Sba communications corporation reports second quarter 2021 results; updates full year 2021 outlook; and declares quarterly cash dividend
Boca raton, fla.--(business wire)--sba communications corporation (nasdaq: sbac) ("sba" or the "company") today reported results for the quarter ended june 30, 2021. highlights of the second quarter include: net income of $152.7 million or $1.37 per share affo per share growth of 15.3% over the prior year period total revenue of $575.5 million issued $1.165 billion of tower securities at an interest rate of 1.631% completed extension and expansion of $1.5 billion revolving credit facility subsequent to quarter end in addition, the company announced today that its board of directors has declared a quarterly cash dividend of $0.58 per share of the company’s class a common stock. the distribution is payable september 23, 2021 to the shareholders of record at the close of business on august 26, 2021. “our second-quarter performance was our best in quite some time,” stated jeffrey stoops, president and ceo. “us wireless carrier activity increased substantially in the quarter. domestically, we produced record services revenue, we had the highest revenue added per tower based on signed leases and amendments since 2014, and our leasing and services backlogs were at multi-year highs at quarter end. while this increased leasing activity will benefit our reported 2021 revenue, the majority of the incremental revenue will begin to be recognized in 2022. based on our backlogs and conversations with our customers, we expect elevated leasing activities to continue through 2022 and perhaps beyond. all of our us wireless carrier customers are actively engaged in building out their 5g networks and we are committed and have the resources to help them achieve their goals. internationally, our second quarter leasing results improved over the first quarter, even though a number of our international markets have not yet returned to pre-pandemic levels of activity. the highlight of our second quarter international activities was the announcement of our entry into tanzania with a proven partner and a very favorable price of entry. we are confident that our tanzania investment will create additional shareholder value. including our tanzanian investment, we expect to easily reach our portfolio growth goals of a minimum of 5% this year. in addition to growth from increased customer activity and portfolio growth, sound cost controls and interest rate savings have allowed us to produce second quarter affo per share in excess of our expectations and further allowed us to increase our full-year outlook for affo per share and other key financial metrics. our balance sheet remains strong and our net debt/adjusted ebitda leverage is back within our target range ahead of schedule. the combination of strong operating results, strong expected demand for the remainder of the year, and excellent capital allocation and balance sheet management gives us great confidence for the remainder of 2021.” operating results the table below details select financial results for the three months ended june 30, 2021 and comparisons to the prior year period. % change excluding q2 2021 q2 2020 $ change % change fx (1) consolidated ($ in millions, except per share amounts) site leasing revenue $ 524.1 $ 482.4 $ 41.7 8.6% 7.9% site development revenue 51.4 24.8 26.6 107.2% 107.2% tower cash flow (1) 421.2 394.1 27.1 6.9% 6.3% net income 152.7 23.1 129.6 561.0% 84.8% earnings per share - diluted 1.37 0.20 1.17 585.0% 89.5% adjusted ebitda (1) 400.2 368.8 31.4 8.5% 7.9% affo (1) 293.5 259.9 33.6 12.9% 12.2% affo per share (1) 2.64 2.29 0.35 15.3% 14.4% (1) see the reconciliations and other disclosures under “non-gaap financial measures” later in this press release. total revenues in the second quarter of 2021 were $575.5 million compared to $507.2 million in the prior year period, an increase of 13.5%. site leasing revenue in the second quarter of 2021 of $524.1 million was comprised of domestic site leasing revenue of $418.8 million and international site leasing revenue of $105.3 million. domestic cash site leasing revenue in the second quarter of 2021 was $408.3 million compared to $387.1 million in the prior year period, an increase of 5.5%. international cash site leasing revenue in the second quarter of 2021 was $106.3 million compared to $95.0 million in the prior year period, an increase of 11.9%, or an increase of 8.3% on a constant currency basis. site development revenues in the second quarter of 2021 were $51.4 million compared to $24.8 million in the prior year period, an increase of 107.2%. site leasing operating profit in the second quarter of 2021 was $428.8 million, an increase of 9.7% over the prior year period. site leasing contributed 97.5% of the company’s total operating profit in the second quarter of 2021. domestic site leasing segment operating profit in the second quarter of 2021 was $354.9 million, an increase of 9.6% over the prior year period. international site leasing segment operating profit in the second quarter of 2021 was $73.9 million, an increase of 10.4% from the prior year period. tower cash flow in the second quarter of 2021 of $421.2 million was comprised of domestic tower cash flow of $345.9 million and international tower cash flow of $75.3 million. domestic tower cash flow in the second quarter of 2021 increased 6.0% over the prior year period and international tower cash flow increased 10.9% over the prior year period, or increased 7.4% on a constant currency basis. tower cash flow margin was 81.9% in the second quarter of 2021, as compared to 81.8% for the prior year period. net income in the second quarter of 2021 was $152.7 million, or $1.37 per share, and included a $73.6 million gain, net of taxes, on the currency-related remeasurement of u.s. dollar denominated intercompany loans with foreign subsidiaries. net income in the second quarter of 2020 was $22.8 million, or $0.20 per share, and included a $20.4 million loss, net of taxes, on the currency-related remeasurement of u.s. dollar denominated intercompany loans with foreign subsidiaries. adjusted ebitda in the second quarter of 2021 was $400.2 million, an 8.5% increase over the prior year period. adjusted ebitda margin in the second quarter of 2021 was 70.7% compared to 72.8% in the prior year period. net cash interest expense in the second quarter of 2021 was $90.0 million compared to $95.0 million in the prior year period, a decrease of 5.3%. affo in the second quarter of 2021 was $293.5 million, a 12.9% increase over the prior year period. affo per share in the second quarter of 2021 was $2.64, a 15.3% increase over the prior year period. investing activities during the second quarter of 2021, sba acquired 57 communication sites for total cash consideration of $67.0 million. sba also built 98 towers during the second quarter of 2021. as of june 30, 2021, sba owned or operated 33,854 communication sites, 17,306 of which are located in the united states and its territories, and 16,548 of which are located internationally. in addition, the company spent $11.8 million to purchase land and easements and to extend lease terms. total cash capital expenditures for the second quarter of 2021 were $108.0 million, consisting of $10.2 million of non-discretionary cash capital expenditures (tower maintenance and general corporate) and $97.8 million of discretionary cash capital expenditures (new tower builds, tower augmentations, acquisitions, and purchasing land and easements). subsequent to the second quarter of 2021, the company purchased or agreed to purchase approximately 1,800 communication sites for an aggregate consideration of approximately $270.0 million in cash, including approximately 1,400 sites and approximately $175.0 million in cash relating to the previously announced deal to acquire towers from airtel tanzania. the company anticipates that the majority of these acquisitions will be consummated by the end of the first quarter of 2022. financing activities and liquidity sba ended the second quarter of 2021 with $12.0 billion of total debt, $7.9 billion of total secured debt, $336.9 million of cash and cash equivalents, short-term restricted cash, and short-term investments, and $11.7 billion of net debt. sba’s net debt and net secured debt to annualized adjusted ebitda leverage ratios were 7.3x and 4.7x, respectively. on may 14, 2021, the company, through an existing trust, issued $1.165 billion of secured tower revenue securities series 2021-1c, which have an anticipated repayment date of november 9, 2026 and a final maturity date of may 9, 2051 (the “2021-1c tower securities”). the fixed interest rate on the 2021-1c tower securities is 1.631% per annum, payable monthly. net proceeds from this offering were used to repay the entire aggregate principal amount of the 2017-1c tower securities ($760.0 million) and for general corporate purposes. on july 7, 2021, the company, through its wholly owned subsidiary, sba senior finance ii llc, amended its revolving credit facility to (1) increase the total commitments under the facility from $1.25 billion to $1.5 billion, (2) extend the maturity date of the facility to july 7, 2026, (3) lower the applicable interest rate margins and commitment fees under the facility, (4) provide mechanics relating to a transition away from libor as a benchmark interest rate and the replacement of libor by an alternative benchmark rate, (5) incorporate sustainability-linked targets which will adjust the facility’s applicable interest and commitment fee rates upward or downward based on how the company performs against those targets, and (6) amend certain other terms and conditions under the senior credit agreement. as of the date of this press release, the company had no amount outstanding under the $1.5 billion revolving credit facility. in the second quarter of 2021, the company declared and paid a cash dividend of $63.5 million. outlook the company is updating its full year 2021 outlook for anticipated results. the outlook provided is based on a number of assumptions that the company believes are reasonable at the time of this press release. information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in the company’s filings with the securities and exchange commission. the company’s full year 2021 outlook assumes the acquisitions of only those communication sites under contract and anticipated to close at the time of this press release. the company may spend additional capital in 2021 on acquiring revenue producing assets not yet identified or under contract, the impact of which is not reflected in the 2021 guidance. the outlook also does not contemplate any additional repurchases of the company’s stock during 2021, although the company may ultimately spend capital to repurchase some of its stock during the year. the company’s outlook assumes an average foreign currency exchange rate of 5.30 brazilian reais to 1.0 u.s. dollar, 1.25 canadian dollars to 1.0 u.s. dollar, and 14.35 south african rand to 1.0 u.s. dollar throughout the last two quarters of 2021. change from change from april 26, 2021 april 26, 2021 outlook (in millions, except per share amounts) full year 2021 outlook (7) excluding fx site leasing revenue (1) $ 2,080.0 to $ 2,100.0 $ 15.0 $ 5.0 site development revenue $ 180.0 to $ 200.0 $ 25.0 $ 25.0 total revenues $ 2,260.0 to $ 2,300.0 $ 40.0 $ 30.0 tower cash flow (2) $ 1,677.0 to $ 1,697.0 $ 10.0 $ 3.0 adjusted ebitda (2) $ 1,586.0 to $ 1,606.0 $ 13.0 $ 6.0 net cash interest expense (3) $ 351.0 to $ 361.0 $ (7.0 ) $ (7.0 ) non-discretionary cash capital expenditures (4) $ 35.0 to $ 45.0 $ (1.0 ) $ (1.0 ) affo (2) $ 1,151.0 to $ 1,195.0 $ 19.0 $ 12.5 affo per share (2) (5) $ 10.32 to $ 10.72 $ 0.16 $ 0.10 discretionary cash capital expenditures (6) $ 1,450.0 to $ 1,470.0 $ 225.0 $ 222.5 (1 ) the company’s outlook for site leasing revenue includes revenue associated with pass through reimbursable expenses. (2 ) see the reconciliation of this non-gaap financial measure presented below under “non-gaap financial measures.” (3 ) net cash interest expense is defined as interest expense less interest income. net cash interest expense does not include amortization of deferred financing fees or non-cash interest expense. (4 ) consists of tower maintenance and general corporate capital expenditures. (5 ) outlook for affo per share is calculated by dividing the company’s outlook for affo by an assumed weighted average number of diluted common shares of 111.5 million. our outlook does not include the impact of any potential future repurchases of the company’s stock during 2021. (6 ) consists of new tower builds, tower augmentations, communication site acquisitions and ground lease purchases. does not include expenditures for acquisitions of revenue producing assets not under contract at the date of this press release. (7 ) changes from prior outlook are measured based on the midpoint of outlook ranges provided. conference call information sba communications corporation will host a conference call on monday, august 2, 2021 at 5:00 pm (edt) to discuss the quarterly results. the call may be accessed as follows: when: monday, august 2, 2021 at 5:00 pm (edt) dial-in number: (877) 692-8955 access code: 1473405 conference name: sba second quarter 2021 results replay available: august 2, 2021 at 11:00 pm to august 16, 2021 at 12:00 am (tz: eastern) replay number: (866) 207-1041 – access code: 2429212 internet access: www.sbasite.com information concerning forward-looking statements this press release and our earnings call include forward-looking statements, including statements regarding the company’s expectations or beliefs regarding (i) customer activity and demand for the company’s wireless communications infrastructure during 2021 and thereafter, and the company’s role in the continued buildout of 5g networks, (ii) the company’s backlog, the impact of that backlog on future leasing activity and timing for the company’s recognition of revenue from second quarter leasing activity, (iii) the company’s future capital allocation, including with respect to stock repurchases, acquisition of new assets and its availability of capital for additional investment, (iv) the company’s financial and operational performance in 2021, including the company’s revised financial and operational guidance, the assumptions and drivers contributing to its full year guidance, and the ability to deliver material growth in total shareholder return, (v) the timing of closing for currently pending acquisitions, including from airtel tanzania, (vi) growth opportunities in the tanzania market and the impact of the company’s investment on additional shareholder value, (vii) the company’s portfolio growth goals, and (viii) foreign exchange rates and their impact on the company’s financial and operational guidance. the company wishes to caution readers that these forward-looking statements may be affected by the risks and uncertainties in the company’s business as well as other important factors may have affected and could in the future affect the company’s actual results and could cause the company’s actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the company. with respect to the company’s expectations regarding all of these statements, including its financial and operational guidance, such risk factors include, but are not limited to: (1) the ability and willingness of wireless service providers to maintain or increase their capital expenditures; (2) the company’s ability to identify and acquire sites at prices and upon terms that will provide accretive portfolio growth; (3) the company’s ability to accurately identify and manage any risks associated with its acquired sites, to effectively integrate such sites into its business and to achieve the anticipated financial results; (4) the company’s ability to secure and retain as many site leasing tenants as planned at anticipated lease rates, including its ability to realize anticipated benefits under the new verizon agreement; (5) the impact of continued consolidation among wireless service providers in the u.s. and internationally, including the impact of the completed t-mobile and sprint merger, on the company’s leasing revenue; (6) the company’s ability to successfully manage the risks associated with international operations, including risks associated with foreign currency exchange rates; (7) the company’s ability to secure and deliver anticipated services business at contemplated margins; (8) the company’s ability to maintain expenses and cash capital expenditures at appropriate levels for its business while seeking to attain its investment goals; (9) the company’s ability to acquire land underneath towers on terms that are accretive; (10) the economic climate for the wireless communications industry in general and the wireless communications infrastructure providers in particular in the united states, brazil, south africa, tanzania, and in other international markets; (11) the ability of dish to become and compete as a nationwide carrier; (12) the company’s ability to obtain future financing at commercially reasonable rates or at all; (13) the ability of the company to achieve its long-term stock repurchases strategy, which will depend, among other things, on the trading price of the company’s common stock, which may be positively or negatively impacted by the repurchase program, market and business conditions; (14) the company’s ability to achieve the new builds targets included in its anticipated annual portfolio growth goals, which will depend, among other things, on obtaining zoning and regulatory approvals, weather, availability of labor and supplies and other factors beyond the company’s control that could affect the company’s ability to build additional towers in 2021; (15) the extent and duration of the impact of the covid-19 crisis on the global economy, on the company’s business and results of operations, and on foreign currency exchange rates; and (16) the company’s ability to meet its total portfolio growth, which will depend, in addition to the new build risks, on the availability of sufficient towers for sale to meet our targets, competition from third parties for such acquisitions and our ability to negotiate the terms of, and acquire, these potential tower portfolios on terms that meet our internal return criteria. with respect to its expectations regarding the ability to close pending acquisitions, these factors also include satisfactorily completing due diligence, the amount and quality of due diligence that the company is able to complete prior to closing of any acquisition and its ability to accurately anticipate the future performance of the acquired towers, the ability to receive required regulatory approval, the ability and willingness of each party to fulfill their respective closing conditions and their contractual obligations and the availability of cash on hand or borrowing capacity under the revolving credit facility to fund the consideration. with respect to the repurchases under the company’s stock repurchase program, the amount of shares repurchased, if any, and the timing of such repurchases will depend on, among other things, the trading price of the company’s common stock, which may be positively or negatively impacted by the repurchase program, market and business conditions, the availability of stock, the company’s financial performance or determinations following the date of this announcement in order to use the company’s funds for other purposes. with respect to the acquisition from airtel tanzania, these factors also include a variety of factors outside of the company’s control, including the accuracy of the information provided to the company, the health of the tanzania economy and wireless communications market, and the willingness of carriers to invest in their networks in that market. furthermore, the company’s forward-looking statements and its 2021 outlook assumes that the company continues to qualify for treatment as a reit for u.s. federal income tax purposes and that the company’s business is currently operated in a manner that complies with the reit rules and that it will be able to continue to comply with and conduct its business in accordance with such rules. in addition, these forward-looking statements and the information in this press release is qualified in its entirety by cautionary statements and risk factor disclosures contained in the company’s securities and exchange commission filings, including the company’s annual report on form 10-k filed with the commission on february 25, 2021. this press release contains non-gaap financial measures. reconciliation of each of these non-gaap financial measures and the other regulation g information is presented below under “non-gaap financial measures.” this press release will be available on our website at www.sbasite.com. about sba communications corporation sba communications corporation is a first choice provider and leading owner and operator of wireless communications infrastructure in north, central, and south america and south africa. by “building better wireless,” sba generates revenue from two primary businesses – site leasing and site development services. the primary focus of the company is the leasing of antenna space on its multi-tenant communication sites to a variety of wireless service providers under long-term lease contracts. for more information please visit: www.sbasite.com. consolidated statements of operations (unaudited) (in thousands, except per share amounts) for the three months for the six months ended june 30, ended june 30, 2021 2020 2021 2020 revenues: site leasing $ 524,095 $ 482,403 $ 1,029,197 $ 974,758 site development 51,433 24,823 95,069 49,534 total revenues 575,528 507,226 1,124,266 1,024,292 operating expenses: cost of revenues (exclusive of depreciation, accretion, and amortization shown below): cost of site leasing 95,350 91,598 190,718 187,397 cost of site development 40,409 19,904 74,815 39,620 selling, general, and administrative expenses (1) 53,945 49,088 105,546 98,704 acquisition and new business initiatives related adjustments and expenses 6,794 4,634 11,795 8,433 asset impairment and decommission costs 3,797 6,242 8,700 20,597 depreciation, accretion, and amortization 175,469 178,706 359,350 361,285 total operating expenses 375,764 350,172 750,924 716,036 operating income 199,764 157,054 373,342 308,256 other income (expense): interest income 547 699 1,179 1,584 interest expense (90,544 ) (95,687 ) (180,639 ) (191,538 ) non-cash interest expense (11,812 ) (2,337 ) (23,615 ) (4,743 ) amortization of deferred financing fees (4,865 ) (5,188 ) (9,755 ) (10,328 ) loss from extinguishment of debt, net (2,020 ) — (13,672 ) (16,864 ) other income (expense), net 108,849 (31,588 ) 20,410 (257,885 ) total other income (expense), net 155 (134,101 ) (206,092 ) (479,774 ) income (loss) before income taxes 199,919 22,953 167,250 (171,518 ) (provision) benefit for income taxes (47,250 ) 165 (26,328 ) 66,702 net income (loss) 152,669 23,118 140,922 (104,816 ) net (income) loss attributable to noncontrolling interests — (305 ) — 569 net income (loss) attributable to sba communications corporation $ 152,669 $ 22,813 $ 140,922 $ (104,247 ) net income (loss) per common share attributable to sba communications corporation: basic $ 1.40 $ 0.20 $ 1.29 $ (0.93 ) diluted $ 1.37 $ 0.20 $ 1.27 $ (0.93 ) weighted average number of common shares basic 109,412 111,738 109,441 111,823 diluted 111,301 113,634 111,210 111,823 (1) includes non-cash compensation of $21,077 and $18,131 for the three months ended june 30, 2021 and 2020, respectively, and $40,661 and $33,684 for the six months ended june 30, 2021 and 2020, respectively. condensed consolidated balance sheets (in thousands, except par values) june 30, december 31, 2021 2020 assets (unaudited) current assets: cash and cash equivalents $ 273,803 $ 308,560 restricted cash 62,370 31,671 accounts receivable, net 85,976 74,088 costs and estimated earnings in excess of billings on uncompleted contracts 33,237 34,796 prepaid expenses and other current assets 26,840 23,875 total current assets 482,226 472,990 property and equipment, net 2,625,097 2,677,326 intangible assets, net 3,051,616 3,156,150 operating lease right-of-use assets, net 2,353,365 2,369,358 acquired and other right-of-use assets, net 956,011 4,202 other assets 491,998 477,992 total assets $ 9,960,313 $ 9,158,018 liabilities, redeemable noncontrolling interests, and shareholders' deficit current liabilities: accounts payable $ 34,602 $ 109,969 accrued expenses 68,655 63,031 current maturities of long-term debt 24,000 24,000 deferred revenue 176,996 113,117 accrued interest 66,392 54,350 current lease liabilities 242,516 236,037 other current liabilities 12,845 14,297 total current liabilities 626,006 614,801 long-term liabilities: long-term debt, net 11,908,447 11,071,796 long-term lease liabilities 2,064,831 2,094,363 other long-term liabilities 185,594 186,246 total long-term liabilities 14,158,872 13,352,405 redeemable noncontrolling interests 15,177 15,194 shareholders' deficit: preferred stock - par value $0.01, 30,000 shares authorized, no shares issued or outstanding — — common stock - class a, par value $0.01, 400,000 shares authorized, 109,534 shares and 109,819 shares issued and outstanding at june 30, 2021 and december 31, 2020, respectively 1,095 1,098 additional paid-in capital 2,657,540 2,586,130 accumulated deficit (6,759,382 ) (6,604,028 ) accumulated other comprehensive loss, net (738,995 ) (807,582 ) total shareholders' deficit (4,839,742 ) (4,824,382 ) total liabilities, redeemable noncontrolling interests, and shareholders' deficit $ 9,960,313 $ 9,158,018 condensed consolidated statement of cash flows (unaudited) (in thousands) for the three months ended june 30, 2021 2020 cash flows from operating activities: net income $ 152,669 $ 23,118 adjustments to reconcile net income to net cash provided by operating activities: depreciation, accretion, and amortization 175,469 178,706 (gain) loss on remeasurement of u.s. dollar denominated intercompany loans (111,295 ) 31,176 non-cash compensation expense 21,643 18,579 non-cash asset impairment and decommission costs 3,498 6,163 loss from extinguishment of debt 2,020 — deferred income tax expense (benefit) 40,996 (5,503 ) other non-cash items reflected in the statements of operations 20,416 8,937 changes in operating assets and liabilities, net of acquisitions: accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts, net 11,105 14,415 prepaid expenses and other assets (6,112 ) 3,622 operating lease right-of-use assets, net 27,130 29,378 accounts payable and accrued expenses 7,766 8,818 accrued interest 39,389 17,723 long-term lease liabilities (28,379 ) (25,116 ) other liabilities (3,531 ) 4,660 net cash provided by operating activities 352,784 314,676 cash flows from investing activities: acquisitions (77,175 ) (29,504 ) capital expenditures (30,839 ) (27,688 ) net purchases of investments — (225,014 ) other investing activities (156 ) 248 net cash used in investing activities (108,170 ) (281,958 ) cash flows from financing activities: net repayments under revolving credit facility (505,000 ) (485,000 ) proceeds from issuance of senior notes, net of fees — 491,690 proceeds from issuance of tower securities, net of fees 1,152,631 — repayment of tower securities (760,000 ) — payment of dividends on common stock (63,481 ) (51,970 ) proceeds from employee stock purchase/stock option plans, net of taxes 25,125 42,935 other financing activities (5,224 ) (6,441 ) net cash used in financing activities (155,949 ) (8,786 ) effect of exchange rate changes on cash, cash equivalents, and restricted cash 7,960 (1,909 ) net change in cash, cash equivalents, and restricted cash 96,625 22,023 cash, cash equivalents, and restricted cash: beginning of period 242,185 229,615 end of period $ 338,810 $ 251,638 selected capital expenditure detail for the three for the six months ended months ended june 30, 2021 june 30, 2021 (in thousands) construction and related costs on new builds $ 13,764 $ 22,587 augmentation and tower upgrades 6,877 14,437 non-discretionary capital expenditures: tower maintenance 8,979 16,292 general corporate 1,219 2,059 total non-discretionary capital expenditures 10,198 18,351 total capital expenditures $ 30,839 $ 55,375 communication site portfolio summary domestic international total sites owned at march 31, 2021 17,259 16,452 33,711 sites acquired during the second quarter 48 9 57 sites built during the second quarter 1 97 98 sites decommissioned/reclassified during the second quarter (2 ) (10 ) (12 ) sites owned at june 30, 2021 17,306 16,548 33,854 segment operating profit and segment operating profit margin domestic site leasing and international site leasing are the two segments within our site leasing business. segment operating profit is a key business metric and one of our two measures of segment profitability. the calculation of segment operating profit for each of our segments is set forth below. domestic site leasing int'l site leasing site development for the three months for the three months for the three months ended june 30, ended june 30, ended june 30, 2021 2020 2021 2020 2021 2020 (in thousands) segment revenue $ 418,829 $ 388,018 $ 105,266 $ 94,385 $ 51,433 $ 24,823 segment cost of revenues (excluding depreciation, accretion, and amort.) (63,948 ) (64,093 ) (31,402 ) (27,505 ) (40,409 ) (19,904 ) segment operating profit $ 354,881 $ 323,925 $ 73,864 $ 66,880 $ 11,024 $ 4,919 segment operating profit margin 84.7 % 83.5 % 70.2 % 70.9 % 21.4 % 19.8 % non-gaap financial measures the press release contains non-gaap financial measures including (i) cash site leasing revenue, tower cash flow, and tower cash flow margin; (ii) adjusted ebitda, annualized adjusted ebitda, and adjusted ebitda margin; (iii) funds from operations (“ffo”), adjusted funds from operations (“affo”), and affo per share; (iv) net debt, net secured debt, leverage ratio, and secured leverage ratio (collectively, our “non-gaap debt measures”); and (v) certain financial metrics after eliminating the impact of changes in foreign currency exchange rates (collectively, our “constant currency measures”). we have included these non-gaap financial measures because we believe that they provide investors additional tools in understanding our financial performance and condition. specifically, we believe that: (1) cash site leasing revenue and tower cash flow are useful indicators of the performance of our site leasing operations; (2) adjusted ebitda is useful to investors or other interested parties in evaluating our financial performance. adjusted ebitda is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. management believes that adjusted ebitda helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. management also believes adjusted ebitda is frequently used by investors or other interested parties in the evaluation of reits. in addition, adjusted ebitda is similar to the measure of current financial performance generally used in our debt covenant calculations. adjusted ebitda should be considered only as a supplement to net income computed in accordance with gaap as a measure of our performance; (3) ffo, affo and affo per share, which are metrics used by our public company peers in the communication site industry, provide investors useful indicators of the financial performance of our business and permit investors an additional tool to evaluate the performance of our business against those of our two principal competitors. ffo, affo, and affo per share are also used to address questions we receive from analysts and investors who routinely assess our operating performance on the basis of these performance measures, which are considered industry standards. we believe that ffo helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion and asset impairment and decommission costs). we believe that affo and affo per share help investors or other interested parties meaningfully evaluate our financial performance as they include (1) the impact of our capital structure (primarily interest expense on our outstanding debt) and (2) sustaining capital expenditures and exclude the impact of (1) our asset base (primarily depreciation, amortization and accretion and asset impairment and decommission costs) and (2) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods and the non-cash portion of our reported tax provision. gaap requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. in accordance with gaap, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. we only use affo as a performance measure. affo should be considered only as a supplement to net income computed in accordance with gaap as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment. we believe our definition of ffo is consistent with how that term is defined by the national association of real estate investment trusts (“nareit”) and that our definition and use of affo and affo per share is consistent with those reported by the other communication site companies; (4) our non-gaap debt measures provide investors a more complete understanding of our net debt and leverage position as they include the full principal amount of our debt which will be due at maturity and, to the extent that such measures are calculated on net debt are net of our cash and cash equivalents, short-term restricted cash, and short-term investments; and (5) our constant currency measures provide management and investors the ability to evaluate the performance of the business without the impact of foreign currency exchange rate fluctuations. in addition, tower cash flow, adjusted ebitda, and our non-gaap debt measures are components of the calculations used by our lenders to determine compliance with certain covenants under our senior credit agreement and indentures relating to our 2016 senior notes, 2020 senior notes, and 2021 senior notes. these non-gaap financial measures are not intended to be an alternative to any of the financial measures provided in our results of operations or our balance sheet as determined in accordance with gaap. financial metrics after eliminating the impact of changes in foreign currency exchange rates we eliminate the impact of changes in foreign currency exchange rates for each of the financial metrics listed in the table below by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, and by eliminating the impact of the remeasurement of our intercompany loans. the table below provides the reconciliation of the reported growth rate year-over-year of each of such measures to the growth rate after eliminating the impact of changes in foreign currency exchange rates to such measure. second quarter 2021 year foreign growth excluding over year currency foreign growth rate impact currency impact total site leasing revenue 8.6% 0.7% 7.9% total cash site leasing revenue 6.7% 0.7% 6.0% int'l cash site leasing revenue 11.9% 3.6% 8.3% total site leasing segment operating profit 9.7% 0.6% 9.1% int'l site leasing segment operating profit 10.4% 3.5% 6.9% total site leasing tower cash flow 6.9% 0.6% 6.3% int'l site leasing tower cash flow 10.9% 3.5% 7.4% net income 561.0% 476.2% 84.8% earnings per share - diluted 585.0% 495.5% 89.5% adjusted ebitda 8.5% 0.6% 7.9% affo 12.9% 0.7% 12.2% affo per share 15.3% 0.9% 14.4% cash site leasing revenue, tower cash flow, and tower cash flow margin the table below sets forth the reconciliation of cash site leasing revenue and tower cash flow to their most comparable gaap measurement and tower cash flow margin, which is calculated by dividing tower cash flow by cash site leasing revenue. domestic site leasing int'l site leasing total site leasing for the three months for the three months for the three months ended june 30, ended june 30, ended june 30, 2021 2020 2021 2020 2021 2020 (in thousands) site leasing revenue $ 418,829 $ 388,018 $ 105,266 $ 94,385 $ 524,095 $ 482,403 non-cash straight-line leasing revenue (10,547 ) (937 ) 1,032 591 (9,515 ) (346 ) cash site leasing revenue 408,282 387,081 106,298 94,976 514,580 482,057 site leasing cost of revenues (excluding depreciation, accretion, and amortization) (63,948 ) (64,093 ) (31,402 ) (27,505 ) (95,350 ) (91,598 ) non-cash straight-line ground lease expense 1,594 3,237 413 441 2,007 3,678 tower cash flow $ 345,928 $ 326,225 $ 75,309 $ 67,912 $ 421,237 $ 394,137 tower cash flow margin 84.7 % 84.3 % 70.8 % 71.5 % 81.9 % 81.8 % forecasted tower cash flow for full year 2021 the table below sets forth the reconciliation of forecasted tower cash flow set forth in the outlook section to its most comparable gaap measurement for the full year 2021: full year 2021 (in millions) site leasing revenue $ 2,080.0 to $ 2,100.0 non-cash straight-line leasing revenue (29.5 ) to (24.5 ) cash site leasing revenue 2,050.5 to 2,075.5 site leasing cost of revenues (excluding depreciation, accretion, and amortization) (379.0 ) to (389.0 ) non-cash straight-line ground lease expense 5.5 to 10.5 tower cash flow $ 1,677.0 to $ 1,697.0 adjusted ebitda, annualized adjusted ebitda, and adjusted ebitda margin the table below sets forth the reconciliation of adjusted ebitda to its most comparable gaap measurement. for the three months ended june 30, 2021 2020 (in thousands) net income $ 152,669 $ 23,118 non-cash straight-line leasing revenue (9,515 ) (346 ) non-cash straight-line ground lease expense 2,007 3,678 non-cash compensation 21,643 18,579 loss from extinguishment of debt, net 2,020 — other (income) expense, net (108,849 ) 31,588 acquisition and new business initiatives related adjustments and expenses 6,794 4,634 asset impairment and decommission costs 3,797 6,242 interest income (547 ) (699 ) total interest expense (1) 107,221 103,212 depreciation, accretion, and amortization 175,469 178,706 provision for taxes (2) 47,485 55 adjusted ebitda $ 400,194 $ 368,767 annualized adjusted ebitda (3) $ 1,600,776 $ 1,475,068 (1) total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees. (2) for the three months ended june 30, 2021 and 2020, these amounts included $235 and $220, respectively, of franchise and gross receipts taxes reflected in the statements of operations in selling, general and administrative expenses. (3) annualized adjusted ebitda is calculated as adjusted ebitda for the most recent quarter multiplied by four. the calculation of adjusted ebitda margin is as follows: for the three months ended june 30, 2021 2020 (in thousands) total revenues $ 575,528 $ 507,226 non-cash straight-line leasing revenue (9,515 ) (346 ) total revenues minus non-cash straight-line leasing revenue $ 566,013 $ 506,880 adjusted ebitda $ 400,194 $ 368,767 adjusted ebitda margin 70.7 % 72.8 % forecasted adjusted ebitda for full year 2021 the table below sets forth the reconciliation of the forecasted adjusted ebitda set forth in the outlook section to its most comparable gaap measurement for the full year 2021: full year 2021 (in millions) net income $ 303.5 to $ 349.5 non-cash straight-line leasing revenue (29.5 ) to (24.5 ) non-cash straight-line ground lease expense 5.5 to 10.5 non-cash compensation 80.0 to 75.0 loss from extinguishment of debt, net 13.0 to 14.0 other expense, net (1.0 ) to (1.0 ) acquisition and new business initiatives related adjustments and expenses 24.0 to 20.0 asset impairment and decommission costs 24.0 to 19.0 interest income (4.5 ) to (1.5 ) total interest expense (1) 430.5 to 420.5 depreciation, accretion, and amortization 696.5 to 686.5 provision for taxes (2) 44.0 to 38.0 adjusted ebitda $ 1,586.0 to $ 1,606.0 (1) total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees. (2) includes projections for franchise taxes and gross receipts taxes, which will be reflected in the statement of operations in selling, general, and administrative expenses. funds from operations (“ffo”), adjusted funds from operations (“affo”), and affo per share the table below sets forth the reconciliations of ffo and affo to their most comparable gaap measurement. for the three months ended june 30, (in thousands, except per share amounts) 2021 2020 net income $ 152,669 $ 23,118 real estate related depreciation, amortization, and accretion 176,340 177,638 asset impairment and decommission costs 3,797 6,242 ffo $ 332,806 $ 206,998 adjustments to ffo: non-cash straight-line leasing revenue (9,515 ) (346 ) non-cash straight-line ground lease expense 2,007 3,678 non-cash compensation 21,643 18,579 adjustment for non-cash portion of tax provision (benefit) 40,991 (5,503 ) non-real estate related depreciation, amortization, and accretion (871 ) 1,068 amortization of deferred financing costs and debt discounts and non-cash interest expense 16,677 7,525 loss from extinguishment of debt, net 2,020 — other (income) expense, net (108,849 ) 31,588 acquisition and new business initiatives related adjustments and expenses 6,794 4,634 non-discretionary cash capital expenditures (10,198 ) (8,315 ) affo $ 293,505 $ 259,906 weighted average number of common shares (1) 111,301 113,634 affo per share $ 2.64 $ 2.29 (1) for purposes of the affo per share calculation, the basic weighted average number of common shares has been adjusted to include the dilutive effect of stock options and restricted stock units. forecasted affo for the full year 2021 the table below sets forth the reconciliation of the forecasted affo and affo per share set forth in the outlook section to its most comparable gaap measurement for the full year 2021: (in millions, except per share amounts) full year 2021 net income $ 303.5 to $ 349.5 real estate related depreciation, amortization, and accretion 689.0 to 681.0 asset impairment and decommission costs 24.0 to 19.0 ffo $ 1,016.5 to $ 1,049.5 adjustments to ffo: non-cash straight-line leasing revenue (29.5 ) to (24.5 ) non-cash straight-line ground lease expense 5.5 to 10.5 non-cash compensation 80.0 to 75.0 adjustment for non-cash portion of tax provision 14.0 to 14.0 non-real estate related depreciation, amortization, and accretion 7.5 to 5.5 amortization of deferred financing costs and debt discounts and non-cash interest expense 66.0 to 67.0 loss from extinguishment of debt, net 13.0 to 14.0 other expense, net (1.0 ) to (1.0 ) acquisition and new business initiatives related adjustments and expenses 24.0 to 20.0 non-discretionary cash capital expenditures (45.0 ) to (35.0 ) affo $ 1,151.0 to $ 1,195.0 weighted average number of common shares (1) 111.5 to 111.5 affo per share $ 10.32 to $ 10.72 (1) our assumption for weighted average number of common shares does not contemplate any additional repurchases of the company’s stock during 2021. net debt, net secured debt, leverage ratio, and secured leverage ratio net debt is calculated using the notional principal amount of outstanding debt. under gaap policies, the notional principal amount of the company's outstanding debt is not necessarily reflected on the face of the company's financial statements. the net debt and leverage calculations are as follows: june 30, 2021 (in thousands) 2013-2c tower securities $ 575,000 2014-2c tower securities 620,000 2018-1c tower securities 640,000 2019-1c tower securities 1,165,000 2020-1c tower securities 750,000 2020-2c tower securities 600,000 2021-1c tower securities 1,165,000 revolving credit facility 85,000 2018 term loan 2,328,000 total secured debt 7,928,000 2016 senior notes 1,100,000 2020 senior notes 1,500,000 2021 senior notes 1,500,000 total unsecured debt 4,100,000 total debt $ 12,028,000 leverage ratio total debt $ 12,028,000 less: cash and cash equivalents, short-term restricted cash and short-term investments (336,937 ) net debt $ 11,691,063 divided by: annualized adjusted ebitda $ 1,600,776 leverage ratio 7.3x secured leverage ratio total secured debt $ 7,928,000 less: cash and cash equivalents, short-term restricted cash and short-term investments (336,937 ) net secured debt $ 7,591,063 divided by: annualized adjusted ebitda $ 1,600,776 secured leverage ratio 4.7x
