Brendan Cavanagh: Yes. I don’t – I think, Nick, it does speak to the higher-margin type work that we’re doing. I’m not sure that it’s sustainable at that same level that we are experiencing right at the moment. Some of that is really tied to an estimate of costs as we put these jobs on the books, and we’re ending up actually finding ways to operate more efficiently and come in at lower cost levels. And then as you kind of true-up [ph] those jobs, since they’re accounted for on a percentage of completion basis that helps. But I think, it just is evidence of our intent to focus on high-quality, high-margin work, and we’ll continue to do that. But I don’t know that 30% margins are the story for the long-term.
Nick Del Deo: Okay. Got it. Thank you, guys.
Operator: And next we’ll hear from Eric Luebchow with Wells Fargo. Please go ahead.
Eric Luebchow: Thank you. I just wanted to echo best wishes for Jeff in retirement. Brendan, I just wanted to get your latest thoughts on how you kind of prepare the balance sheet for the debt maturity staff that’s coming due in a more material way in 2025. I know you don’t have to make a decision on that today whether you’ll pursue investment grade. But just how might that impact your capital allocation policy into 2024 as you kind of look at the puts and takes of buybacks, M&A or further deleveraging with excess cash?
Brendan Cavanagh: Yes. Well, first of all, I think that we have tremendous access to capital. So from a refinancing perspective, I’m not concerned about that. We’re actively evaluating all of our options there. And I’m confident that there are numerous markets available to us. Obviously, the costs are higher than they’ve been in the past. But in terms of access to capital, so that – that part of it doesn’t concern me. I think, when we think about allocation of capital, though, it really is just a matter of what is the best return on investment, what is going to create the most shareholder value. So that sounds simplistic. But ultimately, that’s what we’re looking at. And so if we can use our capital, and maybe our leverage goes a little bit higher, which it’s been in the past, certainly, because we see opportunities to invest that capital into either buybacks or new assets, we’ll do that.
We’d like to do that. But recently, we found that paying down debt has been the better way to go. And at some point, we’ll be at a level where it’s just going to be a natural shift. If that doesn’t change, will be the natural shift to investment grade. And then it’s just a matter of finding the right instruments that fit our capital structure to allow us to retain flexibility, but also get the best cost possible.
Jeff Stoops: Yes. I think said differently, if we continue to operate the way we have the last couple of quarters, we naturally will have the optionality of being an investment-grade issuer. That really, for us, is not so much more a matter of material leverage reduction as it is commitments and policy changes and things like that. We would, of course, before we materially increase leverage for allocation of capital, we would think long and hard about whether that was the right thing to do in advance of 2025. But it kind of is on a path. And Eric, we think, as we look around the world, look at portfolio pricing and things like that, it’s very likely that we end 2024 at a lower leverage level, or certainly not a higher leverage level, than where we end 2023.
Eric Luebchow: Okay. I appreciate that color. And just one follow-up question. Just quickly on domestic churn. I think, excluding the Sprint churn, you’ll be at about $30 million this year, maybe around 2% of your revenues. And it’s been in that ballpark for the last couple of years. As you look further out over the next few years, are there opportunities to bring that run rate churn level lower? We’ve heard from some peers about some of their run rate tower churn moving closer to 1% of revenue. Thanks.
Brendan Cavanagh: Yes. I do think, Eric, there’s definitely opportunities to bring it lower. For one, a big chunk of that is due to kind of smaller customers that frankly, as you start to have less and less of them or they are less of a percentage of our business, obviously, there’s less opportunity or supply for that churn. And then with our agreements with some of our bigger customers, I would expect that any churn that’s come from them will be significantly reduced as well.
Eric Luebchow: Okay. Great to hear. Thank you guys.
Operator: And next, we’ll hear from Brendan Lynch with Barclays.
Brendan Lynch: Great. Thanks for taking my question and Jeff, want to echo everyone’s congratulations as well. Maybe we could just start with the international market. You kind of described demand being above your internal expectations. And a component of that, I believe you mentioned, was the escalators. But if I understand correctly, those are more backward looking. So I’d imagine that you have pretty good visibility on that for the year. So maybe you could just get into some of the other drivers that are driving the international exposure and international profitability higher than what you had been expecting?
Brendan Cavanagh: Yes. The above expectations comment was specifically associated with new leasing revenue signed up through new leases and amendments. And that was – we kind of obviously target based on backlog, and what our market intelligence is telling us what we think those numbers are going to look like in each market. And on average, across our international business, we were successful in signing up more new business than – from a dollar standpoint than we originally expected. So that’s that comment. And I think it’s driven really just by the significant needs that certain of our customers have across our markets for all the basic things that we talked about before, continued expansion of both 4G and even a little bit of 5G coverage.
The coverage that exists in these markets is not nearly where it is in the U.S., so there’s much greater needs in some cases. And so we’re seeing that play out in a number of our markets. The escalator piece is not really a part of that. That varies and just moves based on where inflation is, and in certain of our markets, inflation was – has been a little bit higher. So that’s helped the growth rates stay elevated.
Brendan Lynch: Great. That’s helpful. And maybe just one on the build-to-suit program. You had some more activity there in the quarter. Maybe just give us an update on where you see those opportunities over the next couple of quarters?
Brendan Cavanagh: Yes. I think there’s – most of that is being done internationally, first of all. I’m sure you see that in our release. And that will probably continue to be the case. There’s definitely opportunities for new builds, for the same reasons as I just mentioned. In responding to the previous question, there’s just a lot of coverage needs that exist in these markets. The real question for us is just making sure that we’re doing – we’re making worthwhile investments, given the cost of capital that’s increased, that we’re building sites, that we’re confident are going to make a nice return, and that usually requires the addition of a second tenant at some point over the next several years after you build the site. So we’re pretty diligent in kind of watching those sites. I think opportunities exist. But we’re going to be selective about where we build sites.
