美國電塔 (AMT) 2004 Q3 法說會逐字稿

Good morning. My name is Marvin, and I will be your conference facilitator today. At this time I would like to welcome everyone to the SpectraSite third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. If you would like to ask a question during this time simply press star then the number 1 on your telephone keypad. If anyone should need assistance at any time during this conference please press star then 0 and an operator will assist you. As a reminder, ladies and gentlemen, this conference is being recorded today, November 4, 2004. Thank you. I would now like to introduce Mr. Steven Lilly, Vice President of Finance and Treasurer for SpectraSite. Mr. Lilly, you may begin your conference.

Thank you, operator. Good morning and welcome to SpectraSite's third quarter conference call. Before we begin I'd like to introduce other members of the SpectraSite team present on the call today. Steve Clark, Chief Executive Officer, Mark Slaven, the Company's new Chief Financial Officer, and Dale Carey, President of the Company's wireless division who is sitting in for Tim Biltz, our Chief Operating Officer, who could not be with us today. Please be reminded that during the course of this conference call we may make forward-looking statements regarding future events and future financial performance of the Company. These statements are subject to risks and uncertainties including those detailed in the Company's filings with the SEC. Actual results or developments may differ materially from those in forward-looking statements as a result of various factors. We have based these forward-looking statements on information currently available and would like to remind you that we undertake no obligation to update or revise any forward-looking statement made as part of this call. Today's call will also include discussion of certain non-GAAP financial measures, including adjusted EBITDA and free cash flow. Tables reconciling such non-GAAP financial measures to comparable GAAP financial measures are available as part of the Company's press release issued prior to this call, the Company's Form 8-K and Form 10-K -- Form 10-Q filed with the SEC and under the Investor Relations section of the Company's website at www.spectrasite.com. Now I'd like to turn the call over to Steve Clark.

Thanks, Steven. Good morning, everyone. Thanks for being with us today. There are a few items I'd like to discuss before we get into the meat of today's call. First, the third quarter was a record quarter for SpectraSite. For the first time in the Company's history we generated approximately $90 million in site leasing revenue and approximately $50 million in adjusted EBITDA. As Steven will discuss in greater detail in a few minutes our top-line revenue growth was strong, our adjusted EBITDA growth was strong and our free cash flow growth was strong. Quite simply, I could not be more pleased with the attractiveness of our tower portfolio and the way our operating team continues to execute. Second, as some of you may have seen, on November 1, we announced that Mark Slaven has joined the SpectraSite team as our Chief Financial Officer. During his 25-year career Mark has served in numerous executive, financial, and operating roles, including serving as 3 Com corporation's Chief Financial Officer from June 2002 until August 2004. Prior to serving as 3 Com's CFO Mark served as its Vice President of Treasury, Tax, Trade, and Investor Relations, and prior to that its Vice President and Treasurer. Prior to U.S. Robotics acquisition by 3 Com in 1997, Mark served as Vice President Finance for its manufacturing division. Before joining U.S. Robotics Mark was Chief Financial Officer of the personal printer division at Lexmark International. Mark, on behalf of all of us, welcome. We look forward to leveraging your experience and knowledge at SpectraSite for many years to come.

Next, on behalf of the members of our board of directors I would like to express my sincerest appreciation to Gabriella Gonzales and Steven Lilly for their dedication and service to the Company during the last three months as they served together as interim co-CFOs. Under Steven and Gabriella's leadership the Company's financial strategy has clearly continued to be executed as evidenced by our recently announced $900 million senior credit facility which we expect to close later this quarter as well as our recent upgrades from both Moody's and Standard & Poor's. With the addition of Mark to what is already a very talented financial team, I believe we are extremely well positioned to continue executing our financial strategy of investing in prudent growth opportunities while continuing to return value to shareholders on a consistent basis. With that, I'd like to turn the call over to Steven to discuss our financial results in a little more detail and provide an update on our recent capital markets activities. After his comments Mark will provide some color on our guidance for 2005 and then I'll make a few closing remarks before we open the call for questions.

Thanks, Steve. During the third quarter we had total revenues of 91.6 million as compared to revenues of 79.5 million during the third quarter of 2003. Our third quarter revenue was positively impacted by $2 million due to one-time revenue associated with the final closing under our agreement with SBC, and 1.3 million of nonrecurring revenue associated primarily with the positive settlement of accounts with two of our customers. Net of these nonrecurring items our revenue was 88.3 million. On a recurring basis, which represents a year-over-year growth rate of 11% from the prior year's third quarter. Adjusted EBITDA defined in the traditional manner as operating income plus depreciation, amortization, noncash charges, and nonrecurring items for the quarter was 51.2 million, as compared to 48.1 million during the second quarter of this year, and 40.7 million during the prior year's third quarter. Our third quarter adjusted EBITDA margin increased to 56% from 51% during the prior year's third quarter. You should note that our third quarter 2004 adjusted EBITDA was also positively affected by the items I mentioned previously including the $2 million due to one-time items relating to the SBC closings and including the 3.1 million of nonrecurring adjusted EBITDA related to the positive resolution of open accounts as well as the flow-through of the 2 million of revenue from the final closing of the SBC contract. This positive contribution to EBITDA was offset by 1.1 million of nonrecurring severance compensation detailed in our 10-Q filing relating to the departure of our former CFO. Net of all of these items our normal recurring adjusted EBITDA during the third quarter of 2004 was 49.2 million which represents a 21% growth rate from the prior year's third quarter.

Free cash flow defined as net cash provided by operating activities, less purchases of property and equipment, was 32.9 million during the third quarter as compared to 30.9 million during the prior year's third quarter. Free cash flow defined as normal recurring adjusted EBITDA of 49.2 million less cash interest expense and maintenance capital expenditures was 37.3 million during the quarter as compared to 27.2 million during the prior year's third quarter. Third quarter SG&A on a reported basis was 13.65 million. Net of the previously discussed nonrecurring items our recurring SG&A was 12.5 million as compared to SG&A of 12.7 million during the third quarter of 2003. From a liquidity standpoint at September 30, we had $84 million of cash on hand and a total of 638 million in long-term debt comprised of 438 million of bank debt and $200 million of high-yield debt. Our net debt to annualized adjusted EBITDA was 2.7 times at the end of the third quarter and our annualized adjusted EBITDA to annualized cash interest expense was approximately 5.5 times. As many of you know we have consistently maintained our comfort level of operating on an intermediate to long-term basis with between 4 and 5 times total leverage. As Steve mentioned earlier in the call, in August of this year we met with Moody's and Standard & Poor's and discussed our financial strategy in some detail with both rating agencies. In September, S&P upgraded all three of the Company's ratings one notch and in October, after their review, Moody's also upgraded all three of the Company's ratings one notch. Notably, both agencies have also continued their positive outlook on the Company. A positive outlook from the agencies means that additional upgrades are likely over the next 6 to 12 months provided the Company continues to achieve its operating targets. We view these positive moves by the rating agencies as further confirmation of our long-term financial strategy coupled with recognition of our consistent -- of our consistent operating performance over the last several quarters.

On our second quarter earnings call in July I stated our desire to refinance our bank facility in the next 6 to 9 months. As Steve mentioned earlier in the call, on October 15, on the leading edge of that schedule, we announced that we are in the process of refinancing our senior credit facility. The proposed new bank facility is 900 million in commitments comprised of a $200 million revolver, a $300 million term loan A, and a $400 million institutional term loan B. Given that we have approximately $440 million of bank debt outstanding today, the new facility will provide us with approximately $460 million of incremental bank liquidity. Refinancing our bank facility represents a major step towards reengineering our capital structure to provide the Company with the flexibility we believe we will require and indeed should have over the next several years to utilize our free cash flow to make investments in the business and to continue returning value to shareholders on a consistent basis. While no assurances can be made that the transaction will close on schedule, we are seeking to close the new bank facility before the end of the year. When the transaction closes we will update the market with more details around the key terms of the facility until then with regard to the bank facility let me conclude by saying that we are very pleased with our group of banks and that the syndication process is going well. In terms of activity under our $175 million share repurchase plan that was authorized by the board on July 28, of this year, we repurchased 735,400 shares during the quarter at an average cost of $44.14, including trading costs and legal expenses. In aggregate we spent approximately $32.5 million during the quarter repurchasing common stock over a four-week period from mid-August to mid-September.

As many of you know the Company was precluded from repurchasing stock ahead of the final SBC closing which occurred on August 16, and the Company's window closes two weeks prior to the end of the quarter. That time line left us with approximately four weeks to repurchase stock and we were indeed active during that time frame utilizing close to 20% of our available basket of 175 million. While we obviously cannot comment on too many specifics in terms of future activity under our share repurchase plan, I would say that we have been very consistent in our public message that we put the plan in place with a full intention of using it and that we expect to continue to do so. Finally, in accordance with our plan, all repurchase shares are held as treasury stock. Now I'd like to turn the call over to Mark Slaven to provide some color on our 2005 guidance and outlook.

Thank you, Steven, and good morning, everyone. Before I go through our outlook for 2005 let me comment briefly on the balance of 2004. As most of you know, we provide annual guidance as opposed to providing quarterly guidance. Our belief being that in a recurring revenue business like the tower industry, predicting growth in the quarter to quarter basis is a relatively straightforward exercise. That being said, given the continued strength of our financial performance during the third quarter, we believe we are likely to continue to perform well relative to our 2004 benchmarks. Turning to 2005, our guidance is predicated on our assumption that the major wireless carriers will build approximately 13,000 to 15,000 sites including overlay activity during 2005 and that those sites be placed in the service in the traditional manner of 40% of carrier activity occurring during the first half of the year and 60% of carrier activity occurring during the second half of the year. I guess could you say that in many respects we are approaching our 2005 guidance in a manner very similar to the way we approached our original 2004 guidance. In November 2003, when we gave guidance for 2004, we acknowledged that there was a significant amount of speculation in the market that carriers would invest heavily in their networks during 2004, but we stopped short of encompassing those unsubstantiated rumors into our guidance. Instead we opted to wait until we had clear evidence that those builds were actually going to occur.

As we look out to 2005, a few things are clear and a few things are not so clear. What appears clear is that 2005 will likely be much more of a balanced year in sell side deployment in 2004 which was so heavily weighted toward the first and second quarters. The closing of the Cingular AT&T transaction is also clearly a very positive event for the entire tower sector, because it removes a major overhang for the industry that we believe reduced demand during the second half of 2004. What also appears clear to us is that wireless penetration rates and wireless MOU's are continuing to increase at a much faster pace than people have contemplated. What is not as clear is what final carrier CapEx budgets will be for 2005. Carriers historically have finalized their budgets in the December or even January time frame and it looks as though this year is going to be similar. It is also not clear to us what Cingular's 2005 plans will be. While we are pleased that the transaction has closed, we're eager to understand the specifics of the network-built plans. With that I'll walk through the specific ranges for our 2005 guidance. For full year 2005, we expect site leasing and licensing revenues to be between 372 million and 382 million. We expect site operations costs before depreciation, amortization, and accretion expenses to be between 108 million and 111 million. We expect our selling, general, and administrative expenses during 2005 to be between 51 million and 53 million. From a capital expenditure perspective we expect to spend approximately 50 million during 2005. Of this amount, approximately 10 million is expected to be maintenance CapEx and approximately 40 million is expected to be invested in growth initiatives including developing in-building, distributed to antenna systems, purchasing ground under our towers and upgrading certain tower assets. When you analyze our guidance you see that utilizing the most aggressive and the most conservative ranges for revenues, direct cost, and recurring SG&A expenses generate an adjusted EBITDA range of 208 to 223 million with a midpoint of 215.5 million. At the midpoint, our guidance range equates to year-over-year adjusted EBITDA growth of 13%. With that I'd like to turn the call back to Steve.

Thanks, Mark. From an operating perspective I continue to be extremely pleased with the consistency of our results. Over a year ago, on our 2003 second quarter earnings call, I made the statement that SpectraSite's operating strategy was at that point the clearest it had ever been. Today, over a year later, we're continuing to see the benefits of this clear strategy. SpectraSite's focus on recurring revenue tower assets located in major metropolitan markets continues to provide a firm foundation for a predictable, consistent growth. As a tangible example of this consistent growth consider that over the last 12 months we have added on an annualized basis approximately $35 million of revenue to our towers, while at the same time we've added approximately $34 million of adjusted EBITDA. This incremental EBITDA contribution represents greater than a 90% pass-through margin. To continue on this thought consider that SpectraSite's free cash flow margin at 43% is already higher than the EBITDA margins of many other companies in many other industries. As we look out over the next three or so -- three or so years, through a combination of internally generated free cash flow as well as additional capital required to bring our leverage level to the midpoint of our four to five times goal, we believe we will have the opportunity to invest somewhere around $1 billion of capital. To put that number in perspective, on a per-share basis, that means that over the next three years we expect to have, at a minimum, a little more than $20 per share of capital to invest in the business and to return to shareholders in the form of stock buybacks and dividends.

One of the things that's unusual about SpectraSite versus other investments people may choose to make in the telecom sector is that our Company, while still being viewed by most people as a growth stock, has significantly more options available to it than those companies who are unilaterally focused on de-leveraging as rapidly as possible. Instead of simply utilizing our excess cash to de-lever we have the opportunity to invest our excess cash and also take on additional leverage to generate returns for shareholders. Indeed there are some people who would like SpectraSite to increase its leverage to five or six times or maybe even a higher number and use all the proceeds to repurchase as much common stock as possible. There are other people who would like to see us increase leverage with the sole focus of pursuing growth opportunities in the business. Our view is that both strategies have merit and we should be mindful not to pursue either single strategy to the exclusion of the other. As many of you probably have surmised from the size of our proposed bank refinancing we are not currently pursuing any Company transforming acquisitions at this time. That being said, our strategy is to find worthwhile prudent growth investments that will be accretive to our results. We continue to look at fill-in telecom and broadcast tower acquisitions. We continue to analyze additional opportunities in the distributed antenna business and expect that over time we will be successful in finding ways to invest additional capital there.

Our strategy is also to continue to focus on repurchasing our common stock, especially at levels we find attractive, and lastly, our strategy is to continue to analyze the possibility and timing of instituting a recurring dividend program. Unlocking the value of our balance sheet to generate the highest possible returns for shareholders is a long-term strategy that will play out over several quarters and even several years. Prudent judgment is the most important component of maximizing the potential of our balance sheet. SpectraSite has a superb operating team and a superb financial team. I fully expect those teams to make thoughtful recommendations to our Board of Directors regarding investment opportunities that will continue to produce very positive risk adjusted returns during 2005 and beyond. With that, operator, we'd like to open the call to questions.

Ladies and gentlemen, if you would like to ask a question please press star then 1 on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from David Small with Goldman Sachs. Please go ahead with your question.

Hi, good morning. You had mentioned the timing of this year being slightly different than you had expected being more of the leasing in the front half of the year. Could you just give -- maybe help us quantify when you think about from your original guidance or just even during the year what would have been the impact on your EBITDA had this year fallen under a more normal kind of pattern?

David this is Steve. The expectation, the guidance expectation that we had going into last year, based on what we saw in the last half of 2003, is that we would see relative -- relatively flat quarter to quarter incremental growth and indeed the lease commencements were much more front-end loaded. To try to quantify that, if you compare what actually happened to our original expectation, there was about a $6 million EBITDA delta.

Thank you. And the other question was, you had mentioned that you'd buy the stock at levels you found attractive. Could you just help us understand how you're going to go about determining what levels are attractive for the Company is there a level where you believe it's accretive for you to be buying stock, not accretive? Maybe just give us some more color on that. Thanks.

Sure. I mean, I think, you know, you've heard, I believe, at a recent conference Steven Lilly give the long answer. The short answer is that it's obviously a bit of a moving target based on how we view a broad range of investment opportunities and based on where we see the stock, or where the stock is priced at any one point in time. I don't think there is a single magic number that represents a hurdle rate or -- I mean, we've previously talked about hurdle rates for investing in the business for growth purposes. Those haven't changed. We certainly look at as best we can the investment in stock on the basis of its likelihood of being accretive or dilutive over both shorter and intermediate periods of time, so I think it's a multifaceted equation that we continue to look at. Doesn't have a simple answer.

David this is Steven. The only thing I would add to what Steve said, and I certainly don't want to get long-winded, but in terms of what we said on our second quarter call, we said long-term over the next three to four years we would expect sell-side demand to be in the 13,000 plus or minus range, and I think when you use that as a top-line driver and you recognize that our guidance for 2005 is now based on that similar type of range of 13 to 14 or 15,000 sites there's a consistency there and you can continue to model out the same way we can and we do, those types of growth rates and I think you'll come to the same conclusion that we do that it's a pretty attractive investment.

Thank you very much.

Your next question comes from Ric Prentiss with Raymond James.

Good morning, guys. Couple of questions for you. Continuing on the stock buyback vein have you done any stock buyback in the fourth quarter so far or were you precluded until you could announce your earnings, and the associated question is, what are the time frames that you can look at buying back the stock, and are there any limitations to the volume you can do, or is it just strictly price-based?

Hey, Ric, it's Steven. Appreciate your comments. In the fourth quarter we have not been active in the market, the Company's window closes two weeks prior to the end of the quarter, and then opens again a few days after we report results publicly. So we have not been active at all. And in terms of utilizing the balance of our 175 basket, I guess there are those -- what pretty well known are two I guess are well known and the third is less well-known in terms of options that we could utilize. One is the open market buyback that we have in place today. The second pretty well-known option for companies that do have a buyback program in place would be to do some type of Dutch tender for the stock all at once, and then the third option is sort of, I might call it a compromise between the two which is called an ASB, or an accelerated stock buyback. That's where a company, for accounting purposes, buys back the stock, retires the shares day one and uses a third party broker to work in the transaction and then that broker covers the position over a two, three, four-month period, so you're basically average-cost buying over the life of that transaction. So kind of a compromise between the two but those are sort of the three options available to us. We have obviously just been doing open market buybacks at this point. That's certainly not to give any indication of what could happen in the future.

Second question for you guys, you had mentioned the -- I got a little confused at first. The 2 million one-timers, the final SBC tranche as far as the revenue impact in the quarter, then I thought I heard you say 1.3 million nonrecurring from two accounts that you, I guess that was kind of buying out leases, and then later I heard a 3.1 million. Is it 1.3? Is it 3.1? Are they related at all?

Yeah, let me go through it in some detail. I'm glad -- I'm glad you asked the question, actually, so we can get it out publicly. It's obviously hard in the confines of a conference call. Stated EBITDA was 51.2 million in the quarter. The $2 million of one-time revenue related to the SB -- final SBC closing resulted, and this is detailed in the 10-Q -- resulted in 1.8 million of EBITDA. There are $200,000 of costs associate with that revenue that we recognized. So that's 1.8 million that you would you back off of EBITDA. The other in our fee revenue that we again detailed in the 10-Q this quarter as we always do, was fee revenue in total was 2.7 million. Our normal if you've been tracking us over some time now, our normal fee revenue tends to be somewhere around the 1.5 million range. So 1.3 million of the 2.7 related to the settlement of accounts with two key customers, the majority of that related to settlement of an account with AT&T that we wanted to try to take care of before the Cingular transaction closed, lest it sort of get lost in the shuffle and their activities. So we were obviously glad we took care of that in the quarter but we did want to be sure we told the market about it being nonrecurring. So you back off that 1.3, you're at 48.1 million, netting out the 1.8 and the 1.3 together they add to 3.1 so that takes you to 48.1. Then you need to add back the one-time severance for our former Chief Financial Officer that was recognized during the quarter, and that gets you to the 49.2.

Gotcha.

It is a litany of math, and so we're -- we want to be sure everybody's clear about it so I'm glad you asked the question.

One other question for you in that regard. If you look at churn, where do you think churn's at these days on an annualized basis?

Our churn's been pretty consistent. It's obviously pretty low in this industry, which is great for everybody, but, you know, I think our answer is consistent with what you may have heard from other folks, that it's kind of in that 1 to 2% range. It can obviously change any given quarter but I don't think we've seen it be higher than 2% at any time.

Okay. Then, Mark --.

I'm sorry, Steve, that's on an annualized basis, yeah.

Mark, one for you. New to the Company, new to the industry. What are your initial first thoughts as you come into the industry? What has surprised you about the industry? Given your background kind of from a tech sector. Just kind of share with us your first blush thoughts.

Well, clearly, it's a different business model than the last one that I came from. Initial thoughts, I think, very exciting business, specifically this Company. Clearly underlevered relative to the peer group, relative to the optimum capital structure should be and I think the companies call that out. I think there's tremendous opportunities here to create great shareholder value in many forms that Steve touched on during his notes so I'm excited to be part of the team and to work with this team in getting the right capital structure in place, looking at the right strategic opportunities and looking at the various ways we can return value to the shareholders and create greater value so I'm excited about it.

Great. Well, welcome and good luck.

Thank you very much.

Your next question comes from Jim Ballan with Bear Stearns. Please go ahead with your question.

Thanks a lot. My question also is for Mark. You mentioned that this is a transition period that you're going through, and I guess the Company's going through also with a relatively new board. Investors have been fairly patient in terms of the stock buybacks and when they finally got started. Do you anticipate there being a transition period that will take awhile here, or do you think you can be relatively aggressive out of the box?

Well, yeah, just to get to the heart of the matter here, I don't expect anything to slow down on my account. I was anxious to get started this week, to dive right in, knowing there was an earnings call in a few days, knowing we had to file the Q, et cetera, but I want to get right in I'll catch up. Let me give you my perspective on stock buy backs because that may be a question that you're trying to get at. I've always been a strong proponent of using stock buy backs as an effective way to return capital to shareholders. We had implemented and I executed about four, four and a half years ago a $700 million share repurchase program at 3 Com. So a firm believer in returning excess cash to shareholders either through a stock buy back or if a dividend scenario makes sense we'd explore that as well but I don't expect any slowdown in terms of the financial strategies or other strategies of the Company here just because I'm the new kid on the team.

Great. Well, good luck with everything, and good quarter, gentlemen.

Thank you.

Your next question comes from Matt Krax with Merrill Lynch.

Quick question, the, I guess, discretionary CapEx at $40 million how much of that for retrofitting towers or upgrading towers, for getting them ready for new leases?

Well, Matt, just to be clear on that, let me say, this is Steven, let me say that in the CapEx guidance implied there is about $10 million. That would be discretionary capital for growth purposes when we have tenants coming on towers. If we were doing maintenance, true maintenance work on a tower, that would be captured in our $10 million of sort of total maintenance capital. That the Company spends on a year in/year-out basis.

So if I wanted to look at, of your total tower portfolio, to keep things upgraded and to attract new tenants, 20 million would be the --.

No, I think you're overstating in a pretty material way there. I think when you look at the portfolio of, you know, on a tower basis about 7600 towers, then, you know, most people tend to think that the average is somewhere between 1,000 and $1500 a year of kind of true maintenance CapEx. Obviously recognizing that term does not exist under GAAP but we all use it, which would be somewhere in kind of the 8 to $10 million range for our Company. So I think that, you know, using the 20 would also include all other CapEx the Company spends, IS systems, things like that, as well as upgrades related to new revenue opportunities on the towers. So, yes, be careful you don't overstate that number.

Thank you.

Sure.

Your next question comes from Jonathan Atkin with RBC Capital Markets.

Good morning and welcome, Mark. My question on '05 CapEx is kind of a follow-up. So of your discretionary CapEx for next year what would the composition be among in-building, new towers, CapEx, and ground repurchases? Then question on this hotline what are you seeing right now in terms of the rent levels on new leases as well as escalators on new leases? Is it comparable to what you have in your existing base?

Hey, John, it's Steven. Let me take your first question, then I'll turn it over to Steve for the second part. In terms of CapEx guidance for 2005 I think it's pretty similar to how we've allocated capital this year, meaning in 2004, and that's about $15 million will be spent, we think, at this point, on our ground rights purchase program. That program is going well. We're up to 8% above land owned under towers from 6%, you know, kind of couple quarters ago so we're making good steady progress there that's again very nice cash on cash returns for the Company of anywhere from 10 to 12.5% year one returns, so good place to put capital, especially on a risk-adjusted basis. Then on the in-building space again I think our look for next year is similar to this year's range of about $15 million. So between those two you're up to 30, then the balance of 10 million is related to tower upgrades, in terms of new revenue opportunities, again, just to be clear. And I'll let Steve focus I guess on the second part of your question in terms of lease rates and where those are trending I think was what you were asking.

Jonathan, if you look at the current leasing activity, thus far in Q4 and really throughout the year, the average monthly rate and the escalators are pretty consistent with what they've been over the long term. Don't really see a trend significant trend, up or down.

Okay. Then finally, Steve Lilly in the response you gave to Ric's question, can you just review which of those items were cash versus noncash?

Related to the one-time revenue in the quarter?

Yes, to the one-timers, how much of that was noncash, which items were specifically noncash versus cash?

The only thing that was noncash in the quarter was, as you'll see in the Q, was $80,000 of noncash compensation charges that would round up to .1 on our reported SG&A, and to be consistent with our peer group you would need to net that out since that's the sort of traditional definition of EBITDA. Everything else was cash. So, you know, good for us.

Then finally on the in-building space are you seeing additional tenants come on to your existing installations or is the tenancy already so high that the growth there is really coming from new construction?

Both.

Great. Thanks a lot.

Thanks, John.

Your next question comes from David Barden with Banc of America Securities. Please go ahead with your question.

Hey, guys. Thanks a lot. Just a couple questions. One, just quick, as you guys look forward to your kind of 13 to 15,000 sell-side builds could you just give any insight as to whether you think there's going to be a stable distribution of that sell site creation across the traditional players meaning you've seen a lot of people trying to get into the space, utility players, you know, Clear Channel with their billboards, et cetera, just a kind of a sense of whether you believe that the tower industry is going to kind of hold share given its property position in the market against those new towers, cellular -- new sell site builds next year. Second was just on Nextel. Have you been seeing an elevated level of discussion or any incremental clarity about the magnitude of what they'll be doing with you guys next year as it becomes clear that this 800 megahertz rebanding is moving forward and then last, just any incremental sense you're getting that search ring patterns are accelerating going into some of these auctions for the next wave in the FCC spectrum. Thanks a lot.

This is Steve. In terms of your first question, you know, I don't think the non traditional -- at least short-term, I don't think the nontraditional sources or locations for antenna installation, whether it's billboards, which you mentioned, or other structures coming into the market, I don't think we expect to see those represent any significant increase in market share in the near term. I think there may be -- I think we're much more likely to see longer term, as you see the higher speed data networks deployed, to see a significant increase in the number of sites that are accounted for by outdoor distributed antenna systems and indoor distribute antenna systems like we do in the in-building space. But, you know, the reality is that carriers have known, just to give you an example, further clarification, even though Clear Channel may have now decided to go out and try to market billboards, billboards haven't been hitting. Carriers have known they've existed for a long time and, in fact, a lot of the billboard operators had MSAs -- have had MSAs with the major operators for a long time so no real significant change there. Quite frankly, the next question, you mentioned Nextel and the rebanding, there's also another, I think, significant open question regarding Cingular and what they're going to really do so I think there's two big unknowns going into 2005. One being the one you mentioned, Nextel rebanding, and the other pretty significant range between -- and still quite unknown as to the extent at one extreme to which Cingular may choose to concentrate on trying to rationalize the network, you know, reduce OpEx, et cetera, and at the other extreme, pretty significantly deploying UMTS capability. The answer to your specific question is, no, we don't have any hard data yet, it's what makes guidance a bit difficult in this industry, from either one of those two sources, and I think they could together represent, you know, a very big differential in that 13 to 15,000 estimated count. In terms of new search ring activity a lot of talk, not a lot of search rings being issued yet in any significant way. We know that T-Mobile shut down for awhile after the purchase of the California network, or California-Nevada network from Cingular, and the other -- Cingular and AT&T, of course, both had pulled back getting ready for the integration, and although we have expectations and have seen some early signs of increased search ring activity, certainly not what we expect will come yet in later this quarter and early Q1.

Thank you.

Our next question comes from Dennis Liebowitz with Act 11 Partners.

Act 2. Haven't got that far yet. Most of my questions have been answered but I wanted to ask, when you were talking about a moving target, as far as attractive stack repurchase levels and hurdle rates if I could just pin you down as to whether the current price is an attractive one.

Yeah, we certainly think, so Denny. As Steven said, we're not in the market and the only reason we're not in the market today is because the Company is in a closed window period but we believe the current stock price is very attractive.

When you mentioned the possibility of the dividend, when would that be considered? Is that not mutually exclusive with any repurchase program?

No, I don't think -- I guess the point I was trying to make in the opening remarks are that, you know, we've heard a pretty singular message coming from the investor base which is take a big pile of money and go buy back stock, and I think what we're trying to say is, look, we have spent some time looking at it, maybe longer than some people would have liked for us to have taken, but the reality is this Company has over the next relatively short period of time a lot of capital to put to work, and our view is that there is not a single application for that capital. We should be able to invest quite significantly in the business and buy back stock and if we think it's the right thing to do, initiate a dividend program. I don't think any of those things, any one is mutually exclusive from the other two, nor are we prevented from doing all three. So what we're trying to do is we are in the middle of a continuing, you know, analysis of all that and I think we'll continue to be until we sort out better the timing and magnitude of what we think are the appropriate investment opportunities.

And when you say no large acquisitions, or you said earlier no -- you're not pursuing anything transforming, would that eliminate the probability of buying the Sprint Tower Group?

I think we probably just don't have any comment on the Sprint transaction. We certainly signed an NDA with the bankers a long time ago related to Sprint and are trying to very strictly honor that NDA.

Okay. Great. Thanks.

You have a follow-up question from Ric Prentiss from Raymond James.

Could you guys talk to us a little bit about in the quarter the leasing activity how the mix was as far as big five, I guess we should now call it, leasing versus affiliated or non traditional type of wireless operators?

Ric, I don't think there's a significant change from what we've seen historically. The big five now, what we used to have the big six, still account for, you know, very big percentage of the total, at least for us.

Okay. And for Mark, kind of a philosophical question, several of us in the -- on the sell-side community have been moving the emphasis to beyond just EBITDA to looking at free cash flow and valuation free cash flow. How do you look at this now new industry to yourself as far as valuing it, as far as trying to help create and craft maybe a uniform definition out there and I think that's where some of the questions about augmentation capital versus non augmentation capital are coming from. Have you thought a little bit about definitions of free cash flow?

Well, probably want to work a little more on the definition, but obviously -- I like the metric, and have always been the fan of the cash flow, but we do define free cash flow here a couple of different ways to help folks. But, you know, I think it's an appropriate metric. I'd like to spend a little more time just helping to get down to the right definition and what we think is the most appropriate way to look at it.

Okay. Good luck, guys.

There are no further questions at this time.

Great. Operator, thank you very much, and we'll talk to you next quarter.

This concludes today's conference call. You may disconnect at this time.