NASDAQ:SBAC SBA Communications Q1 2024 Earnings Report $241.95 -0.01 (0.00%) Closing price 05/5/2025 04:00 PM EasternExtended Trading$241.05 -0.90 (-0.37%) As of 04:33 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast SBA Communications EPS ResultsActual EPS$1.42Consensus EPS $1.21Beat/MissBeat by +$0.21One Year Ago EPS$3.13SBA Communications Revenue ResultsActual Revenue$657.86 millionExpected Revenue$671.08 millionBeat/MissMissed by -$13.22 millionYoY Revenue Growth-2.60%SBA Communications Announcement DetailsQuarterQ1 2024Date4/29/2024TimeAfter Market ClosesConference Call DateMonday, April 29, 2024Conference Call Time5:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by SBA Communications Q1 2024 Earnings Call TranscriptProvided by QuartrApril 29, 2024 ShareLink copied to clipboard.There are 15 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to the SBA First Quarter Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference is being recorded. Operator00:00:21And I would now like to turn the conference over to our host, Vice President of Finance, Mr. Mark Dureci. Please go ahead. Speaker 100:00:29Good evening, and thank you for joining us for SBA's Q1 2024 earnings conference call. Here with me today are Brendan Cavanaugh, our President and Chief Executive Officer and Mark Montagnier, our Chief Financial Officer. Some of the information we will discuss on this call is forward looking, including but not limited to any guidance for 2024 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 29, and we have no obligation to update any forward looking statement we may make. Speaker 100:01:06In addition, our comments will include non GAAP financial measures and other key operating metrics. A reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website. With that, I will now turn the call over to Mark. Speaker 200:01:24Thank you, Mark. Our first quarter results were in line with our expectation. Excluding the impact of weakening foreign currency assumptions, we increased our full year outlook for total cash flow, adjusted EBITDA and AFFO per share as compared to our initial 2024 outlook. The primary drivers of these increases are direct cost savings associated with towers to be decommissioned and the reduction in our estimated full year share count from completed share buybacks. Due to the current strength of the U. Speaker 200:01:56S. Dollars versus local currencies in some of our international markets, our overall outlook for site leasing revenue, total revenues, tower cash flow and adjusted EBITDA are slightly down versus our initial guidance. 1st quarter domestic same tower recurring cash leasing revenue growth over the Q1 of last year was 5.9% on a gross basis, 2.3% on a net basis, including 3.6% of churn. EUR 7,500,000 of the first quarter churn was related to Sprint consolidation churn, which we anticipate to be approximately $30,000,000 for the full year 2024. As expected, domestic operational leasing activity or bookings representing new revenue placed under contract during the Q1 was consistent with the levels of activity we saw in 2023. Speaker 200:02:51Non Sprint related domestic annual churn continues to be between 1% 2% of our domestic site leasing revenue. Our previously provided estimates of aggregate Sprint related churn over the next several years remain unchanged. We anticipate a range of $40,000,000 to $45,000,000 in 2025, dollars 45,000,000 to $55,000,000 in 20 $6,000,000 $10,000,000 to $20,000,000 in 20.27. International same tower recurring cash leasing revenue growth for the Q1, which is calculated on a constant currency basis was 3.3% net, including 4.8% of churn or 8.1% on a gross basis. In Brazil, our largest international market, same tower gross organic growth was 6.8% on a constant currency basis. Speaker 200:03:45As compared to the previous quarter and full year 2023, our reported international growth rates continued to be impacted by a declining local CPI link escalator in Brazil. Total international churn remained elevated in the 1st quarter due mostly to carrier consolidation. During the Q1, 78% of consolidated cash site leasing revenue was denominated in U. S. Dollars. Speaker 200:04:13The majority of non U. S. Dollars denominated revenue was from Brazil, with Brazil representing 15.8% of consolidated cash site leasing revenue during the quarter. As a reminder, our 2024 outlook does not include any churn absorption related to the OE wireless consolidation other than the amount associated with the previously announced agreement that we executed with VIVO. If during 2024, we were to enter into further agreements with other carriers related to the oil wireless consolidation that may have an impact on 2024, we will adjust our outlook in future earning calls. Speaker 200:04:56Additionally, the new judicial reorganization plan for oil wireline was recently approved by a majority of creditors. As a result of this plan, we have increased our full year churn outlook for oil wireline by $2,000,000 to a total of approximately $4,000,000 This adjustment is including an updated full year site leasing revenue outlook. As a result, all wireline now represent approximately $20,000,000 total annual site leasing revenue in 2024. During the Q1 of 2024, we acquired 11 communication sites with total cash consideration of $9,200,000 We also built 76 new sites, mostly outside of the U. S. Speaker 200:05:43Subsequent to quarter end, we have purchased or under agreement to purchase 271 sites in our existing markets for an aggregate price of $84,500,000 We anticipate closing only sites under contract by the end of Q3. Our outlook does not assume any further acquisition beyond those under contract today. We also do not assume any share buyback beyond what was already completed so far this year. However, it is possible that we invest in additional assets for share repurchase or both during the year. Our outlook for net cash interest expenses and for FFO and FFO per share continues to include the July 1 refinancing of our $620,000,000 ABS tower securities scheduled to mature in October 2024. Speaker 200:06:37We assume a refinancing at a fixed rate of 6% per year. Actual rate and timing vary from these assumptions. Our balance sheet remains strong and we have ample liquidity. If not for the recent share buyback, our $2,000,000,000 revolver would have been fully paid down. Our current leverage of 6.5 times net debt to EBITDA remains near historical low and well below a steady target of 7 times to 7.5 times. Speaker 200:07:07Our balance sheet is very strong with a current weighted average interest rate of 3.1% across our total outstanding debt. Our weighted average maturity is approximately 4 years, including the impact of our current interest weighted hedge, the interest rate on 96% of our current outstanding debt in fixed. And now I'll turn the call over to Mark. Speaker 100:07:32Thank you, Mark. We ended the quarter with $12,400,000,000 of total debt and $12,200,000,000 of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 6.5 times, below the low end of our target range. Our 1st quarter net cash interest coverage of adjusted EBITDA to net cash interest expense was very strong at 5.2 times. We continue to use cash on hand to repay amounts outstanding under the revolver. Speaker 100:07:59And as of today, we have $195,000,000 outstanding under Speaker 300:08:03our $2,000,000,000 Speaker 100:08:04revolver. During the 1st and second quarter, we repurchased 935,000 shares of our common stock for $200,000,000 at an average price per share of $213.85 We currently have $205,000,000 of repurchase authorization remaining under our $1,000,000,000 stock repurchase plan. The company shares outstanding at March 31, 2024 were 107,900,000. Dollars In addition, during the Q1, we declared and paid a cash dividend of $181,100,000 or $0.98 per share. And as of today, we announced that our Board of Directors has declared a second quarter dividend of $0.98 per share payable on June 19, 2024 to shareholders of record as of the close on May 23, 2024. Speaker 100:08:58This dividend represents an increase of approximately 15% over the dividend paid in the Q2 of 2023. And with that, I'll now turn the call over to Brendan. Speaker 400:09:07Thank you, Mark. Good afternoon. The Q1 marked a good start to 2024. We executed well operationally and produced financial results in line with our expectations. As a result, we have made very few adjustments to our full year outlook on a constant currency basis. Speaker 400:09:25In many of our markets, macroeconomic challenges have continued and as a result, incremental network investments by our customers have remained measured and largely in line with activity levels that we saw last year. In the U. S, leasing activity from an execution standpoint was only slightly higher than the 4th quarter. However, during the Q1, we saw increases in applications for both new leases and amendments as well as an increase in our services backlog. Our customers continue to have significant network needs. Speaker 400:09:57A large percentage of our sites still require 5 gs related upgrades and data heavy use cases including fixed wireless access will compel continued investment by our customers over the next several years. I am personally of the belief that the current high cost of capital environment is perhaps the biggest overhang on this spending and is driving the more elongated spending cycle. Nonetheless, the needs are great. Consumers are demanding and competitive pressures will continue. Our infrastructure will be a critical component of the delivery chain for our customers to meet these challenges and I believe we are well positioned to support them in their efforts. Speaker 400:10:35In addition, the current cost of capital may persist longer than anticipated just a few months ago, but I believe it will ultimately come down in time, which will encourage increased network investment. It is all really just a matter of timing. Internationally, results were also in line with expectations. Although each market has its own specific dynamics, on average, we are in a period of slower growth internationally compared to our historical levels. Lower inflationary escalators are a contributor, but the primary reason is consolidation related churn and its associated impacts on carrier focus. Speaker 400:11:11Internationally, we have found that during these consolidations, the surviving carriers direct most of their attention to rationalizing their existing networks, pausing much of their incremental network expansion. However, new spectrum and new technology generation deployments remain important and we believe will result in an acceleration in organic growth rates over time. As discussed on our last call, churn remains elevated due primarily to these consolidations, but we believe that the steps we have taken and are taking to reach mutually beneficial contractual amendments with these customers will enhance the long term strength and stability of our cash flows. Turning now to our balance sheet and capital allocation priorities. We have not shifted our previously stated overall approach, but we do very much make adjustments along the way in response to broader market dynamics and opportunities. Speaker 400:12:02We prioritize our dividend and have again announced a quarterly dividend 15% higher than the prior year period. This dividend level remains less than 30% of our guided full year AFFO, leaving meaningful capital available for allocation. During the Q1, we added a relatively small number of towers to our portfolio. And as a result of carrier consolidation, we decommissioned almost as many sites as we added. We remain selective about the quality of the sites that we add to our portfolio, but we really remain particular about the price at which we add them, which these days has been the main gating issue. Speaker 400:12:37That's okay as our focus continues to be on return on investment, not growth just for growth sake. Opportunities will come along. In fact, they come along all the time. So we are comfortable being patient, appropriately considering the new cost of capital environment we are operating in and going after those opportunities that we believe we can best drive strong returns on. The sites we are decommissioning are related to consolidation activity among our customers. Speaker 400:13:04We will be more proactive in the coming years in evaluating naked sites for cost saving opportunities and potentially decommissioning. As I mentioned earlier, cost of capital and specifically cost of debt remains high and is now broadly expected to remain elevated for longer. This dynamic beyond any other has had the most significant impact on public tower company valuations. During the Q1 and beginning of Q2, we responded some of this decline in valuations by spending $200,000,000 to repurchase 935,000 shares of our stock. I believe that when there is ultimately a downward shift in rates, repurchases at this level will be even more accretive to future shareholder value. Speaker 400:13:48Nonetheless, rates remain elevated today and we recognize the impact of potential future higher interest costs on AFFO. So a portion of our capital allocation will continue to be appropriately dedicated to reducing debt. We are not formally changing our leverage targets as we believe retaining flexibility for the right investment opportunities is valuable, but operating with lower leverage in the current environment is clearly prudent. Our balance sheet and liquidity position remain in great shape. If not for the share repurchases, our revolver would have been fully paid down as of today. Speaker 400:14:22Our average cost of debt remains very low at 3.1%. However, over the next 12 months, we have approximately $1,800,000,000 that will need to be refinanced. The cost of that debt will certainly be higher than what we are paying today, but our ability to manage the amount of debt needed and the time we are locked into higher rates will be important factors in the approach we take. Capital is widely available to us. It's really just a matter of cost. Speaker 400:14:49We are evaluating a variety of options and we'll provide further updates during the year as incremental steps are taken. Finally, I would like to revisit some of my comments from our prior earnings call with regard to the portfolio review we have undertaken. On the last call, I mentioned that we had begun an effort to analyze all of our operations and our potential operations through a lens of stabilizing results, growing our core business and shifting our mix more and more to high quality assets and operations. I do not see this goal as having a finite deadline as it is more definitional around the key decisions we make. However, there are some very specific steps being taken in looking at each of our key operations, each of our business lines and each of our international markets. Speaker 400:15:32We are setting baselines as to where we think these operations end up on a status quo basis 1 year from now, 5 years from now and even 10 years from now. Then based on potential opportunities we see in each case, we are developing alternative results profiles based on different paths we might take, with the ultimate goal being improving the outcome relative to the base case. We are making good progress and gaining good insights through the effort, but this is not an overnight initiative. Many of the potential steps we have identified to enhance our positioning in given markets or operations will take time, sometimes possibly years to effectuate. After our prior call, a lot of attention was paid to the possibility of divestitures of businesses or markets. Speaker 400:16:17While that may be an outcome in some cases, it is far from the priority or preferred path. I would much rather find ways to improve our position in the addition of quality assets, enhanced customer relationships and agreements and other creative solutions. In fact, I was recently visiting our team in Brazil and learned of a number of creative solutions we are introducing to enhance the customer experience at our site and thereby improve the longevity of our customer relationships at those sites. I am encouraged by the seriousness with which our teams are approaching this initiative. In the end though, as I stated previously, financial results always matter and we will make the best decisions we can to protect or create shareholder value as our top priority. Speaker 400:17:00We have a great business and great assets. It is our job as the management team to maximize the value we can realize from those assets, and that is where our focus squarely is. I'd like to wrap up by thanking our team members and our customers for their contributions to our solid Q1, and we look forward to continuing to share our progress throughout the year. With that, Jeffrey, we are ready for questions. Operator00:17:46Our first question comes from Michael Rollins. Please go ahead. Speaker 300:17:53Thanks and good afternoon. I'm curious if you could discuss a bit more about some of the preconditions you're seeing for better domestic leasing activity. The applications that you described for new leases and amendments? And does this give you encouragement that 2025 can see better leasing activity than 2024? Speaker 400:18:17Yes. Mike, I think it's a little bit premature to say that. My comments about the increased applications are obviously positive in general, as increases obviously would be. But I think it's a little bit early. It's only been 2 months since our last report. Speaker 400:18:37And we haven't seen a material change. We've just seen a minor step up directionally in those items. So at this point, I think it's too early to comment on where 2025 would come out. Speaker 300:18:50And in terms of just the where the activity is coming from, is it coalesced around certain geographies or for certain carriers? Speaker 400:19:02No, I would say it's fairly broad based. In different geographies, different carriers are perhaps a little bit busier than others. But I think you're aware of some of the initiatives that some of our customers have going on. But it's I would say it's generally broad based across the big three carriers. Speaker 300:19:23And just one other question. You mentioned about wanting to manage leverage lower in this environment. Do you have a goal as to where you'd like to see your net debt leverage exit the year? Speaker 400:19:39Yes, we don't really have a goal. In fact, we're actually not explicitly changing our targets, although we're obviously operating well below them today. And the reason we're not changing the targets is that opportunities come along and sometimes being flexible and levering back up to take advantage of a particular opportunity may be the best choice. And so I don't want to kind of present it like we have to be the lower number. I think in absence of investment opportunities that we see as particularly value additive in the current high interest rate environment, the best option in some cases will be to actually pay down absolute debt. Speaker 400:20:19So there's not a particular target, but I think outside of some meaningful opportunity for new assets coming along, you should expect that we would look to reduce our absolute debt levels. Thanks very much. Speaker 500:20:36Yes. Operator00:20:38Our next question comes from Jonathan Atkin. Please go ahead. Speaker 600:20:44Thanks. I was interested in where you see the most interesting build to suit opportunities across your markets? And then as we kind of think about M and A, either within existing markets or elsewhere, can you just remind us in terms of what your guidelines are and where you might be seeing opportunities? Thank you. Speaker 400:21:12Yes. On the new build opportunities, we are well, first of all, we're looking in every market that we're in for specific opportunities that meet our requirements because we already have a presence in that market and an operational scalability there. So ideally, we'd like to build sites wherever we can. But specifically, certain markets, in our African markets, in particular, we're seeing more opportunities and certain select markets in South America as well. On the M and A front, I would say the same premise applies in the sense that if we can find high quality opportunities in any of our existing markets, that's something that we prioritize. Speaker 400:21:54But at the end of the day, it really is a financial analysis around the pricing of those assets and what we think we can do in terms of returns based on growth that we think we can achieve over a period typically of about 5 years or so. Our approach hasn't really changed, although our return thresholds have moved up with the cost of capital. Speaker 600:22:17And then Brazil, can you remind us broadly where Oi is in terms of the equipment being decommissioned off of towers for their mobile network? And then prospectively for the wireline, you gave a little bit of color in the prepared remarks. But where are they in terms of physical decommissioning as opposed to you having already maybe recognized it in your reporting? Thanks. Speaker 400:22:45Yes. On the Oi wireless side, it varies by carrier. Obviously, they were absorbed into 3 different carriers. I would say, I don't know if I could give you an exact percentage, but they're probably 40% -ish or so of the way through that effort would be my guess on average. We're definitely seeing the activity there. Speaker 400:23:05But there's as we see here in the U. S, it's an elongated process and it takes some time. So I would expect this to go on for a number of years. On the wireline side, we've seen some decommissionings that were really in advance of the efforts that they're undertaking here. But that one actually has the most runway still to go. Speaker 400:23:25They just had their reorganization plan approved just a week or so ago. So it's very early days there. But I would expect over the next couple of years, we'll start to get a better sense of that. And in fact, they're under the plan, they're expecting to reorganize and continue to operate that network at least for the next several years. So we'll see how that progresses in terms of how many sites actually get turned down. Speaker 100:23:52Thank you. Operator00:23:57Our next question comes from Michael Ellis. Please go ahead. Speaker 700:24:02Great. Thanks for taking the questions. First, just want to build back on the portfolio review. It seems like when you're talking about the M and A environment, valuation is the hold up. I think just interpretation is that's part of the reason why we're seeing you ship more capital allocation to the buybacks. Speaker 700:24:19Just curious how your thoughts there have evolved? That'd be the first thing. And then second, is there any color that you can share in terms of the 2 71 sites that you announced that you are acquiring, where they're located? That'd be helpful. Thank you. Speaker 400:24:36Sure. Yes. I would say in terms of evolution of our thinking, we announced this portfolio review publicly last quarter and it hasn't been that much time. So we're kind of in the midst and throes of that. The one thing that has shifted a little bit though in that window of time is that rates are not only staying higher, but are expected to continue to stay higher for longer. Speaker 400:24:59And that's something that we have about the fact that we have to watch that. And in some cases, about the fact that we have to watch that. And in some cases, paying down debt may actually be more accretive than we would have thought even couple of months ago. And so it's certainly on the table, perhaps more than it was before. And you're right in that, you see less M and A activity and more towards buybacks, for instance, because we see better return there. Speaker 400:25:34So it is very still very much financially driven. In terms of the sites that are under contract, it's pretty much the same sites that were under contract with a very few exceptions at our last earnings call. There are a mix of markets, some are here in the U. S, but most are located internationally. South America is the primary place where we have those sites under contract. Speaker 700:26:01Perfect. And one other question, if Speaker 400:26:03I could. I think on Speaker 700:26:04the last quarter earnings call, there was commentary that carrier activity in the U. S. Persisted at the current levels that you could see the 4Q 2024 exit run rate be below $40,000,000 Just curious how you're thinking about the potential run rate exiting the year based on the activity that you're currently seeing? Thank Speaker 400:26:24you. Yes. We didn't change any of our outlook for the year. So that still stands as of today that we would expect a similar number to what we talked about last time exiting the year. So right now, we haven't seen enough shift in carrier activity to change those projections. Speaker 700:26:43Thanks so much. Operator00:26:47Our next question comes from Simon Flannery. Please go ahead. Speaker 800:26:52Great. Thank you very much. Good evening. Brendan, I wonder if you could just characterize some of the big three activity. Are you seeing them complete or move further on adding mid band to existing sites? Speaker 800:27:05Are you seeing them move to densification? And any kind of parallels you could draw with the LTE 4 gs kind of phasing from that initial coverage phase to that next phase? How does this compare? Or is this slower, as you noted, because of the rising rates? And perhaps you could just remind us, you talked about an uptick in applications. Speaker 800:27:23How should we think about timing from applications to actually executed leases and revenues revenue generation? Speaker 400:27:32Yes. I mean, the type of activity, I would say, is a mix. There's still plenty of mid band spectrum deployments that need to be done, particularly by AT and T and Verizon. And so we're seeing plenty of that. That's the primary driver of amendment activity. Speaker 400:27:47But we are seeing more new leases than perhaps we've seen in the past from the big carriers. And it's a mix of both coverage and densification, but it's taking a normal transition, I think, that we've seen in previous generations of technology deployment. The difference really, Simon, and you touched on it, you picked up on what I said, which is it's really just timing. We're seeing this kind of go at a much slower pace perhaps than what we've seen before. That can, of course, change rapidly, but I really do believe that just the cost of money has an effect on that. Speaker 400:28:22And it makes total sense why our customers would be a little more disciplined in their capital spending. So that's really what we're seeing. And then in terms of the time frame from signing agreements or getting applications in and executing them to ultimately revenue generation. It's pretty consistent with what it's been in the past. It's really just the absolute volume is a little bit lower. Speaker 800:28:47Great. And any color you can provide on DISH? Speaker 400:28:53Yes. I mean, we're still signing some leases with DISH. Obviously, it's at a much lower level than it was when they were busier. And we're here to support them with all their needs. But I don't really have much else I can offer you. Speaker 900:29:10Okay. Thank you. Operator00:29:15Our next question comes from Ric Prentiss. Please go ahead. Speaker 1000:29:20Thanks. Good afternoon, everybody. Operator00:29:22Hey, Ric. Speaker 1000:29:23Hey. A couple of questions. One, can you unpack for us how much of the stock buyback you did within March and Speaker 200:29:30how much you did subsequent to the quarter? Speaker 400:29:35Yes, I think it was I think it's somewhere in our report or maybe it's not, but it will be in our 10 Q anyway. I believe roughly half, just over half was in March and the balance was in the beginning of April. Sure. Okay. That helps. Speaker 1000:29:49And then when we think about the leverage, I think the leverage went up to about 6.5% in the quarter. How should we think about stock buybacks versus allocating towards debt reductions as we look out through the rest of this year? Is 6.5% kind of the new normal in this operating margin? Do you want to go down closer to 6%? Just trying to think through how buybacks are fitting in with the debt reduction absolute levels. Speaker 400:30:17Yes. It's not so much the leverage ratio. In fact, the ratio was up, but the absolute amount of debt was pretty similar to what it was at year end. It's a little bit higher because of the buybacks, but not much. It was actually higher on a leverage ratio basis because the EBITDA was down a little bit, mainly because of services. Speaker 400:30:40So that I'm a little less focused there because we have so much room in our ratio, and it's more of a focus on the absolute amount of debt that we're carrying. And specifically because we have these 2 maturities that are coming up in the next 8 months or so. And so as I kind of eye that, our ability to kind of reduce the amount of absolute debt as we approach those maturity dates is really what we'd be targeting as opposed to worrying about what the leverage ratio is. And I think on the buyback front, we obviously did a couple of $100,000,000 here and we would be open to doing more. We've generally been opportunistic about it. Speaker 400:31:20But in the short term, we have these maturities. And so to some degree, that takes priority. Speaker 1000:31:27Okay. And then on an operational front, I think Mark M was talking about the Sprint churn confirming those kind of numbers, legacy churn, non carrier consolidation in the U. S. 1% to 2%. As we look out over the next 1, 2, 3 years, it seems like we might be heading to the lower end, lower end of that 1% to 2% historical level because a lot has already been maybe sucked up. Speaker 1000:31:53Is that something that we might think of as maybe heading more toward the lower end of 1 to 2 as we look out over the next few years? Speaker 400:32:01Yes. That would be my expectation. Speaker 900:32:05Great. Very Speaker 1000:32:05helpful. And appreciate your clarity on the strategic review. That helps. Operator00:32:17Our next question comes from Nick Del Deo. Please go ahead. Speaker 100:32:22Hey, thanks for taking my questions. First, Brendan and Mark, you both commented on tower decommissioning as a source of cost savings and something that might tick up with the consolidation related churn in the coming periods. Does this entail doing anything different than what you have made done historically to churn, like having a lower tolerance for hanging on to naked sites? Or is it just the magnitude of the site that may be different today versus the past? Yes. Speaker 400:32:49I think it's really more of the latter. You've got obviously in the Sprint, T Mobile related consolidations here, but internationally with the Oi consolidation in particular, I mean, those are really the big ones. There's some others here and Speaker 500:33:04there, but those are the biggest ones. It's a Speaker 400:33:04lot of sites. And so, as we kind of look at what can Speaker 500:33:07we do in this window Speaker 400:33:07of time, as we kind of look at what can we do in this window of time where carrier spending is a little bit slower and we have some of these headwinds, what can we do to maximize our bottom line results? Costs become a little more material potentially to that story of improvement. So it's really more the volume than it is anything else, but that increased volume requires a little bit more of a concerted direct focused effort on it. Okay. Okay. Speaker 100:33:38That makes sense. And then Brandon, one more for you. In your prepared remarks, you noted that your team in Brazil is taking steps to enhance and you said the customer experience at your sites, which should be value accretive over time. Can you expand on that a bit and maybe share an example or 2 of what those solutions may have been? I mean, it just struck me as interesting because, at least those of us on the outside don't necessarily think of tower leasing as something where you tend to see a lot of innovation like that. Speaker 100:34:04So any description you can share would be interesting? Speaker 400:34:09Yes. Well, I'm going to sidestep that a little bit because there are some specific things we're doing that are creative that actually are adding value for our customers down there. Things that are relate to power, that relate to other centralized hosting of wireless coverage solutions and even security related items. As you add some of these types of things in terms of the service package that you provide, you make your site that much better. And when somebody has the choice to make to make a choice, you want to have your options be preferred. Speaker 400:34:50But it's not just that, it also comes with the ability to enter into longer term agreements that secure that relationship for an extended period of time. And that's really what we're focusing on. Reason I'm sidestepping it a little bit and not getting too specific with you is that it's a little early. And for competitive reasons, I prefer not to get that specific on it. But as it becomes something that's more material, I'll be happy to share at that point. Speaker 400:35:15Okay, great. Thanks, Brendan. Operator00:35:21Our next question comes from David Spartan. Please go ahead. Speaker 1100:35:27Hey, good afternoon. You got Alex Waters on for Dave. Thanks so much for taking my question. Maybe just Speaker 400:35:33first off, Speaker 1100:35:34maybe just when I think about international churn, obviously elevated this year. I mean, Brendan, could you maybe just walk through the way we should be thinking about it for next year and the couple of years after? And then just in terms of M and A, I think we discussed a little bit about options you might have in existing markets, but can you just talk about your appetite for those that SBA does not have a presence in yet? Thanks. Speaker 400:36:01Sure, Alex. Yes, on the international churn front, I would expect that it will be elevated for the next couple of years, maybe not quite as high as it is this year, but it will be elevated by historical standards. We used to have almost 0 churn basically, but we've reached a point where you have a lot more consolidation that's taken place across many of our markets. That's driving a lot of it. And so as we just kind of look at when leases are scheduled to roll off and where there's been consolidations and what we think our exposures we might have, plus frankly the Oi wireline bankruptcy, those things will, I believe, cause it to stay elevated for the next several years. Speaker 400:36:49Although, again, hopefully not quite as high as it's been this year. On the M and A front, yes, I mean new markets are certainly on the table for us. We are we're very financially focused when evaluating the opportunities. I believe that our experience over the last decade or more of expanding into international markets has given us the comfort and the confidence that we can do that as well as anybody that we know the things that we need to understand before we enter a market, how to operate, how to set up operations in a new market. So I'm confident that we can do it from an operational standpoint. Speaker 400:37:32It really just comes down to the opportunity that's on the table and the price point at which we can secure it so that it is value additive ultimately for the company as a whole and for our shareholders. That's the guiding issue. And if it's that's harder and harder these days broadly, whether it's new markets or existing markets, because there are a number of situations where I don't think seller expectations have aligned still with where the market has gone. But that could change over time and our willingness to expand in our existing markets or in new markets would remain the same. We would be open to it. Speaker 400:38:11Perfect. Thank you. Operator00:38:16Our next question comes from Batya Levi. Please go ahead. Speaker 1200:38:21Great. Thank you. Couple of follow ups. On the Network Services side, can you talk a little bit about the slowdown you saw in the quarter? And I think you're tracking below your annual guidance. Speaker 1200:38:32Should we expect this quarter to be the trough and continue to improve from here? And maybe on the tower side, can you give an update on what percent of your sites have been upgraded with 5 gs equipment now? Thank you. Speaker 400:38:47Sure. On the services business, yes, it's down a little bit, but we as you saw, we did not change our full year outlook. And we do expect that the second half of the year will be slightly higher than the first half of the year. I mentioned in my comments that we saw an increase in our services backlogs from the end of the year to the end of Q1 that is supportive of that. And all those little things around applications being up, services backlog being higher, support that I think we will see a little bit more services activity in the second half of the year. Speaker 400:39:29But I think we'll be able to give you more clarity on that on the next call. On the tower side, 5 gs percentage, we're a little more than half now. I think we've said we're around half in the past. We're still while we've seen some increase obviously through the Q1 with volumes being a little bit lower, it's only a little more than half. So the actual percentage that's left to be upgraded is still significant. Speaker 1200:39:57Got it. Thank you. Operator00:40:02Our next question comes from Richard Choe. Please go ahead. Speaker 1300:40:07Hi. I have 2 follow ups also. I'm not sure if you can tell, but with the new lease densification applications, are they mainly in markets where there's a significant amount of fixed wireless? Speaker 400:40:24I can't tell you that for sure, Richard, but that would not be an unreasonable assumption, but I can't tell you that for sure. Speaker 1300:40:31Got it. And then on the decommissionings and cost savings, is there a significant delay from when the decommissionings happen and when you can do the cost savings given maybe the ground leases underlying? Or can you kind of get ahead of it and kind of close that timing gap? Speaker 400:40:53Well, our goal is to achieve those savings as quickly as we can. And you're right that there will be many cases where we're able to do that ahead of decommissioning. In fact, in some cases, it would be our desire to not do the decommissioning and simply put those costs on hold to allow enough time to see what happens. So I think it will be a mix. But where we're able to do that, obviously, it accelerates our ability to generate the cost savings. Speaker 400:41:19So that's our first priority. Speaker 1300:41:23Great. Thank you. Operator00:41:27Our next question comes from Matt Niknam. Please go ahead. Speaker 100:41:32Hey guys, thanks for getting me on the call. Just 2 if I could. First on the debt maturity, I think you talked about evaluating a variety of options in relation to that. Is there any more color you can share in terms of what's being evaluated in terms of alternative sources of capital? And is there the potential for cap recycling with where multiples and valuations are in the private markets? Speaker 100:41:56And then just secondarily on the tower decommissioning, is that more of a housekeeping item, is that what's driving the boots to tower cash flow ex FX relative to the slight reduction in site leasing tied to the oil churn? Thanks. Speaker 400:42:13Your second question, the answer is yes. That is the primary driver. I mean, it's small dollars. Obviously, you're talking about $4,000,000 for the year, but yes, that's the driver. On the first question, I mostly when I talk about different options, we're mostly referring to different markets, debt types of debt that we might issue to refinance it. Speaker 400:42:41On the question about the cap recycling type of solution, at this point, I think I would defer on that. But the bottom line is we're open to looking at all the different options that are available to us, trying to find the most creative and cost effective solutions that we can. And we'll let you know as we secure something. Operator00:43:06Great. Thank you. Our next question comes from Eric Lebchow. Please go ahead. Speaker 1300:43:19Great. Thanks for taking the question. Brendan, maybe you could talk a little bit about the comprehensive MLA you signed with AT and T last year. Any kind of early learnings on whether you think that's helped generate more activity on your sites with that customer and whether there may be appetite for similar agreements with some of your other customers? I know I believe that T Mobile had an agreement that expired relatively recently. Speaker 400:43:46Yes. It's been it's actually been very good in the sense that we have I think it's kind of loosened the gears up, if you will, between the two companies. They have a lot of work to do and we're a big supplier of theirs in terms of tower space. So the ability to have a much easier free flowing kind of understood process by which we they make requests and we help satisfy those requests has been a positive. And so I think that in and of itself is something that we love to have with all of our customers. Speaker 400:44:21And I think we generally do, but with AT and T perhaps it was the one that given that we had never really had any kind of master agreement with them, there was a little more low hanging fruit there to address. In terms of the others, every agreement I think is very specific to the relationship with that customer and what their needs are and their existing relationship with us. So we're certainly open to master agreements. We've had them in the past with the others. In the case of the T Mobile agreement, we actually you mentioned that it expired, that's true, but we actually did extend it for a period of time while we kind of look at the longer term needs for them and how we might structure something that's favorable for both companies into the future. Speaker 400:45:06So I think that evidence is the fact that we work together well with our customers and are able to find solutions that are beneficial for both parties. Speaker 1300:45:17Great. And just one follow-up from one of the earlier questions. I think you talked about getting to 1% U. S. Tower churn, churn Speaker 400:45:29opportunities Speaker 1300:45:34some churn opportunities with the big 3 or 4 customers? Does it have anything to do with less competitive activity from tower over builders or anything you can cite to kind of get down to those levels? Speaker 400:45:48Yes, I think it's both. You have less smaller guys just in general. And so therefore, there's just less of a pool of potential leases to churn with the kind of more narrowband type of tenants that we have. So that is a contributor. And with the bigger guys, I think as you have these master agreements, you have less of these, as you said, over builders that are out there and others that are trying to find ways to take existing tenants. Speaker 400:46:17While not particularly successful in the past, there were some amount of that. I think that's sort of gone its way and you'll see less and less of that happening in general. So I believe all those factors will play into it. Okay. Thanks, Brandon. Operator00:46:37Our next question comes from Walter Piecyk. Please go ahead. Speaker 900:46:43Thanks. And thank you to the operator. That was the perfect pronunciation of my name for the first time ever. I just want to go back to the math on the debt reduction and the share repurchase Because I think basically the way you described it is, you noticed what was going on longer and higher, but then you continued to buy stock back into April, which I guess if you could comment on that, because I'm not sure how those two things fit. But then if you look at kind of the reduction on an empirical basis in 2023, when you reduced it 600,000,000 dollars Obviously, you're not on the pace of that yet this year for any reduction, but then you again piecemealing, I know 3 or 4 people asked this question, but you kind of referenced the $800,000,000 of debt maturities. Speaker 900:47:37So if we look at you using another $100,000,000 already in the June quarter and then just the free cash flow in advance of those maturities, it would seem to me that you basically have to turn that spigot off for any share repurchase for the remainder of the quarter and into Q3 in order if you're specifically targeting those maturities. I get it that you're looking for other ways to I guess refi it or whatever. But so if you could just comment on why you were buying stock back when things change, should we expect more than 600 given the comments that you made and how can you do share repurchase if you've got these maturities that you want to address? Speaker 400:48:18Yes. I'm not sure if there's just a moment in time when things change. We bought back stock in late March and basically the 1st few days of April. So and I think that that still is a good return on investment. The reality Walt, is it's hard to be that precise and exact timing on all these things. Speaker 400:48:42And I think as we go forward, it doesn't mean that we won't buy stock back at all. I'm just telling you that directionally as I look at it today that I think pay downs of debt is slightly more accretive than buying back stock where it is right now. But that doesn't mean there won't be opportunities to do both. And I expect we will do both going forward. But we're going to see what other options we have available to us as we move through the balance of the year and that will influence how Speaker 100:49:12it plays out. Well, I will add one thing here and that's that buybacks have a certain mechanic to them, where when we are in a blackout period, we typically put a plan in place. And those plans typically prevent us from actually making decisions. So the decisions are made ahead of time. And I think that may help explain the timing of this relative to your comments. Speaker 900:49:34That's fine, Mark. I appreciate that. Just one follow-up though. Again, just based on math, right? This is a very predictable business, right? Speaker 900:49:42We can see what the free cash flow is. I don't like if you think it's more if you think share repurchase is more important for these reasons that you've outlined, which I don't disagree with, right? And assuming that that view doesn't change, all of a sudden the Fed doesn't start fucking dropping rates left and right in the upcoming near future, again, unlikely. I just don't see like how that doesn't mean that you have to mostly turn off the share repurchase spigot at least through the end of the year. It's just the math of the free cash flow and what's available in terms of at least trying to top the $600,000,000 reduction that you did last year. Speaker 400:50:26Yes. No, that's true. There is a certain amount of cash that's available under the current structure that we've got. We're producing a certain amount of AFFO and there's a portion allocated to the dividend and there's the rest, right? And the rest will go to one of these buckets or a mix of these buckets. Speaker 400:50:44So what you're saying is right, but things may adjust. Frankly, we may end up with an acquisition opportunity that we think is actually better than all and that would put both of these things to the side. So I'm retaining some flexibility. But yes, if we're going to buy if we're going to pay down a meaningful amount of debt, obviously, we have to stop spending on everything else. Speaker 900:51:09Just got it. Just one last operational question. I guess I'll phrase it this way. Have you seen outside of the big three operators in DISH, have you seen anyone demonstrating interest in or submitting applications for CBRS spectrum to deploy on your towers? Speaker 400:51:29Nothing material. No, nothing really. Speaker 900:51:32Got it. Thank you. Operator00:51:38Our next question comes from Brandon Nispel. Please go ahead. Speaker 500:51:44Great. Thanks for taking the question. Quick one for Mark. Could you just quantify the impact of customer consolidation churn versus normal course trend in the quarter, both domestically and internationally? And then for Brendan, sit here, looking at your leasing and churn numbers. Speaker 400:52:02Hey, Brandon, I'm sorry. Brandon, sorry to interrupt you, but we're having a little bit of a hard time hearing you. You're a little garbled. You may have to repeat that first. Can you hear me better now? Speaker 400:52:14Yes, that's much better. Thanks. Okay. I'll just start over. So quick question for Mark. Speaker 400:52:19Could you just quantify the impact churn with where you're sitting today from a leasing standpoint and from churn standpoint internationally and domestically and what you know about your maturities coming up, Speaker 1000:52:38What do you think Speaker 400:52:38is a reasonable level of AFFO per share growth looking at to 20 25 and 20 26 when your heaviest maturities are coming due? Thanks. Okay. On the second question, AFFO per share growth, I think, Brandon, I mean, the real trick in answering that is that interest rates and interest expense play such a big role in it. So, if it weren't for that, if I could tell you exactly what it was going to cost to refinance debt and what the timing was going to be, I could answer that question with a little more precision. Speaker 400:53:15Obviously, we make certain assumptions internally here, but I'd rather not speculate on that. If you kind of took that away, I think a mid single digits percentage growth rate for AFFO per share would be what we would achieve even with the churn. But the interest headwinds are going to be a challenge to that. And then the first question was the customer consolidation churn percentage. Mark, do you Speaker 500:53:40want to? Speaker 200:53:41Yes. So domestically, Sprint was more than half of the total churn in the U. S. And internationally, I would say that the majority was non oil for this Q1, but oil is going to pick up in Brazil. So I think we said overall the OE churn outside of the in Brazil would be about $15,000,000 for the year. Speaker 500:54:12Great. Thank you. Operator00:54:18And our next question comes from Eridan Lynch. Please go ahead. Speaker 1400:54:23Yes, Brendon Lynch. Thanks for taking the question. Maybe just on the refinancings coming up this year, to what extent are you comfortable using the revolver to refinance that debt, if not longer term, at least in the short term? Speaker 400:54:45Yes. I mean that's one option that's obviously on the table. The advantage to it, of course, is that it would allow you to retire it quickly over time or as you could over time without having to lock into a longer term maturity date. But the negative is that it's some of the most expensive debt that we have right now. It would be more expensive than obviously whatever we would refinance it with in a different market. Speaker 400:55:13So, it's an option. Speaker 1400:55:16Okay. Thank you. And maybe just one on the technology front. A few quarters back, you were discussing dual band radios as a potential driver of incremental demand. Maybe just give us an update on where that stands and any other technology initiatives that your customers might be looking at that could contribute to incremental demand going forward? Speaker 400:55:40Yes. We saw a decent amount of deployment of dual band radios. That certainly was a driver in last year and maybe even before that. But at this stage, it seems like most of the focus is on just deploying the mid band spectrum that they have on hand and just incremental new leases as we talked about before for coverage and densification. I wouldn't say if there's anything more technical than that. Speaker 900:56:08Very good. Thank you. Yes. Operator00:56:14There's currently no other questions in the queue at this time. Speaker 400:56:19Great. Thank you all for dialing in. We appreciate your time tonight and look forward to reporting to you next quarter.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSBA Communications Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) SBA Communications Earnings HeadlinesSBA Communications (NASDAQ:SBAC) Price Target Raised to $270.00May 2, 2025 | americanbankingnews.comDecoding SBA Communications Corp (SBAC): A Strategic SWOT InsightMay 2, 2025 | gurufocus.comShocking AI play that’s beats Nvidia by a country mileYou’ve seen the headlines about Nvidia. Now Tim Sykes is sounding the alarm — because what CEO Jensen Huang is about to announce could change the AI market once again. Experts already predict the total addressable market could climb past $20 trillion. But Sykes believes most investors have missed what’s coming next. He’s tracking a new shift — and says the biggest gains are still ahead.May 6, 2025 | Timothy Sykes (Ad)SBA Communications (NASDAQ:SBAC) Price Target Raised to $240.00May 2, 2025 | americanbankingnews.comSBA Communications (NASDAQ:SBAC) Price Target Raised to $247.00May 2, 2025 | americanbankingnews.comSBA Communications (NASDAQ:SBAC) Receives Strong-Buy Rating from Raymond JamesMay 1, 2025 | americanbankingnews.comSee More SBA Communications Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like SBA Communications? Sign up for Earnings360's daily newsletter to receive timely earnings updates on SBA Communications and other key companies, straight to your email. Email Address About SBA CommunicationsSBA Communications (NASDAQ:SBAC) is a leading independent owner and operator of wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS) and small cells. With a portfolio of more than 39,000 communications sites throughout the Americas, Africa and in Asia, SBA is listed on NASDAQ under the symbol SBAC. Our organization is part of the S&P 500 and is one of the top Real Estate Investment Trusts (REITs) by market capitalization.View SBA Communications ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings Fortinet (5/7/2025)ARM (5/7/2025)DoorDash (5/7/2025)AppLovin (5/7/2025)MercadoLibre (5/7/2025)Lloyds Banking Group (5/7/2025)Manulife Financial (5/7/2025)Novo Nordisk A/S (5/7/2025)Uber Technologies (5/7/2025)Johnson Controls International (5/7/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 15 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to the SBA First Quarter Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference is being recorded. Operator00:00:21And I would now like to turn the conference over to our host, Vice President of Finance, Mr. Mark Dureci. Please go ahead. Speaker 100:00:29Good evening, and thank you for joining us for SBA's Q1 2024 earnings conference call. Here with me today are Brendan Cavanaugh, our President and Chief Executive Officer and Mark Montagnier, our Chief Financial Officer. Some of the information we will discuss on this call is forward looking, including but not limited to any guidance for 2024 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 29, and we have no obligation to update any forward looking statement we may make. Speaker 100:01:06In addition, our comments will include non GAAP financial measures and other key operating metrics. A reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our Investor Relations website. With that, I will now turn the call over to Mark. Speaker 200:01:24Thank you, Mark. Our first quarter results were in line with our expectation. Excluding the impact of weakening foreign currency assumptions, we increased our full year outlook for total cash flow, adjusted EBITDA and AFFO per share as compared to our initial 2024 outlook. The primary drivers of these increases are direct cost savings associated with towers to be decommissioned and the reduction in our estimated full year share count from completed share buybacks. Due to the current strength of the U. Speaker 200:01:56S. Dollars versus local currencies in some of our international markets, our overall outlook for site leasing revenue, total revenues, tower cash flow and adjusted EBITDA are slightly down versus our initial guidance. 1st quarter domestic same tower recurring cash leasing revenue growth over the Q1 of last year was 5.9% on a gross basis, 2.3% on a net basis, including 3.6% of churn. EUR 7,500,000 of the first quarter churn was related to Sprint consolidation churn, which we anticipate to be approximately $30,000,000 for the full year 2024. As expected, domestic operational leasing activity or bookings representing new revenue placed under contract during the Q1 was consistent with the levels of activity we saw in 2023. Speaker 200:02:51Non Sprint related domestic annual churn continues to be between 1% 2% of our domestic site leasing revenue. Our previously provided estimates of aggregate Sprint related churn over the next several years remain unchanged. We anticipate a range of $40,000,000 to $45,000,000 in 2025, dollars 45,000,000 to $55,000,000 in 20 $6,000,000 $10,000,000 to $20,000,000 in 20.27. International same tower recurring cash leasing revenue growth for the Q1, which is calculated on a constant currency basis was 3.3% net, including 4.8% of churn or 8.1% on a gross basis. In Brazil, our largest international market, same tower gross organic growth was 6.8% on a constant currency basis. Speaker 200:03:45As compared to the previous quarter and full year 2023, our reported international growth rates continued to be impacted by a declining local CPI link escalator in Brazil. Total international churn remained elevated in the 1st quarter due mostly to carrier consolidation. During the Q1, 78% of consolidated cash site leasing revenue was denominated in U. S. Dollars. Speaker 200:04:13The majority of non U. S. Dollars denominated revenue was from Brazil, with Brazil representing 15.8% of consolidated cash site leasing revenue during the quarter. As a reminder, our 2024 outlook does not include any churn absorption related to the OE wireless consolidation other than the amount associated with the previously announced agreement that we executed with VIVO. If during 2024, we were to enter into further agreements with other carriers related to the oil wireless consolidation that may have an impact on 2024, we will adjust our outlook in future earning calls. Speaker 200:04:56Additionally, the new judicial reorganization plan for oil wireline was recently approved by a majority of creditors. As a result of this plan, we have increased our full year churn outlook for oil wireline by $2,000,000 to a total of approximately $4,000,000 This adjustment is including an updated full year site leasing revenue outlook. As a result, all wireline now represent approximately $20,000,000 total annual site leasing revenue in 2024. During the Q1 of 2024, we acquired 11 communication sites with total cash consideration of $9,200,000 We also built 76 new sites, mostly outside of the U. S. Speaker 200:05:43Subsequent to quarter end, we have purchased or under agreement to purchase 271 sites in our existing markets for an aggregate price of $84,500,000 We anticipate closing only sites under contract by the end of Q3. Our outlook does not assume any further acquisition beyond those under contract today. We also do not assume any share buyback beyond what was already completed so far this year. However, it is possible that we invest in additional assets for share repurchase or both during the year. Our outlook for net cash interest expenses and for FFO and FFO per share continues to include the July 1 refinancing of our $620,000,000 ABS tower securities scheduled to mature in October 2024. Speaker 200:06:37We assume a refinancing at a fixed rate of 6% per year. Actual rate and timing vary from these assumptions. Our balance sheet remains strong and we have ample liquidity. If not for the recent share buyback, our $2,000,000,000 revolver would have been fully paid down. Our current leverage of 6.5 times net debt to EBITDA remains near historical low and well below a steady target of 7 times to 7.5 times. Speaker 200:07:07Our balance sheet is very strong with a current weighted average interest rate of 3.1% across our total outstanding debt. Our weighted average maturity is approximately 4 years, including the impact of our current interest weighted hedge, the interest rate on 96% of our current outstanding debt in fixed. And now I'll turn the call over to Mark. Speaker 100:07:32Thank you, Mark. We ended the quarter with $12,400,000,000 of total debt and $12,200,000,000 of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 6.5 times, below the low end of our target range. Our 1st quarter net cash interest coverage of adjusted EBITDA to net cash interest expense was very strong at 5.2 times. We continue to use cash on hand to repay amounts outstanding under the revolver. Speaker 100:07:59And as of today, we have $195,000,000 outstanding under Speaker 300:08:03our $2,000,000,000 Speaker 100:08:04revolver. During the 1st and second quarter, we repurchased 935,000 shares of our common stock for $200,000,000 at an average price per share of $213.85 We currently have $205,000,000 of repurchase authorization remaining under our $1,000,000,000 stock repurchase plan. The company shares outstanding at March 31, 2024 were 107,900,000. Dollars In addition, during the Q1, we declared and paid a cash dividend of $181,100,000 or $0.98 per share. And as of today, we announced that our Board of Directors has declared a second quarter dividend of $0.98 per share payable on June 19, 2024 to shareholders of record as of the close on May 23, 2024. Speaker 100:08:58This dividend represents an increase of approximately 15% over the dividend paid in the Q2 of 2023. And with that, I'll now turn the call over to Brendan. Speaker 400:09:07Thank you, Mark. Good afternoon. The Q1 marked a good start to 2024. We executed well operationally and produced financial results in line with our expectations. As a result, we have made very few adjustments to our full year outlook on a constant currency basis. Speaker 400:09:25In many of our markets, macroeconomic challenges have continued and as a result, incremental network investments by our customers have remained measured and largely in line with activity levels that we saw last year. In the U. S, leasing activity from an execution standpoint was only slightly higher than the 4th quarter. However, during the Q1, we saw increases in applications for both new leases and amendments as well as an increase in our services backlog. Our customers continue to have significant network needs. Speaker 400:09:57A large percentage of our sites still require 5 gs related upgrades and data heavy use cases including fixed wireless access will compel continued investment by our customers over the next several years. I am personally of the belief that the current high cost of capital environment is perhaps the biggest overhang on this spending and is driving the more elongated spending cycle. Nonetheless, the needs are great. Consumers are demanding and competitive pressures will continue. Our infrastructure will be a critical component of the delivery chain for our customers to meet these challenges and I believe we are well positioned to support them in their efforts. Speaker 400:10:35In addition, the current cost of capital may persist longer than anticipated just a few months ago, but I believe it will ultimately come down in time, which will encourage increased network investment. It is all really just a matter of timing. Internationally, results were also in line with expectations. Although each market has its own specific dynamics, on average, we are in a period of slower growth internationally compared to our historical levels. Lower inflationary escalators are a contributor, but the primary reason is consolidation related churn and its associated impacts on carrier focus. Speaker 400:11:11Internationally, we have found that during these consolidations, the surviving carriers direct most of their attention to rationalizing their existing networks, pausing much of their incremental network expansion. However, new spectrum and new technology generation deployments remain important and we believe will result in an acceleration in organic growth rates over time. As discussed on our last call, churn remains elevated due primarily to these consolidations, but we believe that the steps we have taken and are taking to reach mutually beneficial contractual amendments with these customers will enhance the long term strength and stability of our cash flows. Turning now to our balance sheet and capital allocation priorities. We have not shifted our previously stated overall approach, but we do very much make adjustments along the way in response to broader market dynamics and opportunities. Speaker 400:12:02We prioritize our dividend and have again announced a quarterly dividend 15% higher than the prior year period. This dividend level remains less than 30% of our guided full year AFFO, leaving meaningful capital available for allocation. During the Q1, we added a relatively small number of towers to our portfolio. And as a result of carrier consolidation, we decommissioned almost as many sites as we added. We remain selective about the quality of the sites that we add to our portfolio, but we really remain particular about the price at which we add them, which these days has been the main gating issue. Speaker 400:12:37That's okay as our focus continues to be on return on investment, not growth just for growth sake. Opportunities will come along. In fact, they come along all the time. So we are comfortable being patient, appropriately considering the new cost of capital environment we are operating in and going after those opportunities that we believe we can best drive strong returns on. The sites we are decommissioning are related to consolidation activity among our customers. Speaker 400:13:04We will be more proactive in the coming years in evaluating naked sites for cost saving opportunities and potentially decommissioning. As I mentioned earlier, cost of capital and specifically cost of debt remains high and is now broadly expected to remain elevated for longer. This dynamic beyond any other has had the most significant impact on public tower company valuations. During the Q1 and beginning of Q2, we responded some of this decline in valuations by spending $200,000,000 to repurchase 935,000 shares of our stock. I believe that when there is ultimately a downward shift in rates, repurchases at this level will be even more accretive to future shareholder value. Speaker 400:13:48Nonetheless, rates remain elevated today and we recognize the impact of potential future higher interest costs on AFFO. So a portion of our capital allocation will continue to be appropriately dedicated to reducing debt. We are not formally changing our leverage targets as we believe retaining flexibility for the right investment opportunities is valuable, but operating with lower leverage in the current environment is clearly prudent. Our balance sheet and liquidity position remain in great shape. If not for the share repurchases, our revolver would have been fully paid down as of today. Speaker 400:14:22Our average cost of debt remains very low at 3.1%. However, over the next 12 months, we have approximately $1,800,000,000 that will need to be refinanced. The cost of that debt will certainly be higher than what we are paying today, but our ability to manage the amount of debt needed and the time we are locked into higher rates will be important factors in the approach we take. Capital is widely available to us. It's really just a matter of cost. Speaker 400:14:49We are evaluating a variety of options and we'll provide further updates during the year as incremental steps are taken. Finally, I would like to revisit some of my comments from our prior earnings call with regard to the portfolio review we have undertaken. On the last call, I mentioned that we had begun an effort to analyze all of our operations and our potential operations through a lens of stabilizing results, growing our core business and shifting our mix more and more to high quality assets and operations. I do not see this goal as having a finite deadline as it is more definitional around the key decisions we make. However, there are some very specific steps being taken in looking at each of our key operations, each of our business lines and each of our international markets. Speaker 400:15:32We are setting baselines as to where we think these operations end up on a status quo basis 1 year from now, 5 years from now and even 10 years from now. Then based on potential opportunities we see in each case, we are developing alternative results profiles based on different paths we might take, with the ultimate goal being improving the outcome relative to the base case. We are making good progress and gaining good insights through the effort, but this is not an overnight initiative. Many of the potential steps we have identified to enhance our positioning in given markets or operations will take time, sometimes possibly years to effectuate. After our prior call, a lot of attention was paid to the possibility of divestitures of businesses or markets. Speaker 400:16:17While that may be an outcome in some cases, it is far from the priority or preferred path. I would much rather find ways to improve our position in the addition of quality assets, enhanced customer relationships and agreements and other creative solutions. In fact, I was recently visiting our team in Brazil and learned of a number of creative solutions we are introducing to enhance the customer experience at our site and thereby improve the longevity of our customer relationships at those sites. I am encouraged by the seriousness with which our teams are approaching this initiative. In the end though, as I stated previously, financial results always matter and we will make the best decisions we can to protect or create shareholder value as our top priority. Speaker 400:17:00We have a great business and great assets. It is our job as the management team to maximize the value we can realize from those assets, and that is where our focus squarely is. I'd like to wrap up by thanking our team members and our customers for their contributions to our solid Q1, and we look forward to continuing to share our progress throughout the year. With that, Jeffrey, we are ready for questions. Operator00:17:46Our first question comes from Michael Rollins. Please go ahead. Speaker 300:17:53Thanks and good afternoon. I'm curious if you could discuss a bit more about some of the preconditions you're seeing for better domestic leasing activity. The applications that you described for new leases and amendments? And does this give you encouragement that 2025 can see better leasing activity than 2024? Speaker 400:18:17Yes. Mike, I think it's a little bit premature to say that. My comments about the increased applications are obviously positive in general, as increases obviously would be. But I think it's a little bit early. It's only been 2 months since our last report. Speaker 400:18:37And we haven't seen a material change. We've just seen a minor step up directionally in those items. So at this point, I think it's too early to comment on where 2025 would come out. Speaker 300:18:50And in terms of just the where the activity is coming from, is it coalesced around certain geographies or for certain carriers? Speaker 400:19:02No, I would say it's fairly broad based. In different geographies, different carriers are perhaps a little bit busier than others. But I think you're aware of some of the initiatives that some of our customers have going on. But it's I would say it's generally broad based across the big three carriers. Speaker 300:19:23And just one other question. You mentioned about wanting to manage leverage lower in this environment. Do you have a goal as to where you'd like to see your net debt leverage exit the year? Speaker 400:19:39Yes, we don't really have a goal. In fact, we're actually not explicitly changing our targets, although we're obviously operating well below them today. And the reason we're not changing the targets is that opportunities come along and sometimes being flexible and levering back up to take advantage of a particular opportunity may be the best choice. And so I don't want to kind of present it like we have to be the lower number. I think in absence of investment opportunities that we see as particularly value additive in the current high interest rate environment, the best option in some cases will be to actually pay down absolute debt. Speaker 400:20:19So there's not a particular target, but I think outside of some meaningful opportunity for new assets coming along, you should expect that we would look to reduce our absolute debt levels. Thanks very much. Speaker 500:20:36Yes. Operator00:20:38Our next question comes from Jonathan Atkin. Please go ahead. Speaker 600:20:44Thanks. I was interested in where you see the most interesting build to suit opportunities across your markets? And then as we kind of think about M and A, either within existing markets or elsewhere, can you just remind us in terms of what your guidelines are and where you might be seeing opportunities? Thank you. Speaker 400:21:12Yes. On the new build opportunities, we are well, first of all, we're looking in every market that we're in for specific opportunities that meet our requirements because we already have a presence in that market and an operational scalability there. So ideally, we'd like to build sites wherever we can. But specifically, certain markets, in our African markets, in particular, we're seeing more opportunities and certain select markets in South America as well. On the M and A front, I would say the same premise applies in the sense that if we can find high quality opportunities in any of our existing markets, that's something that we prioritize. Speaker 400:21:54But at the end of the day, it really is a financial analysis around the pricing of those assets and what we think we can do in terms of returns based on growth that we think we can achieve over a period typically of about 5 years or so. Our approach hasn't really changed, although our return thresholds have moved up with the cost of capital. Speaker 600:22:17And then Brazil, can you remind us broadly where Oi is in terms of the equipment being decommissioned off of towers for their mobile network? And then prospectively for the wireline, you gave a little bit of color in the prepared remarks. But where are they in terms of physical decommissioning as opposed to you having already maybe recognized it in your reporting? Thanks. Speaker 400:22:45Yes. On the Oi wireless side, it varies by carrier. Obviously, they were absorbed into 3 different carriers. I would say, I don't know if I could give you an exact percentage, but they're probably 40% -ish or so of the way through that effort would be my guess on average. We're definitely seeing the activity there. Speaker 400:23:05But there's as we see here in the U. S, it's an elongated process and it takes some time. So I would expect this to go on for a number of years. On the wireline side, we've seen some decommissionings that were really in advance of the efforts that they're undertaking here. But that one actually has the most runway still to go. Speaker 400:23:25They just had their reorganization plan approved just a week or so ago. So it's very early days there. But I would expect over the next couple of years, we'll start to get a better sense of that. And in fact, they're under the plan, they're expecting to reorganize and continue to operate that network at least for the next several years. So we'll see how that progresses in terms of how many sites actually get turned down. Speaker 100:23:52Thank you. Operator00:23:57Our next question comes from Michael Ellis. Please go ahead. Speaker 700:24:02Great. Thanks for taking the questions. First, just want to build back on the portfolio review. It seems like when you're talking about the M and A environment, valuation is the hold up. I think just interpretation is that's part of the reason why we're seeing you ship more capital allocation to the buybacks. Speaker 700:24:19Just curious how your thoughts there have evolved? That'd be the first thing. And then second, is there any color that you can share in terms of the 2 71 sites that you announced that you are acquiring, where they're located? That'd be helpful. Thank you. Speaker 400:24:36Sure. Yes. I would say in terms of evolution of our thinking, we announced this portfolio review publicly last quarter and it hasn't been that much time. So we're kind of in the midst and throes of that. The one thing that has shifted a little bit though in that window of time is that rates are not only staying higher, but are expected to continue to stay higher for longer. Speaker 400:24:59And that's something that we have about the fact that we have to watch that. And in some cases, about the fact that we have to watch that. And in some cases, paying down debt may actually be more accretive than we would have thought even couple of months ago. And so it's certainly on the table, perhaps more than it was before. And you're right in that, you see less M and A activity and more towards buybacks, for instance, because we see better return there. Speaker 400:25:34So it is very still very much financially driven. In terms of the sites that are under contract, it's pretty much the same sites that were under contract with a very few exceptions at our last earnings call. There are a mix of markets, some are here in the U. S, but most are located internationally. South America is the primary place where we have those sites under contract. Speaker 700:26:01Perfect. And one other question, if Speaker 400:26:03I could. I think on Speaker 700:26:04the last quarter earnings call, there was commentary that carrier activity in the U. S. Persisted at the current levels that you could see the 4Q 2024 exit run rate be below $40,000,000 Just curious how you're thinking about the potential run rate exiting the year based on the activity that you're currently seeing? Thank Speaker 400:26:24you. Yes. We didn't change any of our outlook for the year. So that still stands as of today that we would expect a similar number to what we talked about last time exiting the year. So right now, we haven't seen enough shift in carrier activity to change those projections. Speaker 700:26:43Thanks so much. Operator00:26:47Our next question comes from Simon Flannery. Please go ahead. Speaker 800:26:52Great. Thank you very much. Good evening. Brendan, I wonder if you could just characterize some of the big three activity. Are you seeing them complete or move further on adding mid band to existing sites? Speaker 800:27:05Are you seeing them move to densification? And any kind of parallels you could draw with the LTE 4 gs kind of phasing from that initial coverage phase to that next phase? How does this compare? Or is this slower, as you noted, because of the rising rates? And perhaps you could just remind us, you talked about an uptick in applications. Speaker 800:27:23How should we think about timing from applications to actually executed leases and revenues revenue generation? Speaker 400:27:32Yes. I mean, the type of activity, I would say, is a mix. There's still plenty of mid band spectrum deployments that need to be done, particularly by AT and T and Verizon. And so we're seeing plenty of that. That's the primary driver of amendment activity. Speaker 400:27:47But we are seeing more new leases than perhaps we've seen in the past from the big carriers. And it's a mix of both coverage and densification, but it's taking a normal transition, I think, that we've seen in previous generations of technology deployment. The difference really, Simon, and you touched on it, you picked up on what I said, which is it's really just timing. We're seeing this kind of go at a much slower pace perhaps than what we've seen before. That can, of course, change rapidly, but I really do believe that just the cost of money has an effect on that. Speaker 400:28:22And it makes total sense why our customers would be a little more disciplined in their capital spending. So that's really what we're seeing. And then in terms of the time frame from signing agreements or getting applications in and executing them to ultimately revenue generation. It's pretty consistent with what it's been in the past. It's really just the absolute volume is a little bit lower. Speaker 800:28:47Great. And any color you can provide on DISH? Speaker 400:28:53Yes. I mean, we're still signing some leases with DISH. Obviously, it's at a much lower level than it was when they were busier. And we're here to support them with all their needs. But I don't really have much else I can offer you. Speaker 900:29:10Okay. Thank you. Operator00:29:15Our next question comes from Ric Prentiss. Please go ahead. Speaker 1000:29:20Thanks. Good afternoon, everybody. Operator00:29:22Hey, Ric. Speaker 1000:29:23Hey. A couple of questions. One, can you unpack for us how much of the stock buyback you did within March and Speaker 200:29:30how much you did subsequent to the quarter? Speaker 400:29:35Yes, I think it was I think it's somewhere in our report or maybe it's not, but it will be in our 10 Q anyway. I believe roughly half, just over half was in March and the balance was in the beginning of April. Sure. Okay. That helps. Speaker 1000:29:49And then when we think about the leverage, I think the leverage went up to about 6.5% in the quarter. How should we think about stock buybacks versus allocating towards debt reductions as we look out through the rest of this year? Is 6.5% kind of the new normal in this operating margin? Do you want to go down closer to 6%? Just trying to think through how buybacks are fitting in with the debt reduction absolute levels. Speaker 400:30:17Yes. It's not so much the leverage ratio. In fact, the ratio was up, but the absolute amount of debt was pretty similar to what it was at year end. It's a little bit higher because of the buybacks, but not much. It was actually higher on a leverage ratio basis because the EBITDA was down a little bit, mainly because of services. Speaker 400:30:40So that I'm a little less focused there because we have so much room in our ratio, and it's more of a focus on the absolute amount of debt that we're carrying. And specifically because we have these 2 maturities that are coming up in the next 8 months or so. And so as I kind of eye that, our ability to kind of reduce the amount of absolute debt as we approach those maturity dates is really what we'd be targeting as opposed to worrying about what the leverage ratio is. And I think on the buyback front, we obviously did a couple of $100,000,000 here and we would be open to doing more. We've generally been opportunistic about it. Speaker 400:31:20But in the short term, we have these maturities. And so to some degree, that takes priority. Speaker 1000:31:27Okay. And then on an operational front, I think Mark M was talking about the Sprint churn confirming those kind of numbers, legacy churn, non carrier consolidation in the U. S. 1% to 2%. As we look out over the next 1, 2, 3 years, it seems like we might be heading to the lower end, lower end of that 1% to 2% historical level because a lot has already been maybe sucked up. Speaker 1000:31:53Is that something that we might think of as maybe heading more toward the lower end of 1 to 2 as we look out over the next few years? Speaker 400:32:01Yes. That would be my expectation. Speaker 900:32:05Great. Very Speaker 1000:32:05helpful. And appreciate your clarity on the strategic review. That helps. Operator00:32:17Our next question comes from Nick Del Deo. Please go ahead. Speaker 100:32:22Hey, thanks for taking my questions. First, Brendan and Mark, you both commented on tower decommissioning as a source of cost savings and something that might tick up with the consolidation related churn in the coming periods. Does this entail doing anything different than what you have made done historically to churn, like having a lower tolerance for hanging on to naked sites? Or is it just the magnitude of the site that may be different today versus the past? Yes. Speaker 400:32:49I think it's really more of the latter. You've got obviously in the Sprint, T Mobile related consolidations here, but internationally with the Oi consolidation in particular, I mean, those are really the big ones. There's some others here and Speaker 500:33:04there, but those are the biggest ones. It's a Speaker 400:33:04lot of sites. And so, as we kind of look at what can Speaker 500:33:07we do in this window Speaker 400:33:07of time, as we kind of look at what can we do in this window of time where carrier spending is a little bit slower and we have some of these headwinds, what can we do to maximize our bottom line results? Costs become a little more material potentially to that story of improvement. So it's really more the volume than it is anything else, but that increased volume requires a little bit more of a concerted direct focused effort on it. Okay. Okay. Speaker 100:33:38That makes sense. And then Brandon, one more for you. In your prepared remarks, you noted that your team in Brazil is taking steps to enhance and you said the customer experience at your sites, which should be value accretive over time. Can you expand on that a bit and maybe share an example or 2 of what those solutions may have been? I mean, it just struck me as interesting because, at least those of us on the outside don't necessarily think of tower leasing as something where you tend to see a lot of innovation like that. Speaker 100:34:04So any description you can share would be interesting? Speaker 400:34:09Yes. Well, I'm going to sidestep that a little bit because there are some specific things we're doing that are creative that actually are adding value for our customers down there. Things that are relate to power, that relate to other centralized hosting of wireless coverage solutions and even security related items. As you add some of these types of things in terms of the service package that you provide, you make your site that much better. And when somebody has the choice to make to make a choice, you want to have your options be preferred. Speaker 400:34:50But it's not just that, it also comes with the ability to enter into longer term agreements that secure that relationship for an extended period of time. And that's really what we're focusing on. Reason I'm sidestepping it a little bit and not getting too specific with you is that it's a little early. And for competitive reasons, I prefer not to get that specific on it. But as it becomes something that's more material, I'll be happy to share at that point. Speaker 400:35:15Okay, great. Thanks, Brendan. Operator00:35:21Our next question comes from David Spartan. Please go ahead. Speaker 1100:35:27Hey, good afternoon. You got Alex Waters on for Dave. Thanks so much for taking my question. Maybe just Speaker 400:35:33first off, Speaker 1100:35:34maybe just when I think about international churn, obviously elevated this year. I mean, Brendan, could you maybe just walk through the way we should be thinking about it for next year and the couple of years after? And then just in terms of M and A, I think we discussed a little bit about options you might have in existing markets, but can you just talk about your appetite for those that SBA does not have a presence in yet? Thanks. Speaker 400:36:01Sure, Alex. Yes, on the international churn front, I would expect that it will be elevated for the next couple of years, maybe not quite as high as it is this year, but it will be elevated by historical standards. We used to have almost 0 churn basically, but we've reached a point where you have a lot more consolidation that's taken place across many of our markets. That's driving a lot of it. And so as we just kind of look at when leases are scheduled to roll off and where there's been consolidations and what we think our exposures we might have, plus frankly the Oi wireline bankruptcy, those things will, I believe, cause it to stay elevated for the next several years. Speaker 400:36:49Although, again, hopefully not quite as high as it's been this year. On the M and A front, yes, I mean new markets are certainly on the table for us. We are we're very financially focused when evaluating the opportunities. I believe that our experience over the last decade or more of expanding into international markets has given us the comfort and the confidence that we can do that as well as anybody that we know the things that we need to understand before we enter a market, how to operate, how to set up operations in a new market. So I'm confident that we can do it from an operational standpoint. Speaker 400:37:32It really just comes down to the opportunity that's on the table and the price point at which we can secure it so that it is value additive ultimately for the company as a whole and for our shareholders. That's the guiding issue. And if it's that's harder and harder these days broadly, whether it's new markets or existing markets, because there are a number of situations where I don't think seller expectations have aligned still with where the market has gone. But that could change over time and our willingness to expand in our existing markets or in new markets would remain the same. We would be open to it. Speaker 400:38:11Perfect. Thank you. Operator00:38:16Our next question comes from Batya Levi. Please go ahead. Speaker 1200:38:21Great. Thank you. Couple of follow ups. On the Network Services side, can you talk a little bit about the slowdown you saw in the quarter? And I think you're tracking below your annual guidance. Speaker 1200:38:32Should we expect this quarter to be the trough and continue to improve from here? And maybe on the tower side, can you give an update on what percent of your sites have been upgraded with 5 gs equipment now? Thank you. Speaker 400:38:47Sure. On the services business, yes, it's down a little bit, but we as you saw, we did not change our full year outlook. And we do expect that the second half of the year will be slightly higher than the first half of the year. I mentioned in my comments that we saw an increase in our services backlogs from the end of the year to the end of Q1 that is supportive of that. And all those little things around applications being up, services backlog being higher, support that I think we will see a little bit more services activity in the second half of the year. Speaker 400:39:29But I think we'll be able to give you more clarity on that on the next call. On the tower side, 5 gs percentage, we're a little more than half now. I think we've said we're around half in the past. We're still while we've seen some increase obviously through the Q1 with volumes being a little bit lower, it's only a little more than half. So the actual percentage that's left to be upgraded is still significant. Speaker 1200:39:57Got it. Thank you. Operator00:40:02Our next question comes from Richard Choe. Please go ahead. Speaker 1300:40:07Hi. I have 2 follow ups also. I'm not sure if you can tell, but with the new lease densification applications, are they mainly in markets where there's a significant amount of fixed wireless? Speaker 400:40:24I can't tell you that for sure, Richard, but that would not be an unreasonable assumption, but I can't tell you that for sure. Speaker 1300:40:31Got it. And then on the decommissionings and cost savings, is there a significant delay from when the decommissionings happen and when you can do the cost savings given maybe the ground leases underlying? Or can you kind of get ahead of it and kind of close that timing gap? Speaker 400:40:53Well, our goal is to achieve those savings as quickly as we can. And you're right that there will be many cases where we're able to do that ahead of decommissioning. In fact, in some cases, it would be our desire to not do the decommissioning and simply put those costs on hold to allow enough time to see what happens. So I think it will be a mix. But where we're able to do that, obviously, it accelerates our ability to generate the cost savings. Speaker 400:41:19So that's our first priority. Speaker 1300:41:23Great. Thank you. Operator00:41:27Our next question comes from Matt Niknam. Please go ahead. Speaker 100:41:32Hey guys, thanks for getting me on the call. Just 2 if I could. First on the debt maturity, I think you talked about evaluating a variety of options in relation to that. Is there any more color you can share in terms of what's being evaluated in terms of alternative sources of capital? And is there the potential for cap recycling with where multiples and valuations are in the private markets? Speaker 100:41:56And then just secondarily on the tower decommissioning, is that more of a housekeeping item, is that what's driving the boots to tower cash flow ex FX relative to the slight reduction in site leasing tied to the oil churn? Thanks. Speaker 400:42:13Your second question, the answer is yes. That is the primary driver. I mean, it's small dollars. Obviously, you're talking about $4,000,000 for the year, but yes, that's the driver. On the first question, I mostly when I talk about different options, we're mostly referring to different markets, debt types of debt that we might issue to refinance it. Speaker 400:42:41On the question about the cap recycling type of solution, at this point, I think I would defer on that. But the bottom line is we're open to looking at all the different options that are available to us, trying to find the most creative and cost effective solutions that we can. And we'll let you know as we secure something. Operator00:43:06Great. Thank you. Our next question comes from Eric Lebchow. Please go ahead. Speaker 1300:43:19Great. Thanks for taking the question. Brendan, maybe you could talk a little bit about the comprehensive MLA you signed with AT and T last year. Any kind of early learnings on whether you think that's helped generate more activity on your sites with that customer and whether there may be appetite for similar agreements with some of your other customers? I know I believe that T Mobile had an agreement that expired relatively recently. Speaker 400:43:46Yes. It's been it's actually been very good in the sense that we have I think it's kind of loosened the gears up, if you will, between the two companies. They have a lot of work to do and we're a big supplier of theirs in terms of tower space. So the ability to have a much easier free flowing kind of understood process by which we they make requests and we help satisfy those requests has been a positive. And so I think that in and of itself is something that we love to have with all of our customers. Speaker 400:44:21And I think we generally do, but with AT and T perhaps it was the one that given that we had never really had any kind of master agreement with them, there was a little more low hanging fruit there to address. In terms of the others, every agreement I think is very specific to the relationship with that customer and what their needs are and their existing relationship with us. So we're certainly open to master agreements. We've had them in the past with the others. In the case of the T Mobile agreement, we actually you mentioned that it expired, that's true, but we actually did extend it for a period of time while we kind of look at the longer term needs for them and how we might structure something that's favorable for both companies into the future. Speaker 400:45:06So I think that evidence is the fact that we work together well with our customers and are able to find solutions that are beneficial for both parties. Speaker 1300:45:17Great. And just one follow-up from one of the earlier questions. I think you talked about getting to 1% U. S. Tower churn, churn Speaker 400:45:29opportunities Speaker 1300:45:34some churn opportunities with the big 3 or 4 customers? Does it have anything to do with less competitive activity from tower over builders or anything you can cite to kind of get down to those levels? Speaker 400:45:48Yes, I think it's both. You have less smaller guys just in general. And so therefore, there's just less of a pool of potential leases to churn with the kind of more narrowband type of tenants that we have. So that is a contributor. And with the bigger guys, I think as you have these master agreements, you have less of these, as you said, over builders that are out there and others that are trying to find ways to take existing tenants. Speaker 400:46:17While not particularly successful in the past, there were some amount of that. I think that's sort of gone its way and you'll see less and less of that happening in general. So I believe all those factors will play into it. Okay. Thanks, Brandon. Operator00:46:37Our next question comes from Walter Piecyk. Please go ahead. Speaker 900:46:43Thanks. And thank you to the operator. That was the perfect pronunciation of my name for the first time ever. I just want to go back to the math on the debt reduction and the share repurchase Because I think basically the way you described it is, you noticed what was going on longer and higher, but then you continued to buy stock back into April, which I guess if you could comment on that, because I'm not sure how those two things fit. But then if you look at kind of the reduction on an empirical basis in 2023, when you reduced it 600,000,000 dollars Obviously, you're not on the pace of that yet this year for any reduction, but then you again piecemealing, I know 3 or 4 people asked this question, but you kind of referenced the $800,000,000 of debt maturities. Speaker 900:47:37So if we look at you using another $100,000,000 already in the June quarter and then just the free cash flow in advance of those maturities, it would seem to me that you basically have to turn that spigot off for any share repurchase for the remainder of the quarter and into Q3 in order if you're specifically targeting those maturities. I get it that you're looking for other ways to I guess refi it or whatever. But so if you could just comment on why you were buying stock back when things change, should we expect more than 600 given the comments that you made and how can you do share repurchase if you've got these maturities that you want to address? Speaker 400:48:18Yes. I'm not sure if there's just a moment in time when things change. We bought back stock in late March and basically the 1st few days of April. So and I think that that still is a good return on investment. The reality Walt, is it's hard to be that precise and exact timing on all these things. Speaker 400:48:42And I think as we go forward, it doesn't mean that we won't buy stock back at all. I'm just telling you that directionally as I look at it today that I think pay downs of debt is slightly more accretive than buying back stock where it is right now. But that doesn't mean there won't be opportunities to do both. And I expect we will do both going forward. But we're going to see what other options we have available to us as we move through the balance of the year and that will influence how Speaker 100:49:12it plays out. Well, I will add one thing here and that's that buybacks have a certain mechanic to them, where when we are in a blackout period, we typically put a plan in place. And those plans typically prevent us from actually making decisions. So the decisions are made ahead of time. And I think that may help explain the timing of this relative to your comments. Speaker 900:49:34That's fine, Mark. I appreciate that. Just one follow-up though. Again, just based on math, right? This is a very predictable business, right? Speaker 900:49:42We can see what the free cash flow is. I don't like if you think it's more if you think share repurchase is more important for these reasons that you've outlined, which I don't disagree with, right? And assuming that that view doesn't change, all of a sudden the Fed doesn't start fucking dropping rates left and right in the upcoming near future, again, unlikely. I just don't see like how that doesn't mean that you have to mostly turn off the share repurchase spigot at least through the end of the year. It's just the math of the free cash flow and what's available in terms of at least trying to top the $600,000,000 reduction that you did last year. Speaker 400:50:26Yes. No, that's true. There is a certain amount of cash that's available under the current structure that we've got. We're producing a certain amount of AFFO and there's a portion allocated to the dividend and there's the rest, right? And the rest will go to one of these buckets or a mix of these buckets. Speaker 400:50:44So what you're saying is right, but things may adjust. Frankly, we may end up with an acquisition opportunity that we think is actually better than all and that would put both of these things to the side. So I'm retaining some flexibility. But yes, if we're going to buy if we're going to pay down a meaningful amount of debt, obviously, we have to stop spending on everything else. Speaker 900:51:09Just got it. Just one last operational question. I guess I'll phrase it this way. Have you seen outside of the big three operators in DISH, have you seen anyone demonstrating interest in or submitting applications for CBRS spectrum to deploy on your towers? Speaker 400:51:29Nothing material. No, nothing really. Speaker 900:51:32Got it. Thank you. Operator00:51:38Our next question comes from Brandon Nispel. Please go ahead. Speaker 500:51:44Great. Thanks for taking the question. Quick one for Mark. Could you just quantify the impact of customer consolidation churn versus normal course trend in the quarter, both domestically and internationally? And then for Brendan, sit here, looking at your leasing and churn numbers. Speaker 400:52:02Hey, Brandon, I'm sorry. Brandon, sorry to interrupt you, but we're having a little bit of a hard time hearing you. You're a little garbled. You may have to repeat that first. Can you hear me better now? Speaker 400:52:14Yes, that's much better. Thanks. Okay. I'll just start over. So quick question for Mark. Speaker 400:52:19Could you just quantify the impact churn with where you're sitting today from a leasing standpoint and from churn standpoint internationally and domestically and what you know about your maturities coming up, Speaker 1000:52:38What do you think Speaker 400:52:38is a reasonable level of AFFO per share growth looking at to 20 25 and 20 26 when your heaviest maturities are coming due? Thanks. Okay. On the second question, AFFO per share growth, I think, Brandon, I mean, the real trick in answering that is that interest rates and interest expense play such a big role in it. So, if it weren't for that, if I could tell you exactly what it was going to cost to refinance debt and what the timing was going to be, I could answer that question with a little more precision. Speaker 400:53:15Obviously, we make certain assumptions internally here, but I'd rather not speculate on that. If you kind of took that away, I think a mid single digits percentage growth rate for AFFO per share would be what we would achieve even with the churn. But the interest headwinds are going to be a challenge to that. And then the first question was the customer consolidation churn percentage. Mark, do you Speaker 500:53:40want to? Speaker 200:53:41Yes. So domestically, Sprint was more than half of the total churn in the U. S. And internationally, I would say that the majority was non oil for this Q1, but oil is going to pick up in Brazil. So I think we said overall the OE churn outside of the in Brazil would be about $15,000,000 for the year. Speaker 500:54:12Great. Thank you. Operator00:54:18And our next question comes from Eridan Lynch. Please go ahead. Speaker 1400:54:23Yes, Brendon Lynch. Thanks for taking the question. Maybe just on the refinancings coming up this year, to what extent are you comfortable using the revolver to refinance that debt, if not longer term, at least in the short term? Speaker 400:54:45Yes. I mean that's one option that's obviously on the table. The advantage to it, of course, is that it would allow you to retire it quickly over time or as you could over time without having to lock into a longer term maturity date. But the negative is that it's some of the most expensive debt that we have right now. It would be more expensive than obviously whatever we would refinance it with in a different market. Speaker 400:55:13So, it's an option. Speaker 1400:55:16Okay. Thank you. And maybe just one on the technology front. A few quarters back, you were discussing dual band radios as a potential driver of incremental demand. Maybe just give us an update on where that stands and any other technology initiatives that your customers might be looking at that could contribute to incremental demand going forward? Speaker 400:55:40Yes. We saw a decent amount of deployment of dual band radios. That certainly was a driver in last year and maybe even before that. But at this stage, it seems like most of the focus is on just deploying the mid band spectrum that they have on hand and just incremental new leases as we talked about before for coverage and densification. I wouldn't say if there's anything more technical than that. Speaker 900:56:08Very good. Thank you. Yes. Operator00:56:14There's currently no other questions in the queue at this time. Speaker 400:56:19Great. Thank you all for dialing in. We appreciate your time tonight and look forward to reporting to you next quarter.Read morePowered by