company did no t recognize any impairment loss associated with its investments during the three months ended March 31, 2024 and 2023.

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 September 30, 2023 and December 31, 2022, the Company had $ 1.1 million and $ 1.3 million of short-term investments, respectively.

For the nine months ended September 30, 2023, the Company purchased and sold $ 1.0 billion of short-term investments.

For the nine months ended September 30, 2022, the Company purchased $ 501.6 million and sold $ 481.6 million of short-term investments.

As of March 31, 2024 and December 31, 2023, the Company had $ 1.6 million and $ 1.0 million of short-term investments, respectively.

For the three months ended March 31, 2024, the Company purchased and sold $ 0.3 billion of short-term investments.

For the three months ended March 31, 2023, the Company purchased and sold $ 0.2 billion 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 (or Term SOFR as amended July 3, 2023) was set for the Revolving Credit Facility ( 112.5 to 150.0 basis points).

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 spread to the Eurodollar Rate and Term SOFR 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.

2 unchanged sentences

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

September 30, 2023

March 31, 2024

December 31, 2023

15 unchanged sentences

Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company.

Other restricted cash includes $ 5.7 million and $ 6.0 million held in escrow as of September 30, 2023 and December 31, 2022, respectively, related to the Company’s acquisition activities.

Other restricted cash includes $ 6.1 million held in escrow as of March 31, 2024 and December 31, 2023 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 September 30, 2023 and December 31, 2022, the Company had $ 42.0 million and $ 42.3 million in surety and payment and performance bonds, respectively, for which no collateral was required to be posted.

As of March 31, 2024 and December 31, 2023, the Company had $ 41.9 million and $ 42.0 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 September 30, 2023 and December 31, 2022, the Company had pledged $ 2.4 million and $ 2.3 million, respectively, as collateral related to its workers’ compensation policy.

As of March 31, 2024 and December 31, 2023, the Company had pledged $ 2.4 million as collateral related to its workers’ compensation policy.

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

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

September 30, 2023

March 31, 2024

December 31, 2023

4 unchanged sentences

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

September 30, 2023

March 31, 2024

December 31, 2023

3 unchanged sentences

uncompleted contracts (included in Other current liabilities)

At September 30, 2023 and December 31, 2022, the two largest customers comprised 92.8 % 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.

At March 31, 2024 and December 31, 2023, the two largest customers comprised 83.9 % and 84.6 %, respectively, of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings.

PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

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

September 30, 2023

March 31, 2024

December 31, 2023

8 unchanged sentences

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

September 30, 2023

March 31, 2024

December 31, 2023

8 unchanged sentences

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

(2) On March 17, 2023 (and as amended on August 25, 2023), the Company entered into a loan with one of its unconsolidated joint ventures (“the Investee”).

(2) On March 17, 2023 (and as amended on August 25, 2023 and March 31, 2024), 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 $ 115.0 million in aggregate principal amount, consisting of a $ 73.0 million initial term loan and $ 42.0 million of delayed draw term loans.

1 unchanged sentence

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 September 30, 2023, the outstanding principal balance of the loan was $ 93.0 million and was accruing interest at 10.067 %.

As of March 31, 2024, the outstanding principal balance of the loan was $ 106.4 million and was accruing interest at 10.076 %.

The following table summarizes the Company’s acquisition activity:

For the three months

For the nine months

ended September 30,

ended March 31,

(in thousands)

Acquisitions of towers and related intangible assets (1)

Acquisition of right-of-use assets

Acquisitions of towers and related assets

Land buyouts and other assets (1)

Total cash acquisition capital expenditures

(1) The nine months ended September 30, 2022 includes $ 176.1 million of acquisitions related to the Company’s purchase of sites from Airtel Tanzania.

(2) Excludes $ 6.7 million and $ 4.3 million spent to extend ground lease terms for the three months ended September 30, 2023 and 2022, respectively, and excludes $ 15.0 million and $ 10.6 million spent to extend ground lease terms for the nine months ended September 30, 2023 and 2022, respectively.

(1) Excludes $ 4.6 million and $ 5.1 million spent to extend ground lease terms for the three months ended March 31, 2024 and 2023, respectively.

The Company recorded these amounts in prepaid ground rent within prepaid expenses and other current assets on its Consolidated Balance Sheets.

(3) The nine months ended September 30, 2022 includes amounts paid related to the acquisition of a data center.

During the nine months ended September 30, 2023, the Company acquired 68 towers and related assets and liabilities consisting of $ 11.0 million of property and equipment, net, $ 49.0 million of intangible assets, net, $ 13.4 million of operating lease right-of-use assets, net, $ 2.8 million of acquired and other right-of-use assets, net, $ 2.4 million of acquisition related holdbacks, $ 11.3 million of long-term lease liabilities, and $ 0.9 million of other net assets assumed.

During the nine months ended September 30, 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 September 30, 2023, the Company purchased or is under contract to purchase 215 communication sites for an aggregate consideration of $ 74.0 million in cash.

The Company anticipates that these acquisitions will be consummated by the end of the second quarter of 2024.

The maximum potential obligation related to contingent consideration for acquisitions was $ 18.4 million and $ 10.1 million as of September 30, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2024, the Company acquired 11 towers and related assets and liabilities consisting of $ 1.6 million of property and equipment, net, $ 9.6 million of intangible assets, net, $ 1.6 million of operating lease right-of-use assets, net, $ 2.3 million of acquisition related holdbacks, and $ 0.2 million of long-term lease liabilities.

During the three months ended

March 31, 2024 , 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, 2024, the Company purchased or is under contract to purchase 271 communication sites for an aggregate consideration of $ 84.5 million in cash.

The Company anticipates that these acquisitions will be consummated by the end of the third quarter of 2024.

The maximum potential obligation related to contingent consideration for acquisitions was $ 16.4 million and $ 17.9 million as of March 31, 2024 and December 31, 2023, respectively.

No such amounts have been recorded on the Company’s Consolidated Balance Sheets.

1 unchanged sentence

Property and equipment, net consists of the following:

September 30, 2023

March 31, 2024

December 31, 2023

11 unchanged sentences

(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 $ 68.2 million and $ 68.3 million for the three months ended September 30, 2023 and 2022, respectively, and $ 206.6 million and $ 205.0 million for the nine months ended September 30, 2023 and 2022, respectively.

September 30, 2023 and December 31, 2022, unpaid capital expenditures that are included in accounts payable and accrued expenses were $ 7.1 million and $ 7.5 million, respectively.

Depreciation expense was $ 37.5 million and $ 69.4 million for the three months ended March 31, 2024 and 2023, respectively.

As a result of the Company’s revision of the estimated useful lives of its towers, the Company experienced decreased depreciation expense for the three months ended March 31, 2024.

At March 31, 2024 and December 31, 2023, unpaid capital expenditures that are included in accounts payable and accrued expenses were $ 6.5 million.

INTANGIBLE ASSETS, NET

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

As of September 30, 2023

As of March 31, 2024

As of December 31, 2023

12 unchanged sentences

All intangible assets noted above are included in the Company’s site leasing segment.

Amortization expense relating to the intangible assets above was $ 100.4 million for the three months ended September 30, 2023 and 2022, and $ 303.5 million and $ 303.0 million for the nine months ended September 30, 2023 and 2022, respectively.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Amortization expense relating to the intangible assets above was $ 27.1 million and $ 101.8 million for the three months ended March 31, 2024 and 2023, respectively.

As a result of the Company’s revision of the estimated useful lives of certain intangible assets, the Company experienced decreased amortization expense for the three months ended March 31, 2024.

ACCRUED EXPENSES

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

September 30, 2023

March 31, 2024

December 31, 2023

5 unchanged sentences

Total accrued expenses

The Company’s other current liabilities are comprised of the following:

September 30, 2023

December 31, 2022

(in thousands)

Billings in excess of costs and estimated earnings on uncompleted contracts

Taxes payable

Total other current liabilities

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

September 30, 2023

March 31, 2024

December 31, 2023

2 unchanged sentences

2018 Term Loan (2)

2024 Term Loan (2)

2014-2C Tower Securities (3)

9 unchanged sentences

current maturities of long-term debt

( 1,805,395 )

Total long-term debt, net of current maturities

(1) On January 25, 2024, the Company amended its Revolving Credit Facility to extend the maturity date to January 25, 2029 as well as amend certain other terms and conditions under the Senior Credit Agreement.

For further discussion of the amendments, refer to “Terms of the Senior Credit Agreement” below.

(2) On January 25, 2024, the Company repaid its 2018 Term Loan and issued a new $ 2.3 billion Term Loan (“2024 Term Loan”) with a maturity date of January 25, 2031 .

For further discussion of the amendments, refer to “Term Loan under the Senior Credit Agreement” below.

(3) 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:

For the three months ended September 30,

For the nine months ended September 30,

September 30,

For the three months ended March 31,

(in thousands)

1 unchanged sentence

2018 Term Loan

2014-2C Tower Securities

2024 Term Loan (1)

2014-2C Tower Securities

8 unchanged sentences

2021 Senior Notes

(1) The 2018 Term Loan has a blended rate of 2.651 %, which includes the impact of the interest rate swaps entered into on August 4, 2020, and amended on June 21, 2023, 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 July 31, 2023 and then at Term SOFR plus 185 basis points (inclusive of a credit spread adjustment (“CSA”) of 0.10 %) for an all-in fixed rate of 1.900 % 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 7.170 % as of September 30, 2023.

(1) The 2024 Term Loan has a blended rate of 2.855 %, which includes the impact of the interest rate swaps.

Excluding the impact of the interest rate swap, the 2024 Term Loan was accruing interest at 7.340 % as of March 31, 2024.

Refer to Note 17 for more information on the Company’s interest rate swap .

Terms of the Senior Credit Agreement

On July 3, 2023, the Company, through its wholly owned subsidiary, SBA Senior Finance II LLC (“SBA Senior Finance II”), amended its Revolving Credit Facility to replace LIBOR with Term SOFR as the benchmark interest rate and make related changes.

On January 25, 2024, the Company, through its wholly owned subsidiary, SBA Senior Finance II LLC (“SBA Senior Finance II”), amended and restated its Senior Credit Agreement to (1) issue a new $ 2.3 billion Term Loan and retire the 2018 Term Loan, (2) increase the total commitments under its Revolving Credit Facility from $ 1.5 billion to $ 1.75 billion, (3) extend the maturity date of its Revolving Credit Facility to January 25, 2029, and (4) amend certain other terms and conditions under the Senior Credit Agreement.

On February 23, 2024 the Company, through its wholly owned subsidiary, SBA Senior Finance II, further increased the total commitments under the Revolving Credit Facility from $ 1.75 billion to $ 2.0 billion.

As of March 31, 2024, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility consists of a revolving loan under which up to $ 1.5 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing.

Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate (or Term SOFR as amended July 3, 2023) plus a margin that ranges from 112.5 basis points to 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement.

The Revolving Credit Facility consists of a revolving loan under which up to $ 2.0 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing through the maturity date of January 25, 2029.

Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate or Term SOFR Rate plus a margin that ranges from 112.5 basis points to 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement.

In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.15 % and 0.25 % per annum on the amount of unused commitment.

If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, July 7, 2026.

Furthermore, the Revolving Credit Facility incorporates sustainability-linked targets which will adjust the Revolving Credit Facility’s applicable interest and commitment fee rates upward or downward based on how the Company performs against those targets.

3 unchanged sentences

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

Financial Covenant

Interest Rate

September 30, 2023 (1)

September 30, 2023 (2)

September 30, 2023

March 31, 2024 (1)

March 31, 2024 (2)

Revolving Credit Facility

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, 2023.

(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, 2023.

The table below summarizes the Company’s Revolving Credit Facility activity during the three and nine months ended September 30, 2023 and 2022 (in thousands):

The table below summarizes the Company’s Revolving Credit Facility activity during the three months ended March 31, 2024 and 2023 (in thousands):

For the three months

For the nine months

ended September 30,

ended March 31,

Beginning outstanding balance

Ending outstanding balance

Subsequent to September 30, 2023, the Company repaid $ 85.0 million under the Revolving Credit Facility, and as of the date of this filing, $ 285.0 million was outstanding.

Subsequent to March 31, 2024, the Company repaid $ 50.0 million and borrowed $ 50.0 million under the Revolving Credit Facility, and as of the date of this filing, $ 195.0 million was outstanding.

Term Loan under the Senior Credit Agreement

On July 3, 2023, the Company, through its wholly owned subsidiary, SBA Senior Finance II, amended its 2018 Term Loan to replace LIBOR with Term SOFR as the benchmark interest rate.

As amended, the 2018 Term Loan accrues interest at Term SOFR plus 185 basis points (inclusive of a CSA of 0.10 %).

On June 21, 2023, the Company, through its wholly owned subsidiary, SBA Senior Finance II, amended its interest rate swap agreement which swapped $ 1.95 billion of notional value accruing interest at Term SOFR plus 185 basis points (inclusive of a CSA of 0.10 %) for an all-in fixed rate of 1.900 % from August 1, 2023 through the maturity date of the 2018 Term Loan.

During the three and nine months ended September 30, 2023, the Company repaid an aggregate of $ 6.0 million and $ 18.0 million, respectively, of principal on the 2018 Term Loan.

As of September 30, 2023, the 2018 Term Loan had a principal balance of $ 2.3 billion.

2024 Term Loan

On January 25, 2024, the Company, through its wholly owned subsidiary, SBA Senior Finance II, issued a term loan under the amended and restated Senior Credit Agreement.

The 2024 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $ 2.3 billion that matures on January 25, 2031 .

The 2024 Term Loan accrues interest, at SBA Senior Finance II's election, at either the Base Rate plus 100 basis points (with a zero Base Rate floor) or at Term SOFR plus 200 basis points (with a floor of 0 %).

The 2024 Term Loan was issued at 99.75 % of par value.

The proceeds from the 2024 Term Loan were used to retire the 2018 Term Loan and to pay related fees and expenses.

In connection with the repayment, the Company expensed $ 3.3 million of net deferred financing fees and $ 1.2 million of discount related to the debt.

Principal payments on the 2024 Term Loan will be made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $ 5.75 million beginning on June 30, 2024.

The Company incurred financing fees of approximately $ 19.4 million in relation to this transaction, which are being amortized through the maturity date.

Secured Tower Revenue Securities

As of September 30, 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.

As of March 31, 2024, 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 .

2 unchanged sentences

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).

Registration of Additional Shares

On February 29, 2024, the Company filed with the Securities and Exchange Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR, which enables the Company to issue shares of its Class A common stock, preferred stock, debt securities, warrants, or depositary shares as well as units that include any of these securities.

The Company will file a prospectus supplement containing the amount and type of securities each time it issues securities under its automatic shelf registration statement on Form S-3ASR.

During the three months ended March 31, 2024, the Company did no t issue any securities under this automatic shelf registration statement.

Stock Repurchases

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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 $ 404.7 million of authorization remaining under the new plan.

On October 28, 2021, the Company’s Board of Directors authorized a $ 1.0 billion stock repurchase plan.

As of the date of this filing, the Company had $ 204.7 million of authorization remaining under this plan.

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

For the three months

For the nine months

ended September 30,

ended March 31,

Total number of shares purchased (in millions) (1)

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Total purchase price (in millions) (1)

Subsequent to September 30, 2023, the Company made the following share repurchases:

Subsequent to March 31, 2024, the Company made the following share repurchases:

Total number of shares purchased (in millions) (1)

1 unchanged sentence

Total purchase price (in millions) (1)

(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.

For the nine months ended September 30, 2023, the Company paid the following cash dividends:

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

For the three months ended March 31, 2024, the Company paid the following cash dividends:

Payable to Shareholders

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March 28, 2024

April 30, 2023

$ 92.1 million

June 21, 2023

July 30, 2023

August 24, 2023

$ 92.1 million

September 20, 2023

Dividends paid in 2024 were ordinary taxable dividends.

Subsequent to September 30, 2023, the Company declared the following cash dividends:

Subsequent to March 31, 2024, the Company declared the following cash dividends:

Payable to Shareholders

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Date to be Paid

November 1, 2023

November 16, 2023

December 14, 2023

April 29, 2024

June 19, 2024

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 with the assumptions included in the table below.

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.

The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:

September 30, 2023

Risk free interest rate

Dividend yield

Expected volatility

Expected lives

The following table summarizes the Company’s activities with respect to its stock option plans for the nine months ended September 30, 2023 as follows (dollars and shares in thousands, except for per share data):

The following table summarizes the Company’s activities with respect to its stock option plans for the three months ended March 31, 2024 as follows (dollars and shares in thousands, except for per share data):

Weighted-Average

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Outstanding at December 31, 2023

Forfeited/canceled

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Unvested at September 30, 2023

The weighted-average per share fair value of options granted during the nine months ended September 30, 2023 was $ 58.95 .

The total intrinsic value for options exercised during the nine months ended September 30, 2023 was $ 24.2 million.

Outstanding at March 31, 2024

Exercisable at March 31, 2024

Unvested at March 31, 2024

The total intrinsic value for options exercised during the three months ended March 31, 2024 was $ 14.2 million.

Restricted Stock Units and Performance-Based Restricted Stock Units

The following table summarizes the Company’s RSU and PSU activity for the nine months ended September 30, 2023:

The following table summarizes the Company’s RSU and PSU activity for the three months ended March 31, 2024:

Weighted-Average

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Forfeited/canceled

Outstanding at September 30, 2023

Outstanding at March 31, 2024

(1) PSUs represent the target number of shares granted that are issuable at the end of the three year performance period.

1 unchanged sentence

(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.

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 release of the full valuation allowance on the net deferred tax assets of the U.S.

taxable REIT subsidiary (“TRS”).

The TRS concluded that it was appropriate to release the full valuation allowance of $ 66.3 million during the second quarter of 2023.

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 primary reason for the difference between the Company’s effective tax rate and the U.S.

statutory rate is the Company’s REIT election.

A tax provision is recognized because U.S.

taxable REIT subsidiary and 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.

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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 has filed an appeal with the higher appellate taxing authorities as the Company believes the proposed adjustments are without merit.

The Company disagrees with the assessment and has filed an appeal with the higher appellate taxing authorities.

The Company estimates that there is a more likely than not probability that the Company’s position will be sustained upon appeal.

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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 September 30,

2023, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued to be between zero and $ 94.3 million.

As of March 31, 2024, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued to be between zero and $ 94.6 million.

This range excludes penalties and interest, which as of such date would have been $ 103.7 million.

10 unchanged sentences

Domestic Site

Int'l Site

For the three months ended September 30, 2023

(in thousands)

Cost of revenues (2)

Operating profit

Selling, general, and administrative expenses

Acquisition and new business initiatives

related adjustments and expenses

Asset impairment and decommission costs

Depreciation, amortization and accretion

Operating income (loss)

Other expense, net (principally interest

expense and other income)

Income before income taxes

Cash capital expenditures (3)

For the three months ended September 30, 2022

Cost of revenues (2)

Operating profit

Selling, general, and administrative expenses

Acquisition and new business initiatives

related adjustments and expenses

Asset impairment and decommission costs

Depreciation, amortization and accretion

Operating income (loss)

Other expense, net (principally interest

expense and other income)

Income before income taxes

Cash capital expenditures (3)

Domestic Site

Int'l Site

For the nine months ended September 30, 2023

For the three months ended March 31, 2024

(in thousands)

11 unchanged sentences

Cash capital expenditures (3)

For the nine months ended September 30, 2022

For the three months ended March 31, 2023

Cost of revenues (2)

11 unchanged sentences

Domestic Site

Int'l Site

(in thousands)

As of September 30, 2023

As of March 31, 2024

As of December 31, 2023

(1) For the three months ended September 30, 2023 and 2022, site leasing revenue in Brazil was $ 100.0 million and $ 70.7 million, respectively.

For the nine months ended September 30, 2023 and 2022, site leasing revenue in Brazil was $ 293.6 million and $ 209.8 million, respectively.

Other than Brazil, no foreign country represented more than 5 % of the Company’s total revenues in any of the periods presented.

(1) For the three months ended March 31, 2024 and 2023, site leasing revenue in Brazil was $ 97.5 million and $ 93.8 million, respectively.

Other than Brazil, no foreign country represented more than 5 % of the Company’s total site leasing revenue in any of the periods presented.

(2) Excludes depreciation, amortization, and accretion.

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

Total domestic long-lived assets were $ 5.6 billion and $ 5.9 billion as of September 30, 2023 and December 31, 2022, respectively.

Total international long-lived assets were $ 3.4 billion and $ 3.5 billion as of September 30, 2023 and December 31, 2022.

Total long-lived assets in Brazil were $ 2.1 billion and $ 2.0 billion as of September 30, 2023 and December 31, 2022, respectively.

Total domestic long-lived assets were $ 5.4 billion as of March 31, 2024 and December 31, 2023.

Total international long-lived assets were $ 3.3 billion and $ 3.4 billion as of March 31, 2024 and December 31, 2023.

Total long-lived assets in Brazil were $ 2.0 billion and $ 2.1 billion as of March 31, 2024 and December 31, 2023, 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.

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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 and nine months ended September 30, 2023 and 2022 (in thousands, except per share data):

The following table sets forth basic and diluted net income per common share attributable to common shareholders for the three months ended March 31, 2024 and 2023 (in thousands, except per share data):

For the three months

For the nine months

ended September 30,

ended March 31,

Net income attributable to SBA

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Communications Corporation:

For the three and nine months ended September 30, 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.

For the three months ended March 31, 2024 and 2023, 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.

REDEEMABLE NONCONTROLLING INTERESTS

3 unchanged sentences

The fair value of the redeemable noncontrolling interest is estimated using Level 3 inputs.

The components of redeemable noncontrolling interests as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

September 30,

The components of redeemable noncontrolling interests as of March 31, 2024 and December 31, 2023 are as follows (in thousands):

Beginning balance

6 unchanged sentences

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 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.

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.

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 .

The Company concluded that the amendment to the interest rate swap qualifies for the relief provided by ASU 2021-01 and ASU 2022-06 and as such, has not de-designated its cash flow hedge.

Refer to Note 1 for further discussion of the expedient adopted under ASU 2021-01 and ASU 2022-06.

As of September 30, 2023, the hedge remains highly effective;

As of March 31, 2024, the Company has an interest rate swap agreement on its 2024 Term Loan which swaps $ 1.95 billion of notional value accruing interest at one month Term SOFR plus 200 basis points for an all-in fixed rate of 2.050 % per annum through March 31, 2025.

Additionally, the Company has a forward-starting interest rate

swap agreement which will swap $ 1.0 billion of notional value accruing interest at one month Term SOFR plus 200 basis points for an all-in fixed rate of 5.830 % per annum.

The forward-starting swap has an effective start date of March 31, 2025 and a maturity date of April 11, 2028.

As of March 31, 2024, the hedges remain highly effective;

therefore, changes in fair value are recorded in Accumulated other comprehensive loss, net.

As of September 30, 2023 and December 31, 2022, the interest rate swap had a fair value of $ 143.3 million and $ 182.9 million, respectively, and is recorded in Other assets on the Consolidated Balance Sheets.

Accumulated other comprehensive loss, net includes an aggregate $ 103.0 million gain and a $ 119.6 million gain as of September 30, 2023 and December 31, 2022, respectively.

The table below outlines the effects of the Company’s interest rate swaps on the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

Fair Value as of

Balance Sheet

Derivatives Designated as Hedging Instruments

(in thousands)

Interest rate swap agreements in a fair value asset position

Interest rate swap agreement in a fair value liability position

Other long-term liabilities

Accumulated other comprehensive loss, net includes an aggregate $ 62.3 million gain and a $ 51.5 million gain as of March 31, 2024 and December 31, 2023, 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 and nine months ended September 30, 2023 and 2022.

The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows .

For the three months

For the nine months

ended September 30,

ended March 31,

Cash Flow Hedge - Interest Rate Swap Agreement

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements