Ladies and gentlemen, thank you very much for standing by. And welcome to the SBA First Quarter Results for 2022 Conference. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. And I would now like to turn the conference over to our host, Mark DeRussy, Vice President of Finance. Please go ahead, sir.

Good evening, everyone. And thank you for joining us for SBA's First Quarter 2022 Earnings Conference Call. Here with me today are Jeff Stoops, our President and Chief Executive Officer; and Brendan Cavanagh, 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 2022 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 25, and we have no obligation to update any forward-looking statements that 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 Brendan to discuss our first quarter results.

Thanks, Mark. Good evening. SBA started the year off with a very strong quarter with many of the results ahead of our internal expectations, and we continue to anticipate a solid performance throughout 2022. Total GAAP site leasing revenues for the first quarter were $559.4 million, and cash site leasing revenues were $551.4 million. Foreign exchange rates were slightly ahead of our previously forecasted FX rate estimates for the quarter, positively impacting revenues by approximately $2.3 million. They were also a tailwind on comparisons to the first quarter of 2021, positively impacting revenues by $2.3 million on a year-over-year basis. Same-tower recurring cash leasing revenue growth for the first quarter, which is calculated on a constant currency basis, was 4.3% over the first quarter of 2021, including the impact of 3.1% of churn. On a gross basis, same-tower growth was 7.4%. Domestic same-tower recurring cash leasing revenue growth over the first quarter of last year was 6.4% on a gross basis and 3.7% on a net basis, including 2.7% of churn. Domestic operational leasing activity or bookings, representing new revenue placed under contract during the first quarter, was very strong again and materially higher than the first quarter of last year. And we continue to replenish our domestic new lease and new amendment application backlog, which remained very healthy at quarter end. These backlogs support our expectations for continued strong domestic operational leasing activity throughout the rest of 2022. During the first quarter, amendment activity represented 55% of our domestic bookings, with 45% coming from new leases. The big four carriers of AT&T, T-Mobile, Verizon and DISH represented 95% of total incremental domestic leasing revenue signed up during the quarter. Internationally, on a constant currency basis, same-tower cash leasing revenue growth was 7% net, including 4.8% of churn or 11.8%…

Thanks, Brendan. We ended the quarter with $12.7 billion of total debt and $12.4 billion of net debt. Our net debt to annualized adjusted EBITDA leverage ratio was 7.3 times, well within our target, notwithstanding a substantial amount of capital allocated in the first quarter. Our first quarter net cash interest coverage ratio of adjusted EBITDA to net cash interest expense was 5.3 times, the highest in the company's history. As of the end of the quarter, the weighted average interest rate of our outstanding debt was 2.6% with a weighted average maturity of approximately 4.6 years, and the interest rate on 92% of our outstanding debt is fixed. As of today, we have $590 million outstanding under our $1.5 billion revolver. During the quarter, we repurchased approximately 1.3 million shares of our common stock for $431.6 million at an average price per share of $332. Included in these amounts, subsequent to our previous disclosure of share buybacks in our fourth quarter earnings release, is the repurchasing of 253,000 shares for $81.6 million at an average price per share of $322.10. All the shares repurchased were retired. We currently have $504.7 million of repurchase authorization remaining under our $1 billion stock repurchase plan. The company's shares outstanding at March 31, 2022, were 107.8 million, compared to 109.3 million at March 31, 2021, a reduction of 1.4%. In addition, during the first quarter, we declared and paid a cash dividend of $76.9 million or $0.71 per share. And today, we announced that our Board of Directors declared a second quarter dividend of $0.71 per share, which is an increase of 22.4% over the second quarter of last year. It's payable on June 14, 2022, to shareholders of record as of the close of business on May 19, 2022. And with that, I'll now turn the call over to Jeff.

Thanks, Mark. And good evening, everyone. As you have heard, we had a very strong start to the year with strong operating and financial results, again generating double-digit percentage growth in AFFO per share. Our better-than-expected results combined with continued elevated activity levels with our customers have set us up well for the balance of this year. We have increased our outlook for full year revenues by $65 million and AFFO per share by $0.24. These upward revisions are indicative of the positive environment we are currently in. The U.S. market remains particularly strong. Each of our U.S. carrier customers remained busy during the quarter, signing up new leases and amendments and generally investing in the build-out of their networks through the deployment of new spectrum bands. T-Mobile continued their nationwide deployment of 2.5 gigahertz and 600 megahertz spectrum. Verizon and AT&T increased their 5G-related signings with us, with particular focus on C-band-oriented deployments. And DISH continued signing up new lease agreements actively in support of their nationwide 5G network build-out. These carrier activity levels also drove meaningful U.S. services results where we produced record services revenue and margin results for the fourth quarter in a row. Our backlogs also continue to replenish and support our confidence in continued strong performance. Internationally, we had another strong quarter, finishing ahead of our internal expectations for organic tower leasing and new build activity in most of our markets. During the first quarter, we signed up 49% of new international revenue through new leases and 51% through amendments to existing leases. Coupled with increased escalators due to higher consumer price indexes in many of our markets, this leasing activity drove some of our strongest organic international leasing revenue growth in years. We are also off to a good start integrating our new Tanzanian…

Hi. This is Amir for Phil. Two, if I may. So you guys mentioned lower expectations for churn this year. You reconsidered the timing of the Sprint and T-Mobile merger revenues falling off. Can you give us an update on maybe how your expectations for long-term churn with them have changed? And then secondly, is the datacenter acquisition within guidance? And does this kind of indicate SBAC is leaning more into the mobile edge compute opportunity? Thank you.

Just, Amir, on the churn question, we don't have any real changes to our long-term expectations. What you're seeing is a slight shift in timing. So a little bit less of an expectation in this year, but ultimately, those incremental dollars would just move to next year. So what we've given out in the past in terms of expectations each year is generally the same as it's been before.

Yeah. On the datacenter question, I think it's really no change in our activity, trajectory and direction around mobile edge that we've been talking about now for, I guess, at least a year. I would look at this as an extension of what we're doing in the U.S. to our largest international market, Brazil. And we think it will continue our learning and interactions with our customers. And I would say so far that the results are encouraging, and we continue to believe that we will be benefited and that the mobile edge will in fact have value created or create value at our tower sites. And we think these datacenter investments, albeit modest, are going to help us get there.

And it is in guidance, too, the datacenter.

Okay. Great. And one more, if I could. How prepared do you think you are versus like an AMT that has that CoreSite asset for them? Do you -- how do you kind of view that?

Well, prepared for what? I mean I think it all -- it all remains to be seen how robust the edge at the tower site business. And that's what we're focused on. So from that perspective, I think our measured approach is the right one for us.

Great. Thank you.

And next, we'll go to the line of Simon Flannery with Morgan Stanley.

Great. Good afternoon. Jeff, thanks for all the comments. Great to hear the momentum in the business. I wonder if you could talk about the sustainability of this. We've heard from both Verizon and T-Mobile that CapEx peaks this year and then falls fairly sharply. And how do you think about your medium-term outlook given some of those commentary? And perhaps relatedly, we've seen very strong fixed wireless results. How do you think that might impact some of their builds, some of their densification over the coming years? Thanks.

Yeah. I think it is going to be a multiyear endeavor, Simon, particularly keeping in mind that the C-band clears in phases over years. So there's really going to be multiple years still ahead where C-band deployments are going to have to take place. I take our customers' comments at face value. I can tell you, though, that there's a lot of work to be done. And at least on the C-band deployment side of things, they are just in their infancy. It can only be a multiyear endeavor. So I'm not sure how that will be impacted, if at all, by the fixed wireless initiative and the spend there. It's really -- obviously, one is primarily a mobility product, and the other is a location-driven product, but I don't -- we've not seen any signs that the success in the fixed wireless area is going to impact the mobility spend.

And next, we'll go to the line of Rick Prentiss with Raymond James.

Thanks. Good afternoon, everybody. Hey, I want to follow up on some of the comments about the international churn. You mentioned you called out the Digicel Panama. How much of that should roll into next year, though, if you say that's the impact for the rest of this year? How much should we think about that kind of tail hitting us next year? And update us as far as what's going on with Oi. We've seen obviously a lot of press releases. It looks like some transactions are finally coming to pass in Brazil.

Yeah. So the $6 million of incremental churn for Digital represents about three quarters. So there'll be another couple of million dollars into next year. There's probably also a little bit of additional, Rick, because we were already assuming some digital churn previously, not associated with this liquidation, just as they were shutting down certain sites because they were obviously already having some issues. So there's probably an extra $1 million or so in addition that would flow into next year.

Yeah. On the Oi situation, Rick, the sale has closed. Oi Mobility. Wireless has been sold in parts to Claro, TIM and Vivo. They've all got some cell sites. They've all got some subscribers. Only Tim and Vivo got spectrum, however, because Claro was already at their regulatory prescribed limits. And where it all stands right now is that each of the recipients or winning bidders or the three remaining need to prepare and file with the regulators various plans and answers to some conditions and restrictions that were put on the approvals. That has not happened yet. We'll be watching with great interest what those filings will be. But also keep in mind now we have the 5G auctions done in Brazil and the spectrum ready to be released and with some time limits on deployment at least around the major capital cities.

Okay. And you also -- obviously, CPI is benefiting escalators. How should we think about how often they get updated? What's -- where are we at in the process of you guys? Maybe also just update on where you're seeing CPI in Brazil and South Africa. But just help us understand the time line as far as where the benefit and escalator is at currently where it might head? And also, is there anything on the cost side?

The CPI in Brazil right now for us -- for our average for the year went to about 9%. The actual rate is higher than that. It's closer to 11%, I believe, right now. And the timing is really tied to when the leases individually escalate. There are some larger concentrations because of some of the acquisitions that we did. Those tend to be in the fourth quarter and the second quarter. But really, it's just a function of the time that the anniversary date of each individual lease and what the CPI looks like on a year-over-year basis at that point in time.

Keep in mind on the expense side, Rick, the ground leases, which are the single largest component in Brazil, are a pass-through item. So we have that protection. Where we are likely to see the impact is, of course, on the labor side. And we will see that because of the way the Brazilian employment laws are written. But again, I would point out that, given the operating leverage in the business, the percentage of employee costs against revenue is extremely small. So we have some great elasticity to be able to absorb any employee-related CPI increases.

Make sense. Thanks for that. Have a good day.

And next, we'll go to the line of David Barden with Bank of America.

Hey, guys. Thanks for taking questions. I guess first one maybe for you, Brendan or Mark. With respect to the guidance expectations for rate movements, for the rest of the year and the impact on the net change in the updated '22 guide, could you kind of give us a sense as to what you were originally baking in and what maybe is net incremental probably a headwind presumably on the 8% remaining variable rate debt. And then the second piece would be just on the service revenue kind of outlook. Obviously, pretty healthy activity across the board. We've talked in the past about the margin mix, whether it's earlier stage, it's more human capital, higher margin, later stage is more labor-related and lower margin. Where are we in that curve? And where do you see margins in that business going?

Yeah. On the rate impacts, the impact is primarily due to: one, an assumed increase in CPI rates; and two, slightly more of our revolver being drawn during the course of the year associated with some of the incremental spend that we've just incurred or have under contract. So if you look at our CapEx guidance, it's up a little bit so that, that requires that along with the share repurchases that we did that weren't assumed before that we have a little bit more capital drawn and because it's floating rate and the CPI is increasing. That's really driving the increase in our net cash interest expense guidance that we gave. Otherwise, there's really no changes to that.

Yeah. On the services, Dave, the biggest issue is not so much the margin inside each of our two services segments. It's really the mix of the two. Site acquisition has historically been the higher-margin business. Construction has been a lower-margin business. I will tell you, though, that the margins that we're currently experiencing in both segments relative to our history are very good, maybe pushing all-time highs. But really, the biggest driver of where margins come out, it's the mix between site acquisition and construction services, although we -- again, we're very, very happy with where each of those segments are performing. One of the ramifications of a big services quarter, though, given the fact that it is a lower-margin business, is its impact on our adjusted EBITDA margin. So for those of you who are wondering why that is where it is this quarter, it's really because of the large amount of services revenue that we booked this quarter.

Okay. That’s helpful. Thanks, Jeff.

And next, we'll go to the line of Nick Del Deo with MoffettNathanson. Your line is open.

Hey. Thanks for taking my questions. First, kind of turning back to Brazil and the Oi situation, can you talk at all about the conversations you've had with customers? And anything they've said about their plans to invest behind the assets they're acquiring? And are any of the initial goals that they've laid out for site decommissionings, I think at least TIM has talked about that, have those been consistent with your expectations?

Yeah. I think we're still of the same mind in terms of the aggregate exposure, which -- Mark, jump in here and make sure I say the right numbers.

$20 million to $30 million over the life is what we think our exposure is.

Yes. So nothing's really changed there, Nick. As what we have seen in the U.S. that to actually migrate customers and truly decommission sites, it's a little more complex. It takes a little more time than people think. Now that's really a timing comment. We don't -- we think the ultimate numbers will be what Brendan just said. But we really don't have any specific instructions from them as of this point. We do expect that, as the year progresses, we will begin to get more clarity on the timing and final amount that we will be looking at. But they are -- on the other side, the 3 now nationwide carriers are all active to varying degrees with the new spectrum deployments.

Okay, okay. That's great. And then maybe turning to the datacenter topic. I think, to date, you've described what you're doing is buying assets to learn about the business, learn about the edge opportunity. Do you feel like you currently own a sufficient number of datacenters in the U.S. to fulfill that goal? Or should we expect you to pick up some more in the future maybe in different geographies or different size or something like that?

Yeah. I think, as our experimentation and learning process continues to move in a positive direction, it would not be impossible to see us buy a couple more datacenters, but I don't think we would ever get to the point where you would see -- I mean it won't ever get close to 1% of enterprise value, I don't believe.

Okay, that’s helpful. Thank you, Jeff.

And next, we'll go to the line of Michael Rollins with Citi.

Thanks and good afternoon. First question for me was, curious if you could unpack the merger churn in the U.S. from Sprint and T-Mobile that was within the first quarter results as well as what's in the guidance for 2022.

Yeah. What's in the guidance for 2022 is now approximately $27 million. I think we had previously told you $30 million. Obviously, we lowered our full year number by $3 million. The first quarter piece of that, I don't know -- let me check that and get back to you, and I'll mention on the call if we are done with you before then.

Sure. And then just as you're thinking about the year domestically. Just curious how you're thinking about that 3.7% net growth that you did in 1Q relative to the full year guide. If I'm calculating the numbers right on Slide 4, I think it is, it also looks like for the full year organically you're looking for about that amount, but with churn possibly ramping higher as a contribution. So just kind of curious how you're thinking about the growth moving through the year and the net and what the contribution that may be layered in for DISH and AT&T as you're just thinking about that full year growth expectation for 2022.

Well, I know, Brendan, you could get to the net, but I know that the gross number, Mike, we expect to grow sequentially as we move through the year.

Yeah. We do expect the growth to move up sequentially. We also expect the churn node to move up sequentially during the year. Obviously, as indicated by the first quarter shift here, there's some potential that our expectations around timing are off on the churn, but our expectation and what's in our guidance shows that it's increasing. So the net will be a modest increase, maybe flat to modest increase quarter-over-quarter going through the year. In terms of the mix, I don't think we want to get into the individual carriers that make up the mix. I think we've been pretty clear in the past that on a lot of -- the last few quarters, a lot of the lease-up, one of the significant contributors there was DISH in terms of their new agreements. So obviously, they would be a nice component of that growth, but all the carriers have contributed to the lease-up activity. So they're all in the mix.

And how does the -- when we think about the longer-term leverage targets for the business, do you have a rule of thumb in terms of rates to a certain level and leverage to be a certain level? Or is your view of leverage less dependent on the rate environment within

Well, clearly, there would be a rate level which would -- and I -- and I don't really want to get pinned down on what that is. But clearly, there would be a rate at which we would look at different leverage levels. But beyond that, Mike, what we're looking at is our dividend, our dividend payout ratio, how much our EBITDA growth looks to be. So I mean we really do try and be very thoughtful and take into account everything that should be taken into account. But I mean on an absolute basis, of course, there would be some interest rate that if we thought it was going to be maintained and sustained for long periods of time, if it were materially higher than where we are today, will cause us to revisit our leverage targets.

And Mike, before you go, let me follow back up on your question about how much Sprint in the first quarter. It was approximately $4 million of impact in the quarter, so a little over 1% of the roughly 2.7%.

Thanks very much.

And next, we go to the line of Sami Badri with Credit Suisse.

Great. Thank you. I just wanted to get a little bit of an update on the MLAs. And I think what we'd all kind of could really use maybe a little bit more color on how much activity is falling into those MLAs versus out of those MLAs with the same customers that actually sign them. Can you just give us a little bit of color or more color than normal on what the mix of in versus out of MLA looks like?

Well, I think it's 100% for every customer that we have an MLA with is somehow touched by the MLA. So that's DISH, Verizon and T-Mobile. And then we don't have one with AT&T. It's not really a situation where some of it's covered and some of it's not per carrier.

Got it. And --

And just to be clear, our MLAs, though, are still based on specific activity from those customers and equipment specificity. They're not just a broad open-ended thing.

Got it. The other thing is, last quarter, you stated that the 3.45 gigahertz spectrum would require incremental radios to C-band. Do you still hold that view?

We do. Although I know that they're working on an integrated one as well, which will come out at some point.

Got it. And then just to be clear, right, just the -- if they do work on an integrated radio, that does still have scope for amendment because they're riding on two separate different spectrum bands? Or is there a different type of negotiation now take place if they came out with that?

Well, it will be primarily driven by what the equipment looks like and how it stacks up compared to: a, if anything is coming off, that's a swap. If it's not, then we would look at the equipment and price it accordingly based on height, weight, wind load.

Got it. Thank you for the color.

And next, we'll go to the line of Greg Williams with Cowen.

What multiples look like, given the rising rate environment, private multiples and the geopolitical landscape by region generally? Second question just on the record service revenues. Are you seeing any labor or logistic bottlenecks in the current environment and keeping up with this record activity?

Greg, I think we missed your first question. You didn't -- you were -- the first part of that cut off.

Sorry. The M&A landscape, what multiples are looking like through the regions?

Yeah, they're not increasing. So that's -- we're thankful for that. There are some signs that the current interest rate environment is going to have a depressive effect on prices. As you know, Greg, it takes a while for current market conditions to factor through to private market sellers. However, it is headed in that direction where, obviously, rates should and I think will impact price over time. On the supply side of equipment and labor, I don't want to jinx things, but as of today, we are not seeing any material impact on either the supply chain side or the labor side for our business.

Thank you.

And next, we'll go to the line of Brett Feldman with Goldman Sachs.

Great. Thanks for the questions. Jeff, for the vast majority of SBA's history is a U.S. tower operator. Your fixed escalators, which are generally, I think, in the low 3% range have exceeded inflation. And that's obviously not the circumstances were today and who knows what the long-term view is going to be. But I'm wondering if we've been in an inflationary environment long enough for you to see any impact on your business or maybe to change how you think about it. So just as an example, I'm wondering, is there any increased mutual interest between you and your carrier customers maybe finally moving to a CPI-based escalator model in your leases. If you are doing build-to-suits in this environment, are you actually still doing that at the historical escalator? Or is that changing? And maybe just bigger picture, if we're not likely to see a change in the escalation model and we do remain in an inflationary environment, could that suggest that you may have a preference for continuing to invest increasingly outside the U.S. where you can actually develop and acquire towers that can escalate in line with CPI? Thank you.

Yeah. I think I'd characterize the state of the escalator issue with our customers, Brett, as one where I think certainty and a fixed number benefits both sides. Even though, clearly, in a year like this, with a fixed escalator, one party wins, the other loses, but that's a very temporary kind of condition. And over time, the Fed has a mandate to reduce inflation back to 2% or less. So I really don't know that there's a lot of appetite on either side to change that around really because if you have a very, very big inflation year, the person on the CPI end of that, whether it's us on ground leases or our customers on the tenant leases, they're not going to be happy. So I think we're pretty satisfied with the state of the world as it currently exists. And I don't think -- we consciously are making international decisions relative to U.S. decisions with any kind of belief that this will be better because we get CPI escalators. The traditional economic theory is if there's higher inflation in those markets, the currency is going to trade off. So we don't really think that, that is a reason why to favor international over the U.S. The reason we go internationally is because we have a capital allocation and a target leverage, which we think is one of our principal creators of shareholder value, and we have been able to find enough to do in the U.S. And we found some very, very good things to do internationally, and I think that will continue to be the primary motivation.

If I could ask just 1 quick follow-up question. I believe in the U.S., what we've typically believed in the U.S. is that the escalation clauses on your ground rent was reasonably similar to what you see on the tower side, so kind of a fixed low 3% escalator. Is that the right understanding? Or could we see a mismatch at any point over the coming quarters?

No, no. We've generally matched off -- when I say generally, I mean we've -- substantially, every single U.S. tower that is ground leased has a fixed escalator. And they typically average less than our average tenant escalator. So we feel -- and of course, you know that's our single largest source of expense and getting to the tower cash flow line is the ground leases. So we feel pretty well protected there, Brett.

Thanks.

And next, we'll go to the line of Walter Piecyk with LightShed.

Hey, Jeff, this first question, I'm going to send over to Brendan. You said to a prior question that Sprint churn was $4 million. Maybe if you were rounding up there, that implies, I think, a churn rate for the rest of your domestic business that I couldn't find that low, unless I went back, I guess, for a quarter or two in 2018 when it was like 1.7-1.5 for second quarter. Is this a sustainable number? Because that's just much lower than we've seen for several years.

No, I don't -- I mean I think it's -- so that what's left is about 1.5, maybe 1.6% if you exclude the Sprint piece. And I don't think that's lower. I mean we've actually been -- we've been much lower than that. If you go back a couple of years ago where we were below 1%, but we've historically been somewhere in that usually between 1% and 2%, sometimes lower. So I don't think it's abnormal.

Well, it's Mark. The absolute dollars, the numerator in that calculation, has been flat for a couple of quarters now, which is -- as a percentage is going down.

Got you. But --

I think there's a different reason. I think, Walt, what you're looking at is kind of the gross churn that historically includes -- has always included some kind of consolidation churn.

Yeah. Maybe that's -- obviously, we've had Metro Leap and Clearwire. We had iDEN-related churns.

I'm saying, like if you look at all these years passed, you've always had something setting in there. Maybe you're like actual core, core stuff, which you don't really report, was that low. But as far as reportable churn numbers, it's never been that low that I can say. Because you don't break -- you haven't broken out --

Apples to apples, you have to include the Sprint.

I mean that's -- so that was my second question, which is $4 million is fine. But if you look at $30 million for the year, you still have to step that Sprint component up pretty at some point. Like is it -- was part of this just the delay in turning off CDMA? Which quarter do you think you're really going to see? I mean, obviously, I think last year you were doing like two a quarter, somewhere in that ballpark. So four is not like it's no step-up, but are you expecting a larger step-up in Q2 or Q3, do you think?

We're expecting a larger step up as we move throughout the year. So I mean, just incrementally, I think stepping up because it just builds over time. But it's really dependent on when those leases turn down, termination dates and everything else.

And it's quite possible that you see it increase each succeeding quarter.

Okay. And then just same basic question for amendments in colo. You think the target is whatever 60 something for the year, 65%, I think. That would imply a much bigger step-up sequentially than maybe what we saw in first quarter. Any sense on kind of when you're going to see a more material step-up from quarter-to-quarter? Or do you think it's going to be somewhat linear from here?

Yeah. No, it's going to step up, but I think mostly in the second half of the year. There'll be a modest step-up is our expectation next quarter and then more material into the third and then even further into the fourth quarter.

And next, we'll go to the line of David Guarino with Green Street.

Hey. Jeff, going back to the M&A conversation, you mentioned multiples aren't increasing, but I think it's fair to say that they're rich today. And we've seen some deal terms on a few recent transactions that really appear to benefit the MNO sellers. So I was just wondering if you could help us understand how are you guys competing for deals now that your peers are bidding more aggressively. And has that caused you to adjust your underwriting at all?

No. We don't adjust our underwriting. We may do fewer deals, David. But if you look at the history of what we've done, we like what we've done, and we'll continue to exercise the same discipline. And I think when you -- if you really understand what we're about, it's about creating value for our shareholders. There aren't particularly great as we see them strategic benefits of just being big in a bunch of different countries. We are much more interested in the financial characteristics and investment goals of each and every transaction. And we lose a lot, but we get enough to generally satisfy our 5% to 10% portfolio growth goals. And we're going to continue to operate that way.

Okay. That's helpful. Maybe switching gears on the '22 guide. I was wondering is there any conservatism in your exchange rate forecasting for the Brazilian real? It looks like your full year guidance is below where the current exchange rate is, and we've got eight months left in the year. So I just wanted to know, how do you guys think about forecasting exchange rates?

We typically will use whatever the forwards are that you would generally pull from Bloomberg, some sort of average of a number of institutions that published projections. The one thing I can assure you of, David, is that we will be wrong on what we assume. I don't know whether we'll be wrong to the positive or the negative, but it's very hard to nail down. So we use what the experts are saying at any given time. But even since we kind of put our numbers together, which is at the end of last week, just in the last 2 days, we've seen the currency weakened relative to the dollar. So it's a little bit closer. So you -- basically, if you look at Brazil, our average for the balance of the year that we've assumed is essentially 5:1. And I think today, it ended up 4 88 or something like that. So it's fairly close to what the spot rate is.

Okay. I appreciate the email, and thanks for that.

And next, we'll go to the line of Eric Luebchow with Wells Fargo.

Hi. Thanks for squeezing me in. So wondering if you could talk about what you're seeing from DISH. I mean they publicly said they think they're about six months behind where they originally expected it to be. So just wondering if either the actual site construction when they hang equipment or the date certain under your contract with them would have much of an impact on your assumed leasing outlook for the year. And then just more broadly, are you seeing their leasing concentrated in just a few markets? Or is it pretty broadly distributed across your portfolio today? Thanks.

I could tell you that the activity level is pretty broadly distributed. And we do have a construct with DISH where once the lease is signed, revenue recognition for us begins at either a construction milestone or a date certain. And it's really the -- to actually look at all that and synthesize that and turn it into guidance is a bit of an art. So there'll be some possibilities that things move around there. But for the most part, as we move through the year, things are known with a greater degree of certainty. So there's some opportunities for some movement. But for the most part, we feel pretty, pretty good about DISH's contribution. In terms of your comment about them being behind by six-- I mean maybe that's their own internal goals and projections, but I would repeat what we've said now for, I think, the better part of the year, which is they're very active, actually busier with us than we thought they would be for a rolling 12-month period. And they continue to be very, very busy and driving hard towards satisfying their June 2023 regulatory obligations.

Great. Appreciate the color.

And next, we'll go to the line of Brandon Nispel with KeyBanc Capital Markets.

Okay. Great. Thank you for taking questions. Maybe two, one follow-up though. Could you share what the backlog of lease applications was? What was that up this quarter? And if we just held that flat looking at the comparables in sort of the second and third quarter, what would that growth rate look like? Then secondly, following up on Walt's question, it looks like you had about $12.6 million in U.S. organic growth this quarter on that 6.4%. Do you still think you can get to a low $20 million number exiting this year? And then is that a reasonable number to run rate into 2023? Thanks.

Okay. On the backlog question, just to be clear on how we evaluate backlog for our leasing business, we're looking at the number of applications for new leases and amendments. Obviously, the pricing may vary depending on exactly what they do and sometimes that pricing has to be negotiated. So it's not necessarily dollar-based. So I think I can't -- the number of applications is up. So when we say it's up, that's what we're referring to. So I can't really give you a -- what would the lease-up be if it were the same for the last few quarters. On the leasing dollars question in the fourth quarter, we do think we can get to the low-20s by the end of the year. As to whether that would be a run rate going forward is partially dependent on activity levels for the balance of this year, which we think will remain fairly strong. But as of today, I can't comment on what next year's number will be.

Okay. Thanks for taking the questions.

And next, we'll go to the line of Matt Niknam with Deutsche Bank. Your line is open.

Just two quick ones, if I could. First, on M&A. I know you mentioned, I think, 358 sites acquired are under contract as of the end of the quarter. Any color you can share in terms of where they're located and when they're expected to close? And then secondly, on the dividend payout ratio, I know you mentioned in the release that you're still under 25%. And I know you've talked about 20% annual growth the next several years. Any sort of update in terms of where you'd like to get that payout ratio to over time? Thanks.

Well, we like it low because it gives us plenty of opportunities, including stock repurchases, which we think -- I think the execution and the allocation that we have, including setting the dividend really has served our shareholders well. So -- but at the same time, Matt, we want to continue to be an industry leader in terms of our dividend growth rates, which is why we set things to start at a low level. So really, it's kind of the balance of those two which will ultimately drive where we set the dividend going forward, but I think you would agree at 25 -- less than a 25% payout ratio, we have a lot of room to increase the dividend materially in the years ahead. What was your first question?

M&A under contract mix. It's largely international. There is some domestic and some international. Was there more to the question?

Any color you can share in terms of country or region, if possible?

They're all existing markets.

Okay. All right. Thank you, guys.

And we do have a question from the line of Jon Atkin with RBC.

Was interested in talking a little bit about other types of infrastructure. You did the PG&E deal. There's rooftops, but on kind of non-conventional macro towers and opportunities you see within that segment? Thanks.

Yeah. We continue to pursue a variety of different things, Jon. We have a growing indoor DAS business. We have a growing connected venues business where we get in and actually kind of build out the telecommunications infrastructure in new developments. We have added some rooftop sites for sure. And we have picked up now three datacenters. None of that stuff comes close to being anywhere near material compared to the basic macro tower business. And while we are seeing good return on invested capital in all these areas, and we will continue to look at them and believe that we're picking areas that will scale over time. I mean we are, for all intents and purposes, for the foreseeable future we are a macro tower company.

So alternatives like rooftops, transmission lines, utility?

We're buying rooftops. We are developing rooftops. We're playing in pretty much all the areas other than fiber, outdoor small cells on a big basis and undersea cable. But none of it is -- gets to the point where it's going to occupy a material portion of our financial results in the foreseeable future. So the question then, I guess, should be, why are you doing it? And the answer is, well, because of where we are, who we are and what we've done over the years, we do get a lot of ancillary opportunities. And these are good assets, exclusive assets that are going to produce for us a good return on invested capital and are generally pursued and occupied by folks who are otherwise engaged in the macro tower business.

Thanks very much.

Yeah.

And we have no further lines in queue at this time.

Great. Well, I want to thank everyone for joining us for what you heard was a great first quarter. And we look forward to reporting continued success as we move through this year. Thank you.

And ladies and gentlemen, that does conclude our teleconference call for today. Again, thank you very much for your participation and for using the AT&T Teleconference service. You may now disconnect.