Welcome. Thank you for joining the SBA First Quarter 2026 Results. Please note that all audio lines are in listen-only mode. There will be a Q&A session at the end of the presentation, and we'll give you instructions on how to ask a question at that time. With that, I'll turn the call over to Louis Friend, Vice President of Finance and Capital Markets. Please go ahead.
Good evening. Thank you for joining us for SBA's First Quarter 2026 Earnings Conference Call. Here with me today are Brendan Cavanagh, our President and Chief Executive Officer, and Marc Montagner, our Chief Financial Officer. Some of the information we will discuss on this call is forward-looking, including but not limited to, any guidance for 2026 and beyond. In today's press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, April 29th, and we have no obligation to update any forward-looking statements we may make. In addition, our comments will include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our supplemental financial data package, which is located on the landing page of our investor relations website.
With that, I will now turn it over to Marc to comment on the first quarter results and 2026 outlook.
Thank you, Louis. Given the solid start of the year, we are increasing our full year outlook for all key metrics, including site leasing revenue, Tower Cash Flow, Adjusted EBITDA, AFFO, and AFFO per share as compared to our initial 2026 guidance. The primary drivers of these increases include outperformance during our first quarter, higher street-level revenue, and favorable foreign currency rates. In the first quarter, we continued to operate efficiently, controlling direct costs and achieving company-wide Tower Cash Flow margins of approximately 80%. In the U.S., we added approximately $10 million of quarterly new lease and amendment billings year-over-year. The bulk of the activity continues to come from new collocations as carriers both densify and expand their network footprints. With respect to churn, our priority for both Sprint and EchoStar churn for the year remains unchanged.
With regard to EchoStar, we continue to litigate the matter in federal court and believe strongly in our contractual rights. Internationally, we continue to see healthy demand for infrastructure, and we added approximately $4 million of quarterly new lease and amendment billings year-over-year. International churn continues to be elevated due to carrier consolidations, bankruptcy restructurings, and wireless operators network rationalizations. We believe 2026 will be the peak year for international churn and expect improvement in our churn rate over the next several years. Moving to our balance sheet. In January, we paid off $750 million of ABS debt with our revolving credit facility, and our outlook assume that we will use our free cash flow to pay down the current outstanding amount on our credit facility over time.
Consistent with our prior outlook, we continue to assume that our $1.2 billion November ABS maturity will be refinanced in November at 5.25%. We also continue to be committed to becoming an investment grade issuer and anticipate making our inaugural investment grade bond issuance at some point in 2026, dependent on market conditions. We ended the quarter with approximately $13 billion total debt. Our current leverage of 6.6x net debt to Adjusted EBITDA remains near historical lows and within our target range of 6x to 7x. During the first quarter, we declare a cash dividend of $135.2 million or $1.25 per share.
Today, we announced that our board of directors declare our first quarter dividend of $1.25 per share, payable on June 17, 2026 to shareholders of record as of the close of business on May 22nd, 2026. This dividend represents an increase of approximately 13% over the dividend paid in the first quarter of 2025 and an annualized rate of approximately 41% of the midpoint of our full year AFFO guidance. I will now turn the call over to Brendan.
Thanks, Marc. The first quarter was another quarter of solid financial and operational results, leading both an industry AFFO per share and year-over-year growth in our dividend. Our customers around the globe remained busy deploying cutting-edge technology, expanding their footprints, and deepening existing capacity to meet strong customer demand. In the U.S., our customers continued to invest in their networks, expanding 5G coverage with new spectrum, including C-band, technology upgrades such as Massive MIMO antennas, and growth in Fixed Wireless Access, which continues to add strain to carrier networks. The majority of leasing activity in the quarter came from new leases as carriers focus on coverage gaps and capacity needs. Our backlogs also continued to steadily increase during the quarter, and we expect to see steady activity levels throughout the remainder of 2026.
Looking farther out, we expect the drivers of organic growth to include the Upper C-band auction expected in mid-2027, 6G network architecture moving towards a more balanced uplink/downlink mix, and new spectrum bands currently being studied for future auction. All of these items will require new hardware at the tower sites.
Today, we are starting to see the early signs of 6G with higher capacity radios and denser and more intelligent antenna configurations to send and receive growing volumes of data. Beyond towers, we continue to make progress and are very excited about the opportunities to leverage our existing portfolio to play a more meaningful role in mobile edge computing as edge workloads move closer to the end user. Macro tower compounds offer a cost-effective solution for edge compute needs, benefiting from strategically located sites with existing power, backhaul infrastructure, and zoning protections. We are excited about the potential of this incremental revenue driver. Internationally, we had a solid quarter as well. We've made tremendous progress integrating the Millicom assets and are seeing healthy co-location demand for these sites, exceeding our initial lease-up projections.
We are also just starting to ramp up the number of new tower builds, building just over 60 towers in Central America in the first quarter, with expectations to do much more over the coming quarters and years. Between building towers and buying the land underneath, we intend to put capital to work in Central America at risk-adjusted returns that are expected to be well above our cost of capital. We expect that our leading position in Central America will enhance our overall international portfolio, reducing relative FX exposure, diversifying our customer base, and extending lease terms, all with the overarching goal of improving the durability of cash flow over the long term. Turning to capital allocation, our dividend as a percentage of AFFO remains relatively low.
This means a continuation of our shareholder-friendly remuneration policy, while also preserving the flexibility to opportunistically invest in new assets in our existing markets. While we did not repurchase meaningful shares in the first quarter as we prioritized paying down our revolving credit facility with excess free cash flow, we expect share buybacks to remain an important part of our capital allocation strategy in 2026. In the first quarter, leverage remained within our recently revised target levels, even with the removal of all EchoStar revenue as of January 1st. We are well positioned to be an investment grade issuer during this year. We expect that this shift to IG will reduce our relative overall cost of debt over time while providing access to the deepest and most liquid market in the world, improving our already solid balance sheet. SBA is a truly remarkable company.
We have solid financials, high-quality assets, an established track record, the best people in the industry, and perhaps most importantly, a drive and culture that continually pushes us forward to maximize outcomes for all of our stakeholders. The future potential for this company remains very exciting. Before opening it up for questions, I'd like to thank our team members and customers for their trust in SBA. The company's ability to achieve our vision to be our customers' first choice provider and the industry leader in quality infrastructure solutions is only possible because of the incredible team members we have at SBA. With that, operator, we are now ready for questions.
Thank you. If you'd like to enter the question queue, please dial pound two on your telephone keypad now. You will hear notification when your line is unmuted. At that time, please state your organization, your name, and question. Let's go to our first caller.
Yeah. Hey, it's Ric Prentiss, Raymond James. Can you hear me?
Yes, we can.
Okay.
Hey, Ric.
Good afternoon, everybody.
How you doing?
Good. Hey, I wanna ask a couple philosophical questions. Can you help us understand what are the advantages and disadvantages of being a public company versus a private company as you look at competing for assets and tenants and capital? Just kinda help us lay it out, long-term view, short-term view, leverage levels. Help us understand kinda how you think about public versus private.
Well, I mean, Ric, I think, you know, for us, it's not really about public versus private. We focus on the quality of assets that we have and providing the best service possible to our customers and the best meet their needs where they have them. I think whether we're a public company or private company, that'll continue to be the case. There's, of course, differences in public and private companies in the way that they're capitalized and, you know, things that they have to talk about publicly, but otherwise, you know, the business is the same.
Okay. The other philosophical question is, you guys sold the Canadian tower portfolio. As you review that Canadian sale, how do you stack up the priorities or criteria or the factors of, you know, price versus ability to close versus financing? When you look at Canada, how do you kind of think of going through the potential list of buyers and what's important?
Well, Ric, I mean, the approach with Canada was specific to Canada. We had come to the conclusion after being there for many years, that our ability to get to a scale that would position us in the best place possible to continue to grow that business and, you know, meet customer needs there, was not gonna be achievable. We decided to explore monetizing those assets as a better potential outcome for our shareholders. Based on that process that we ran, we were able to achieve a price that we felt was attractive and appropriate, we sold the assets. That's really no different than the way we've approached all of our markets.
We've talked for the last couple of years about portfolio review that we're doing, trying to make sure that we're positioned in the best place possible in each of the markets where we operate in terms of our relative scale, as well as our relative positioning to the leading carriers in those markets. The Canada situation was no different than any other.
Okay. One operational question. Obviously not meaningful stock buyback this quarter, but you said you still plan to do some in 2026. How should we think about leverage level buyback, M&A opportunities, and how you're kind of balancing those use of your flexibility?
Yeah. Our leverage target, we revised late last year to six to seven turns of net debt to Adjusted EBITDA, and we're obviously operating right in the middle of that range. We start with the leverage first. We make sure that we kind of maintain leverage in that target range. Then prioritize what we think provides us the best opportunity at a given point in time among buybacks. Obviously dividends are paid out and growing on a pretty steady basis. New asset investments, mostly new tower builds and acquisitions. That's not really that different than the way we've approached things historically. I think from quarter to quarter, different opportunities come up, and we spend time on those opportunities.
Depending on what we're looking at, that may cause us to slow down on buybacks, or possibly increase them because we don't have enough other options to invest that capital. It's our goal to stay levered at the same level that we've targeted, and as a result, that provides us a lot of excess cash flow to invest every year. You know, we look at all the options available and compare them to each other at a given time. Ultimately, I expect we're gonna spend money on all of those categories over time, just as we've done in the past.
Okay, great. Thanks, Brendan.
Sure.
All right, let's move on to our next caller. Please go ahead. State your name, organization, then question.
Hi, thanks for taking the question. It's Mike Rollins from Citi. two topics, if I could please. You know, the first on the leasing environment. The release referred to, I believe it was a larger backlog in domestic leasing. Just curious if you could talk about the significance of that change in backlog versus, you know, maybe other historical first quarters and put that into perspective in terms of the type of leasing growth that you're expecting to deliver this year or in future years. The second question, you know, maybe just taking a step back. As, you know, as you talked at some conferences, the subject of your value versus, you know, private markets, has come up.
I'm curious, you know, as you talk with investors about it, you know, what you've learned about how investors are valuing you in the public markets. What are the ways that SBA is trying to respond to questions about whether it's the business or the financial outlook in a way to improve that visibility and transparency for your future financial opportunities? Thanks.
First on the leasing environment, our backlog did increase from December 31st levels to March 31st levels. That was a good sign. I'm talking about U.S. backlog specifically. I think that's what you're questioning. That increase, I would categorize as moderate. You know, it wasn't extreme necessarily, it definitely was an increase where we have more applications coming in than new business that we are executing. It's actually replenishing faster and at a higher rate than it's being used. That's a good sign in terms of the rest of the year and how the year should shape up in terms of leasing activity.
I think from a historical standpoint, it's not necessarily an extreme outlier, and I would expect that this year's leasing activity in the U.S. will be relatively steady based on where we sit today. Obviously, things can change throughout the course of the year, but at this moment in time, based on our interactions with our customers and the way that the backlogs have grown, I would expect to see fairly steady activity levels.
In terms of, you know, how we position SBA, it's a little bit of a cryptic question, Mike, but I think, you know, our focus is on trying to be as clear as we can with our public investors about all of the tremendous attributes of our business and, sharing that information clearly in terms of the quality of our assets, the quality of our growth prospects, and the quality of the cash flow that we produce on a very steady, consistent basis, and we have, frankly, for decades. The more that I think we can share that message and evangelize it and then ultimately demonstrate our ability to execute, I think we'll be just fine.
I, you know, I can't speak to how every individual party might look at valuing this company if they're outside of the public shareholder base at this point.
Thanks very much.
Sure.
All right, let's move on to our next caller, Batya Levi from UBS.
Great. Thank you. Just to follow up on the domestic activity. With the backlog, the moderate increase in the backlog that you're seeing, is that across the board or specific to a company? I think one of your tenants had been slowing down significantly. Do you see some uptick in their activity to maybe offset some of the slowdown you were expecting in the second half? A question on the Mobile Edge Compute that you think could provide a new incremental revenue opportunity. What kind of investment do you think it would require to refit your sites, and when do you think that will start to flow into the P&L, both from an expense and a revenue perspective? Thank you.
On the domestic activity, I don't like to necessarily share specifically what each customer of ours is doing. I will say that it was not necessarily completely even among our biggest customers in terms of backlog increases. We obviously have one customer where we've signed a recent agreement, we're starting to see an increase in activity associated with that. That definitely has influenced it. You know, overall, that ebbs and flows generally over time anyway. That's what we've always seen historically. In a given quarter, one quarter does not necessarily tell the story. I would expect that we'll see all three of the primary customers we have in the U.S. be active at various points during the year.
On the Edge Compute side, you know, we are kind of excited about the potential opportunity there. It's definitely emerged as something that I think there's gonna be a lot of interest in, specifically for AI inference and low latency environments that are gonna be critical as AI just continues to infiltrate all of the applications that end users will eventually be using over these wireless networks. We are ourselves engaged actively with multiple companies exploring how we might deploy some of these edge data centers at our tower sites. We're in the early stage of the stages to that, Batya. I would say we have some that we've already done, a very small number. Some of that is almost trial in nature.
We expect some of those to come online shortly. We've incurred some dollars as it relates to that. I think I need to just punt a little bit on the timing for impact to the financials in any material way. That's something that I'm sure we will be coming back to you with in future quarters because it is definitely starting to gain traction, and I think, it will be a contributor down the road.
Got it. Thank you.
You're welcome.
All right. As a reminder to our audience, if you'd like to enter the question queue, please dial pound two. Let's move on to our next caller, Brendan Lynch from Barclays.
Sorry. Thanks for taking the question. Maybe just a follow-up on the edge site. Hello, this is Brendan. Can you hear me?
Yes, we can hear you.
Yep. We can hear you.
Okay, good. Thanks. Just to follow up on the edge sites, Brendan, can you give any concrete examples of how AI being deployed at a tower site is advantageous relative to in a traditional data center? I ask this because it's largely been theoretical over the past several years, so maybe it sounds like there's some momentum and things are changing there. Any additional color you can give would be helpful.
Yeah. I mean, it's hard for me to give you exact. I mean, really what we're talking about and what we're seeing is some of these applications that have much greater amounts of uplink versus downlink, which affects, by the way, the general architecture of the wireless networks itself, is requiring in order to be effective, an even lower level of latency to make those solutions as effective as possible. As a result, the closer that you can move the compute power to the edge of the network and closer, frankly, to the user, we're finding that folks think that that's gonna make a real difference to the success of some of these applications. As a result, there's a push to move that out.
I also think there's a practical issue in that in some ways it may be easier to have this more distributed compute sort of network through these micro data centers versus just having the bigger facilities that are more centralized in terms of just power usage and other resources that are necessary to make these things effective. That to some degree, when you distribute it out on a further basis, that it's actually easier to achieve in some cases. We'll see, Brendan, but I think as long as latency is a real issue, then edge compute's gonna become more and more important.
Okay. Great. Thanks. That's helpful. Then, maybe just another question on the land purchase in Guatemala. Can you just kind of walk through some of those details and what the cap rate was that you paid?
Yeah. We actually talked about that I think on the last call, 'cause we closed on that early in the year. We were able to buy out land under most of the towers in Guatemala that we acquired as part of the Millicom acquisition. I believe the multiple we paid was in the seven-ish range. I'm looking for confirmation. I think it was about seven turns was about what we paid for that. You know, a pretty attractive and accretive in terms of valuation, but also helpful to us in terms of our relative positioning from a risk standpoint. On all those properties, that we can control that land a lot better than obviously we could have before.
Great. Thank you. Great.
Yep.
Our next caller is Nick Del Deo from MoffettNathanson.
Quest-
Hey there.
Evening. Thank you. Hey, thanks for taking my questions. Brendan, you noted in your prepared remarks that the demand you're seeing for the Millicom towers, has exceeded your expectations. I guess based on your conversation with those customers, you know, is it your sense that this is, like, an initial burst that's happening as the sites have become available, that may subside? Does it strike you as something that's more sustainable?
Yeah, I think, there's definitely, you know, an initial interest because these sites were obviously in carrier-controlled hands before. Now that they're kind of opened up more directly for co-location business than they probably were before, that's caused some inbound interest that I think is, you know, what you would normally expect when assets like this become available. I do think that there is an opportunity to sustain the growth for an extended period of time because for one thing, there's a lot of sites. Two, we're just at the very beginning stages of having conversations with those other customers, and it's primarily one customer in many of these markets.
Mm-hmm
about the site. You know, based on the pent-up demand that we see and what they've expressed to us, I think we're gonna see a very attractive lease-up for an extended period of time.
Okay. Okay, great. Then maybe one about the U.S. market. You know, one of your peers has commented that, you know, the big carriers might be more interested in working with, you know, the larger public tower companies to undertake more new construction opportunities. I was wondering if you've observed anything similar.
Yeah, I think there is some of that. I mean, definitely the dialogue that we've had with the MNOs as of late has been much more constructive towards new build opportunities here in the U.S. than it has been in the past. I mean, really, if you, if you kinda go back in history, and this isn't just SBA, but the other big tower companies as well, were primary suppliers of new builds for many, many years, and then that obviously changed dramatically. You had a lot of smaller new companies coming up, and the financial terms that were being offered were not really something we found attractive, and I imagine most of our peers, our bigger peers, did not as well. That's why you saw the level of what we were doing dry up.
In this current environment, as we sign some of these master agreements and we have broader reaching, relationships that get established, as well as the cost of capital increasing and the stability of the end, provider that the carriers are dealing with, it's becoming more and more important to them that there was somebody that they know that they can rely on to be there for the long term. I think as a result, you're gonna see more opportunity for companies like us, to do more new tower builds here in the U.S.
Okay, great. Appreciate that.
Sure.
Moving on to our next caller, David Barden from New Street Research.
Oh, thank you. Hey, appreciate it, guys. Thank you so much for taking the question. I guess, Brendan, I just have to ask, like, do you and The story that there were a couple questions already about this, which is that there are multiple PE firms circling, wanting to buy SBA, take it private. TMT Finance reported that they would do it at $250 a share. I question whether you and Jeff, who's still determined, would really wanna sell. Could you kind of walk us through what would it take for this to actually happen? That would be kind of question number one. That's it. That's my question.
I was like, "What's the next one, David?
Yes. Sorry.
Yeah.
Sorry, Brendan.
It's all right. Yeah, I mean, listen, I've seen, of course, these articles that have been out there for the last few weeks. You won't be surprised to hear me say that as a matter of policy, which is our policy, we don't comment on, you know, speculation or rumors that get put out there in the press. I mean, what I can say just more generally is that, you know, I've been with SBA for over 28 years, and during that entire time, we have always focused on evaluating all options and all possible routes we can take around various different things in order to act in the best interest of our shareholders. We do that still today, and I expect we will do that in the future.
Of course, we will always evaluate any opportunity that presents itself to us. Beyond that, I mean, I can't really comment on what somebody, you know, decides to put in an article, without any real basis.
Would it be fair, Brendan, to say that if there was ever a moment in the last, say, three, four, five years while this constant evaluation has been happening where you've bought back stock, that you would never sell the company for a number that's less than the number that you bought that stock at?
Well, I mean, David, I can't really tell you what we would do or what we would not do in some hypothetical case. What we would do is always make the decision that we thought was best for the shareholders, whatever that was at that moment in time. That's the decision we would make.
Okay. I appreciate you. Thank you, Brendan.
Yep. Thanks.
All right, one last reminder. If you'd like to ask a question, you can dial pound two on your telephone keypad now. All right, that looks like that's all the questions we have for today.
Okay. All right. Well, thank you, Marilyn. Thank you everybody for dialing in. We look forward to reporting our second quarter results to you next quarter. Thanks.
Thank you to our speakers and everyone in the audience for joining us today. The call has concluded. You may now disconnect.