Brendan T. Cavanagh
President & Chief Executive Officer at SBA Communications
Thank you, Mark. Good afternoon.
I am pleased for the opportunity to reflect on our 2023 performance and to share our thoughts about 2024 and beyond. 2023 was a year marked by some significant macro headwinds, in particular, the consistently high interest rate environment that not only directly affected SBA's floating rate debt costs and the views around our cost of future refinancing but also impacted our customers and their network spending levels. In spite of these macro headwinds, SBA executed extremely well and produced solid financial results.
When compared against the initial outlook for 2023, given in February of last year, our actual results for the year finished materially above the high end of the ranges given for site leasing revenue, tower cash flow, adjusted EBITDA, AFFO and AFFO per share. Most of the outperformance was organic as we spent very little incremental discretionary capex in comparison to our initial outlook. Our excess free cash flow was instead largely spent on paying down our floating rate revolver debt, and we finished the year at a multi-decade low leverage level of 6.3x. And today have a current revolver balance of only $70 million.
Internally, it was a year of leadership transition for the company. Jeffrey Stoops retirement, the addition of Marc Montagner to the team and new leaders in our international legal and IT functions. Everyone has stepped up extremely well into their roles, and I am very happy with how the team is collaborating and performing. The disciplined succession planning and highly capable team members assembled throughout the organization have positioned us well for the future.
As we look forward to 2024, we recognize that we are coming off of a period of reduced network investment by our largest domestic customers. However, future network needs for each of these customers remain significant, and we anticipate being a critical partner for our customers in meeting their operational goals and objectives. A significant percentage of our sites still require 5G-related upgrades, which we are confident will take place over the next couple of years. In addition, the success and growth of fixed wireless access as a product offering for our customers will add greater demand for increased network capacity as the average user of this product uses 20x or more broadband data than the typical mobile customer. And the evolution of AI-infused 5G offerings will continue to fuel the demand for improved speeds and lower latency. All of these factors as well as good old-fashioned service-based competition are supportive of steady organic leasing activity on our US assets for years to come.
Internationally, we also see a dynamic of significant network needs, providing a backdrop for continued solid organic leasing activity throughout many of our markets. Financial pressures have impacted many of our international customers as well but the demand for advanced wireless products and services is significant, and in a number of cases, even greater than that seen in the US. We expect this will in turn drive continued demand for incremental space at our tower sites. Nonetheless, there have been customer consolidations in several of our markets. As a result, we have worked closely with our customers to help them achieve necessary efficiencies in their operations. But while preserving the breadth of our business relationships, and solidifying our contractual commitments for the long term.
While this temporarily leads to elevated churn, we believe the long-term strength and stability of our cash flow streams produced as a result of these efforts meaningfully improves our go-forward value proposition. This is a good segue into my views around our forward strategy. Internally, we are highlighting a desire to analyze everything we do or consider doing through the lens of stabilizing our results, growing our core business and shifting our mix more and more to high-quality assets and operations. While this is not materially different than the approach SBA has taken throughout its history, we recognize that not all of our assets or business lines fit well within this goal. As a result, we are doing the work to evaluate our full portfolio and develop action plans around how we improve our position in each business line and in each market. For instance, in our international operations, we have found it to be valuable to be a market leader in the markets we operate in.
In places where we hold a more significant position, we have tended to do better than those places where we do not. This ultimately means that we need to find a path to increase scale in certain markets or possibly exit a market. An example of this was our fourth quarter exit from Argentina. Not only was our market position subscale, but the economic instability in that country created operational challenges that were dilutive to the otherwise typically very attractive attributes of the tower business. We will pursue incremental investments to drive continued growth as we always have. But we will prioritize either an overall favorable shift in the quality and stability of our asset mix or an opportunistic investment that improves our standing and existing markets. Financial results always matter. We will be disciplined toward producing the best possible financial results over the long term. We believe high-quality assets ultimately produce that result.
We also believe that when opportunities for incremental asset investments are not available stock repurchases and debt reductions are worthwhile uses of capital. We intend to continually evaluate our optimal capital structure, and we'll look to balance the lowest cost of capital with retaining appropriate investment flexibility. Our attention to optimize capitalization of the company has placed us in what I believe is the best position in the industry. We are the fastest dividend grower, but yet have the greatest retained AFFO post dividend to invest in the business. We have maintained an average cost of debt very close to our larger peers, but have retained access to up to 2 turns more leverage.
We have recently extended and expanded our revolver capacity by $500 million, creating increased liquidity. This structure provides us with significant optionality to move in whichever direction we believe will provide the best return for our shareholders. The strength and stability of our core tower business remains and it provides a tremendous foundation for all future endeavors. As a result, I have great confidence in our ability to create future value for our shareholders. I want to thank our customers for their support and their confidence in SBA. I also want to thank our team members for their contributions to our success.
And with that, Eric, we are ready to take questions.
