SECOND QUARTER 2015 HIGHLIGHTS
Consolidated Results
- Total revenue increased 13.9% to $1,174
million
- Adjusted EBITDA increased 11.7% to $762
million
- AFFO increased 13.3% to $537
million
Segment Results
- Domestic rental and management segment
revenue increased 21.7%, or 21.2% on a core basis
- International rental and management
segment revenue increased 1.6%, or 28.5% on a core basis
- Network development services segment
revenue was $20 million
American Tower Corporation (NYSE:AMT) today reported financial
results for the quarter ended June 30, 2015.
Jim Taiclet, American Tower's Chief Executive Officer stated,
"Our second quarter 2015 results reflected yet another quarter of
strong demand for our tower space both domestically and
abroad. In the U.S., we are rapidly integrating our Verizon
portfolio, which already has more than 900 lease applications in
its pipeline. Internationally, leasing activity from our top
customers, including Telefónica, América Móvil and Airtel, drove
Organic Core Growth in revenue of nearly 12%.
In addition, we are confident that the customer network
investment trends developing in markets like Mexico, India and
Brazil position us well to not only deliver 2015 Core Growth of
over 20% in rental and management revenue, Adjusted EBITDA and
AFFO, but also to drive compelling growth in all three of these
metrics well into the future."
SECOND QUARTER 2015 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the
quarter ended June 30, 2015 (unless otherwise indicated, all
comparative information is presented against the quarter ended
June 30, 2014).
- Total revenue increased 13.9% to $1,174
million, and total rental and management revenue increased 14.8% to
$1,154 million.
- Total rental and management revenue
Core Growth was approximately 23.2%, and total rental and
management Organic Core Growth was approximately 7.3%.
- Total rental and management Gross
Margin increased 13.1% to $843 million, and total rental and
management Gross Margin percentage was 73%.
- Adjusted EBITDA increased 11.7% to $762
million, Core Growth in Adjusted EBITDA was 21.1%, and Adjusted
EBITDA Margin was 65%.
- Adjusted Funds From Operations (AFFO)
increased 13.3% to $537 million, AFFO per Share increased 5.9% to
$1.26, and Core Growth in AFFO was approximately 25.4%.
- Net income attributable to American
Tower common stockholders decreased 43.8% to $129 million, and Net
income attributable to American Tower common stockholders per basic
and diluted common share decreased to $0.31 and $0.30,
respectively.
- The Company incurred approximately $75
million in one-time debt retirement costs in the quarter, which,
together with increased depreciation expense associated with
recently completed acquisitions, were the primary drivers of the
net income decline versus the prior period.
- Cash provided by operating activities
decreased 3.3% to $1,036 million for the first half of 2015.
Segment Results
Domestic Rental and Management Segment
- Revenue increased 21.7% to $803
million;
- Organic Core Growth in revenue was
5.8%, or nearly 7% excluding the impact of revenue recognition
timing associated with equipment decommissioning agreements;
- Gross Margin increased 16.4% to $621
million;
- Gross Margin percentage was 77%;
- Operating Profit increased 16.7% to
$589 million, which represented 75% of total Operating Profit;
and
- Operating Profit Margin was 73%.
International Rental and Management Segment
- Revenue increased 1.6% to $351
million;
- Organic Core Growth in revenue was
11.6% and Core Growth in revenue was 28.5%;
- Gross Margin increased 4.8% to $222
million;
- Gross Margin percentage was 63% (87%
excluding the impact of $94 million of pass-through revenues);
- Operating Profit increased 8.2% to $192
million, which represented 24% of total Operating Profit; and
- Operating Profit Margin was 55% (75%
excluding the impact of $94 million of pass-through revenues).
Network Development Services Segment
- Revenue was $20 million;
- Gross Margin was $12 million;
- Gross Margin percentage was 60%;
- Operating Profit was $9 million, which
represented 1% of total Operating Profit; and
- Operating Profit Margin was 43%.
Please refer to “Non-GAAP and Defined Financial Measures” below
for definitions of Gross Margin, Operating Profit, Operating Profit
Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From
Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth,
New Property Core Growth and Net Leverage Ratio. For additional
financial information, including reconciliations to GAAP measures,
please refer to the unaudited selected financial information
below.
CAPITAL ALLOCATION OVERVIEW
Common Stock Distributions – During the quarter ended
June 30, 2015, the Company paid its first quarter 2015 distribution
of $0.42 per share, or a total of approximately $178 million, to
common stockholders. Subsequent to the end of the second quarter,
the Company paid its second quarter distribution of $0.44 per
share, or a total of approximately $186 million, to common
stockholders.
Mandatory Convertible Preferred Stock Dividends – During
the quarter ended June 30, 2015, the Company paid an aggregate
amount of $23 million in Series A and Series B preferred stock
dividends. Subsequent to the end of the second quarter, the Company
declared dividends on its Series A and Series B preferred stock in
an aggregate amount of $27 million, payable on August 17, 2015 to
stockholders of record at the close of business on August 1,
2015.
Cash Paid for Capital Expenditures – During the second
quarter of 2015, total capital expenditures of $152 million
included:
- $58 million for discretionary capital
projects, including spending to complete the construction of 12
towers and the installation of three distributed antenna system
networks domestically and the construction of 911 towers and the
installation of six distributed antenna system networks
internationally;
- $29 million to purchase land under the
Company’s communications sites;
- $9 million for start-up capital
projects;
- $33 million for the redevelopment of
existing communications sites to accommodate new tenant equipment;
and
- $23 million for capital improvements
and corporate capital expenditures.
Cash Paid for Acquisitions – During the second quarter of
2015, the Company spent approximately $649 million to acquire four
sites in the U.S. and 4,188 sites internationally.
In addition, on July 1, 2015, the Company acquired 4,699
communications sites in Nigeria as part of its previously announced
transaction with Bharti Airtel, for a total consideration of
approximately $1.09 billion, including VAT. Approximately $736
million of the consideration was paid in July 2015, with the
remainder to be paid prior to January 15, 2016. The purchase price
is subject to post-closing adjustments.
The Company expects to acquire up to approximately 2,300
additional TIM Brazil sites and up to approximately 200 additional
Airtel Nigeria sites within the next 12 months, pursuant to each
purchase agreement.
FINANCING OVERVIEW
Leverage – For the quarter ended June 30, 2015, the
Company’s Net Leverage Ratio was approximately 5.2x net debt (total
debt less cash and cash equivalents) to second quarter 2015
annualized Adjusted EBITDA.
Liquidity – As of June 30, 2015, the Company had
approximately $2.8 billion of total liquidity, comprised of the
ability to borrow up to an aggregate of approximately $2.5 billion
under its revolving credit facilities, net of outstanding letters
of credit, and approximately $0.3 billion in cash and cash
equivalents. In July, the Company borrowed an additional $850
million under the 2013 credit facility, which was primarily used to
fund the acquisition in Nigeria.
FULL YEAR 2015 OUTLOOK
The following estimates are based on a number of assumptions
that management believes to be reasonable and reflect the Company’s
expectations as of July 29, 2015. Actual results may differ
materially from these estimates as a result of various factors, and
the Company refers you to the cautionary language regarding
“forward-looking” statements included in this press release when
considering this information.
As reflected in the table below, the Company has raised the
midpoint of its full year 2015 outlook for total rental and
management revenue by $90 million, Adjusted EBITDA by $30 million
and AFFO by $60 million. The Company’s outlook includes the 4,699
Airtel Nigeria sites acquired on July 1, 2015, which are expected
to contribute approximately $110 million in revenue, $30 million in
Adjusted EBITDA and $20 million in AFFO to full year 2015 results,
at current exchange rates. The Company's revised revenue outlook
also reflects a $15 million decline in U.S. straight line revenue
expectations for the year.
The Company intends to file a tax election pursuant to which
Global Tower Partners (GTP) REIT will no longer operate as a
separate REIT for federal and state income tax purposes, effective
July 25, 2015. As a result, the Company expects to incur one-time
costs of approximately $92 million in the second half of 2015,
which are reflected in its current full year 2015 outlook, as noted
in the reconciliations below.
The Company's outlook is based on the following average foreign
currency exchange rates to 1.00 U.S. Dollar for the remainder
of 2015: (a) 3.25 Brazilian Reais; (b) 650 Chilean Pesos;
(c) 2,700 Colombian Pesos; (d) 0.94 Euros; (e) 4.20
Ghanaian Cedi; (f) 64.20 Indian Rupees; (g) 15.90 Mexican
Pesos; (h) 205 Nigerian Naira; (i) 3.20 Peruvian Soles;
(j) 12.70 South African Rand; and (k) 3,340 Ugandan
Shillings. These assumptions are based on the more conservative of:
(a) the 30-day average spot rate; or (b) the average Bloomberg
forecast for each currency.
Midpoint
Midpoint Core ($ in millions) Full Year 2015
Growth Growth Total rental and management revenue $
4,645 to $ 4,695 16.6% 22.9% Adjusted
EBITDA 3,020 to 3,060 14.7% 21.4% AFFO 2,095 to 2,135 16.5% 24.6%
Net income 705 to 735 (10.4)% N/A
The Company’s outlook for total rental and management revenue
reflects the following at the midpoint:
- Domestic rental and management segment
revenue of $3,145 million and Organic Core Growth of approximately
7%; and
- International rental and management
segment revenue of $1,525 million and Organic Core Growth of over
10%.
- International rental and management
segment revenue includes approximately $412 million of pass-through
revenue.
The calculation of midpoint Core
Growth is as follows: (Totals may not add due to
rounding)
Total Rental and
Management Adjusted Revenue EBITDA
AFFO Outlook midpoint Core Growth 22.9% 21.4% 24.6% Impact
of pass-through revenues (0.3)%
-
-
Estimated impact of fluctuations in foreign currency exchange rates
(5.9)% (5.9)% (7.7)% Impact of straight-line revenue and expense
recognition (0.2)% (0.5)%
-
Impact of significant one-time items
-
(0.1)% (0.2)% Outlook midpoint growth 16.6% 14.7% 16.5%
Total Rental and Management Revenue Core
Growth Components((1)): (Totals may not add due to
rounding) Full Year 2015
Organic Core Growth
~8% New Property Core Growth(2) ~15% Core Growth ~23%
(1) Reflects growth at the midpoint of outlook ranges.
Excludes pass-through revenue. (2) Revenue growth attributable to
sites added to the portfolio on or after January 1, 2014.
Outlook for Capital Expenditures:
($ in millions) (Totals may not add due to
rounding)
Full Year 2015 Discretionary capital projects(1) $
275 to $ 315 Ground lease purchases 150 to 170 Start-up capital
projects 85 to 95 Redevelopment 155 to 175 Capital improvement 90
to 100 Corporate 15 — 15 Total $ 770 to $ 870 (1)
Includes the construction of approximately 2,750 to 3,250
communications sites.
Reconciliations of Outlook for Net
Income to Adjusted EBITDA: ($ in millions)
(Totals may not add due to rounding)
Full Year 2015 Net
income $ 705 to $ 735 Interest expense 593 to
623 Depreciation, amortization and accretion 1,280 to 1,290 Income
tax provision(1) 173 to 148 Stock-based compensation expense 90 —
90
Other, including other operating expenses,
interest income, (gain) loss on retirement of
long-term obligations, (income) loss on
equity method investments and other expense
(income)
180 to 175 Adjusted EBITDA $ 3,020 to $ 3,060
(1) Includes an approximately $92 million one-time
cash tax charge.
Reconciliations of Outlook for Net
Income to AFFO: ($ in millions) (Totals
may not add due to rounding)
Full Year 2015 Net income $ 705
to $ 735 Straight-line revenue (136 ) — (136 )
Straight-line expense 51 — 51 Depreciation, amortization and
accretion 1,280 to 1,290 Stock-based compensation expense 90 — 90
Non-cash portion of tax provision (5 ) to 5 GTP REIT one-time
charge 92 92
Other, including other operating expenses,
amortization of deferred financing costs,
capitalized interest, debt discounts and
premiums, (gain) loss on retirement of long-
term obligations, other expense (income),
non-cash interest related to joint venture
shareholder loans and dividends on
preferred stock
123 to 124 Capital improvement capital expenditures (90 ) to (100 )
Corporate capital expenditures (15 ) — (15 ) AFFO $ 2,095 to
$ 2,135
Conference Call InformationAmerican Tower will host a
conference call today at 8:30 a.m. ET to discuss its financial
results for the quarter ended June 30, 2015 and its outlook for
2015. Supplemental materials for the call will be available on the
Company’s website, www.americantower.com. The conference call dial-in
numbers are as follows:
U.S./Canada dial-in: (877)
586-5042International dial-in: (706) 645-9644Passcode: 78024660
When available, a replay of the call can be accessed until 11:59
p.m. ET on August 5, 2015. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (855)
859-2056International dial-in: (404) 537-3406Passcode: 78024660
American Tower will also sponsor a live simulcast and replay of
the call on its website, www.americantower.com.
About American TowerAmerican Tower, one of the largest
global REITs, is a leading independent owner, operator and
developer of multitenant communications real estate with a
portfolio of approximately 97,000 communications sites. For more
information about American Tower, please visit the “Earnings
Materials” and “Company & Industry Resources” sections of our
investor relations website at www.americantower.com.
Non-GAAP and Defined Financial MeasuresIn addition to the
results prepared in accordance with generally accepted accounting
principles in the United States (GAAP) provided throughout this
press release, the Company has presented the following non-GAAP and
defined financial measures: Gross Margin, Operating Profit,
Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin,
NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth,
Organic Core Growth, New Property Core Growth and Net Leverage
Ratio. The Company uses Funds From Operations as defined by the
National Association of Real Estate Investment Trusts (NAREIT),
referred to herein as NAREIT Funds From Operations. The Company
defines Gross Margin as revenues less operating expenses, excluding
stock-based compensation expense recorded in costs of operations,
depreciation, amortization and accretion, selling, general,
administrative and development expense, and other operating
expenses. The Company defines Operating Profit as Gross Margin less
selling, general, administrative and development expense, excluding
stock-based compensation expense and corporate expenses. For
reporting purposes, the international rental and management segment
Operating Profit and Gross Margin also include interest income, TV
Azteca, net. These measures of Gross Margin and Operating Profit
are also before interest income, interest expense, gain (loss) on
retirement of long-term obligations, other income (expense), net
income (loss) attributable to non-controlling interest, income
(loss) on equity method investments and income tax benefit
(provision). The Company defines Operating Profit Margin as the
percentage that results from dividing Operating Profit by revenue.
The Company defines Adjusted EBITDA as net income before income
(loss) from discontinued operations, net, income (loss) from equity
method investments, income tax benefit (provision), other income
(expense), gain (loss) on retirement of long-term obligations,
interest expense, interest income, other operating income
(expense), depreciation, amortization and accretion and stock-based
compensation expense. The Company defines Adjusted EBITDA Margin as
the percentage that results from dividing Adjusted EBITDA by total
revenue. NAREIT Funds From Operations is defined as net income
before gains or losses from the sale or disposal of real estate,
real estate related impairment charges, real estate related
depreciation, amortization and accretion and dividends on preferred
stock, and including adjustments for (i) unconsolidated affiliates
and (ii) noncontrolling interest. The Company defines AFFO as
NAREIT Funds From Operations before (i) straight-line revenue and
expense, (ii) stock-based compensation expense, (iii) the non-cash
portion of our tax provision, (iv) non-real estate related
depreciation, amortization and accretion, (v) amortization of
deferred financing costs, capitalized interest, debt discounts and
premiums and long-term deferred interest charges, (vi) other income
(expense), (vii) gain (loss) on retirement of long-term
obligations, (viii) other operating income (expense), and
adjustments for (ix) unconsolidated affiliates and (x)
noncontrolling interest, less cash payments related to capital
improvements and cash payments related to corporate capital
expenditures. The Company defines AFFO per Share as AFFO divided by
the diluted weighted average common shares outstanding. The Company
defines Core Growth in total rental and management revenue,
Adjusted EBITDA and AFFO as the increase or decrease, expressed as
a percentage, resulting from a comparison of financial results for
a current period with corresponding financial results for the
corresponding period in a prior year, in each case, excluding the
impact of pass-through revenue (expense), where applicable,
straight-line revenue and expense recognition, foreign currency
exchange rate fluctuations and significant one-time items. The
Company defines Organic Core Growth in rental and management
revenue as the increase or decrease, expressed as a percentage,
resulting from a comparison of financial results for a current
period with corresponding financial results for the corresponding
period in a prior year, in each case, excluding the impact of
pass-through revenue (expense), straight-line revenue and expense
recognition, foreign currency exchange rate fluctuations,
significant one-time items and revenue associated with new
properties that the Company has added to the portfolio since the
beginning of the prior period. The Company defines New Property
Core Growth in rental and management revenue as the increase or
decrease, expressed as a percentage, on the properties the Company
has added to its portfolio since the beginning of the prior period,
in each case excluding the impact of pass-through revenue
(expense), straight-line revenue and expense recognition, foreign
currency exchange rate fluctuations and significant one-time items.
The Company defines Net Leverage Ratio as net debt (total debt,
less cash and cash equivalents) divided by last quarter annualized
Adjusted EBITDA. These measures are not intended to replace
financial performance measures determined in accordance with GAAP.
Rather, they are presented as additional information because
management believes they are useful indicators of the current
financial performance of the Company's core businesses. The Company
believes that these measures can assist in comparing company
performances on a consistent basis irrespective of depreciation and
amortization or capital structure. Depreciation and amortization
can vary significantly among companies depending on accounting
methods, particularly where acquisitions or non-operating factors,
including historical cost bases, are involved. Notwithstanding the
foregoing, the Company's measures of Gross Margin, Operating
Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA
Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core
Growth, Organic Core Growth, New Property Core Growth and Net
Leverage Ratio may not be comparable to similarly titled measures
used by other companies.
Cautionary Language Regarding Forward-Looking
Statements
This press release contains "forward-looking statements"
concerning our goals, beliefs, expectations, strategies,
objectives, plans, future operating results and underlying
assumptions, and other statements that are not necessarily based on
historical facts. Examples of these statements include, but are not
limited to, statements regarding our full year 2015 outlook,
foreign currency exchange rates, our expectation regarding the
leasing demand for communications real estate and the anticipated
contributions of recently closed acquisitions. Actual results may
differ materially from those indicated in our forward-looking
statements as a result of various important factors, including: (1)
decrease in demand for our communications sites would materially
and adversely affect our operating results, and we cannot control
that demand; (2) if our tenants share site infrastructure to a
significant degree or consolidate or merge, our growth, revenue and
ability to generate positive cash flows could be materially and
adversely affected; (3) increasing competition for tenants in the
tower industry may materially and adversely affect our pricing; (4)
competition for assets could adversely affect our ability to
achieve our return on investment criteria; (5) our business is
subject to government regulations and changes in current or future
laws or regulations could restrict our ability to operate our
business as we currently do; (6) our leverage and debt service
obligations may materially and adversely affect us; (7) failure to
successfully and efficiently integrate acquired or leased assets,
including those leased from Verizon, into our operations may
adversely affect our business, operations and financial condition;
(8) our expansion initiatives involve a number of risks and
uncertainties that could adversely affect our operating results,
disrupt our operations or expose us to additional risk; (9) our
foreign operations are subject to economic, political and other
risks that could materially and adversely affect our revenues or
financial position, including risks associated with fluctuations in
foreign currency exchange rates; (10) a substantial portion of our
revenue is derived from a small number of tenants, and we are
sensitive to changes in the creditworthiness and financial strength
of our tenants; (11) new technologies or changes in a tenant’s
business model could make our tower leasing business less desirable
and result in decreasing revenues; (12) if we fail to remain
qualified as a REIT, we will be subject to tax at corporate income
tax rates, which may substantially reduce funds otherwise
available; (13) complying with REIT requirements may limit our
flexibility or cause us to forego otherwise attractive
opportunities; (14) certain of our business activities may be
subject to corporate level income tax and foreign taxes, which
reduce our cash flows and may create deferred and contingent tax
liabilities; (15) we may need additional financing to fund capital
expenditures, future growth and expansion initiatives and to
satisfy our REIT distribution requirements; (16) if we are unable
to protect our rights to the land under our towers, it could
adversely affect our business and operating results; (17) if we are
unable or choose not to exercise our rights to purchase towers that
are subject to lease and sublease agreements at the end of the
applicable period, our cash flows derived from such towers will be
eliminated; (18) restrictive covenants in the agreements related to
our securitization transactions, our credit facilities and our debt
securities could materially and adversely affect our business by
limiting flexibility, and we may be prohibited from paying
dividends on our common stock if we fail to pay scheduled dividends
on our preferred stock, which may jeopardize our qualification for
taxation as a REIT; (19) our costs could increase and our revenues
could decrease due to perceived health risks from radio emissions,
especially if these perceived risks are substantiated; (20) we
could have liability under environmental and occupational safety
and health laws; and (21) our towers, data centers or computer
systems may be affected by natural disasters and other unforeseen
events for which our insurance may not provide adequate coverage.
For additional information regarding factors that may cause actual
results to differ materially from those indicated in our
forward-looking statements, we refer you to the information
contained in Item 1A of our Form 10-K for the year ended December
31, 2014. We undertake no obligation to update the information
contained in this press release to reflect subsequently occurring
events or circumstances.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands)
June 30, 2015 December 31,
2014(1) ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 274,702 $ 313,492 Restricted cash 135,149 160,206
Short-term investments 40,387 6,302 Accounts receivable, net
212,919 199,074 Prepaid and other current assets 263,274 264,793
Deferred income taxes 14,144 14,507 Total current assets 940,575
958,374 PROPERTY AND EQUIPMENT, NET 9,586,400 7,588,126 GOODWILL
4,036,642 4,033,174 OTHER INTANGIBLE ASSETS, NET 9,853,199
6,900,637 DEFERRED INCOME TAXES 222,276 253,186 DEFERRED RENT ASSET
1,093,812 1,030,707 NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS
736,821 567,724 TOTAL $ 26,469,725 $ 21,331,928
LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable
$ 82,850 $ 90,366 Accrued expenses 412,981 417,754 Distributions
payable 187,987 159,864 Accrued interest 120,482 130,265 Current
portion of long-term obligations 38,814 897,624 Unearned revenue
193,514 233,819 Total current liabilities 1,036,628 1,929,692
LONG-TERM OBLIGATIONS 16,185,211 13,711,084 ASSET RETIREMENT
OBLIGATIONS 824,991 609,035 OTHER NON-CURRENT LIABILITIES 1,049,737
1,028,765 Total liabilities 19,096,567 17,278,576
COMMITMENTS AND CONTINGENCIES EQUITY: 5.25%, Series A
Preferred Stock 60 60 5.50%, Series B Preferred Stock 14 — Common
stock 4,260 3,995 Additional paid-in capital 9,619,406 5,788,786
Distributions in excess of earnings (876,607) (837,320) Accumulated
other comprehensive loss (1,228,521) (794,221) Treasury stock
(207,740) (207,740) Total American Tower Corporation equity
7,310,872 3,953,560 Noncontrolling interest 62,286 99,792 Total
equity 7,373,158 4,053,352 TOTAL $ 26,469,725 $ 21,331,928
(1) December 31, 2014 balances have been revised to
reflect purchase accounting measurement period adjustments.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share data)
Three Months Ended Six Months
Ended June 30, June 30, 2015
2014
2015 2014 REVENUES: Rental and management $
1,154,235 $ 1,005,761 $ 2,216,415 $ 1,965,881 Network development
services 20,140 25,696 37,150 49,665
Total operating revenues 1,174,375 1,031,457
2,253,565 2,015,546 OPERATING EXPENSES: Costs of
operations (exclusive of items shown separately below):
Rental and management (including
stock-based compensation
expense of $390, $343, $822 and $715,
respectively)
314,285
263,184
573,542
514,019
Network development services (including stock-based
compensation expense of $98, $110, $237
and $242, respectively)
8,173
9,091
13,556
19,025
Depreciation, amortization and accretion 328,356 245,427 591,876
491,190
Selling, general, administrative and
development expense (including
stock-based compensation expense of
$23,557, $18,382, $52,847
and $42,482, respectively)
116,338 98,499 239,628 208,528 Other operating expenses 17,449
12,757 25,223 26,648 Total operating
expenses 784,601 628,958 1,443,825 1,259,410
OPERATING INCOME 389,774 402,499 809,740
756,136
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net 2,662 2,662 5,258 5,257 Interest
income 4,404 2,281 7,368 4,299 Interest expense (148,507 ) (146,234
) (296,441 ) (289,541 ) Loss on retirement of long-term obligations
(75,068 ) (1,284 ) (78,793 ) (1,522 )
Other expense (including unrealized
foreign currency gains (losses)
of $25,461, ($23,553), ($30,007) and
($25,558), respectively)
(2,129 ) (16,463 ) (56,632 ) (20,206 ) Total other expense (218,638
) (159,038 ) (419,240 ) (301,713 ) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 171,136 243,461 390,500 454,423
Income tax provision (13,956 ) (21,802 ) (37,828 ) (39,451 ) NET
INCOME 157,180 221,659 352,672 414,972 Net (income) loss
attributable to noncontrolling interest (1,124 ) 12,772
(3,299 ) 21,958 NET INCOME ATTRIBUTABLE TO AMERICAN TOWER
CORPORATION STOCKHOLDERS 156,056 234,431 349,373 436,930 Dividends
on preferred stock (26,782 ) (4,375 ) (36,601 ) (4,375 ) NET INCOME
ATTRIBUTABLE TO AMERICAN TOWER CORPORATION
COMMON STOCKHOLDERS
$ 129,274 $ 230,056 $ 312,772 $ 432,555
NET INCOME PER COMMON SHARE AMOUNTS:
Basic net income attributable to American
Tower Corporation common
stockholders
$ 0.31 $ 0.58 $ 0.76 $ 1.09
Diluted net income attributable to
American Tower Corporation
common stockholders
$ 0.30 $ 0.58 $ 0.75 $ 1.08 WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: Basic 423,154 395,872
414,182 395,511 Diluted 426,933 399,588
418,303 399,452
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
Six Months Ended June 30, 2015
2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
352,672 $ 414,972 Adjustments to reconcile net income to cash
provided by operating activities: Stock-based compensation expense
53,906 43,439 Depreciation, amortization and accretion 591,876
491,190 Loss on early retirement of long-term obligations 78,793
1,269 Other non-cash items reflected in statements of operations
75,531 48,636 Increase in net deferred rent asset (46,653 ) (46,293
) Decrease (increase) in restricted cash 26,804 (194 ) Increase in
assets (99,179 ) (28,473 ) Increase in liabilities 2,710
147,836 Cash provided by operating activities 1,036,460
1,072,382 CASH FLOWS FROM INVESTING
ACTIVITIES: Payments for purchase of property and equipment and
construction activities (311,122 ) (466,247 ) Payments for
acquisitions, net of cash acquired (670,246 ) (315,527 ) Payment
for Verizon transaction (5,060,416 ) — Proceeds from sale of
short-term investments and other non-current assets 781,469 338,787
Payments for short-term investments (816,038 ) (332,684 ) Deposits,
restricted cash and other (3,087 ) (61,134 ) Cash used for
investing activities (6,079,440 ) (836,805 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Borrowings under credit facilities 4,740,308
360,000 Proceeds from issuance of senior notes, net 1,492,298
769,640 Proceeds from term loan 500,000 — Proceeds from other
long-term borrowings — 3,033 Proceeds from issuance of securities
in securitization transaction 875,000 — Repayments of notes
payable, credit facilities, senior notes and capital leases
(5,931,401 ) (1,838,728 ) Distributions to noncontrolling interest
holders, net (383 ) (291 ) Proceeds from stock options and stock
purchase plan 17,364 30,738 Proceeds from the issuance of common
stock, net 2,440,327 — Proceeds from the issuance of preferred
stock, net 1,337,946 583,326 Payment for early retirement of
long-term obligations (86,107 ) (6,767 ) Deferred financing costs
and other financing activities (34,284 ) (22,914 ) Distributions
paid on common stock (329,766 ) (127,269 ) Distributions paid on
preferred stock (31,085 ) — Cash provided by (used for)
financing activities 4,990,217 (249,232 ) Net effect of
changes in foreign currency exchange rates on cash and cash
equivalents 13,973 3,038 NET DECREASE IN CASH AND
CASH EQUIVALENTS (38,790 ) (10,617 ) CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 313,492 293,576 CASH AND CASH
EQUIVALENTS, END OF PERIOD $ 274,702 $ 282,959 CASH PAID FOR INCOME
TAXES, NET $ 29,911 $ 35,776 CASH PAID FOR INTEREST $
291,103 $ 270,257
UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT(In
thousands, except percentages. Totals may not add due to
rounding.)
Three Months Ended June 30, 2015 Rental and
Management
NetworkDevelopment
Services
Total
Domestic International Total
Segment revenues $ 802,841 $ 351,394 $ 1,154,235 $ 20,140 $
1,174,375 Segment operating expenses (1) 182,172 131,723 313,895
8,075 321,970 Interest income, TV Azteca, net — 2,662
2,662 — 2,662 Segment Gross Margin 620,669
222,333 843,002 12,065 855,067
Segment selling, general, administrative
and
development expense ((1))
31,243 29,981 61,224 3,439 64,663
Segment Operating Profit $ 589,426 $ 192,352 $
781,778 $ 8,626 $ 790,404 Segment Operating
Profit Margin 73 % 55 % 68 % 43 % 67 % Percent of total Operating
Profit 75 % 24 % 99 % 1 % 100 %
Three Months Ended
June 30, 2014 Rental and Management
NetworkDevelopment Services Total
Domestic International Total Segment revenues
$ 659,743 $ 346,018 $ 1,005,761 $ 25,696 $ 1,031,457 Segment
operating expenses (1) 126,340 136,501 262,841 8,981 271,822
Interest income, TV Azteca, net — 2,662 2,662
— 2,662 Segment Gross Margin 533,403 212,179
745,582 16,715 762,297
Segment selling, general, administrative
and
development expense ((1))
28,313 34,472 62,785 2,326 65,111
Segment Operating Profit $ 505,090 $ 177,707 $
682,797 $ 14,389 $ 697,186 Segment Operating
Profit Margin 77 % 51 % 68 % 56 % 68 % Percent of total Operating
Profit 72 % 26 % 98 % 2 % 100 % (1) Excludes
stock-based compensation expense.
UNAUDITED SELECTED FINANCIAL INFORMATION(In thousands,
except where noted. Totals may not add due to rounding.)
SELECTED BALANCE SHEET DETAIL:
Pro Forma Long-term obligations
summary, including current portion June 30, 2015
June 30, 2015 (1)
2013 Credit Facility $ 250,000 $ 1,100,000 2013 Term Loan 2,000,000
2,000,000 2014 Credit Facility 1,980,000 1,980,000 2.800% senior
notes due 2020 748,265 748,265 3.40% senior notes due 2019
1,004,874 1,004,874 3.450% senior notes due 2021 646,634 646,634
3.50% senior notes due 2023 993,594 993,594 4.000% senior notes due
2025 744,339 744,339 4.500% senior notes due 2018 999,688 999,688
4.70% senior notes due 2022 699,047 699,047 5.00% senior notes due
2024 1,010,351 1,010,351 5.050% senior notes due 2020 699,539
699,539 5.900% senior notes due 2021 499,506 499,506 7.25% senior
notes due 2019 297,530 297,530 Total unsecured at American
Tower Corporation $ 12,573,367 $ 13,423,367 Secured Tower
Revenue Securities, Series 2013-1A 500,000 500,000 Secured Tower
Revenue Securities, Series 2013-2A 1,300,000 1,300,000 American
Tower Secured Revenue Notes, Series 2015-1 Class A 350,000 350,000
American Tower Secured Revenue Notes, Series 2015-2 Class A 525,000
525,000
Secured Tower Cellular Side Revenue Notes,
Series, 2012-1 Class A, Series 2012-2
Class A, Series 2012-2 Class B and Series
2012-2 Class C((2))
286,597 286,597 Unison Notes(2) 202,807 202,807 South African
facility(3) 68,315 68,315 Colombian credit facility(3) 75,432
75,432 BR Towers debentures(3)(4) 105,776 105,776 Brazil credit
facility(3) 12,955 12,955 India credit facility(3) — 7,800
Shareholder loans(5) 126,772 126,772 Capital leases 97,004
97,004 Total secured or subsidiary debt $ 3,650,658 $
3,658,458 Total debt $ 16,224,025 $ 17,081,825 Cash and cash
equivalents 274,702 Net debt (total debt less cash and cash
equivalents) $ 15,949,323 (1) Pro Forma
for the following activity in July 2015: (i) borrowings of $850
million under the 2013 credit facility, which were primarily used
to fund the Company's acquisition in Nigeria and (ii) borrowings of
$7.8 million under the India credit facility . (2) The notes are
secured debt and were assumed in connection with an acquisition.
(3) Denominated in local currency. (4) The BR Towers debentures
were assumed in connection with an acquisition. (5) Reflects
balances attributable to minority shareholder loans in the
Company's joint ventures in Ghana and Uganda. The Ghana shareholder
loan is denominated in Ghanaian Cedi and the Uganda shareholder
loan is denominated in USD.
UNAUDITED SELECTED FINANCIAL INFORMATION(In thousands,
except where noted. Totals may not add due to rounding.)
SELECTED BALANCE SHEET DETAIL
(CONTINUED):
Three Months Ended
Calculation of Net Leverage Ratio
($ in thousands)
June 30, 2015 Total debt $ 16,224,025 Cash and cash
equivalents 274,702 Numerator: net debt (total debt less cash and
cash equivalents) $ 15,949,323 Adjusted EBITDA $ 762,286
Denominator: annualized Adjusted EBITDA 3,049,144
Net Leverage Ratio
5.2x
Three Months Ended
Share count rollforward: (in
millions of shares)
June 30, 2015
Total common shares, beginning of
period
423.1
Common shares repurchased
—
Common shares issued
0.2
Total common shares outstanding, end of
period (1)
423.3
(1) As of June 30, 2015, excludes (a) 4.0
million potentially dilutive common shares associated with vested
and exercisable stock options with an average exercise price of
$53.79 per common share, (b) 4.1 million potentially dilutive
common shares associated with unvested stock options, (c) 1.6
million potentially dilutive common shares associated with unvested
restricted stock units and (d) the potentially dilutive common
shares associated with the Company’s preferred stock .
SELECTED STATEMENT OF OPERATIONS DETAIL:
Rental and management segment
straight-line revenue and expense (1):
Three Months Ended June 30,
Domestic straight-line revenue and expense detail:
2015 2014 Straight-line revenue $ 30,516 $
22,725 Straight-line expense
$
12,114 $ 6,470
Three Months Ended June 30,
International straight-line revenue and
expense detail:
2015
2014
Straight-line revenue
$
5,025
$
10,423
Straight-line expense
$
1,847
$
1,402
(1) In accordance with GAAP, the Company
recognizes rental and management revenue and expense related to
non-cancellable tenant and ground lease agreements with fixed
escalations on a straight-line basis, over the applicable lease
term. As a result, the Company’s revenue recognized may differ
materially from the amount of cash collected per tenant lease, and
the Company’s expense incurred may differ materially from the
amount of cash paid per ground lease. Additional information
regarding straight-line accounting can be found in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2014 in
the section entitled “Revenue Recognition,” in note 1, “Business
and Summary of Significant Accounting Policies” within the notes to
the consolidated financial statements. The above table sets forth a
summary of total rental and management straight-line revenue and
expense, which represents the non-cash revenue and expense recorded
due to straight-line recognition .
UNAUDITED SELECTED FINANCIAL INFORMATION($ in thousands.
Totals may not add due to rounding.)
SELECTED STATEMENT OF OPERATIONS DETAIL
(CONTINUED)
Three Months Ended June 30,
International pass-through revenue detail: 2015
2014 Pass-through revenue
$
94,400 $ 93,236
Three Months Ended June 30,
Pre-paid rent
detail(1)(2):
2015
2014
Beginning balance
$
519,381
$
414,196
Cash
13,287
37,379
Amortization(3)
(20,028)
(16,880)
Ending balance
$
512,641
$
434,695
(1) Reflects cash received for capital
contributions and prepayments associated with long-term tenant
leases and amortization of GAAP revenue associated with the leases
corresponding to the capital contributions or prepayments . (2)
Excludes the impacts of decommissioning revenues and termination
fees. (3) Includes the impact of foreign currency exchange rate
fluctuations
Three Months Ended June 30, Selling,
general, administrative and development expense breakout:
2015 2014 Total rental and management overhead
$ 61,224 $ 62,785 Network development services segment overhead
3,439 2,326 Corporate and development expenses 28,118 15,006
Stock-based compensation expense 23,557 18,382 Total $ 116,338 $
98,499
The following table reflects the estimated impact of foreign
currency exchange rate fluctuations, pass-through revenue
(expense), straight-line revenue and expense recognition and
material one-time items on total rental and management revenue,
Adjusted EBITDA and AFFO:
The calculation of Core Growth is as follows:
Total Rental and
Management
Adjusted Three Months Ended June 30, 2015
Revenue EBITDA AFFO Core Growth 23.2% 21.1%
25.4 % Impact of pass-through (1.4)% — — Estimated impact of
fluctuations in foreign currency exchange rates (6.8)% (7.1)% (9.2
)% Estimated Impact of straight-line revenue recognition (0.3)%
(1.1)% — Estimated Impact of material one-time items — (1.1)% (2.6
)% Reported growth 14.8% 11.7% 13.3%
The components of Core Growth in rental and management
revenue are as follows:
Three Months Ended June 30, 2015
Domestic International Total
Organic Core Growth 5.8% 11.6% 7.3% New Property Core Growth(1)
15.4% 16.9% 15.9% Core Growth 21.2% 28.5% 23.2% (1)
Revenue growth attributable to sites added to the portfolio
on or after April 1, 2014.
UNAUDITED SELECTED FINANCIAL INFORMATION($ in thousands.
Totals may not add due to rounding.)
SELECTED CASH FLOW DETAIL:
Three Months Ended June 30, Payments for
purchase of property and equipment and construction activities:
2015 2014 Discretionary - capital projects $
57,715 $ 155,401 Discretionary - ground lease purchases 29,168
22,835 Start-up capital projects 9,372 4,589 Redevelopment 32,608
48,367 Capital improvements 19,849 17,225 Corporate 3,225 3,939
Total $ 151,937 $ 252,356
Six Months Ended June
30, Payments for purchase of property and equipment and
construction activities: 2015 2014
Discretionary - capital projects $ 128,706 $ 266,573 Discretionary
- ground lease purchases 58,162 67,695 Start-up capital projects
14,415 9,622 Redevelopment 67,669 78,739 Capital improvements
36,633 34,456 Corporate 5,537 9,162 Total $ 311,122 $ 466,247
SELECTED PORTFOLIO DETAIL – OWNED AND
OPERATED SITES:
Tower Count
(1): As of March 31, 2015 Constructed
Acquired Adjustments As of June 30, 2015
United States 40,048 12 4 — 40,064 Brazil 11,989 160 4,185 (7)
16,327 Chile 1,159 6 — — 1,165 Colombia 3,626 54 — (3) 3,677 Costa
Rica 464 — — — 464 Germany 2,031 — — (1) 2,030 Ghana 2,052 10 — 5
2,067 India 13,289 624 — (30) 13,883 Mexico 8,717 4 — — 8,721 Peru
578 1 — — 579 South Africa 1,918 1 — (1) 1,918 Uganda 1,326 51 3
—
1,380 Total 87,197 923 4,192 (37) 92,275 (1)
Excludes in-building and outdoor
distributed antenna system networks, as well as the 4,699 sites
acquired in Nigeria on July 1, 2015.
UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE
CALCULATION OF DEFINED FINANCIAL MEASURES(In thousands, except
per share data and percentages. Totals may not add due to
rounding.)
The reconciliation of net income to
Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are
as follows:
Three Months Ended June 30, 2015
2014 Net income $ 157,180 $ 221,659 Income tax provision
13,956 21,802 Other expense 2,129 16,463 Loss on retirement of
long-term obligations 75,068 1,284 Interest expense 148,507 146,234
Interest income (4,404 ) (2,281) Other operating expenses 17,449
12,757 Depreciation, amortization and accretion 328,356 245,427
Stock-based compensation expense 24,045 18,835 Adjusted EBITDA $
762,286 $ 682,180 Divided by total revenue 1,174,375 1,031,457
Adjusted EBITDA Margin 65 % 66%
The reconciliation of net income to NAREIT Funds From
Operations and the calculation of AFFO and AFFO per Share are
presented below:
Three Months Ended June 30, 2015
2014 Net income $ 157,180 $ 221,659 Real estate related
depreciation, amortization and accretion 291,183 219,171 Losses
from sale or disposal of real estate and real estate related
impairment charges 6,775 559 Dividends on preferred stock (26,782)
(4,375) Adjustments for unconsolidated affiliates and
noncontrolling interest (5,856) 6,965 NAREIT Funds From Operations
422,500 443,979 Straight-line revenue (35,541) (33,148)
Straight-line expense 13,961 7,872 Stock-based compensation expense
24,045 18,835 Non-cash portion of tax (benefit) provision (1,241)
5,120 Non-real estate related depreciation, amortization and
accretion 37,173 26,256
Amortization of deferred financing costs,
capitalized interest, debt discounts and premiums
and long-term deferred interest
charges
5,297 3,176 Other expense(1) 2,129 16,463 Loss on retirement of
long-term obligations 75,068 1,284 Other operating expenses(2)
10,674 12,198 Capital improvement capital expenditures (19,849)
(17,225) Corporate capital expenditures (3,225) (3,939)
Adjustments for unconsolidated affiliates
and noncontrolling interest
5,856 (6,965) AFFO $ 536,847 $ 473,906 Divided by weighted average
diluted shares outstanding 426,933 399,588 AFFO per Share $ 1.26 $
1.19 (1) Primarily includes unrealized losses
on foreign currency exchange rate fluctuations. (2) Primarily
includes acquisition related costs, integration costs, losses from
sale of assets and impairment charges.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729005790/en/
American Tower CorporationLeah Stearns,
(617) 375-7500Senior Vice President, Treasurer & Investor
Relations
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