SBA Communications Corporation (NASDAQ:SBAC) Q1 2024 Earnings Call Transcript

SBA Communications Corporation (NASDAQ:SBAC) Q1 2024 Earnings Call Transcript April 29, 2024

SBA Communications Corporation misses on earnings expectations. Reported EPS is $1.42 EPS, expectations were $3.3. SBA Communications Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the SBA First Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. And I now like to turn the conference over to our host, Vice President of Finance, Mr. Mark DeRussy. Please go ahead.

Mark DeRussy: Good evening, and thank you for joining us for SBA’s First Quarter 2024 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 2024 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 29, 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 the call over to Marc.

Marc Montagner: Thank you Marc. Our first quarter results were in line with our expectations. Excluding the impact of weakening foreign currency assumptions, we increased our full-year outlook for Tower cash flow, adjusted EBITDA, and AFFO per share as compared to our initial 2024 outlook. The primary drivers of these increases are direct cost-saving associated with towers to be decommissioned, and a reduction in our estimated full-year share count from completed share buybacks. Due to the current strength of the U.S. dollars versus local currency in some of our international markets our overall outlook for site leasing revenue, total revenues, Tower cash flow, and adjusted EBITDA are slightly down versus our initial guidance.

First quarter Domestic same tower recurring cash leasing revenue growth over the first quarter of last year was 5.9% on the growth basis, 2.3% on the net basis, including 3.6% of churn. $7.5 million of the first quarter churn was related to sprint consolidation churn, which we anticipate to be approximately $30 million for the full year 2024. As expected, domestic operational leasing activity or bookings representing new revenue placed under contract during the first quarter was consistent with the levels of activity we saw in 2023. Non-Sprint related domestic annual churn continues to be between 1% and 2% of our domestic site leasing revenue. Our previously provided estimates of aggregate sprint will return over the next several years remain unchanged.

We anticipate a range of $40 million to $45 million in 2025, $45 million to $55 million in 2026, and $10 million to $20 million in 2027. International same tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis with 3.3% net, including 4.8% of churn or 8.1% on the gross basis. In Brazil, our largest international market, same tower growth — organic growth was 6.8% on the constant currency basis. As compared to the previous quarter in full year 2023, our reported international growth rates continue to be impacted by a declining local CPI link escalator in Brazil. Total international churn remain elevated in the first quarter, mostly to carrier consolidation. During the first quarter, 78% of consolidated cash site leasing revenue was denominated in U.S. dollars.

The majority of non-U.S. dollar denominated revenue was from Brazil, with Brazil representing 15.8% of consolidated cash site leasing revenue during the quarter. As a reminder, our 2024 outlook does not include any churn and surcharge related to the oil wireless consolidation, other than the amount associated with the previously announced agreement that we executed with Vivo. If during 2024, we were to enter into further agreements with other carriers related to the oil wireless consolidation that may have an impact on 2024, we will adjust our outlook in future earning calls. Additionally, the new judicial reorganization plan for oil wireline was recently approved by a majority of creditors. As a result of this plan we have increased our full year churn outlook for oil wireline by $2 million to a total of approximately $4 million.

This adjustment is including an updated full year site leasing revenue outlook. As a result, oil wireline now represent approximately $20 million total annual site leasing revenue in 2024. During the first quarter of 2024, we acquired 11 communication sites for total cash consideration of $9.2 million. We also built 76 new sites mostly outside of the U.S. Subsequent to quarter-end we have purchased or under agreement to purchase 271 sites in our existing market for an aggregate price of $84.5 million. We anticipate closing on these sites under contract by the end of the third quarter. Our outlook does not assume any further acquisition beyond those under contract today. We also do not assume any share buyback beyond what was already completed so far this year.

However, it is possible that we invest in additional assets or share repurchase or both during the year. Our outlook for net cash interest expenses and for FFO and FFO per share continues to include a July 1st refinancing of our $620 million ABS Tower Securities scheduled to mature in October 2024. We assume a refinancing at a fixed rate of 6% per year. Actual rates and timing may vary from these assumptions. Our balance sheet remains strong and with ample liquidity. If not for the recent share buyback, our $2 billion revolver would have been fully paid down. Our current leverage of 6.5 times net debt to EBITDA remains near historical low and will be a steady target of 7 to 7.5 times. Our balance sheet is very strong with a current weighted average interest rate of 3.1% across our total outstanding debt.

Our weighted average maturity is approximately four years, including the impact of our current interest rate hedge, the interest rate on 96% of our current outstanding debt is fixed. And now I’m going to turn the call over to Mark.

Mark DeRussy: Thank you, Marc. We ended the quarter with $12.4 billion of total debt and $12.2 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 6.5 times, below the low end of our target range. Our first quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was very strong at 5.2 times. We continue to use cash on hand to repay amounts outstanding under the revolver. And as of today, we have $195 million outstanding under our $2 billion revolver. During the first and second quarter, we repurchased 935,000 shares of our common stock for $200 million at an average price per share of $213.85. We currently have $205 million of repurchase authorization remaining under our $1 billion stock repurchase plan.

The company’s shares outstanding at March 31, 2024, were $107.9 million. In addition during the first quarter, we declared and paid a cash dividend of $108.1 million or $0.98 per share. And as of today we announced that our Board of Directors has declared a second quarter dividend of $0.98 per share, payable on June 19, 2024 to shareholders of record as of the close on May 23, 2024. This dividend represents an increase of approximately 15% over the dividend paid in the second quarter of 2023. And with that, I’ll now turn the call over to Brendan.

Brendan Cavanagh: Thank you, Mark. Good afternoon. The first quarter marked a good start to 2024. We executed well operationally and produced financial results in line with our expectations. As a result, we have made very few adjustments to our full year outlook on a constant currency basis. In many of our markets, macroeconomic challenges have continued and as a result, incremental network investments by our customers have remained measured and largely in line with activity levels that we saw last year. In the U.S., leasing activity from an execution standpoint was only slightly higher than the fourth quarter. However, during the first quarter we saw increases in applications for both new leases and amendments as well as an increase in our services backlog.

Our customers continue to have significant network needs. A large percentage of our sites still require 5G-related upgrades and data-heavy use cases, including fixed wireless access, will compel continued investment by our customers over the next several years. I am personally of the belief that the current high cost of capital environment is perhaps the biggest overhang on this spending and is driving the more elongated spending cycle. Nonetheless, the needs are great. Consumers are demanding and competitive pressures will continue. Our infrastructure will be a critical component of the delivery chain for our customers to meet these challenges, and I believe we are well positioned to support them in their efforts. In addition, the current cost of capital may persist longer than anticipated just a few months ago, but I believe it will ultimately come down in time, which will encourage increased network investment.

It is all really just a matter of timing. Internationally, results were also in line with expectations. Although each market has its own specific dynamics on average, we are in a period of slower growth internationally compared to our historical levels. Lower inflationary escalators are a contributor, but the primary reason is consolidation-related churn and its associated impacts on carrier focus. Internationally, we have found that during these consolidations, the surviving carriers direct most of their attention to rationalizing their existing networks, causing much of their incremental network expansion. However, new spectrum and new technology generation deployments remain important and we believe will result in an acceleration in organic growth rates over time.

As discussed on our last call, chart remains elevated due primarily to these consolidations, but we believe that the steps we have taken and are taking to reach mutually beneficial contractual amendments with these customers will enhance the long-term strength and stability of our cash flows. Turning now to our balance sheet and capital allocation priorities, we have not shifted our previously stated overall approach, but we do very much make adjustments along the way in response to broader market dynamics and opportunities. We prioritize our dividend and have again announced a quarterly dividend 15% higher than the prior year period. This dividend level remains less than 30% of our guided full year AFFO, leaving meaningful capital available for allocation.

During the first quarter, we added a relatively small number of towers to our portfolio. And as a result of carrier consolidation, we decommissioned almost as many sites as we added. We remain selective about the quality of the sites that we add to our portfolio, but we really remain particular about the price at which we add them, which these days has been the main gating issue. That’s okay as our focus continues to be on return on investment, not growth just for growth’s sake. Opportunities will come along. In fact, they come along all the time. So we are comfortable being patient appropriately considering the new cost of capital environment we are operating in, and going after those opportunities that we believe we can best drive strong returns on.

The sites we are decommissioning are related to consolidation activity among our customers. We will be more proactive in the coming years in evaluating naked sites for cost-saving opportunities and potentially decommissioning. As I mentioned earlier, cost of capital and specifically cost of debt remains high and is now broadly expected to remain elevated for longer. This dynamic beyond any other has had the most significant impact on public tower company valuations. During the first quarter and beginning of the second quarter, we responded to some of this decline in valuation by spending $200 million to repurchase 935,000 shares of our stock. I believe that when there is ultimately a downward shift in rates, repurchases at this level will be even more accretive to future shareholder value.

Nonetheless, rates remain elevated today, and we recognize the impact of potential future higher interest costs on AFFO. So a portion of our capital allocation will continue to be appropriately dedicated to reducing debt. We are not formally changing our leverage targets as we believe retaining flexibility for the right investment opportunities is valuable, but operating with lower leverage in the current environment is clearly prudent. Our balance sheet and liquidity position remain in great shape. If not for the share repurchases, our revolver would have been fully paid down as of today. Our average cost of debt remains very low at 3.1%. However, over the next 12 months, we have approximately $1.8 billion that will need to be refinanced. The cost of that debt will certainly be higher than what we are paying today, but our ability to manage the amount of debt needed and the time we are locked into higher rates will be important factors in the approach we take.

Capital is widely available to us. It’s really just a matter of cost. We are evaluating a variety of options and we’ll provide further updates during the year as incremental steps are taken. Finally, I would like to revisit some of my comments from our prior earnings call with regard to the portfolio review we have undertaken. On the last call, I mentioned that we had begun an effort to analyze all of our operations and our potential operations through a lens of stabilizing results, growing our core business and shifting our mix more and more to high-quality assets and operations. I do not see this goal as having a finite deadline as it is more definitional around the key decisions we make. However, there are some very specific steps being taken and looking at each of our key operations, each of our business lines in each of our international markets.

We are setting baselines as to where we think these operations end up on a status quo basis 1 year from now, 5 years from now and even 10 years from now. Then based on potential opportunities we see in each case, we are developing alternative results profiles based on different paths we might take with the ultimate goal being improving the outcome relative to the base case. We are making good progress in gaining good insights through the effort, but this is not an overnight initiative. Many of the potential steps identified to enhance our positioning in given markets or operations will take time, sometimes possibly years to effectuate. After our prior call, a lot of attention was paid to the possibility of divestitures of businesses or markets.

While that may be an outcome in some cases, it is far from the priority or preferred path. I would much rather find ways to improve our position in the market through the addition of quality assets, enhance customer relationships and agreements and other creative solutions. In fact, I was recently visiting our team in Brazil, and learned a number of creative solutions we are introducing to enhance the customer experience at our sites and thereby improve the longevity of our customer relationships at those sites. I am encouraged by the seriousness with which our teams are approaching this initiative. In the end though, as I stated previously, financial results always matter, and we will make the best decisions we can to protect or create shareholder value as our top priority.

We have a great business and great assets. It is our job as the management team to maximize the value we can realize from those assets, and that is where our focus squarely is. I’d like to wrap up by thanking our team members and our customers for their contributions to our solid first quarter, and we look forward to continuing to share our progress throughout the year. With that, Jeffrey we are ready for questions.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Michael Rollins. Please go ahead.

Michael Rollins: Thanks and good afternoon. I’m curious if you could discuss a bit more about some of the preconditions you’re seeing for better domestic leasing activity. The applications that you described for new leases and amendments. And does this give you encouragement that 2025 can see better leasing activity than 2024?

Brendan Cavanagh: Yes, Mike, I think it’s a little bit premature to say that. My comments about the increased applications are obviously positive in general, as increases, obviously would be. But I think it’s a little bit early. It’s only been two months since our last report. And we haven’t seen a material change. We’ve just seen a minor step up directionally in those items. So at this point I think it’s too early to comment on where 2025 will come out.

Michael Rollins: And in terms of just the where the activity is coming from. Is it coalesced [ph] around certain geographies or for certain carriers?

Brendan Cavanagh: No. I would say it’s fairly broad-based in different geographies, different carriers are perhaps a little bit busier than others. But I think you’re aware of some of the initiatives that some of our customers have going on. But it’s, I would say, it’s generally broad-based across the big 3 carriers.

Michael Rollins: And just one other question. You mentioned about wanting to manage leverage lower in this environment. Do you have a goal as to where you’d like to see your net debt leverage exit the year?

Brendan Cavanagh: Yes. We don’t really have a goal. In fact, we’re actually not explicitly changing our targets, although we’re obviously operating well below them today. And the reason we’re not changing the targets is that opportunities come along and sometimes being flexible and levering back up to take advantage of a part opportunity may be the best choice. And so I don’t want to kind of present it like we have to be the lower number. I think in absence of investment opportunities that we see as particularly value additive, in the current high interest rate environment, the best option in some cases will be to actually pay down absolute debt. So there’s not a particular target, but I think outside of some meaningful opportunity for new assets coming along, you should expect that we would look to reduce our absolute debt levels.

Michael Rollins: Thanks very much.

Operator: Our next question comes from Jonathan Atkin. Please go ahead.

Jonathan Atkin: Thanks. I was interested in where you see the most interesting build-to-suit opportunities across your markets? And then as we kind of think about M&A, either within existing markets or elsewhere, can you just remind us in terms of what your guidelines are and where you might be seeing opportunities? Thank you.

Brendan Cavanagh: Yes. On the new build opportunities, we are, first of all, we’re looking in every market that we’re in for specific opportunities that meet our requirements because we already have a presence in that market in an operation scalability there. So ideally, we’d like to build sites wherever we can. But specifically, certain markets in our African markets, in particular, we’re seeing more opportunities and certain select markets in South America as well. On the M&A front, I would say the same premise applies in the sense that if we can find high quality opportunities in any of our existing markets, that’s something that we prioritize. But at the end of the day, it really is a financial analysis around the pricing of those assets and what we think we can do in terms of returns based on growth that we think we can achieve over a period typically of about 5 years or so.

Our approach hasn’t really changed, although our return thresholds have moved up with the cost of capital.

Jonathan Atkin: And then Brazil, can you remind us broadly where Oi is in terms of the equipment being decommissioned off of towers for their mobile network? And then prospectively, for the wireline, you gave a little bit of color in the prepared remarks. But where are they in terms of physical decommissioning as opposed to you haven’t already maybe recognized it in your reporting? Thanks.

Brendan Cavanagh: Yes. On the Oi wireless side, it varies by carrier. Obviously, they were absorbed into 3 different carriers. I would say, I don’t know if I could give you an exact percentage, but they’re probably 40-ish percent or so of the way through that effort would be my guess on average. We’re definitely seeing the activity there. But there’s — as we see here in the U.S., it’s an elongated process and it takes some time. So I’d expect this to go on for a number of years. On the wireline side, we’ve seen some de-commissionings that were really in advance of the efforts that they’re undertaking here. But that one actually has the most runway still to go. They just had their reorganization plan approved just a week or so ago.

So it’s very early days there. But I would expect over the next couple of years, we’ll start to get a better sense of that. And in fact, they’re under the plan, they’re expecting to reorganize and continue to operate that network at least for the next several years. So we’ll see how that progresses in terms of how many sites actually get turned on.

Jonathan Atkin: Thank you.

Operator: Our next question comes from Michael Elias. Please go ahead.

Michael Elias: Great. Thanks for taking the questions. First, I just want to delve back on the portfolio review. It seems like when you’re talking about the M&A environment, valuation as the hold up, I think just interpretation is that’s part of the reason why we’re seeing you shift more capital allocation to the buyback. Just curious how your thoughts there have evolved? That would be the first thing. And then second, is there any color that you can share in terms of the 271 sites that you announced that you are acquiring, where they’re located, that would be helpful. Thank you.

Brendan Cavanagh: Sure. Yes. I would say in terms of evolution of our thinking, we announced this portfolio review publicly last quarter. And it hasn’t been that much time. So we’re kind of in the midst and throws of that. The one thing that has shifted a little bit though in that window of time is that rates are not only staying higher, but are expected to continue to stay higher for longer, and that’s something that we have to be sensitive to. And so my comments earlier in the prepared remarks are really about that, about the fact that — we have to watch that and in some cases, paying down debt may actually be more accretive than we would have thought even a couple of months ago. And so it’s certainly on the table, perhaps more than it was before.

And you’re right in that you see less M&A activity and more towards buybacks, for instance, because we see a better return there. So it is very still very much financially driven. In terms of the sites that are under contract, it’s pretty much the same sites that we’re under contract with a very few exceptions at our last earnings call. There are a mix of markets, some are here in the U.S., but most are located internationally. South America is the primary place where we have those types of contracts.

Michael Elias: Perfect. And one other question, if I could. I mean, on the last quarter earnings call, there was commentary that carrier activity in the U.S. persisted at the current levels that you can see the 4Q 2024 exit run rate be below $40 million. Just curious how you’re thinking about the potential run rate exiting the year based on the activity that you’re currently seeing? Thank you.

Brendan Cavanagh: Yes. We didn’t change any of our outlook for the year. So that still stands as of today that we would expect a similar number to what we talked about last time exiting the year. So right now, we haven’t seen enough shift in carrier activity to change those projections.

Michael Elias: Thank you so much.

Operator: Our next question comes from Simon Flannery. Please go ahead.

Simon Flannery: Great. Thank you very much. Good evening. Brendan, I wonder if you could just characterize some of the big 3 activity. Are you seeing them complete or move further on adding mid-band to existing sites? Are you seeing them move to densification. And any kind of parallels you could draw with the LTE 4G kind of phasing from that initial coverage phase to the next phase, how does this compare or is it slower as you noted, because of the rising rates? And perhaps you could just remind us, you talked about an uptick in applications. How should we think about timing from applications to actually execute leases and revenue generation?

Brendan Cavanagh: Yes. I mean the type of activity, I would say, is a mix. There’s still plenty of mid-band spectrum deployments that need to be done, particularly by AT&T and Verizon. And so, we’re seeing plenty of that. That’s the primary driver of amendment activity. But we are seeing more new leases than perhaps we’ve seen in the past from the big carriers, and it’s a mix of both coverage and densification, but it’s taking a normal transition, I think, that we’ve seen previous generations of technology deployment. The difference really, Simon, and you touched on it, you picked up on what I said, which is it’s really just timing we’re seeing this kind of go at a much slower pace perhaps than what we’ve seen before.

That can, of course, change rapidly, but I really do believe that just the cost of money has an effect on that. And it makes total sense why our customers would be a little more disciplined in their capital spending. So that’s really what we’re seeing. And then in terms of the time frame from dining agreements or getting applications and executing them to ultimately revenue generation. It’s pretty consistent with what it’s been in the past. It’s really just the absolute volume is a little bit lower.

Simon Flannery: Great. And any color you can provide on DISH?

Brendan Cavanagh: Yes. I mean we’re still signing some leases with DISH. Obviously, it’s at a much lower level than it was when they were busier. And we’re here to support them with all their needs, but I don’t really have much else that can offer you.

Simon Flannery: Thank you.

Operator: Our next question comes from Ric Prentiss. Please go ahead.

Ric Prentiss: Good morning Brendan and everybody.

Brendan Cavanagh: Hey Ric.

Ric Prentiss: A couple of questions. One, can you unpack for us how much of the stock buyback you did within March and how much you did subsequent to the quarter?

Brendan Cavanagh: Yes. I think it was, I think it’s somewhere in our report or maybe it’s not, but it will be in our 10-Q anyway. I believe roughly half, just over half was in March and the balance was in the beginning of April.

Ric Prentiss: Sure. Okay. That helps. And then when we think about the leverage, I think the leverage went up to about 6.5% in the quarter. How should we think about stock buybacks versus allocating towards debt reductions as we look out through the rest of this year? Is 6.5% kind of the new normal in this operating more? Do you want to go down closer to 6%? Just trying to think through how buybacks are fitting in with the debt reduction, absolute levels?

Brendan Cavanagh: Yes. It’s not so much the leverage ratio. In fact, the ratio was up but the absolute amount of debt was pretty similar to what it was at year-end. It’s a little bit higher because of the buybacks, but not much. It was actually higher on a leverage ratio basis because the EBITDA was down a little bit, mainly because of services. So that, I’m a little less focused there because we have so much room in our ratio, and it’s more of a focus on the absolute amount of debt that we’re carrying. And specifically because we have these maturities that are coming up in the next 8 months or so. And so as I kind of eye that, our ability to kind of reduce the amount of absolute debt as we approach those maturity dates, is really what we’ll be targeting as opposed to worrying about where the leverage ratio is.

And I think on the buyback front, we obviously did a couple of hundred million here, and we would be open to doing more. We’ve generally been opportunistic about it. But in the short term, we have these maturities. And so to some degree, that takes priority.

Ric Prentiss: Okay. And then on operational front, I think Marc was talking about the Sprint churn confirming those kind of numbers. Legacy churn, non-carrier consolidation in the U.S. more to 2%. As we look out over the next 1, 2, 3 years, it seems like we might be heading to the lower end of that 1% to 2% of historical level because a lot has already been made sucked up. Is that something that we might think of as maybe heading more towards the lower end of one to two as we look out over the next few years?

Brendan Cavanagh: Yes. That would be my expectation.

Ric Prentiss: Great. Very helpful. And I appreciate your clarity on the strategic review that helps.

Operator: Our next question comes from Nick Del Deo. Please go ahead.

Nick Del Deo: Hey thanks for taking my questions. First, Brendan and Marc, you both commented on tower decommissioning as a source of cost savings and something that might tick up with the consolidation-related churn in the coming periods. Does this entail to anything different than what you have may done historically churn, like having a lower tolerance for hanging on to naked sites? Or is it just the magnitude of the site that may be different today versus the past?

Brendan Cavanagh: Yes, I think it’s really more the latter. You’ve got, obviously, on the Sprint few more related consolidations here. But internationally, with the oil consolidation in particular, I mean, those are really the big ones. There’s some others here and there, but those are the biggest ones. It’s a lot of sites. And so as we kind of look at what can we do in this window of time where carrier spending is a little bit slower and you have some of these headwinds, what can we do to maximize our bottom line results. Costs become a little more material potentially to that story of improvement. So it’s really more the volume than it is anything else. But that increased volume requires a little bit more of a concerted direct focused effort on it.

Nick Del Deo: Okay. That makes sense. And then Brendan, one more for you. In your prepared remarks you noted that your team in Brazil is taking steps to enhance, I think you said the customer experience at your sites, which should be value accretive over time. Can you expand on that a bit and maybe share an example or two of what those solutions may have been? I mean it just struck me is interesting because it also of us on the outside don’t necessarily think of tower leasing as something where you tend to see a lot of innovation like that. So any description you can share would be interesting.

Brendan Cavanagh: Yes. Well, I’m going to sidestep that a little bit because there are some specific things that we’re doing that are creative, that actually are adding value for our customers down there. Things that are related to power that relate to other centralized hosting of wireless coverage solutions and even security-related items. As you add some of these types of things in terms of the service package that you provide, you make your site that much better. And when somebody has the choice to make choice, you want to have your options be preferred, but it’s not just that. It also comes with the ability to enter into longer-term agreements that secure that relationship for an extended period of time. And that’s really what we’re focusing on.

The reason I’m side stepping it a little bit and not getting too specific with you is that it’s a little early and for competitive reasons, I prefer not to get that specific on it. But as it becomes something that’s more material, I’ll be happy to share at that point.

Nick Del Deo: Okay, thanks Brendan.

Operator: Our next question comes from David Barden. Please go ahead

Unidentified Analyst: Hey good afternoon, Got Alex Waters [ph] on for Dave. Thanks so much for taking my question. Maybe just first, maybe just when I think about international churn, obviously elevated this year. I mean, Brendan, could you maybe just walk through the way we should be thinking about it for next year and the couple of years after. And then just in terms of M&A, I think you — we discussed a little bit about options you might have in existing markets. But can you just talk about your appetite for those that FDA does not have a presence in yet? Thanks.

Brendan Cavanagh: Sure, Alex. Yes, on the international churn front, I would expect that it will be elevated for the next couple of years, maybe not quite as high as it is this year, but it will be elevated by historical standards. We used to have almost zero churn basically. But we’ve reached a point where you have a lot more consolidation that’s taken place across many of our markets. That’s driving a lot of it. And so as we just kind of look at when leases are scheduled to roll off and where there’s been consolidations and what we think our exposures we might have, plus, frankly, wireline bankruptcy. Those things will, I believe, cause it to stay elevated for the next several years, although, again, hopefully not quite as high as it’s been this year.

On the M&A front, yes, I mean, new markets are certainly on the table for us. We’re very financially focused when evaluating the opportunities. I believe that are experienced over the last decade or more of expanding into international markets has given us a comfort and the confidence that we can do that as well as anybody that we know the things that we need to understand before we enter a market, how to set up operations in a new market. So I’m confident that we can do it from an operational standpoint. It really just comes down to the opportunity that’s on the table, and the price point at which we can secure it so that it is value additive ultimately for the company as a whole and for our shareholders. That’s the guiding issue. And if it’s — that’s harder and harder these days broadly, whether it’s new markets or existing markets because there are a number of situations where I don’t think seller expectations have aligned still with where the market has gone.

But that could change over time and our willingness to expand in our existing markets or in new markets would remain the same. We would be open to it.