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SBA Communications Corporation Reports Second Quarter 2018 Results

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Updates Full Year 2018 Outlook

SBA Communications Corporation (NASDAQ:SBAC) ("SBA" or the "Company")
today reported results for the quarter ended June 30, 2018.

"We continued our strong operational performance in the second quarter,"
commented Jeffrey A. Stoops, President and Chief Executive Officer.
"Adjusting for currency, leasing revenue, tower cash flow and Adjusted
EBITDA were all ahead of our expectations for the quarter, evidencing
the underlying strength in our business. In the U.S., the four major
wireless service providers are all active investing in their networks,
and our leasing and services backlogs continue to grow. Demand in our
international markets also remains solid, particularly in Brazil.
Against this favorable demand environment, we continue to execute very
well and continue to post the highest tower cash flow and adjusted
EBITDA margins in our industry. We continued, and expect to continue, to
allocate capital to a mix of portfolio growth and stock repurchases such
as to maintain a target leverage rate of 7.0x to 7.5x net debt/adjusted
EBITDA to maximize long-term growth in AFFO per share. We look forward
to a busy and productive second half of 2018, which we expect to
continue into 2019."

Operating Results

The table below details select financial results for the three months
ended June 30, 2018 and comparisons to the prior year period.

             
 
% Change
Q2 2018 Q2 2017 $ Change % Change excluding FX (1)
 
Consolidated ($ in millions, except per share amounts)
Site leasing revenue $ 429.9 $ 403.0 $ 26.9 6.7% 8.3%
Site development revenue 26.4 24.3 2.1 8.8% 8.8%
Tower cash flow (1) 337.6 317.2 20.4 6.4% 7.7%
Net (loss) income (57.4) 9.2 (66.6) (721.6%) (80.7%)
Earnings per share - diluted (0.50) 0.08 (0.58) (725.0%) (75.0%)
Adjusted EBITDA (1) 318.9 298.8 20.1 6.7% 7.9%
AFFO (1) 213.5 211.2 2.3 1.1% 2.7%
AFFO per share (1) 1.83 1.73 0.10 5.8% 7.5%
 

(1) See the reconciliations and other disclosures under "Non-GAAP
Financial Measures" later in this press release.

Total revenues in the second quarter of 2018 were $456.3 million
compared to $427.3 million in the year earlier period, an increase of
6.8%. Site leasing revenue in the quarter of $429.9 million was
comprised of domestic site leasing revenue of $346.7 million and
international site leasing revenue of $83.2 million. Domestic cash site
leasing revenue was $343.5 million in the second quarter of 2018
compared to $325.0 million in the year earlier period, an increase of
5.7%. International cash site leasing revenue was $81.3 million in the
second quarter of 2018 compared to $73.8 million in the year earlier
period, an increase of 10.0%, or 18.5% excluding the impact of changes
in foreign currency exchange rates.

Site leasing operating profit was $336.2 million, an increase of 7.2%
over the year earlier period. Site leasing contributed 98.3% of the
Company's total operating profit in the second quarter of 2018. Domestic
site leasing segment operating profit was $278.9 million, an increase of
7.2% over the year earlier period. International site leasing segment
operating profit was $57.3 million, an increase of 6.9% over the year
earlier period.

Tower Cash Flow for the second quarter of 2018 of $337.6 million was
comprised of Domestic Tower Cash Flow of $281.9 million and
International Tower Cash Flow of $55.7 million. Domestic Tower Cash Flow
for the quarter increased 5.8% over the prior year period and
International Tower Cash Flow increased 9.9% over the prior year period.
Tower Cash Flow Margin was 79.5% for both the second quarter of 2018 and
the year earlier period.

Adjusted EBITDA for the quarter was $318.9 million, a 6.7% increase over
the prior year period. Adjusted EBITDA Margin was 70.7% in the second
quarter of 2018 compared to 70.6% in the second quarter of 2017.

Net Cash Interest Expense was $92.0 million in the second quarter of
2018 compared to $75.5 million in the second quarter of 2017, an
increase of 21.9%.

Net loss for the second quarter of 2018 was $57.4 million, or $(0.50)
per share, and included a $58.7 million loss, net of taxes, on the
currency related remeasurement of U.S. dollar denominated intercompany
loans with a Brazilian subsidiary, while net income for the second
quarter of 2017 was $9.2 million, or $0.08 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.

AFFO for the quarter was $213.5 million, a 1.1% increase over the prior
year period. AFFO per share for the second quarter of 2018 was $1.83, a
5.8% increase over the second quarter of 2017.

Investing Activities

During the second quarter of 2018, SBA purchased 224 communication sites
for total consideration of $152.3 million. SBA also built 87 towers
during the second quarter of 2018. As of June 30, 2018, SBA owned or
operated 28,604 communication sites, 16,239 of which are located in the
United States and its territories, and 12,365 of which are located
internationally. In addition, the Company spent $18.1 million to
purchase land and easements and to extend lease terms. Total cash
capital expenditures for the second quarter of 2018 were $205.3 million,
consisting of $9.1 million of non-discretionary cash capital
expenditures (tower maintenance and general corporate) and $196.2
million of discretionary cash capital expenditures (new tower builds,
tower augmentations, acquisitions, and purchasing land and easements).

Subsequent to the second quarter of 2018, the Company acquired 23
communication sites for an aggregate consideration of $5.0 million in
cash. In addition, the Company has agreed to purchase in the U.S. and
internationally 867 communication sites for an aggregate amount of
$168.9 million. These sites include the previously announced 811 sites
in El Salvador being purchased from a subsidiary of Millicom
International Cellular, S.A., the majority of which the Company expects
will close in the third quarter and a portion of which the Company now
expects will close in 2019. The Company anticipates that the remaining
acquisitions will be consummated by the end of 2018.

Financing Activities and Liquidity

SBA ended the second quarter with $9.8 billion of total debt, $7.2
billion of total secured debt, $159.7 million of cash and cash
equivalents, short-term restricted cash, and short-term investments, and
$9.6 billion of Net Debt. SBA's Net Debt and Net Secured Debt to
Annualized Adjusted EBITDA Leverage Ratios were 7.6x and 5.5x,
respectively.

On April 11, 2018, the Company, through its wholly owned subsidiary, SBA
Senior Finance II LLC, obtained a new $2.4 billion, seven-year, senior
secured Term Loan B (the "2018 Term Loan) under its amended and restated
Senior Credit Agreement. The 2018 Term Loan was issued at 99.75% of par
value and will mature on April 11, 2025. The Company also amended its
Revolving Credit Facility to (1) increase the total commitments under
the Facility from $1.0 billion to $1.25 billion, (2) extend the maturity
date of the Facility to April 11, 2023, (3) lower the applicable
interest rate margins and commitment fees under the Facility, and (4)
amend certain other terms and conditions under the Senior Credit
Agreement.

As of the date of this press release, the Company had $90.0 million
outstanding under the $1.25 billion Revolving Credit Facility.

During the second quarter of 2018, the Company purchased under its $1.0
billion stock repurchase plan 1.9 million shares of its Class A common
stock for $306.9 million, at an average price per share of $163.44.
Shares purchased were retired. As of the date of this filing, the
Company had $654.5 million of authorization remaining under the plan.

Outlook

The Company is updating 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, the
impact of which is not reflected in the 2018 guidance. The Outlook also
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 3.80 Brazilian Reais to 1.0 U.S. Dollar and 1.32 Canadian Dollars to
1.0 U.S. Dollar throughout the last two quarters of 2018. When compared
to the Company's full year 2018 Outlook provided April 30, 2018, the
variances in the actual second quarter foreign currency exchange rates
versus the Company's assumptions, and the changes in the Company's
foreign currency rate assumptions for the remainder of the year
negatively impacted the full year 2018 Outlook by approximately $11.0
million for Site Leasing Revenue, $7.0 million for Tower Cash Flow, and
$6.0 million for Adjusted EBITDA and AFFO. Applying the same foreign
currency exchange rate assumptions as the outlook provided April 30,
2018, the Company would have increased the mid-point for Site Leasing
Revenue by $3.0 million, Tower Cash Flow by $2.5 million, Adjusted
EBITDA by $2.0 million, and AFFO per share by $0.01.

 
               
(in millions, except per share amounts) Full Year 2018
 
Site leasing revenue (1) $ 1,719.0 to $ 1,739.0
Site development revenue $ 100.0 to $ 120.0
Total revenues $ 1,819.0 to $ 1,859.0
Tower Cash Flow (2) $

1,354.5

to $ 1,374.5
Adjusted EBITDA (2) $ 1,278.0 to $ 1,298.0
Net cash interest expense (3) $ 361.5 to $ 371.5
Non-discretionary cash capital expenditures (4) $ 31.5 to $ 41.5
AFFO (2) $ 844.0 to $ 891.0
AFFO per share (2) (5) $ 7.21 to $ 7.62
Discretionary cash capital expenditures (6) $ 560.0 to $ 580.0
 

(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 117.0 million. Our Outlook does not include the impact of any
repurchases of the Company's stock during 2018 other than those
completed as of the date of this press release.

(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.

Conference Call Information

SBA Communications Corporation will host a conference call on Monday,
July 30, 2018 at 5:00 PM (ET) to discuss the quarterly results. The call
may be accessed as follows:

When:       Monday, July 30, 2018 at 5:00 PM (ET)
Dial-in Number: (800) 230-1059
Conference Name: SBA second quarter results
Replay Available: July 30, 2018 at 8:00 PM to August 13, 2018 at 11:59 PM (TZ: Eastern)
Replay Number: (800) 475-6701
Access Code: 451295
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)
market conditions and activity levels among the four major wireless
carriers, (ii) the Company's intentions for future capital allocation,
including allocating capital to both stock repurchases and portfolio
growth, (iii) the Company's intention to maintain its target leverage
range, (iv) the impact of the Company's capital allocation and target
leverage range on its AFFO per share goal, (v) the Company's financial
and operational guidance for the full year 2018, (vi) the timing of
closing for currently pending acquisitions, (vii) the Company's
expectations regarding additional capital spending in 2018, and (vii)
the Company's expectations regarding 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; (5) the impact of continued consolidation among wireless
service providers, including the impact of the potential 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, and
internationally; (11) the Company's ability to obtain future financing
at commercially reasonable rates or at all; (12) 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 and (13) 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 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. Furthermore, the Company's forward-looking statements and
its 2018 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 March 1, 2018.

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.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
 
  For the three months   For the six months
 
ended June 30, ended June 30,
 
2018   2017 2018   2017
Revenues:
Site leasing $ 429,883 $ 403,001 $ 860,425 $ 800,551
Site development   26,439   24,293   54,199   50,106
Total revenues   456,322   427,294   914,624   850,657
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion,
and amortization shown below):
Cost of site leasing 93,688 89,337 186,505 178,719
Cost of site development 20,726 20,007 43,246 41,595
Selling, general, and administrative (1) 35,943 33,394 71,993 67,618
Acquisition related adjustments and expenses 3,133 2,306 6,177 5,274
Asset impairment and decommission costs 7,404 8,140 15,909 16,491
Depreciation, accretion, and amortization   169,558   159,520   334,956   318,551
Total operating expenses   330,452   312,704   658,786   628,248
Operating income   125,870   114,590   255,838   222,409
Other income (expense):
Interest income 1,671 2,909 2,966 6,143
Interest expense (93,639) (78,456) (182,562) (156,058)
Non-cash interest expense (638) (717) (1,370) (1,421)
Amortization of deferred financing fees (4,897) (4,949) (10,285) (11,647)
Loss from extinguishment of debt, net (13,798) (1,961) (14,443) (1,961)
Other income (expense), net   (90,210)   (18,793)   (85,657)   (3,844)
Total other expense   (201,511)   (101,967)   (291,351)   (168,788)
(Loss) income before income taxes (75,641) 12,623 (35,513) 53,621
Benefit (provision) for income taxes   18,249   (3,390)   9,667   (6,789)
Net (loss) income $ (57,392) $ 9,233 $ (25,846) $ 46,832
Net (loss) income per common share
Basic $ (0.50) $ 0.08 $ (0.22) $ 0.39
Diluted $ (0.50) $ 0.08 $ (0.22) $ 0.38
Weighted average number of common shares
Basic   115,064   121,455   115,775   121,253
Diluted   115,064   122,437   115,775   122,087
 

(1) Includes non-cash compensation of $11,034 and $10,030 for the three
months ended June 30, 2018 and 2017, respectively, and $20,927 and
$18,856 for the six months ended June 30, 2018 and 2017, respectively.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
 
  June 30,   December 31,
 
2018 2017
 
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 134,651 $ 68,783
Restricted cash 24,842 32,924
Accounts receivable, net 87,393 90,673
Costs and estimated earnings in excess of billings on uncompleted
contracts
13,763 17,437
Prepaid expenses and other current assets   66,227   49,716
Total current assets 326,876 259,533
Property and equipment, net 2,778,372 2,812,346
Intangible assets, net 3,459,866 3,598,131
Other assets   724,264   650,195
Total assets $ 7,289,378 $ 7,320,205
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 32,382 $ 33,334
Accrued expenses 60,637 69,862
Current maturities of long-term debt 24,000 20,000
Deferred revenue 94,552 97,969
Accrued interest 49,764 48,899
Other current liabilities   16,475   8,841
Total current liabilities 277,810 278,905
Long-term liabilities:
Long-term debt, net 9,675,738 9,290,686
Other long-term liabilities   377,965   349,728
Total long-term liabilities 10,053,703 9,640,414
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,
114,832
and 116,446 shares issued and outstanding at June 30, 2018
and December 31, 2017, respectively 1,148 1,164
Additional paid-in capital 2,217,273 2,167,470
Accumulated deficit (4,759,637) (4,388,288)
Accumulated other comprehensive loss   (500,919)   (379,460)
Total shareholders' deficit   (3,042,135)   (2,599,114)
Total liabilities and shareholders' deficit $ 7,289,378 $ 7,320,205
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) (in thousands)
 
 
  For the three months
 
ended June 30,
 
2018   2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (57,392) $ 9,233
Adjust. to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation, accretion, and amortization 169,558 159,520
Non-cash asset impairment and decommission costs 7,232 6,672
Non-cash compensation expense 11,297 10,194
Amortization of deferred financing fees 4,897 4,949
Loss on remeasurement of U.S. denominated intercompany loans 88,898 20,417
Loss from extinguishment of debt, net 13,798 1,961
Deferred income tax benefit (22,161) (548)
Other non-cash items reflected in the Statements of Operations 1,850 61
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable and costs and estimated earnings in excess of
billings
on uncompleted contracts, net 8,026 (2,523)
Prepaid expenses and other assets (6,325) (6,298)
Accounts payable and accrued expenses 6,442 4,480
Accrued interest 15,902 22,829
Other liabilities   5,984   946
Net cash provided by operating activities   248,006   231,893
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (167,741) (39,530)
Capital expenditures (37,518) (33,688)
Other investing activities   (13,299)   (11,146)
Net cash used in investing activities   (218,558)   (84,364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under Revolving Credit Facility (150,000) (130,000)
Repayment of Tower Securities (610,000)
Proceeds from issuance of Tower Securities, net of fees 750,153
Proceeds from Term Loans, net of fees 2,377,264
Repayment of Term Loans (1,930,000) (5,000)
Repurchase and retirement of common stock (306,979) (140,019)
Other financing activities   2,383   23,028
Net cash used in financing activities   (7,332)   (111,838)
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
(10,573) (3,969)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 11,543 31,722
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period   164,820   165,471
End of period $ 176,363 $ 197,193
 

Selected Capital Expenditure Detail

 
 
      For the three   For the six
 
months ended months ended
 
June 30, 2018 June 30, 2018
 
(in thousands)
Construction and related costs on new builds $ 15,302 $ 28,573
Augmentation and tower upgrades 13,072 23,417
Non-discretionary capital expenditures:
Tower maintenance 7,719 14,383
General corporate   1,425   2,241
Total non-discretionary capital expenditures   9,144   16,624
Total capital expenditures $ 37,518 $ 68,614
 

Communication Site Portfolio Summary

         
 
Domestic International Total
 
 
Sites owned at March 31, 2018 16,018 12,291 28,309
Sites acquired during the second quarter 220 4 224
Sites built during the second quarter 15 72 87
Sites decommissioned during the second quarter (14) (2) (16)
Sites owned at June 30, 2018 16,239 12,365 28,604
 

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,
 
2018   2017 2018   2017 2018   2017
 
(in thousands)
Segment revenue $ 346,682 $ 325,324 $ 83,201 $ 77,677 $ 26,439 $ 24,293
Segment cost of revenues (excluding
depreciation, accretion, and amort.)   (67,756)   (65,251)   (25,932)   (24,086)   (20,726)   (20,007)
Segment operating profit $ 278,926 $ 260,073 $ 57,269 $ 53,591 $ 5,713 $ 4,286
Segment operating profit margin   80.5%   79.9%   68.8%   69.0%   21.6%   17.6%
 

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:

(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). 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;

(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 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, 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 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
 
Second quarter excluding
 
2018 year Foreign foreign
 
over year currency currency
 
growth rate impact impact
 
Total site leasing revenue 6.7% (1.6%) 8.3%
Total cash site leasing revenue 6.5% (1.5%) 8.0%
Int'l cash site leasing revenue 10.0% (8.5%) 18.5%
Total site leasing segment operating profit 7.2% (1.3%) 8.5%
Int'l site leasing segment operating profit 6.9% (7.8%) 14.7%
Total site leasing tower cash flow 6.4% (1.3%) 7.7%
Int'l site leasing tower cash flow 9.9% (7.9%) 17.8%
Net (loss) income (721.6%) (640.9%) (80.7%)
Earnings per share - diluted (725.0%) (650.0%) (75.0%)
Adjusted EBITDA 6.7% (1.2%) 7.9%
AFFO 1.1% (1.6%) 2.7%
AFFO per share 5.8% (1.7%) 7.5%
 

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 June 30, ended June 30, ended June 30,
2018   2017 2018   2017 2018   2017
 
(in thousands)
Site leasing revenue $ 346,682 $ 325,324 $ 83,201 $ 77,677 $ 429,883 $ 403,001
Non-cash straight-line leasing revenue   (3,216)   (290)   (1,942)   (3,835)   (5,158)   (4,125)
Cash site leasing revenue 343,466 325,034 81,259 73,842 424,725 398,876
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization) (67,756) (65,251) (25,932) (24,086) (93,688) (89,337)
Non-cash straight-line ground lease expense   6,185   6,753   404   940   6,589   7,693
Tower Cash Flow $ 281,895 $ 266,536 $ 55,731 $ 50,696 $ 337,626 $ 317,232
Tower Cash Flow Margin   82.1%   82.0%   68.6%   68.7%   79.5%   79.5%

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 $ 1,719.0 to $ 1,739.0
Non-cash straight-line leasing revenue   (21.0) to     (16.0)
Cash site leasing revenue 1,698.0 to 1,723.0
Site leasing cost of revenues (excluding
depreciation, accretion, and amortization) (366.5) to (376.5)
Non-cash straight-line ground lease expense   23.0 to     28.0
Tower Cash Flow $ 1,354.5 to $   1,374.5
 

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,
 
2018   2017
 
(in thousands)
Net (loss) income $ (57,392) $ 9,233
Non-cash straight-line leasing revenue (5,158) (4,125)
Non-cash straight-line ground lease expense 6,589 7,693
Non-cash compensation 11,297 10,194
Loss from extinguishment of debt, net 13,798 1,961
Other (income) expense 90,210 18,793
Acquisition related adjustments and expenses 3,133 2,306
Asset impairment and decommission costs 7,404 8,140
Interest income (1,671) (2,909)
Total interest expense (1) 99,174 84,122
Depreciation, accretion, and amortization 169,558 159,520
(Benefit) provision for taxes (2)   (18,059)   3,857
Adjusted EBITDA $ 318,883 $ 298,785
Annualized Adjusted EBITDA (3) $ 1,275,532 $ 1,195,140
 

(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, 2018 and 2017, these amounts
included $190 and $467, 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,
2018   2017
 
(in thousands)
Total revenues $ 456,322 $ 427,294
Non-cash straight-line leasing revenue   (5,158)   (4,125)
Total revenues minus non-cash straight-line leasing revenue $ 451,164 $ 423,169
Adjusted EBITDA $ 318,883 $ 298,785
Adjusted EBITDA Margin   70.7%   70.6%
 

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 (loss) income $ 9.0 to $ 65.0
Non-cash straight-line leasing revenue (21.0) to (16.0)
Non-cash straight-line ground lease expense 23.0 to 28.0
Non-cash compensation 42.5 to 37.5
Loss from extinguishment of debt, net 15.0 to 14.0
Other (income) expense 95.0 to 90.0
Acquisition related adjustments and expenses 15.0 to 10.0
Asset impairment and decommission costs 35.5 to 30.5
Interest income (9.0) to (6.0)
Total interest expense (1) 398.0 to 386.0
Depreciation, accretion, and amortization 670.0 to 660.0
Provision for taxes (2)   5.0 to   (1.0)
Adjusted EBITDA $ 1,278.0 to $ 1,298.0

(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") 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 June 30,
 
(in thousands, except per share amounts) 2018   2017
 
Net (loss) income $ (57,392) $ 9,233
Real estate related depreciation, amortization, and accretion 168,379 158,521
Adjustments for unconsolidated joint ventures   333   218
FFO $ 111,320 $ 167,972
Adjustments to FFO:
Non-cash straight-line leasing revenue (5,158) (4,125)
Non-cash straight-line ground lease expense 6,589 7,693
Non-cash compensation 11,297 10,194
Adjustment for non-cash portion of tax provision (23,760) (548)
Non-real estate related depreciation, amortization, and accretion 1,179 999
Amortization of deferred financing costs and debt discounts 5,535 5,666
Loss from extinguishment of debt, net 13,798 1,961
Other (income) expense 90,210 18,793
Acquisition related adjustments and expenses 3,133 2,306
Asset impairment and decommission costs 7,404 8,140
Non-discretionary cash capital expenditures (9,144) (8,058)
Adjustments for unconsolidated joint ventures   1,104   255
AFFO $ 213,507 $ 211,248
Weighted average number of common shares (1)   116,679   122,437
AFFO per share $ 1.83 $ 1.73
 

(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 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 (loss) income $ 9.0 to $ 65.0
Real estate related depreciation, amortization, and accretion 664.0 to 655.0
Adjustments for unconsolidated joint ventures   1.5 to   2.5
FFO $ 674.5 to $ 722.5
Adjustments to FFO:
Non-cash straight-line leasing revenue (21.0) to (16.0)
Non-cash straight-line ground lease expense 23.0 to 28.0
Non-cash compensation 42.5 to 37.5
Adjustment for non-cash portion of tax provision (20.0) to (21.0)
Non-real estate related depreciation, amortization, and accretion 6.0 to 5.0
Amort. of deferred financing costs and debt discounts 17.5 to 18.5
Loss from extinguishment of debt, net 15.0 to 14.0
Other (income) expense 95.0 to 90.0
Acquisition related adjustments and expenses 15.0 to 10.0
Asset impairment and decommission costs 35.5 to 30.5
Non-discretionary cash capital expenditures (41.5) to (31.5)
Adjustments for unconsolidated joint ventures   2.5 to   3.5
AFFO $ 844.0 to $ 891.0
Weighted average number of common shares (1)   117.0   117.0
AFFO per share $ 7.21 $ 7.62
 

(1) 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:

 
 
                          June 30,
 
2018
 
(in thousands)
2013-2C Tower Securities $ 575,000
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
2018-1C Tower Securities 640,000
Revolving Credit Facility 85,000
2018 Term Loan   2,400,000
Total secured debt 7,200,000
2014 Senior Notes 750,000
2016 Senior Notes 1,100,000
2017 Senior Notes   750,000
Total unsecured debt   2,600,000
Total debt $ 9,800,000

Leverage Ratio

Total debt $ 9,800,000
Less: Cash and cash equivalents, short-term restricted cash and
short-term investments
  (159,730)
Net debt $ 9,640,270
Divided by: Annualized Adjusted EBITDA $ 1,275,532
Leverage Ratio   7.6x

Secured Leverage Ratio

Total secured debt $ 7,200,000
Less: Cash and cash equivalents, short-term restricted cash and
short-term investments
  (159,730)
Net Secured Debt $ 7,040,270
Divided by: Annualized Adjusted EBITDA $ 1,275,532
Secured Leverage Ratio   5.5x
 

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