SBA Communications Q2 2025 Update: More Buybacks and Leaving Canada
- Q2 2025 AFFO attributable to SBAC per share came in at $3.15, beating consensus estimates by $.02.
- Guidance for 2025 AFFO per share attributable to SBAC for 2025 increased 0.95%.
- With our preferred adjustments, guidance is still up 0.88%.
- Foreign exchange rates account for part of the increase, but it was less than half of the raise.
- Shares repurchased. Average price of $211.63 in Q2 and $227.92 in early Q3.
- We have reached about 0.75% of outstanding shares being retired.
- SBAC announced they are selling their Canadian tower assets. It should be immediately accretive due to the cap rates.
- SBAC is currently our largest single position excluding cash (Treasury bill ETFs) so the strong report is quite welcome.
SBA Communications (SBAC) announced earnings this afternoon.
From the Earnings Release
The earnings release commentary (bolding added):
“Domestic activity remained very strong in the second quarter as our carrier customers continued to invest meaningfully in their wireless networks. New U.S. leasing business signed up during the quarter was ahead of our expectations and benefitted from continued high levels of new colocations. The results of our services business also reflect the significant level of network investment we are seeing, with construction volumes continuing to grow sequentially over the first quarter. Internationally, we also saw solid new leasing activity, and our company-wide total of new colocations executed during the quarter was the highest in nearly three years. In addition, we were able to close over 4,300 sites from our previously announced Millicom acquisition during the quarter, beginning the integration of these sites several months ahead of our prior projected timeframe.
As a result of our strong leasing results, steady leasing and services backlogs, early Millicom closing, and favorable foreign currency movements, we have meaningfully increased our full year outlook across all key financial metrics. Our balance sheet remains strong with a quarter ending net debt to Adjusted EBITDA leverage ratio of 6.5x, and 6.3x adjusted on a pro forma basis for a full quarter of Adjusted EBITDA from the acquired Millicom assets, and only $80 million outstanding on our revolving credit facility.
And lastly, as part of our ongoing portfolio review, we are announcing today that we have entered into an agreement to sell all of our Canadian tower assets. This divestiture will be immediately accretive to AFFO per share upon closing and is in alignment with our stated desire to optimize or otherwise exit subscale markets. I am very pleased with the progress we have made to date which will allow us to continue to focus our attention on growing and operating our key markets. Our team continues to execute very well, supporting our customers’ significant network goals, and creating incremental value for our shareholders.”
Results for AFFO Attributable to SBA Communications Per Share
- AFFO consensus estimate: $3.13
- AFFO attributable to SBA Communications Per Share Result: $3.15
- Result: Beats by $.02.
Note: SBAC reports two AFFO metrics. Sometimes the databases pull the one labeled as “AFFO” and other times they pull “AFFO attributable to SBA Communications”. We focus on “AFFO attributable to SBA Communications”.
Some websites are running this as a huge beat because they pulled “AFFO” of $3.17 (rather than AFFO attributable to SBAC) and then compared that number to consensus estimates for FFO (only $2.96). Why would they do that? I don’t know. I’m not in charge of their data. They probably don’t have a REIT analyst on staff.
Guidance for AFFO
- Old Guidance for AFFO (attributable to SBAC): $12.47 to $12.84. Midpoint $12.66.
- New Guidance for AFFO (attributable to SBAC): $12.59 to $12.96. Midpoint $12.78. Up $.12.
- Guidance is up 0.95%.
- Note: The official press releases lists an increase of $.13 rather than $.12 because of rounding.
By the Line Items
I create the chart below to make it easier to visualize the changes in guidance across key items. The most relevant line is the one at the bottom:
- The most prominently listed metric is AFFO per share (in yellow).
- The one used by most analysts is AFFO per share to SBAC (in grey).
- The most useful is AFFO Ex Non-Cash per share (in purple). We have to calculate this one because it’s not an official metric.
As you can see, the primary one for analysts is up 0.95%. The one we prefer to use is up 0.88%. Either way, that’s another solid increase.
Currency Exchange Rates
There was a slight tailwind from currency exchange rates. Without that tailwind, SBAC would’ve been raising guidance by $.08 rather than $.12. That’s still a respectable increase.
