The operator of the SBA Second Quarter Results Conference Call introduces the speakers and gives instructions for the call. The VP of Finance, Mark DeRussy, thanks everyone for joining and introduces the CEO, Brendan Cavanagh, and CFO, Marc Montagner. They discuss forward-looking statements and non-GAAP financial measures, and provide a summary of the second quarter results. They mention a slight decrease in financial outlook due to foreign exchange rates, but an increase in projected results on a constant currency basis. Overall, the year has gone as expected.

The company has seen steady carrier activity but no significant increase in new leases or amendments. However, there is potential for increased demand in the future due to the growing consumption of mobile network and the offering of fixed wireless access. The incorporation of new Generative AI capabilities and the upgrade of mid-band 5G spectrum also create opportunities for network investment. The company expects continued growth in fixed wireless access subscribers and competitive pressures among customers to drive future network investment. International markets have even lower completion rates for mid-band 5G upgrades compared to the US.

The company expects increased network spending due to 5G coverage commitments and is well positioned to assist customers in meeting their objectives. The services business had a good quarter and is expected to increase in the second half of the year. International results were in line with expectations, with a pick-up in new leasing activity. There are opportunities for organic growth in each market due to new spectrum and wireless technology.

The company is facing challenges in some markets due to macroeconomic factors and imbalanced market share among mobile network operators, but they are working towards enhancing their market positioning and alignment with leading carriers. They have a balanced approach to capital allocation, with a focus on debt reduction and liquidity. They have reduced their outstanding revolver balance and plan to refinance upcoming debt maturities. They are also exploring investment opportunities while maintaining financial discipline and precise valuation.

The speaker believes that their company is the best in the business at valuing, integrating, and operating tower assets. They expect to continue creating value through asset acquisitions due to the steady cash flow and low-risk nature of their business. The demand for infrastructure solutions is increasing, making them a valuable partner for their customers. The second quarter results were as expected, with domestic same tower revenue growth at 5.9% and international same tower recurring cash leasing revenue growth at 2.7%. Churn and consolidation had an impact on the numbers. The international market, particularly Brazil, saw strong organic growth, but overall returns were affected by a declining local CPI link escalator. The majority of consolidated cash site leasing revenue was in US dollars.

The majority of non-US dollar revenue was from Brazil and the company has slightly increased its outlook for site leasing revenue, tower cash flow, adjusted EBITDA, AFFO, and FFO per share. The devaluation of the Brazilian real will have a negative impact on site leasing revenue, but the company is still expecting strong gross profit contribution from its site development business. The outlook does not include any further acquisitions or share repurchases, but the company may invest in additional assets or repurchase shares in the future. The company's outlook for net cash interest expenses and core FFO and FFO per share has been revised to assume a refinancing of $620 million in ABS Tower Securities. This has resulted in an increase in the full-year FFO per share outlook. The company's balance sheet remains strong and it has ample liquidity.

The company's current leverage and net cash interest coverage ratio remain strong, with a weighted average maturity of four years and an average interest rate of 3%. They have used cash on hand to repay amounts under their revolver and have a $30 million balance remaining. They declared and paid a dividend in the second quarter and have announced an increase for the next quarter. The financing market has been evolving and the company has taken steps to pre-finance a term loan coming due in 2025. The rates being presented are compared to those from a month ago.

The speaker asks about the company's budgeting for foreign exchange rates and how they have been affected by the Brazilian real's recent increase. The company's CFO explains that the market has been improving and they expect to refinance their outstanding debt using a similar instrument. They also use forward rates to forecast FX, but the projections have been inaccurate due to the unexpected weakening of the Brazilian real.

Brendan Cavanagh, CEO of a company, talks about their current financial situation and their approach to M&A opportunities. He mentions that their leverage is at its lowest point, giving them more flexibility to make material value-enhancing investments. Their approach to M&A is not different, but the higher cost of capital may affect their ability to pay for opportunities. They hope to find opportunities that are both financially and strategically beneficial, potentially in international markets.

The speaker discusses their company's strategy for finding new opportunities and expanding into new markets. They explain that they constantly search for potential investments globally, not just in their current markets. They also mention that there may be some synergies in expanding within their current markets. They believe that the gap between private and public multiples is starting to narrow. They also address the question of whether they will focus on growing in smaller markets where they are already present or expanding in larger markets where they already have a significant presence.

The company is reviewing all of their international markets and business lines. They have determined that having a greater scale and relevance to customers is an advantage. They may expand in some markets or move on from others. There is progress being made, but no specifics can be discussed yet. The company aims to have good scale and be aligned with strong carriers in each market. There has been a downtick in site development expectations for the year, but this does not signify anything significant in terms of domestic care activity. It is simply a result of the company being selective in the business they are taking on.

The speaker addresses a question about the company's outlook for the year, stating that although the first half of the year has been lower in terms of volume, the second half is expected to be higher. They also mention that the market mix may have an impact on these numbers. In response to a question about the European tower market and domestic leasing in 2025, the speaker declines to give an outlook for 2025 and says it will depend on the second half of 2024.

The speaker, who does not have any operations in Europe, believes that the European market has stable currency and regulations but slow growth and potential risks due to consolidation. Any decision to expand into Europe would depend on the specific opportunity and its valuation. The company will continue to explore opportunities but is also content with its current position. In regards to leverage, the company's goal is not to continue decreasing it, but rather to consider alternative uses of capital, such as potential investments, which may cause it to increase.

Brendan Cavanagh discusses the current state of investment opportunities and the potential for future asset acquisitions. He also addresses the impact of foreign exchange rates on the company's performance and how it influences their asset and revenue mix.

The speaker discusses the goal of stability and avoiding exposure to volatile currencies. They also mention that the US is about 50% done with mid-band deployment, while international markets are around 25% or less. The idea of selling a piece of the domestic business to bring in capital is also brought up.

During a conference call, Brendan Cavanagh and Ric Prentiss discuss the possibility of selling off assets to address the disparity between public and private valuations. Brendan says that selling assets is not a top priority, but partnerships and selling assets are not entirely off the table. Ric suggests that a mark to market valuation could wake the public up to the real value of the company. Jon Atkin asks about the potential for more build-to-suit opportunities given the recent run rate of domestic builds-to-suit.

The speaker discusses the increase in interest in leasing due to mandated rural build-outs, but notes that their numbers have not been particularly high in recent years due to competition from low-cost providers. They express a desire to be more aggressive in securing high-quality locations for coverage needs, but are unsure if this will significantly impact their backlog. The speaker also mentions the influence of fixed wireless access on their backlog, but notes that it is difficult to determine its exact impact due to the use of mid-band spectrum.

The company's networks may become more congested due to a new product, which will benefit them. AMX has been the most active leasing customer and their percentage has increased due to FX decline in Brazil. Using the revolver to pay down ABS debt and waiting for potential Fed cuts may not be a good idea as it could result in a higher rate and there are other financings maturing.

The company is in regular conversations with their carrier customers, covering a variety of topics including potential larger deals. They are operating under existing agreements and are open to MLA arrangements. The timing and magnitude of churn from consolidations has not changed significantly. There has been a slight increase in churn from Sprint, but overall expectations remain the same.

The speaker discusses how their company's leasing activity has increased overseas, with Claro being a major driver. They are unsure if this trend will continue, but the company's backlog remains strong. The speaker also mentions potential mergers and acquisitions in the US.

Brendan Cavanagh discusses the potential benefits of a larger scale deal in the US, stating that while there may be some operational benefits, the impact would likely be marginal. He also mentions a moderate increase in new business execution and a potential increase in backlog of lease applications in the US.

The speaker is asked about the guidance for the rest of the year and if leasing has reached its lowest point. The speaker cannot give next year's numbers but says that there have been increases in applications, which is a good sign. However, it is too early to determine the impact on next year's numbers. The speaker also mentions a decrease in services revenue due to a shift in the mix of work.

The speaker is answering a question from Matt Niknam with Deutsche Bank about any changes in activity with DISH and updates on the operational review of the business. They mention that there have been ongoing conversations with DISH and they continue to sign leases, but there hasn't been any significant changes. They also mention that they are in the process of an operational review, but it is too early to share any specific actions or updates. The speaker also mentions that they are focused on de-risking and reducing leverage, potentially reaching investment grade and exiting non-core markets.

Brendan Cavanagh believes that their risk tolerance will be informed and managed as they continue to make decisions to invest in new assets. Their knowledge and understanding of the markets they operate in will help them make educated decisions. The cost of capital and opportunity set have changed, but their overall risk tolerance remains similar. Their view of the future and the needs of M&Os in each market will play a role in their decisions to pursue growth. The cost of capital being higher is a factor, but it is the same for everyone and is starting to normalize.

Brendan Cavanagh discusses how the change in cost of capital has affected the buying power of certain individuals and how everyone is adjusting to this change. He also mentions that carrier inquiries have changed in terms of specific needs and initiatives, but this is not uncommon. These conversations inform their strategy and help them capture a greater percentage of business.

Jonathan Chaplin asks two questions, one about the company's leverage and potential asset acquisitions, and the other about which markets the company feels it is subscaling in and how their expectations for those markets have played out. Brendan Cavanagh responds by stating that the company is considering all types of opportunities, including material portfolios, but nothing is certain yet. He also mentions that the company will continue to have a mix of buybacks, debt paydowns, and potential asset acquisitions. Cavanagh does not specify which markets the company feels it is subscaling in, but mentions that the company is always looking for opportunities and that their expectations may not always align with reality.

In the past, the company's view on scale was focused on reaching a point of positive EBITDA, but it has evolved to also include relevance to leading carriers in the market. The company may need to become a bigger player to be more relevant to customers in certain markets. The opportunity for lower domestic churn exists, and SG&A expenses have decreased.

The speaker discusses the company's recent investments in Tanzania and the Philippines, stating that the Tanzania investment has been successful with strong growth and attractive returns, while the Philippines investment is still in its early stages but has shown promising leasing results.

The speaker is discussing the company's focus on acquisitions, specifically in macro tower assets. They mention that they have also looked at investments in DAS networks, data centers, active equipment, and fiber assets, but those are not the core of their business. They thank the participants for joining the call and announce that the conference is now over.

This summary was generated with AI and may contain some inaccuracies.