SBAC
$167.84
SBA Communications
$.07
.04%
Earnings Details
4th Quarter December 2017
Monday, February 26, 2018 4:01:20 PM
Tweet Share Watch
Summary

SBA Communications Beats

SBA Communications (SBAC) reported 4th Quarter December 2017 earnings of $0.23 per share on revenue of $443.1 million. The consensus earnings estimate was $0.18 per share on revenue of $437.5 million. The Earnings Whisper number was $0.19 per share. Revenue grew 6.4% on a year-over-year basis.

The company said it expects 2018 revenue of $1.83 billion to $1.87 billion. The current consensus estimate is revenue of $1.84 billion for the year ending December 31, 2018.

SBA Communications Corporation is an independent owner & operator of wireless communications tower structures, rooftops & other structures that support antennas for communication. Its business segments are site leasing and site development.

Results
Reported Earnings
$0.23
Earnings Whisper
$0.19
Consensus Estimate
$0.18
Reported Revenue
$443.1 Mil
Revenue Estimate
$437.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

SBA Communications Corporation Reports 4th Quarter 2017 Results; Provides Full Year 2018 Outlook

SBA Communications Corporation (SBAC) ("SBA" or the "Company") today reported results for the quarter ended December 31, 2017.

Highlights of the fourth quarter include:

-- Net income of $7.7 million or $0.06 per share

-- AFFO per share growth of 9% over the year earlier period

-- Added 1,165 sites to our portfolio during the quarter

-- Repurchased 1.9 million shares during the fourth quarter

"We ended the year with solid results and strong momentum as we move into 2018," commented Jeffrey A. Stoops, President and Chief Executive Officer. "In 2017 we saw steady activity across all our markets and we executed well, with results exceeding our plan and initial guidance. We stayed fully invested, allocating capital in substantial amounts to both portfolio growth and stock repurchases. We met our portfolio growth goals, growing the portfolio by 6.5% in 2017. We have moved into 2018 with solid momentum and the opportunity to build on the momentum we have. For the first time in years, all four major U.S. wireless carriers are active and anticipated to remain active through 2018. FirstNet activity is growing and has begun to produce revenue. Our international markets are also performing well, and we view the judicial approval of the Oi reorganization in Brazil as a major positive. We are off to a fast start in terms of portfolio growth, and expect to again achieve our portfolio growth goals of 5% to 10% in 2018. We anticipate staying fully invested to our target net debt leverage range of 7.0x to 7.5x annualized adjusted EBITDA, and to do so through a mix of portfolio growth and stock repurchases. We are optimistic that the anticipated improved organic leasing activity and continued opportunistic capital allocation will keep us on track to achieving our goal of $10 or more of AFFO per share in 2020."

Operating Results

The table below details select financial results for the three months ended December 31, 2017 and comparisons to the prior year period.

% Change
Q4 2017
Q4 2016
$ Change
% Change
excluding FX
Consolidated
($ in millions, except per share amounts)
Site leasing revenue
$
414.1
$
393.6
$
20.5
5.2
%
4.9
%
Site development revenue
29.0
22.9
6.1
26.6 %
26.6
%
Tower cash flow
327.0
308.4
18.6
6.0
%
5.8
%
Net income
7.7
5.3
2.4
45.3 %
431.2 %
Earnings per share - diluted
0.06
0.04
0.02
50.0 %
475.0 %
Adjusted EBITDA
310.1
287.0
23.1
8.0
%
7.8
%
AFFO
211.8
201.3
10.5
5.2
%
4.9
%
AFFO per share
1.78
1.63
0.15
9.2
%
9.2
%

Non-GAAP metrics, please see the reconciliations and other disclosures under "Non-GAAP Financial Measures" later in this press release.

Total revenues in the fourth quarter of 2017 were $443.1 million compared to $416.5 million in the year earlier period, an increase of 6.4%. Site leasing revenue in the quarter of $414.1 million was comprised of domestic site leasing revenue of $333.5 million and international site leasing revenue of $80.5 million. Domestic cash site leasing revenue was $332.9 million in the fourth quarter of 2017 compared to $320.7 million in the year earlier period, an increase of 3.8%. International cash site leasing revenue was $77.2 million in the fourth quarter of 2017 compared to $66.3 million in the year earlier period, an increase of 16.6%.

Site leasing operating profit was $323.6 million, an increase of 5.4% over the year earlier period. Site leasing contributed 98.5% of the Company’s total operating profit in the fourth quarter of 2017. Domestic site leasing segment operating profit was $268.6 million, an increase of 4.2% over the year earlier period. International site leasing segment operating profit was $55.0 million, an increase of 11.7% over the year earlier period.

Tower Cash Flow for the fourth quarter of 2017 of $327.0 million was comprised of Domestic Tower Cash Flow of $274.4 million and International Tower Cash Flow of $52.6 million. Domestic Tower Cash Flow for the quarter increased 4.4% over the prior year period and International Tower Cash Flow increased 15.7% over the prior year period. Tower Cash Flow Margin was 79.7% for the fourth quarter of 2017 and 2016.

Net Cash Interest Expense was $83.6 million in the fourth quarter of 2017 compared to $75.0 million in the fourth quarter of 2016, an increase of 11.5%.

Net income for the fourth quarter of 2017 was $7.7 million, or $0.06 per share, and included a $20.4 million loss on the currency related remeasurement of a U.S. dollar denominated intercompany loan with a Brazilian subsidiary, while net income for the fourth quarter of 2016 was $5.3 million, or $0.04 per share, and included a $1.1 million gain on the currency related remeasurement of a U.S. dollar denominated intercompany loan with a Brazilian subsidiary.

Adjusted EBITDA for the quarter was $310.1 million, an 8.0% increase over the prior year period. Adjusted EBITDA Margin was 70.6% in the fourth quarter of 2017 compared to 70.0% in the fourth quarter of 2016.

AFFO for the quarter was $211.8 million, a 5.2% increase over the prior year period. AFFO per share for the fourth quarter of 2017 was $1.78, a 9.2% increase over the fourth quarter of 2016.

Investing Activities

During the fourth quarter of 2017, SBA purchased 989 communication sites for total consideration of $250.2 million, including 941 sites in Brazil. SBA also built 176 towers during the fourth quarter of 2017. As of December 31, 2017, SBA owned or operated 27,909 communication sites, 15,979 of which are located in the United States and its territories, and 11,930 of which are located internationally. In addition, the Company spent $19.6 million to purchase land and easements and to extend lease terms. Total cash capital expenditures for the fourth quarter of 2017 were $322.4 million, consisting of $10.2 million of non-discretionary cash capital expenditures (tower maintenance and general corporate) and $312.2 million of discretionary cash capital expenditures (new tower builds, tower augmentations, acquisitions, and purchasing land and easements).

Subsequent to the fourth quarter of 2017, the Company acquired 308 communication sites for an aggregate consideration of $79.5 million in cash. In addition, the Company has agreed to purchase in the U.S. and internationally 1,038 communication sites for an aggregate amount of $308.5 million, including 811 sites in El Salvador from a subsidiary of Millicom International Cellular S.A. The Company anticipates that these acquisitions will be consummated throughout 2018.

Financing Activities and Liquidity

SBA ended the fourth quarter with $9.4 billion of total debt, $6.8 billion of total secured debt, $101.9 million of cash and cash equivalents, short-term restricted cash, and short-term investments, and $9.3 billion of Net Debt. SBA’s Net Debt and Net Secured Debt to Annualized Adjusted EBITDA Leverage Ratios were 7.5x and 5.4x, respectively.

As of the date of this press release, SBA had $75.0 million outstanding under its $1.0 billion Revolving Credit Facility.

During the fourth quarter of 2017, the Company repurchased 1.9 million shares of its Class A common stock for $311.1 million, at an average price per share of $160.15.

On February 16, 2018, the Company’s Board of Directors authorized a new $1.0 billion stock repurchase plan, replacing the prior plan authorized on January 12, 2017 which had a remaining authorization of $150.0 million. This new plan authorizes the Company to purchase, from time to time, up to $1.0 billion of our outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. As of the date of this filing, the Company had the full $1.0 billion authorization remaining under the new plan.

On October 13, 2017, the Company issued $750.0 million of unsecured senior notes due October 1, 2022 (the "2017 Senior Notes"). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. Net proceeds from this offering were used to repay $460.0 million outstanding under the Revolving Credit Facility and for general corporate purposes.

On February 16, 2018, the Company agreed to issue, through a Trust, $640.0 million of Secured Tower Revenue Securities Series 2018-1C (the "2018-1C Tower Securities"), which offering is expected to close March 9, 2018. These securities are expected to have an anticipated repayment date of March 9, 2023 and a final maturity date of March 9, 2048. The fixed interest rate on the 2018-1C Tower Securities will be 3.448% per annum, payable monthly, and the proceeds of this offering, in combination with borrowings under the Revolving Credit Facility, will be used to repay the entire aggregate principal amount of the 2013-1C Tower Securities ($425.0 million) and 2013-1D Tower Securities ($330.0 million), as well as accrued and unpaid interest.

Outlook

The Company is providing its full year 2018 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 2018 Outlook assumes the acquisitions of only those communication sites under contract at the time of this press release. The Company may spend additional capital in 2018 on acquiring revenue producing assets not yet identified or under contract, or on stock repurchases, the impact of which is not reflected in the 2018 guidance. The Outlook does not contemplate any new financings or any additional repurchases of the Company’s stock during 2018 other than those financings and repurchases completed as of the date of this press release.

The Company’s Outlook assumes an average foreign currency exchange rate of 3.33 Brazilian Reais to 1.0 U.S. Dollar and 1.25 Canadian Dollars to 1.0 U.S. Dollar for the full year 2018 Outlook, including an assumption of 3.25 BRL to 1.0 USD during the first quarter of 2018.

(in millions, except per share amounts)
Full Year 2018
Site leasing revenue
$
1,730.0 to $
1,750.0
Site development revenue
$
100.0
to $
120.0
Total revenues
$
1,830.0 to $
1,870.0
Tower Cash Flow
$
1,357.0 to $
1,377.0
Adjusted EBITDA
$
1,279.0 to $
1,299.0
Net cash interest expense
$
346.0
to $
356.0
Non-discretionary cash capital expenditures $
34.0
to $
44.0
AFFO
$
861.0
to $
908.0
AFFO per share
$
7.27
to $
7.67
Discretionary cash capital expenditures
$
530.0
to $
550.0

The Company’s Outlook for site leasing revenue includes revenue associated with pass through reimbursable expenses.

See the reconciliation of this non-GAAP financial measure presented below under "Non-GAAP Financial Measures."

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.

Consists of tower maintenance and general corporate capital expenditures. Includes $3.5 million of estimated capital expenditures associated with hurricanes Harvey, Irma, and Maria.

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 118.4 million. Our Outlook does not include the impact of any repurchases of the Company’s stock during 2018.

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.

Conference Call Information

SBA Communications Corporation will host a conference call on Monday, February 26, 2018 at 5:00 PM (ET) to discuss the quarterly results. The call may be accessed as follows:

When:
Monday, February 26, 2018 at 5:00 PM (ET)
Dial-in Number:
(800) 230-1059
Conference Name:
SBA fourth quarter results
Replay Available:
February 26, 2018 at 9:00 PM (ET) through March 12, 2018 at 11:59 PM (ET)
Replay Number:
(800) 475-6701
Access Code:
442692
Internet Access:
www.sbasite.com

Information Concerning Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the Company’s expectations or beliefs regarding (i) the Company’s long term goal of producing AFFO of $10 or more per share in 2020, the factors contributing to its ability to achieve that goal and its progress toward achieving that goal, (ii) future customer activity levels, including with respect to FirstNet, (iii) the Company’s intentions for future capital allocation, including its target leverage range, (iv) the Company’s portfolio growth goals, (v) the Company’s financial and operational guidance for the full year 2018, (vi) timing of closing for currently pending acquisitions, (vii) the Company’s expectations regarding additional capital spending in 2018, and (viii) the Company’s expectations regarding foreign exchange rates and their impact on the Company’s financial and operational guidance. Furthermore, the Company’s 2018 outlook assumes that the Company’s business is currently operated in a manner that complies with the REIT rules and that the Company is able to qualify and to remain qualified as a REIT and the timing of such qualification. These forward-looking statements may be affected by the risks and uncertainties in the Company’s business. This information 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 March 1, 2017.

The Company wishes to caution readers that certain 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 allow the portfolio growth to be accretive; (3) the Company’s ability to accurately identify 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; (5) the impact of continued consolidation among wireless service providers 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 Company’s ability to realize economies of scale from its tower portfolio; (11) the economic climate for the wireless communications industry in general and the wireless communications infrastructure providers in particular in the United States, Brazil, and internationally; (12) the continued dependence on towers and outsourced site development services by the wireless carriers; (13) the Company’s ability to protect its rights to land under its towers; (14) the Company’s ability to obtain future financing at commercially reasonable rates or at all; and (15) the Company’s ability to qualify for treatment as a REIT for U.S. federal income tax purposes and to comply with and conduct its business in accordance with such rules. With respect to the Company’s plan for new builds, these factors also include 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 2018. 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 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.

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. 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.

Contacts

Mark DeRussy, CFA

Capital Markets

561-226-9531

Lynne Hopkins

Media Relations

561-226-9431

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the three months
For the year
ended December 31,
ended December 31,
2017
2016
2017
2016
(unaudited)
(unaudited)
(unaudited)
Revenues:
Site leasing
$
414,084
$
393,609
$
1,623,173
$
1,538,070
Site development
28,989
22,896
104,501
95,055
Total revenues
443,073
416,505
1,727,674
1,633,125
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion,
and amortization shown below):
Cost of site leasing
90,457
86,606
359,527
342,215
Cost of site development
24,073
19,661
86,785
78,682
Selling, general, and administrative
30,520
33,024
130,697
143,349
Acquisition related adjustments and expenses
5,510
4,167
12,367
13,140
Asset impairment and decommission costs
10,789
7,063
36,697
30,242
Depreciation, accretion, and amortization
162,643
158,554
643,100
638,189
Total operating expenses
323,992
309,075
1,269,173
1,245,817
Operating income
119,081
107,430
458,501
387,308
Other income (expense):
Interest income
2,689
3,224
11,337
10,928
Interest expense
(86,334
)
(78,258 )
(323,749
)
(329,171
)
Non-cash interest expense
(733
)
(703
)
(2,879
)
(2,203
)
Amortization of deferred financing fees
(5,336
)
(5,102
)
(21,940
)
(21,136
)
Loss from extinguishment of debt, net
--
(18,189 )
(1,961
)
(52,701
)
Other income (expense), net
(18,636
)
2,139
(2,418
)
94,278
Total other expense
(108,350 )
(96,889 )
(341,610
)
(300,005
)
Income before provision for income taxes
10,731
10,541
116,891
87,303
Provision for income taxes
(3,071
)
(5,285
)
(13,237
)
(11,065
)
Net income
$
7,660
$
5,256
$
103,654
$
76,238
Net income per common share
Basic
$
0.07
$
0.04
$
0.86
$
0.61
Diluted
$
0.06
$
0.04
$
0.86
$
0.61
Weighted average number of common shares
Basic
117,231
122,682
119,860
124,448
Diluted
118,931
123,307
121,022
125,144

Includes non-cash compensation of $9,167 and $8,057 for the three months ended December 31, 2017 and 2016, respectively, and $37,236 and $32,497 for the year ended December 31, 2017 and 2016, respectively.

Includes the impact of the $16,498 Oi reserve for the year ended December 31, 2016.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
December 31,
December 31,
2017
2016
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
68,783
$
146,109
Restricted cash
32,924
36,786
Accounts receivable, net
90,673
78,344
Costs and estimated earnings in excess of billings on uncompleted contracts
17,437
11,127
Prepaid and other current assets
49,716
52,205
Total current assets
259,533
324,571
Property and equipment, net
2,812,346
2,792,076
Intangible assets, net
3,598,131
3,656,924
Other assets
650,195
587,374
Total assets
$
7,320,205
$
7,360,945
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable
$
33,334
$
28,320
Accrued expenses
69,862
61,129
Current maturities of long-term debt
20,000
627,157
Deferred revenue
97,969
101,098
Accrued interest
48,899
44,503
Other current liabilities
8,841
11,240
Total current liabilities
278,905
873,447
Long-term liabilities:
Long-term debt, net
9,290,686
8,148,426
Other long-term liabilities
349,728
334,993
Total long-term liabilities
9,640,414
8,483,419
Shareholders’ deficit:
Prefer. stock-par value $.01, 30,000 shares authorized, no shares issued or outst.
--
--
Common stock - Class A, par value $.01, 400,000 shares authorized, 116,446
and 121,004 shares issued and outstanding at December 31, 2017
and December 31, 2016, respectively
1,164
1,210
Additional paid-in capital
2,167,470
2,010,520
Accumulated deficit
(4,388,288 )
(3,637,467 )
Accumulated other comprehensive loss
(379,460
)
(370,184
)
Total shareholders’ deficit
(2,599,114 )
(1,995,921 )
Total liabilities and shareholders’ deficit
$
7,320,205
$
7,360,945
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) (in thousands)
For the three months
ended December 31,
2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
7,660
$
5,256
Adjust. to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization
162,643
158,554
Non-cash asset impairment and decommission costs
10,107
6,643
Non-cash compensation expense
9,355
8,163
Amortization of deferred financing fees
5,336
5,102
Loss (gain) on remeasurement of U.S. denominated intercompany loan
20,403
(1,066
)
Provision for doubtful accounts
1,411
2,000
Loss from extinguishment of debt, net
--
18,189
Other non-cash items reflected in the Statements of Operations
(2,370
)
2,193
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable and costs and estimated earnings in excess of billings
on uncompleted contracts, net
(8,943
)
(3,626
)
Prepaid expenses and other assets
1,280
(9,316
)
Accounts payable and accrued expenses
(4,550
)
2,609
Accrued interest
29,231
8,963
Other liabilities
(3,429
)
11,630
Net cash provided by operating activities
228,134
215,294
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
(280,540 )
(85,433
)
Capital expenditures
(41,870
)
(35,662
)
Other investing activities
7,082
(6,927
)
Net cash used in investing activities
(315,328 )
(128,022 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under Revolving Credit Facility
(390,000 )
240,000
Repurchase and retirement of common stock, inclusive of fees
(331,164 )
(343,340 )
Payment for the redemption of 5.625% Senior Notes
--
(514,065 )
Proceeds from 2017 Senior Notes, net of fees and original issue discount
741,108
(264
)
Other financing activities
3,084
(4,422
)
Net cash provided by (used in) financing activities
23,028
(622,091 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(4,001
)
(142
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(68,167
)
(534,961 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period
172,462
720,931
End of period
$
104,295
$
185,970

Selected Capital Expenditure Detail

For the three
For the year
months ended
ended
December 31, 2017
December 31, 2017
(in thousands)
Construction and related costs on new builds
$
20,461
$
68,790
Augmentation and tower upgrades
11,204
43,028
Non-discretionary capital expenditures:
Tower maintenance
8,274
30,091
General corporate
1,931
5,135
Total non-discretionary capital expenditures
10,205
35,226
Total capital expenditures
$
41,870
$
147,044

Communication Site Portfolio Summary

Domestic
International
Total
Sites owned at September 30, 2017
15,949
10,815
26,764
Sites acquired during the fourth quarter
36
953
989
Sites built during the fourth quarter
12
164
176
Sites decommissioned during the fourth quarter
(18
)
(2
)
(20
)
Sites owned at December 31, 2017
15,979
11,930
27,909

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 December 31,
ended December 31,
ended December 31,
2017
2016
2017
2016
2017
2016
(in thousands)
Segment revenue
$
333,539
$
322,685
$
80,545
$
70,924
$
28,989
$
22,896
Segment cost of revenues (excluding
depreciation,
accretion, and amort.)
(64,922 )
(64,913 )
(25,535 )
(21,693 )
(24,073 )
(19,661 )
Segment operating profit
$
268,617
$
257,772
$
55,010
$
49,231
$
4,916
$
3,235
Segment operating profit margin
80.5
%
79.9
%
68.3
%
69.4
%
17.0
%
14.1
%

Non-GAAP Financial Measures

The press release contains non-GAAP financial measures including (i) Cash Site Leasing Revenue; (ii) Tower Cash Flow and Tower Cash Flow Margin; (iii) Adjusted EBITDA, Annualized Adjusted EBITDA, and Adjusted EBITDA Margin; (iv) Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage Ratio (collectively, our "Non-GAAP Debt Measures"); (v) Funds from Operations ("FFO"), Adjusted Funds from Operations ("AFFO"), and AFFO per share; and (vi) 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:

Cash Site Leasing Revenue and Tower Cash Flow are useful indicators of the performance of our site leasing operations;

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;

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). 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 our (1) asset base (primarily depreciation, amortization and accretion) 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;

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

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 2014 Senior Notes, 2016 Senior Notes, and 2017 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 following financial metrics by dividing the current period’s financial results by the average monthly exchange rates of the prior year period. The table below provides the reconciliation of the reported growth rate year-over-year of each of the following measures to the growth rate after eliminating the impact of changes in foreign currency exchange rates to such measure: (1) total site leasing revenue, total cash site leasing revenue, and International cash site leasing revenue, (2) total site leasing segment operating profit and International site leasing segment operating profit, (3) total Tower Cash Flow and International Tower Cash Flow, (4) Net income, (5) diluted earnings per share, (6) Adjusted EBITDA, and (7) AFFO and AFFO per share.

Growth
Fourth quarter
excluding
2017 year
Foreign
foreign
over year
currency
currency
growth rate
impact
impact
Total site leasing revenue
5.2
%
0.3
%
4.9
%
Total cash site leasing revenue
6.0
%
0.3
%
5.7
%
Int’l cash site leasing revenue
16.6
%
1.6
%
15.0
%
Total site leasing segment operating profit
5.4
%
0.2
%
5.2
%
Int’l site leasing segment operating profit
11.7
%
1.4
%
10.3
%
Total site leasing tower cash flow
6.0
%
0.2
%
5.8
%
Int’l site leasing tower cash flow
15.7
%
1.5
%
14.2
%
Net income
45.3
%
(385.9 %)
431.2 %
Earnings per share - diluted
50.0
%
(425.0 %)
475.0 %
Adjusted EBITDA
8.0
%
0.2
%
7.8
%
AFFO
5.2
%
0.3
%
4.9
%
AFFO per share
9.2
%
0.0
%
9.2
%

Cash Site Leasing Revenue, Tower Cash Flow, and Tower Cash Flow Margin

The tables below set 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 December 31,
ended December 31,
ended December 31,
2017
2016
2017
2016
2017
2016
(in thousands)
Site leasing revenue
$
333,539
$
322,685
$
80,545
$
70,924
$
414,084
$
393,609
Non-cash straight-line leasing revenue
(669
)
(2,033
)
(3,311
)
(4,662
)
(3,980
)
(6,695
)
Cash site leasing revenue
332,870
320,652
77,234
66,262
410,104
386,914
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(64,922 )
(64,913 )
(25,535 )
(21,693 )
(90,457 )
(86,606 )
Non-cash straight-line ground lease expense
6,439
7,152
950
945
7,389
8,097
Tower Cash Flow
$
274,387
$
262,891
$
52,649
$
45,514
$
327,036
$
308,405
Tower Cash Flow Margin
82.4
%
82.0
%
68.2
%
68.7
%
79.7
%
79.7
%

Forecasted Tower Cash Flow for Full Year 2018

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 2018:

Full Year 2018
(in millions)
Site leasing revenue
$
1,730.0
to $
1,750.0
Non-cash straight-line leasing revenue
(24.0
)
to
(19.0
)
Cash site leasing revenue
1,706.0
to
1,731.0
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization)
(371.0
)
to
(381.0
)
Non-cash straight-line ground lease expense
22.0
to
27.0
Tower Cash Flow
$
1,357.0
to $
1,377.0

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 December 31,
2017
2016
(in thousands)
Net income
$
7,660
$
5,256
Non-cash straight-line leasing revenue
(3,979
)
(6,695
)
Non-cash straight-line ground lease expense
7,389
8,097
Non-cash compensation
9,355
8,163
Loss from extinguishment of debt, net
--
18,189
Other (income) expense
18,636
(2,139
)
Acquisition related adjustments and expenses
5,510
4,167
Asset impairment and decommission costs
10,789
7,063
Interest income
(2,689
)
(3,224
)
Total interest expense
92,403
84,063
Depreciation, accretion, and amortization
162,643
158,554
Provision for taxes
2,347
5,523
Adjusted EBITDA
$
310,064
$
287,017
Annualized Adjusted EBITDA
$
1,240,256
$
1,148,068

Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

For the three months ended December 31, 2017 and 2016, these amounts included $(724) and $238, respectively, of franchise and gross receipts taxes reflected in the Statements of Operations in selling, general and administrative expenses.

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 December 31,
2017
2016
(in thousands)
Total revenues
$
443,073
$
416,505
Non-cash straight-line leasing revenue
(3,979
)
(6,695
)
Total revenues minus non-cash straight-line leasing revenue
$
439,094
$
409,810
Adjusted EBITDA
$
310,064
$
287,017
Adjusted EBITDA Margin
70.6
%
70.0
%

Forecasted Adjusted EBITDA for Full Year 2018

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 2018:

Full Year 2018
(in millions)
Net income
$
65.5
to $
119.5
Non-cash straight-line leasing revenue
(24.0
)
to
(19.0
)
Non-cash straight-line ground lease expense
22.0
to
27.0
Non-cash compensation
45.0
to
40.0
Other (income) expense
20.0
to
15.0
Acquisition related adjustments and expenses
15.0
to
10.0
Asset impairment and decommission costs
36.0
to
31.0
Interest income
(9.0
)
to
(6.0
)
Total interest expense
386.0
to
374.0
Depreciation, accretion, and amortization
700.0
to
690.0
Provision for taxes
22.5
to
17.5
Adjusted EBITDA
$
1,279.0
to $
1,299.0

Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

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") and Adjusted Funds from Operations ("AFFO")

The tables below set forth the reconciliations of FFO and AFFO to their most comparable GAAP measurement.

For the three months
ended December 31,
(in thousands, except per share amounts)
2017
2016
Net income
$
7,660
$
5,256
Real estate related depreciation, amortization, and accretion
161,766
157,407
Adjustments for unconsolidated joint ventures
992
--
FFO
$
170,418
$
162,663
Adjustments to FFO:
Non-cash straight-line leasing revenue
(3,979
)
(6,695
)
Non-cash straight-line ground lease expense
7,389
8,097
Non-cash compensation
9,355
8,163
Adjustment for non-cash portion of tax provision
(2,740
)
2,663
Non-real estate related depreciation, amortization, and accretion
877
1,147
Amortization of deferred financing costs and debt discounts
6,069
5,805
Loss from extinguishment of debt, net
--
18,189
Other (income) expense
18,636
(2,139
)
Acquisition related adjustments and expenses
5,510
4,167
Asset impairment and decommission costs
10,789
7,063
Non-discretionary cash capital expenditures
(10,205 )
(7,820
)
Adjustments for unconsolidated joint ventures
(343
)
--
AFFO
$
211,776
$
201,303
Weighted average number of common shares
118,931
123,307
AFFO per share
$
1.78
$
1.63

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 2018

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 2018:

(in millions, except per share amounts)
Full Year 2018
Net income
$
65.5
to $
119.5
Real estate related depreciation, amortization, and accretion
691.0
to
683.0
Adjustments for unconsolidated joint ventures
1.5
to
2.5
FFO
$
758.0
to $
805.0
Adjustments to FFO:
Non-cash straight-line leasing revenue
(24.0 )
to
(19.0 )
Non-cash straight-line ground lease expense
22.0
to
27.0
Non-cash compensation
45.0
to
40.0
Non-real estate related depreciation, amortization, and accretion
9.0
to
7.0
Amort. of deferred financing costs and debt discounts
22.0
to
23.0
Other (income) expense
20.0
to
15.0
Acquisition related adjustments and expenses
15.0
to
10.0
Asset impairment and decommission costs
36.0
to
31.0
Non-discretionary cash capital expenditures
(44.0 )
to
(34.0 )
Adjustments for unconsolidated joint ventures
2.0
to
3.0
AFFO
$
861.0
to $
908.0
Weighted average number of common shares
118.4
118.4
AFFO per share
$
7.27
$
7.67

Our assumption for weighted average number of common shares does not contemplate any additional repurchases of the Company’s stock during 2018 other than those repurchases completed as of the date of this press release.

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:

December 31,
2017
(in thousands)
2013-1C Tower Securities
$
425,000
2013-2C Tower Securities
575,000
2013-1D Tower Securities
330,000
2014-1C Tower Securities
920,000
2014-2C Tower Securities
620,000
2015-1C Tower Securities
500,000
2016-1C Tower Securities
700,000
2017-1C Tower Securities
760,000
Revolving Credit Facility
40,000
2014 Term Loan
1,447,500
2015 Term Loan
487,500
Total secured debt
6,805,000
2014 Senior Notes
750,000
2016 Senior Notes
1,100,000
2017 Senior Notes
750,000
Total unsecured debt
2,600,000
Total debt
$
9,405,000
Leverage Ratio
Total debt
$
9,405,000
Less: Cash and cash equivalents, short-term restricted cash and short-term investments
(101,937
)
Net debt
$
9,303,063
Divided by: Annualized Adjusted EBITDA
$
1,240,256
Leverage Ratio
7.5x
Secured Leverage Ratio
Total secured debt
$
6,805,000
Less: Cash and cash equivalents, short-term restricted cash and short-term investments
(101,937
)
Net Secured Debt
$
6,703,063
Divided by: Annualized Adjusted EBITDA
$
1,240,256
Secured Leverage Ratio
5.4x

<img src="http://www.globenewswire.com/newsroom/ti?ndecode=MTUwIzcxNjEwOTI=" alt="" width="1" height="1"/>